With AI becoming toast of every industry, some ASX listed companies supporting the infrastructure need become equally important. The top growth stocks matching this pace can be the best growth stocks to buy now.
Telstra Corporation Limited (ASX: TLS)
Telstra Corporation Limited (ASX: TLS) delivered its third consecutive year of underlying EBITDA growth, highlighting consistent execution of its strategy. Underlying EBITDA increased by $300 million (+3.7%) to $8.2 billion in FY24, with underlying NPAT also up 7.5% to $2.3 billion. Among the potential growth companies, its growth reflects strong performances in the Mobiles and Infrastructure businesses, which together contributed 96% of underlying EBITDA and posted growth rates of nearly 6% or higher. However, the Enterprise segment underperformed, prompting a strategic reset that is expected to take time. The Mobiles segment was a standout, with EBITDA growth exceeding $400 million. This was driven by strong subscriber growth (+560,000 net handheld customers) and higher Average Revenue Per User (ARPU), leading to a 5.6% increase in mobile service revenue. Infrastructure also performed robustly, with InfraCo Fixed and Amplitel contributing approximately $150 million in aggregate EBITDA growth. Management remains confident in the long-term growth potential of its infrastructure assets, as evidenced by the expansion of its strategic partnership with Microsoft, leveraging Telstra’s intercity fibre network to support digital innovations like AI.
In Fixed Consumer and Small Business, disciplined cost management and ARPU growth resulted in EBITDA growth of nearly $120 million. Furthermore, the establishment of Telstra Business demonstrates a focused strategy to better serve small and medium enterprises, positioning the segment for growth and innovation. On the other hand, Fixed Enterprise remains a drag on performance. Weakness in Network Applications and Services (NAS) necessitated decisive action, including plans to reduce the NAS product portfolio by two-thirds and focus on differentiated offerings. Organizational restructuring and cost reductions are expected to improve customer outcomes and reduce inefficiencies. While these measures are critical, management acknowledges the turnaround will require time and sustained effort.
Reported earnings reflect the challenges and restructuring actions undertaken, with reported EBITDA down 4.2% to $7.5 billion and reported NPAT falling 12.8% to $1.8 billion due to $715 million in one-off net costs. Despite this, strong underlying performance enabled a 5.9% increase in dividends to 18 cents per share (fully franked), aligned with the company’s policy of sustainable dividend growth. Telstra reaffirmed confidence in achieving its T25 strategy targets, including growth in underlying EBITDA, EPS, and ROIC by FY25. Cost reduction initiatives, targeting $350 million by FY25, remain on track. While challenges in Enterprise persist, strong momentum in core segments underscores Telstra’s resilience and growth potential.
Source: Company’s Report
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