Has Telstra Corporation Limited continued to deliver growth?

Team Veye | 14 Feb 2020 ASX - TLS
Has Telstra Corporation Limited continued to deliver growth?

Telstra Corporation Limited (ASX: TLS)

Telstra delivers 1H FY20 results in line with expectations, with strong progress against T22 strategy

Telstra Corporation Limited (ASX: TLS) on 13 February 2020 released its half-year results for the financial year 2020, in line with guidance and market expectations.

  • Total Income, EBITDA and NPAT in line with expectations 
  • Strong progress against T22 strategy and cost reduction 
  • Continued customer growth thanks to multi-brand strategy and 5G leadership 
  • Interim dividend of 8 cents per share for 1H20 and FY20 guidance reconfirmed

 

(Chart source: TradingView)

On a reported basis Total Income for the first half decreased 2.8 percent to $13.4 billion and NPAT decreased 6.4 percent to $1.2 billion. Reported EBITDA for the first half was $4.8 billion

Telstra’s underlying EBITDA decreased by 6.6 percent to $3.9 billion. Underlying EBITDA excluding the in-year NBN headwind3 grew by approximately $90 million, the first time this figure has grown since FY16. (Data Source – Company Reports)

 

Veye’s Take

During the first half of FY20, Telstra continued to make strong progress delivering its T22 strategy, now in its second year of implementation. Telstra continued reducing its costs and delivering new and simplified products and services to its customers. Progress on T22, combined with ongoing efforts to simplify the business, helped reduce underlying fixed costs by $422 million, or 12.1 percent. This brought the total underlying fixed cost reductions to around $1.6 billion since FY16. Telstra’s multi-brand strategy continued to deliver growth in customer numbers, particularly on mobile. After excluding the expected in-year NBN headwind, which Telstra continues to expect to be in the range of ~$600 million to ~$800 million, underlying EBITDA is expected to grow up to $500 million in FY20. The stock has so far been protecting its strong support at $3.60. For upside to continue the stock should cross a major resistance at $3.79 with volumes. Veye maintains a “Hold “recommendation on “Telstra Corporation” at the current price of $3.76

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