CEO David Thodey, five years in the helm, has presided over a vast improvement in Telstra’s fortunes. All key indicators are way up, and there are no dark clouds on its horizon. Those who invested in the three share floats and stayed with the company during the dark days of the unlamented Sol Trujillo have been handsomely rewarded.

Telstra has confirmed a fully franked final dividend of 15 cents per share, with payment on 26 September.

Look at the numbers:

• Revenue (‘Income’): up 6.1% to $26.3 billion
• Earnings per share: up 14.3% to 34.4 cents.
• EBITDA up 9.5% or $967 million to $11.1 billion
• Domestic retail mobile customer services up 937,000 to 16 million
• Mobile revenue up 5.1% to $9.7 billion
• Final dividend up 7.1% to 15 cents per share. Total dividend for FY14 is 29.5 cents.

Good work if you can get it.

“We have a clear strategy that we are focussed on implementing – we have delivered strong financial performance, we continue to take a disciplined approach to portfolio and capital management and we are carefully investing to provide sustainable long term growth,” Thodey said.

Telstra also announced an increased final dividend of 15 cents fully franked and an off-market share buy-back of up to approximately $1 billion of Telstra shares.

Thodey said the increase in shareholder returns, with two dividend increases during the year and a share buy-back, was made possible by ongoing strong operating performance, three consecutive years of earnings growth and increased cash flows from recent divestments.

During the year Telstra completed the sale of its stake in the Hong Kong mobile business CSL and its sale of 70% of directories business, Sensis. Chinese car website Autohome was listed on the New York Stock Exchange, with Telstra’s 63.2% share valued at $2.9 billion at 13 August. Thodey said Telstra also further strengthened its balance sheet by diversifying funding and reducing interest costs.

He said investing in new businesses and growing in new geographic markets was essential for Telstra’s growth ambitions, and good progress had been made through investments in the areas of eHealth, Global Enterprise and Services (GES) and Global Applications and Platforms (GAP).

“We continued to grow our capabilities in eHealth, acquiring DCA eHealth Solutions and 50% of Fred IT,” said Thodey in his statement announcing the results. “We also signed licensing agreements with Dr Foster, iScheduler and InstantPHR, building on our objective to deliver eHealth solutions via connectivity of health services, electronic health records and electronic prescriptions.

“In GES, our proposed joint venture with Telkom Indonesia aims to open opportunities in Indonesia and the Asian Network Applications and Services (NAS) market, and we acquired NSC Group and 02 Networks to further boost our NAS capabilities. We launched our start up incubator muru-D to foster local technology innovation and in GAP this week announced the purchase of leading global video streaming company, Ooyala.”

The news just gets better. Read on ...

Thodey said over the year Telstra had again stepped up its efforts to improve customer service. “Building customer advocacy, as measured by NPS (net promoter score), continues to be Telstra’s number one priority.

“Our NPS score showed an aggregate improvement of three points over the 2014 financial year – building on the improvements we saw last year – but we still have a lot of work to do to consistently deliver our customers a great service experience,” he said.

Thodey said Telstra’s network advantage was significant and its investment in spectrum, network infrastructure, greater network intelligence and machine to machine technologies would help maintain this leadership position. It has grown its mobile share while Optus has stagnated and Vodafone has conti8nued to drop.

“As more and more devices are connected to our networks – not just smart phones and tablets, but also cars, trucks, machines and smart meters – the more our customers tell us how important the size and reliability of our networks is.

“Our mobile network already offers four times the 4G geographical coverage area of any other 4G mobile network, providing coverage to 87% of the Australian population.

“To help improve speed and capacity for our customers on the 4G network, in September we will invest $1.3 billion to secure the largest available holding of the 700 MHz and 2500 MHz spectrum. Our commercial trials are proving this spectrum will greatly improve speed and capacity for customers from 1 January 2015.

“We also expect to again invest around $1 billion in the mobile network this financial year,” he said.

During the year Telstra also announced it would build Australia’s largest national public Wi-Fi access network, which aims to offer Australians access to two million Wi-Fi hotspots across the nation and more than 13 million international hotspots within five years. By the end of 2014 Telstra expects to have switched on around 1,000 hotspots in metro, urban and holiday centres.

During the year 937,000 new domestic retail mobile customer services and 183,000 new fixed retail data services added. Revenue from Telstra’s fixed business decreased by 0.8% overall. Fixed data revenue grew by 6.3%, but with more customers moving onto bundled plans there was the lowest rate of decline in the fixed voice business for five years, with a revenue decrease of 7.5%.

Thodey said the share buy-back was expected to improve the efficiency of Telstra’s capital structure and was considered the most effective way to deploy some of the surplus capital from ongoing performance and key divestitures. “The buy-back will be managed through a tender process with final tenders closing 3 October. Detailed process information is will be released to shareholders in two weeks.

Thodey said Telstra continued to renegotiate potential changes to the NBN Definitive Agreements with the Government and NBN Co. “We share the Government’s objective to finalise the agreements as soon as possible, but no date has been set for completion.

“The current agreements are complex, therefore the shift to the multi-technology model requires careful consideration as to how these agreements need to be modified.

“The teams are working to get the material commercial issues resolved. To that end, we have agreed the non-binding commercial framework around which revised agreements would be built and are now working out the detail.

“The renegotiations are progressing well and the parties are working constructively towards a common goal. This is important as we will be NBN Co’s largest customer and one of their biggest suppliers. It is in our mutual interest to achieve clarity on exactly how the transition to a multi-technology model will occur.

“We are committed to acting in the best interests of our shareholders, and are focused on maintaining the value of the current agreements, achieving certainty of outcome as soon as reasonably possible, and minimising any additional regulatory risk.”

Guidance

In 2015 Telstra expects continued low single-digit income and EBITDA growth to offset the absence of CSL 2014 operating revenue and EBITDA. As a result, and after excluding the $561 million profit on the sale of CSL in 2014, Telstra’s income and EBITDA guidance for 2015 is broadly flat.

Telstra expects 2015 free cashflow of between $4.6 billion and $5.1 billion and capital expenditure to be around 14 per cent of sales.