Telstra today unveiled a muted set of half-yearly financial results for the six months to December 31,, with revenue and earnings both slightly down, but free cash flow showing a spark spike upward.

According to statements issued to the Australian Securities Exchange this morning ahead of the company’s results briefing in Sydney, Telstra’s total revenue for the period sank 2.9 per cent compared with the same six months to the end of 2008. Total sales revenue was $12.34 billion.

Earnings before interest, depreciation, amortisation and taxation (EBITDA) were also down by 0.3 per cent to $5.32 billion, although once the sales of the company’s IT services business KAZ to Fujitsu last year was taken out of the equation along with currency movements, EBITDA looked a little better, 0.2 per cent up.

But the real winner in the results was Telstra’s free cash flow, which jumped from $1.91 billion in the half to the end of 2008 to $2.62 billion at the end of 2009 – a figure 37 per cent up.

The company said it was experiencing “challenging market conditions”, with revenue from its traditional fixed-line telephony business (the public switched telephony network or PSTN) dropping by $222 million compared with the previous corresponding period.

The “PSTN headwinds have increased,” the company said in its management presentation. Revenue from advertising and Telstra’s directories business (contained within Sensis) was also down by $53 million.

Revenue from mobile services, however, was growing strongly – up $145 million, as the telco continued to capitalise on its leadership in the field with its Next G network.

The amount of people signing up for new broadband connections on Telstra’s network was also decreasing, with the telco saying the fixed broadband market was “maturing”. However, the number of mobile-only households – households without a fixed connection at all – was growing rapidly each six months.

In terms of guidance for the 2010 financial year as a whole, Telstra said it expected a low single digit decline in total sales revenue, with EBITDA growth set to experience low single digit growth.

With regards to its ongoing negotiations with the Federal Government and the National Broadband Network Company regarding the NBN, Telstra said only in its briefing document that the talks “continue”.

Further coverage throughout the day.

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