Telstra's half-year profit has tumbled 27 per cent to $1.2 billion as the telco feels the full force of the NBN taking away its wholesale fixed-line customers.

Key points: Telstra cuts its interim dividend to a total of 8 cents after profit fell to $1.2b

Telstra cuts its interim dividend to a total of 8 cents after profit fell to $1.2b "We are no longer the national wholesale provider. That part of our business — the revenue and value — is being transferred to the NBN," says Telstra CEO

"We are no longer the national wholesale provider. That part of our business — the revenue and value — is being transferred to the NBN," says Telstra CEO Revenue fell 4.1 per cent as customers migrated onto the NBN eroding Telstra's wholesale business

Telstra has further slashed its interim dividend to just 5 cents per share, with an additional 3 cents of special dividend, taking the total to 8 cents.

That is 27 per cent lower than the half-year dividends paid last year, and well down on a peak half-year dividend of 15.5 cents.

Despite this, the company's chief executive, Andy Penn, said he was, "very positive about Telstra's prospects for the future".

"Demand for telco products and services continues to grow and telecommunications infrastructure is only going to increase in importance over the next decade," he said.

"Telstra's circumstances today are very different from what they were before the NBN.

"We are no longer the national wholesale provider. That part of our business — the revenue and value — is being transferred to the NBN and that is reflected in our income, profit, and dividends."

Mr Penn said the company was seeking to address the loss in revenue through its "T22 strategy to cut costs", "digitise the business" and invest in future networks, such as 5G mobile.

"Thanks to our new partnership arrangements with a series of leading manufacturers, 5G devices will be available exclusively through Telstra before any other Australian mobile operator when they are released in the first half of calendar year 2019," Mr Penn said.

"Telstra's global leadership on 5G will help ensure mobile is the engine room of our business into the future."

'Prices will have to go up' if NBN doesn't cut costs

The other area Telstra's boss is targeting for profit growth is a hoped-for decrease in NBN access charges.

NBN Co's mandate is to deliver a commercial return to its shareholder, the Federal Government, and to do so Mr Penn said it is charging telcos far too much for access.

"If you compare the wholesale price today relative to what is was historically, when Telstra was a wholesale provider, prices are probably more than double," he told The Business.

"The wholesale price needs to reduce by $20 not $2 so that is order of magnitude that we need to consider."

Sorry, this video has expired Extended interview with Andy Penn ( Elysse Morgan )

When asked how customers would benefit from the NBN reducing wholesale prices for telcos, Mr Penn said they may escape looming retail price increases for their broadband plans.

"Unfortunately if the industry continues to make a zero margin what will actually happen is that ultimately prices will have to go up, the laws of arithmetic [unfortunately mean] that's the dynamic."

Telstra cuts 3,200 out of a planned 8,000 jobs to go

Telstra last year announced an aggressive cost-cutting strategy to help offset the loss of revenue to the NBN.

The company said its underlying fixed costs were down 4.2 per cent, or $162 million, in the first-half of this financial year, with nearly $900 million a year in cost savings achieved over the past three years.

Mr Penn said 3,200 people have now left Telstra out of a targeted staff reduction of 8,000 full-time positions by financial year 2022.

"This for me is by far the hardest aspect of the changes we have to make," he said.

"I feel deeply when people are impacted personally and I am committed to both be transparent with our teams on what this means and to provide all the support we possibly can for people affected."

Telstra noted more than 1,500 of the positions cut were management or executive roles.