Australian telco giant Telstra Corporation Limited (ASX:TLS) posted a $4.2bn profit for the financial year ending 30 June 2015.
Profit after tax decreased by 1% or $44m compared to the previous corresponding period. Revenue from continued operations rose 2.8% to $26bn, an increase of $700m compared to $25.3bn during the last financial year. However total income decreased around 1%, impaced by the sale of CSL. Telstra announced a 15.5 cents final dividend per share, bringing the total dividend to 30.5 cents. The record date is 27 August 2015 which a payment date of 25 September 2015.
The key to Telstra's re-rating has been the combination of a sustainably high dividend yield coupled with a healthy operating business. Over the past 12 months TLS shares have gained 14.3% and he stock is up 4.5% year-to-date. The stock was last traded at $6.24 on Wednesday. The current valuation result in a market cap of more than $75bn.
Chief Executive Officer Andrew Penn is pleased with the financial year 2015 and said “This is our first full financial year operating without the CSL Hong Kong mobile business, which was sold in May 2014. As a result our reported income and profit numbers are impacted on a comparative basis.” Andrew Penn said that excluding the CSL operating results total income actually increased 6.6% while EBITDA rose 4.5%.
On the back of strong core earnings, management decided to increase the total dividend to 30.5 cents and therefore distributed a total of $3.7bn to shareholders.
Telstra managed to grow its customer bae with a net addition of 664,000 retail mobile customer services and 189,000 retail fixed broadband customers during FY15.
Telstra plans to significantly invest in its network and maintain its leading position in the Australian network industry. The company plans to invest 15% of sales in mobile network investments in order to strengthen its domestic market position. The outlook for 2016 looks robust as the company aims to deliver mid-single digit income growth and low-single digit EBITDA growth. Free cashflow is expected to be between $4.6bn and $5.1bn
Author: Simon Herrmann
Aug 13, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.