The Telstra Group Ltd (ASX: TLS) share price is under the spotlight after the company reported its FY24 result.
FY24 result
Here are some of the highlights from the 12 months to 30 June 2024:
- Total income increased 1% to $23.5 billion
- Underlying EBITDA rose by 3.7% to $8.2 billion
- Statutory net profit after tax (NPAT) fell 12.8% to $1.8 billion
- Underlying NPAT rose 7.5% to $2.3 billion
- Underlying profit / earnings per share (EPS) grew by 5.7% to $0.185
- Annual dividend per share increased 5.9% to $0.18
On the revenue side of things, Telstra said its mobiles business has continued to perform very strongly, with EBITDA growth of over $400 million. It saw more than 560,000 net new handheld customers, along with average revenue per user (ARPU) growth. Postpaid handheld ARPU grew 3.3% to $52.85, while prepaid handheld ARPU rose 3.8%, largely thanks to price rises. In my opinion, the mobile division is integral for the Telstra share price.
Its infrastructure business grew, reflecting ongoing demand for its assets. InfraCo fixed and Amplitel EBITDA grew by approximately $150 million in total, further strengthening its confidence in its infrastructure growth ambitions. It’s investing in an intercity fibre network.
Telstra’s fixed customer and small business segment continued to grow, with EBITDA growth of almost $120 million, reflecting ongoing cost discipline and ARPU growth.
Its fixed enterprise segment is “clearly a long way” from where it wants it to be. Telstra has started taking action during the year to address challenges, and took additional action on cost overall.
Telstra’ reported statutory earnings reflect those decisions and, combined with other adjustments, resulted in a significant one-off net costs totalling $715 million.
Outlook for the Telstra share price
The telco points out “there is no version of Australia’s future that does not rely on technology in some form” and telecommunications has an important role to play.
Telstra said its T25 strategy is “on track”, including its growth ambitions in underlying EBITDA, EPS and return on invested capital (ROIC).
In FY25, the business is expecting to generate underlying EBITDA of between $8.5 billion to $8.7 billion, up from $8.2 billion. It’s guiding strategic investment of at least $0.3 billion in FY25. Telstra is expecting to make free cashflow after lease payments, before strategic investment, of between $3 billion to $3.4 billion (compared to $3.2 billion).
With how Telstra’s underlying earnings keep growing, and the dividend keep rising, I’d call Telstra one of the best ASX 20 shares to own right now.
Telstra’s offering is an essential service, so it has defensive earnings. Subscriber numbers and ARPU keeps rising for the mobile division, which is great news for profit and margins. It was pleasing to see underlying EBITDA rising faster than revenue, and underlying NPAT rose faster than underlying EBITDA.
I’d be happy to buy Telstra shares today, though I’m not expecting it to be a huge winner because it’s already a very large business.
