Telstra confirms full-year guidance, New $100 million solar fund launched: Economy Roundup

Telco giant Telstra has reaffirmed its full-year guidance, but says despite a lift in consumer numbers its earnings growth will fall in the first half of the year.

At the company’s annual general meeting, chief executive David Thodey said the company expects earnings before interest, tax, depreciation and amortisation to fall by a high single-digit percentage figure in the 2011 financial year.

Thodey also said the company’s customer base will rise, while revenue will be flat.

“I currently expect our half-year results will show higher customer numbers, a low double digit decline in EBITDA as a result of increased redundancy costs in the first half and a change in the recognition of revenue from the Sydney Yellow Pages from the first half to the second half,” he said.

“The company remains strong and in an excellent position to capitalise on the emerging market opportunities.”

Thodey also said that negotiations over the National Broadband Network remain “critically important”.

“In the short-term we need to do more to protect shareholder value, because your board is very concerned by Telstra’s undervalued share price,” chairman Catherine Livingstone said.

“Your board is confident that Telstra has the right strategy and is resolute in ensuring its execution,” she said.

Meanwhile, oil and gas company Karoon Gas Australia has scrapped an IPO worth up to $US1 billion, blaming unfavourable market conditions.

The company had planned the IPO to help fund exploration projects in Brazil and Peru.

Meanwhile, Moss Capital has launched the country’s first solar energy fund, with the $100 fund to invest in commercial and industrial scale solar projects which have long-term sales agreements, the company said.

“Australia is already riding the wave of mineral, coal and gas sales, but there is one natural resource which in terms of raw energy puts them all in the shade – our sunshine,” Moss Capital chairman Bill Moss said in Australia.

“The Australian Solar Fund takes advantage of positive market conditions and captures this resource of clean, emission-free energy to generate saleable power and returns for investors.”

The company said the fund will provide fixed-term, fixed-rate loans and preferred equity to solar projects which have guarantee sales agreements with local councils, blue chip property owners and electricity retailers.

Shares higher after solid Wall Street lead

The Australian sharemarket has opened higher this morning following a solid result on Wall Street where investors were given a boost of confidence due to positive financial results and the expectation of a result for debt talks in Ireland.

The benchmark S&P/ASX200 index was up 23 points or 0.51% to 4663.8 at 12.10 AEST, while the Australian dollar also gained some ground to US98.93c.

AMP shares lost 0.2% to $5.10, while Commonwealth Bank shares dropped 0.3% to $49.39. Westpac rose 0.4% to $21.89 as Woolworths lost 0.2% to $27.69.

Bendigo & Adelaide Bank chairman Robert Johanson has said that the global economic remains fragile. Speaking to Business Spectator, Johanson also said discussions over interest rates need to remain rational.

“That seems to have become the item of political anger when we really need this to all settle back a bit and work out what are the real things at stake in this discussion and be pleased with the state of the health of the banking system, but also be very aware of the vulnerabilities we still have,” he said.

“Hearing about the issues that Europe faces, for example, seems to me to show that this still is all pretty fragile and we shouldn’t get locked into indulgent kinds of disputes on things and therefore use up a lot of political capital because we may need it again.”

Regarding rate rises, RBA deputy governor Ric Battellino has told a conference that inflation is now “broadly in the middle of the target range”, but also noted pressure will rise.

“For this reason, the board of the Reserve Bank decided at its meeting earlier this month that it would be prudent to make an early, modest tightening to guard against such an outcome,” he said.

OECD spies global recovery slowdown

The OECD has said global economic recovery is slowing due to tensions over the United States and the ongoing “currency war”.

“The recovery, though still in progress, is more hesitant than in the early part of the year,” OECD secretary general Angel Gurria told a news conference. “We are in a soft patch… Output and trade growth have both softened as support from fiscal stimulus and other temporary factors have faded.”

In the United States, stocks have risen due to solid financial data and expectations of a resolution for Ireland’s debt problems. The Dow Jones Industrial Average gained 173.55 points or 1.57% to 11,181.23.

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