The Telstra Group Ltd (ASX: TLS) share price is in the spotlight as the telco ASX share revealed another result of dividend growth.
Telstra HY23 result
Here are some of the highlights from Telstra’s result for the six months to 31 December 2022:
- Income up 6.4% to $11.6 billion
- EBITDA (EBITDA explained) up 11.4% to $3.9 billion
- Net profit after tax (NPAT) rises 25.7% to $0.9 billion
- Profit / earnings per share (EPS) up 27.1% to $0.075
- Dividend per share up 6.3% to $0.085
This result included earnings from the acquired Digicel Pacific, which is a telco provider for a number of Pacific island nations, such as Fiji. Excluding Digicel Pacific, underlying EBITDA rose 6.8%.
The key mobile division saw continued growth of revenue, average revenue per user (ARPU) and EBITDA. Mobile service revenue increased by 9.3%, assisted by the return of international roaming. Postpaid handheld ARPU increased by 4.5% and services increased by a net 68,000. Prepaid handheld revenue increased by 28.7%, with unique users up 137,000. EBITDA grew 13.3%. This is all promising stuff for the Telstra share price.
The international division now represents 10% of EBITDA. Excluding Digicel Pacific, international EBITDA increased 9.3% in Australian dollar terms, or 7% in constant currency.
T25 strategy update
The business said how it’s performing with its T25 strategy.
On network leadership, Telstra said it’s on track to meet all of its commitments. It has the largest 5G network, with 5G covering 81% of the population and it’s on track for the FY23 target of 85%.
On the goal of growth and value, it did grow underlying EBITDA and EPS. With the underlying return on invested capital (ROIC) at 7.5%, it’s on track to achieve around 8% in FY23.
Looking at costs, inflation is having an impact, it continues to have ways to reduce the impact of costs, and grow revenue, while remaining committed to its FY25 $500 million cost reduction ambition.
Looking at employee engagement, its score was 79. That’s near the top of companies globally, but below its target.
Outlook for the Telstra share price
The telco is expecting to grow its total income from $22 billion in FY22, up to between $23 billion to $25 billion in FY23.
Underlying EBITDA was $7.3 billion in FY22, and it could rise to $7.8 billion to $8 billion in FY23.
Free cashflow after lease payments for FY23 is expected to be between $2.6 billion and $3.1 billion including strategic investments.
It’s good to see that the business is growing profit and the dividend, which is ultimately what investors should want to see from Telstra. I think the Telstra share price is much more attractive now because the outlook looks good. I’d be happy to have it in my portfolio.
