The Telstra Corporation Ltd (ASX: TLS) share price is in focus as it holds its annual general meeting (AGM) and gave investors an update.
An AGM gives management the chance to tell shareholders how the last financial year went, and plans for the coming year.
FY23 guidance
One of the things that Telstra shareholders are doing at the meeting is voting on whether to change its corporate structure. The restructure will give more transparency about the value of the telco’s infrastructure assets and improvement management focus on those assets.
The telco confirmed its FY23 guidance today. All guidance includes the acquired Asian telco business Digicel Pacific.
FY22 total income was $22 billion. It’s expected to grow to $23 billion to $25 billion in FY23.
The underlying EBITDA (EBITDA explained) was $7.3 billion in FY22, which is expected to grow to $7.8 billion to $8 billion in FY23.
FY22 capital expenditure was $3 billion, which is expected to rise to $3.5 billion to $3.7 billion in FY23.
Finally, free cashflow after lease payments was $4 billion in FY22, but this is expected to fall to $2.6 billion to $3.1 billion, after including strategic investments.
Focus on growth
The chair of the Telstra board noted that the telco had increased its dividend for the first time in several years. This could be a useful boost for the Telstra share price if it keeps rising.
A key part of Telstra’s outlook is its T25 strategy, which aims to achieve ‘high-teen’ earnings per share (EPS) growth between FY21 to FY25.
It’s looking to grow its core business as well as benefit from its health and international businesses. 5G could be an important area as it unlocks the next phase of technology.
Telstra’s 5G network covers 80% of the population and it is “among the very best globally” and its total network covers 99.5% of all Australians.
For shareholders it’s looking to grow financial statistics like EBITDA and return on invested capital. It also sees opportunities to monetise assets, though no decisions have been made about this.
Final thoughts on the Telstra share price
I think that Telstra has a much more compelling future than it did a few years ago. Plus, increasing prices in line with inflation can give the business a natural earnings boost.
While I wouldn’t rate it as one of my favourite ASX dividend shares, I do think Telstra can grow earnings and the dividend nicely in the coming years. I’d be happy to own it in a blue chip portfolio focused on income.
