Australian telecommunications giant Telstra reported a 44 per cent plunge in net profit after writing off US$546 million on its failed business with PCCW. Telstra on Thursday announced a net profit of A$1.18 billion (about HK$5.59 billion) for the six months to December 31, down from A$2.09 billion a year ago, with a provision on Reach, its joint venture undersea cable company, dominating the worst half-yearly result since the company listed in 1997. The writedown, revealed last week, slashed the value of Reach to zero on the books of Australia's dominant telecom carrier. Earnings before interest and tax were down 3.3 per cent on the year-ago period, at A$3.5 billion, stripping out the writedown. Telstra's shares fell 2.39 per cent on the announcement to A$4.08, just above a five-year low. The stock has been in the doldrums since it became clear a year ago that plans for the government to sell its remaining stake in the former state-owned company had stalled. A larger final dividend of 14 A cents a share did nothing to calm investor fears of domestic drift amid competition from Singapore Telecommunications (SingTel) unit Optus and concerns that its Asian strategy is in deep trouble. 'The only good thing to say is that they seem to have abandoned hopes for an Asian empire,' said one Sydney-based fund manager. 'We've been trying to give them that message for some time, but it seems it takes a writedown of this magnitude to get that through.' Telstra originally agreed to pay US$3 billion for stakes in Reach and Hong Kong-based mobile phone operator CSL, but negotiated that down to US$2.43 billion in 2000. Its stake in CSL was written down by US$500 million in 2001, prior to it assuming full control from PCCW. In one bright spot, Telstra finance director John Stanhope said there would be no further writedowns this year on CSL. Mr Stanhope also confirmed recent market rumours that Telstra was negotiating to buy SingTel's yellow pages directories, which are expected to be sold for about A$300 million. But after the problems with CSL and Reach, chief executive Ziggy Switkowski repeated his comments of last week that major investments in Asian mobile and wireless markets were on hold. 'In the area of wireless... Internet and broadband infrastructure, the job for us now is to make what we have invested in work,' he said. 'The message to the market is that any investment that we may make will be of a moderate kind. So we are not inclined at all to contemplate big steps at this stage.' Mr Switkowski has publicly said he wanted to lift Asian revenue from 8 per cent now to 25 per cent by 2005, but despite investing A$10 billion overseas in the past decade, in addition to losses in Hong Kong, the company is out of pocket in Indonesia, Sri Lanka, Cambodia, Laos, Poland, Europe and Kazakhstan. The only success story has been in Vietnam. While the main problems are in Asia, Telstra is facing flat revenue growth at home largely due to aggressive competition from Optus. Telstra's domestic mobile revenues were flat at A$1.63 million for the half, while Optus had an 18 per cent gain and added 2 per cent to its market share, which now stands at 34 per cent. Thursday's results showed underlying sales revenue fell 0.1 per cent to A$10.2 billion, reflecting sluggish conditions in Telstra's main domestic market. Excluding the writedown and other one-time items, net income declined 4.1 per cent to A$2.16 billion. The earnings report heightened speculation on the future of Mr Switkowski, whose five-year contract expires in March next year, who was the architect of the firm's offshore strategy with Reach chief Dick Simpson.