First payout lift in seven years for Telstra

Company News

by Glenn Dyer

Full year profits at Telstra (ASX:TLS) fell 4.6% to $1.81 billion for the year to June, with the company lifting its final dividend for the first time in seven years to 8.5 cents a share.

That was hardly a outlandish increase at just over 1% – more a token to mark the retirement of seven year CEO, Andy Penn.

The shares eased 1.2% to $3.96 – not exactly a ringing endorsement of the higher dividend. That was after they jumped to a day’s high of $4.08 in the early part of the session and before analysts had come to grips with the details in the report and accounts.

The company reported a 4.7% year over year decline in revenue to $22.045 billion but an 8.4% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $7.256 billion.

Telstra said its operating earnings growth was underpinned by a solid performance from its mobile business.

It reported EBITDA growth of 21.2% or $700 million thanks to the addition of 155,000 net retail postpaid handheld services, 2.9% postpaid handheld average revenue per user (ARPU) growth, and 6.4% mobile services revenue growth.

Telstra sees underlying EBITDA growing in the 2022-23 financial year with the company providing underlying EBITDA guidance of $7.8 billion to $8.0 billion. This would a 7.5% to 10% increase year over year.

The higher final takes the full payout for the year to 16.5 cents a share

Telstra’s about to retire CEO, Andy Penn, revealed that this increase reflects “the confidence of the Board” and “the recognition by the Board of the importance of the dividend to shareholders.”

Speaking at the full year results presentation Mr Penn said Telstra’s T22 strategy had set the company up well to manage through the current uncertain economic climate and created the foundation for growth.

“When we launched our T22 strategy four years ago, we were in part responding to the operational and financial headwinds created by the rollout of the nbn. We were also responding to the technology innovation we could see around us and the growing rate of digital adoption,” Mr Penn said.

“We knew we needed to fundamentally transform the company, to simplify and digitise, to set bold aspirations and radical interventions and that is what we have done.

“Telstra is a very different company today and while of course there is always more to do, we are much better equipped to face the very exciting digital future ahead.

“What we could not have foreseen was COVID and the other seismic economic, political and social changes that have unfolded.

“While we are by no means immune, the transformational changes we made through T22 have prepared us well to manage through the uncertainty – we are a much simpler, more agile, more efficient, leaner, more customer-focussed and more digitally-enabled business.

“Our mobiles result was outstanding, Consumer & Small Business Fixed grew sequentially in the second half, Enterprise returned to growth and we started to realise the benefits of setting up our infrastructure assets as standalone InfraCo businesses,” Mr Penn said.

“We also continued to take cost out of the business, with underlying fixed costs down $454 million and total operating expenses down $906 million, or 5.8 percent.”

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