Telstra’s half yearly financial results have confirmed it is on track to meet its full year guidance – meaning it will have another record year.
It has announced an interim dividend of 15 cents per share, up 0.5 cents on the same period last year, and it has also reactivated a dividend reinvestment plan.
CEO David Thodey said the results demonstrated Telstra’s strategy of improving customer advocacy, driving value from its core business and building new growth businesses continued to create value for shareholders.
“Our earnings per share growth of 23.4% highlights a continuing increase in returns for shareholders. We continue to provide our customers with access to Australia’s leading mobile network. Our 4G coverage is now at 90% of the Australian population and we aim to have 94% covered by the middle of the year.
“We also launched our new 4GX services as a result of a $1.25 billion dollar investment in 700 MHz spectrum, with top speeds on compatible devices on 4GX up to twice as fast as 4G. There are already over one million 4GX compatible devices in customers’ hands today and that number will grow during the year.
“We are building Australia’s largest national public Wi-Fi access network, with more than 1,000 Wi-Fi hotspots already enabled. We aim to offer Australians access to two million Wi-Fi hotspots across the nation and more than 13 million hotspots around the world,” Thodey said.
He also commented on the growth in Telstra’s mobile customer numbers. “We had our best ever iPhone launch and we have seen growth in the number of connected tablets and data sharing. Our focus on the customer has led to the addition of 366,000 new retail mobile customer services, 87,000 new retail fixed broadband customers and 127,000 new customers on a fixed bundle.”
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The results show revenue from Telstra’s mobile business increased 9.6% over the same period last year to $5.3 billion. Fixed data revenue grew 7.8% and more customers moving onto bundled plans led to the lowest rate of decline in the fixed voice business for five years, with a revenue decrease of 6.9%. Overall, revenue from Telstra’s fixed business declined 1.7 per cent, to $3.5 billion.
Revenue from Telstra’s fast growing Network Applications and Services (NAS) product line increased 18.1% to $1 billion, with growth continuing in the Global Enterprise and Services segment and Telstra Retail. International NAS revenues, an area Telstra is targeting, increased 28.1%, but only to $41 million. Financial highlights for the six months ended 31 December 2014 were:
- Total incomeexcluding finance income increased 1.6% to $13.0 billion
- Earnings per share increased 23.4% to 16.9 cents
- Net profit after tax increased 21.7%or $378 million to $2.1 billion
- EBITDAincreased 0.5% to $5.3 billion
- Interim dividend of 15 cents, returning $1.8 billion to shareholders
- Dividend reinvestment plan to be reactivated
- Capital expendituredecreased 4.7% to $1.7 billion
Thodey said investing in new businesses and growing telecommunications services in Asia was essential for Telstra’s growth ambitions and significant progress had been made during the first half of 2015.
“I am pleased to see the expansion of our international networks through the acquisition of Pacnet. Once completed, this acquisition will increase the scale and capability of our fixed infrastructure, our network density and our reach across the Asia Pacific region, as well as our customer base and our capability.
“In August we acquired Ooyala, a leader in video streaming and analytics, increasing our ownership to 98.9%. Through Ooyala we aim to establish a leading global company to deliver platforms and services on which the next generation of TV and video will be built,” he said.
Telstra would continue to build new innovative offerings for Telstra’s customers. “We formally launched Telstra Health in October 2014 and increased our total investment in Health to more than $100 million. This includes acquisitions and joint ventures to provide technology solutions in telemedicine, aged and residential care, hospital, radiology and pathology and will help us deliver a more integrated health system,” he said.
Thodey said Telstra continued its productivity drive, delivering improved revenues and capital expenditure efficiency. “We have an extensive cost control program in place. While profitability has continued to improve we are still in the early stages of building out our new growth businesses and there is more work to do to achieve our long-term target margins. It is pleasing to see margins remain at a steady level across our core products.”
Thodey said Telstra had signed the revised NBN Agreements in December 2014, “preserving value for shareholders as we maintained the overall value of original agreements. As a result, our shareholders have been kept whole in terms of the transaction they approved in October 2011.
“As with the original agreements, the estimated value of the revised agreements is based on a range of dependencies and assumptions over the long term life of the agreements. We were pleased to have signed the planning and design contract with NBN Co,” he said.
