Telstra boss Andrew Penn says the economics of the national broadband network are "challenging", but his organisation remains committed to being the market leader.
Mr Penn told Telstra's investor day conference that wholesale prices on the NBN made for "extremely slim" margins for retailers offering services on the network, exacerbating the major earnings hit Telstra expects once the network is completed.
"While the current economics are challenging I am confident that ultimately the dynamics will improve," he said.
The growing number of resellers of NBN services is leading to significant downward pressure on pricing, Mr Penn said.
The NBN rollout, once completed, is expected to leave Telstra with a $3 billion loss in earnings.
Mr Penn said he was sure Telstra was buying enough bandwidth on the NBN to meet customer demand, as robotic testers were sampling customer speeds and giving the telco confidence in its provisioning.
The Telstra chief executive also warned of increased competition in the mobile market, with TPG Telecom planning to become the fourth major operator.
"One of our critical objectives is to achieve growth in mobile services revenue which has been under pressure from these competitive dynamics over the last two years," Mr Penn said.
"We did see some modest signs of growth in the second half of last year, however we have yet to see this translate into further momentum."
