Weeks after Telstra confirmed that its net profit for the six months to December 31 had jumped 6.5% to $1.03 billion, it is now confirmed that it is exiting the venture capital business as it looks to further reduce costs, as well as tighten and redirect some of its spending.
Telstra had a majority stake in Telstra Ventures Fund II, which was launched in 2018, and worth around $675 million, according to Bloomberg. The telco’s 62.5% share was worth around $422 million.
The company said that it sold its stake in the fund, now referred to as Titanium Ventures, at a profit on book value.
“We have transferred $166 million of cumulative gains held in fair value of equity instruments reserve to retain profits,” said the telco, according to The Australian.
Telstra’s chief executive Vicki Brady
Founded 13 years ago, the fund gave 42 cashouts, with almost $1 billion returned to its investors. Some of its investments that didn’t go according to plan included the backing of the Sam bankman-Fried led FTX crypto exchange.
As part of the company’s plan to refocus its spending, Telstra has now committed to spending $800 million to boost mobile coverage and increase internet speeds across its network over the next four years.
The money spent on its 5G network, boosting speeds and coverage in regional areas, will “absolutely cement and extend” its dominance, said its chief executive Vicki Brady. To fund its upgrade programme, the company has engaged in a $750 million share buyback programme.
Telstra has pointed out that its network is more than three times of Vodafone’s expanded footprint, and that there are significant costs associated with maintaining those networks.
Last year, the company cut 2800 positions, almost 10% of its workforce, as it works towards a target of $350 million cost savings between 2021 and the middle of this year. Its former chief executive Andy Penn had said the company had hoped to cut $500 million during that time.
