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MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  Telstra Corporation Limited    TLS   AU000000TLS2

TELSTRA CORPORATION LIMITED

(TLS)
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Telstra Maintains Dividend as Fiscal Year Profit Falls 16% on NBN Impact--Update

08/12/2020 | 05:20pm EST

By Stuart Condie

SYDNEY--Telstra Corp. Ltd. said full-year profit fell 16% as the government-owned national broadband network continued to eat into earnings and mobile revenues fell.

Australia's largest communications provider said Thursday that net profit attributable to shareholders for the 12 months to June fell to 1.82 billion Australian dollars ($1.30 billion) from A$2.15 billion a year earlier. Total income fell 5.9% to A$26.16 billion, as mobile revenue fell 4.4% and fixed-line revenue fell 12.1%.

Telstra will pay a final dividend of 8.0 Australian cents, the same as at its half-year results. Shareholders received the same amount a year ago, albeit split into a final dividend of 5.0 cents and special dividend of 3.0 cents.

Stripping out one-off costs including A$200 million of restructuring charges, Telstra recorded underlying earnings before interest, tax, depreciation and amortization of A$7.4 billion. That was in line with the bottom end of the A$7.4 billion-A$7.9 billion guidance range issued with February's half-year results and confirmed by the company in late March.

The company said it expects underlying Ebitda to fall again in FY 2021, to between A$6.5 billion and A$7.0 billion as mobile roaming revenues remain depressed by restrictions on international travel, the potential for increased bad debt from defaulting customers, and reduced professional services revenue.

Analysts have also suggested businesses could cut back on non-essential expenditure in an uncertain economic environment.

The underlying Ebitda guidance assumes an estimated A$400 million impact from the coronavirus pandemic, and a A$700 million headwind from the NBN, Telstra said. The company said it experienced an A$830 million FY20 headwind from the NBN, which has effectively re-nationalized a material part of Telstra's business and sells access back to retailers.

Total income is expected to fall by between 4.1% and 11% in FY21, with capital expenditure expected to be between A$2.8 billion and A$3.2 billion, compared with A$3.2 billion in FY20.

Mobile revenue declined to A$10.08 billion largely due to declines in post- and pre-paid average revenue per user and lower sales of hardware, even as retail customer service numbers increased by 437,000 to 18.8 million.

Telstra said in June it would lift pre- and post-paid mobile prices, a move that UBS estimated would help generate a total A$700 million in additional mobile revenues by FY 2023, but only if rivals followed suit.

Most analysts are overweight on the stock, with an average A$3.83 target price, according to data compiled by Factset. Many believe Telstra's performance will improve as it moves past the drag from the NBN transition.

Telstra shares last traded at A$3.39, 4.2% lower for 2020.

Telstra wrote down the value of its stake in Australian cable TV service Foxtel by about 40% after joint-venture partner News Corp did likewise amid a widespread subscriber switch to streaming services such as Netflix Inc. The A$300 million non-cash impairment, which was announced in May, slashed the carrying value of the 35% stake to about A$450 million.

 

Write to Stuart Condie at stuart.condie@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
NETFLIX, INC. 1.31% 482.88 Delayed Quote.49.24%
NEWS CORPORATION 1.51% 18.17 Delayed Quote.28.50%
TELSTRA CORPORATION LIMITED 1.30% 3.12 End-of-day quote.-11.86%
UBS GROUP AG 0.79% 13.4 Delayed Quote.8.75%
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Financials
Sales 2021 24 394 M 17 958 M 17 958 M
Net income 2021 1 646 M 1 212 M 1 212 M
Net Debt 2021 14 332 M 10 551 M 10 551 M
P/E ratio 2021 22,0x
Yield 2021 4,99%
Capitalization 37 079 M 27 260 M 27 296 M
EV / Sales 2021 2,11x
EV / Sales 2022 2,11x
Nbr of Employees 28 959
Free-Float 99,2%
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Telstra Corporation Limited Technical Analysis Chart | TLS | AU000000TLS2 | MarketScreener
Technical analysis trends TELSTRA CORPORATION LIMITED
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 14
Average target price 3,55 AUD
Last Close Price 3,12 AUD
Spread / Highest target 34,6%
Spread / Average Target 13,8%
Spread / Lowest Target -3,85%
EPS Revisions
Managers
NameTitle
Andrew Richard Penn Chief Executive Officer, Executive Director & MD
John Patrick Mullen Chairman
Vicki Maree Brady Chief Financial Officer & Head-Strategy & Finance
Hakan Ericsson Chief Technology Officer
Nikos Katinakis Group Executive-Networks & Information Technology
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