According to its latest market update, Telstra Corporation Ltd’s (ASX: TLS) shareholders can expect the company to report a 2018 EBITDA result of around $10.1 billion.

In an announcement to the ASX on Monday, Telstra provided a trading update for its third quarter and the execution of its strategy.

“Telstra has re-affirmed guidance consistent with its FY18 guidance,” it wrote. “However, EBITDA is expected to be at the bottom end of the range and free cashflow is expected to be at the top end to moderately above.”

Previously, Telstra said it expected to report earnings before interest, taxes, depreciation and amortisation (EBITDA) of between $10.1 billion and $10.6 billion in 2018.

While Telstra’s revenue is expected to hold steady somewhere between $27.6 billion and $29.5 billion the rapidly changing mobile and broadband markets are taking their toll on profit margins.

“We are seeing data volumes increase 50% per annum across both fixed and mobile networks and the range of services supported by our networks increase dramatically,” Telstra CEO Andrew Penn is expected to say in a speech in Boston on Monday.

“On top of this, as an industry we are in a transition to the next generation of technology as we move to software defined networks, network function virtualisation and 5G.”

Telstra added 60,000 new mobile subscribers during its most recent quarter and an additional 36,000 home broadband users. However, Telstra said its average revenue per user (ARPU) on post paid mobile plans fell, which is expected to result in subdued profit performance from its mobiles division.

Over the course of the 2018 financial year, Telstra is targeting a 7% reduction in underlying fixed costs although it will incur a restructuring cost of around $300 million.

Telstra’s free cash flow result is expected to be at the top end of its range (around $4.7 billion). It expects its total dividends for the year will be around 22 cents per share, fully franked.

Interested in finance and investing?

Did you know it’s free to join The Rask Group’s Investor Club Newsletter? It’s a regular (usually weekly) news and educational update on financial markets, investing and unique strategies. Join today and get ready to laugh and learn.

Click here to join The Rask Group’s Investor Club Newsletter Today