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News.com.au
9 hours ago
- News.com.au
Criterion: Telstra rings up profit growth, but it may be time to look for better value elsewhere
Telstra's full year earnings soared 31%, but the nation's leading telco lacks the 'wow' factor Smaller rivals arguably have better growth prospects Tua's proposed $1.66 billion takeover of a Singapore rival will turbocharge its growth Telstra's (ASX:TLS) internal repair efforts are cracking along at a pace that would even leave self-help gurus such as Dale Carnegie and Stephen Covey in the dust. While the telco stalwart's full-year revenue edged up less than one per cent, earnings bounced 31%. Measures such as paring thousands of staff aside, Telco has been aided by a rare sector-wide outbreak of rational mobile plan pricing. Still, Thursday's result left investors nonplussed, even though they met market expectations. One concern is that customer growth in mobiles – Telstra's most important division – slowed in the second half. Telstra has a commanding 40% share of the sector. But overall growth looks elusive, as evidenced by the board's decision to launch a $1 billion share buyback. While Telstra will grab the headlines courtesy of its 1.14 million, yield-hungry shareholders, it's not the only telco stock to watch as the reporting season unfolded. Arguably there's better value elsewhere, especially given Telstra shares have gained 25% over the last year. Tuas can play at the M&A game How about a Singapore Fling instead? On Tuesday, Tuas (ASX:TUA) stole Telstra's limelight with a surprise S$1.4 billion ($1.66 billion) buyout of Singaporean rival M1. The proposed purchase shapes as transformative the $2.6 billion market cap Tuas, funded and led by TPG's creator, David Teoh. How much of a game changer for the owner of the Lion City's Simba Telecom? Citi models combined revenue of S$984 million in the current year, compared with S$178 million for the stand-alone Tua. Earnings before interest, tax depreciation and amortization (ebitda) soars to S$275 million, from S$79 million on a stand-alone basis. Still the consumers' Buddy Aussie Broadband (ASX:ABB) is expected to ring up some rosy numbers when it reports later this month. On the back of market share gains. On consensus numbers, Aussie should report revenue of $1.187 billion, 17% higher than previously. The telco's underlying earnings are expected to be $137 million, 13% higher. While Aussie lifted prices across its own brand, left its low-cost Buddy Telco's rates pricing unchanged. Citi says: 'Aussie Broadband's value proposition, solid user experience and superior customer experience continue to be differentiating factors compared to both incumbents and most of the challengers'. Super profits for Superloop The market expects internet provider Superloop's (ASX:SLC) full-year revenue to come in at $550 million, 33% better. The company in late June upgraded its guidance underlying ebitda at or above $91 million, 67% higher year on year. As with Telstra, the company's doing more bottom line with not so much top line. Citi says Superloop has 'set the tone for the rest of the industry' in terms of pushing through National Broadband Network (NBN) price increases. As part of a six-year a six-year wholesale agreement, Origin Energy is migrating its NBN customers to Superloop. Superloop's results next Wednesday should shed light on the pace of this transition. TPG has cash to spare Most of the intrigue around TPG Telecom (ASX:TPG) is what the owner of Vodafone Australia will do with the $5.3 billion of proceeds from the sale of its fixed-asset business to Vocus. S&P Global Ratings says TPG's capital needs are tapering because of an end to 5G investment and 'initiatives such as IT modernisation and business simplification that reduce fixed costs.' Once again, TPG should benefit from mobile price rises, but at the risk of higher churn and promotional costs. TPG has guided to flat ebitda of around $1.66 billion. Dipping into data centres Macquarie Technology Group (ASX:MAQ) is mentioned as an emerging force in the data centre game, having acquired land at Sydney's Macquarie Park to bolster its capacity threefold. But in the December half Macquarie still derived 31% of revenue ($56 million) and 22% of ebitda ($12.3 million) from its traditional telco business. Morgan Stanley tips total revenue of $382 million for the 2024-25 year, up 5% with ebitda edging up 4% to $113 million. Powered by data centre (and cloud) growth, turnover should climb to $419 million in the current year, up 10%. Ebitda should rise 11.5% to $126 million. Macquarie has been an outlier share price wise, falling 22% over the past year. Should the data centre sector wobble, the telco stuff is a nice hedge.
Perth Now
18 hours ago
- Perth Now
Asia markets stumble as Fed rate cut hype reined in
Stocks in Asia made an uneven recovery as higher-than-expected producer price inflation dampened expectations of a jumbo rate cut at the Federal Reserve's September meeting, while US bonds and equity futures stabilised. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.3 per cent after a report on Thursday from the Bureau of Labor Statistics which showed the Producer Price Index increased 0.9 per cent in July on a month-over-month basis, well above economists' expectations. "What it did was to get rid of all the chat about a 50 basis point cut," said Mike Houlahan, director at Electus Financial Ltd in Auckland. The market is currently pricing in a 92.1 per cent probability of a 25 basis point rate cut at its September meeting, compared with a 100 per cent likelihood of a cut on Thursday, according to the CME Group's FedWatch tool. The chance of a jumbo 50 basis point cut fell to zero per cent from an earlier expectation of 5.7 per cent a day ago. US stock futures were flat in early Asian trading after ending a choppy trading session on Wall Street with mild gains on Thursday. The yield on the US 10-year Treasury bond was down 1 basis point at 4.2829 per cent. The two-year yield, which is sensitive to traders' expectations of Fed fund rates, slipped to 3.7304 per cent compared with a US close of 3.739 per cent. Nasdaq futures extended losses into a third consecutive day, sliding 0.1 per cent lower. The dollar index, which tracks the greenback against a basket of currencies of other major trading partners, retraced some gains after the PPI data release, last trading down 0.1 per cent at 98.143. The Nikkei 225 rebounded 0.4 per cent after snapping a six-day winning streak on Thursday with its biggest one-day selloff since April 11, as Japanese GDP data showed the economy expanding by an annualised 1.0 per cent in the April-June quarter, beating analyst estimates. The dollar weakened 0.3 per cent against the yen to 147.64. Australian shares were last up 0.2 per cent, while stocks in Hong Kong were down 0.9 per cent following losses on Thursday for US-listed exchange-traded funds tracking Chinese companies. The CSI 300 gave up early gains and was last trading flat after the release of weaker-than-expected Chinese economic data for July including retail sales and industrial production. Markets in India and South Korea are closed for public holidays. Cryptocurrency markets stabilised after a new record for bitcoin of $US124,480.82 ($A191,777.05) on Thursday proved fragile and promptly crumbled after falling short of its next key milestone. The digital currency was last up 0.7 per cent, recovering some ground, while ether gained 1.7 per cent. "Bitcoin's failure to conquer the $US125,000 ($A192,577) resistance signals another consolidation phase," said Tony Sycamore, a market analyst at IG in Sydney. In commodities markets, Brent crude was flat at $US66.94 ($A103.13) per barrel ahead of a meeting in Alaska between US President Donald Trump and Russian leader Vladimir Putin. Gold was slightly lower as the markets digested the path of inflation-adjusted interest rates, which typically move in the opposite direction from bullion prices. Spot gold was trading up 0.1 per cent at $US3,339 ($A5,144) per ounce. In early European trades, the pan-region futures were up 0.4 per cent, German DAX futures were up 0.3 per cent at 24,489, and FTSE futures were up 0.5 per cent.
ABC News
a day ago
- ABC News
Businesses globally have been navigating tariff chaos and economic uncertainty well, says ING's head of wholesale banking
Skip to main content Head of wholesale banking at ING, Andrew Bester, who's on a tour of the company's Asian region, including Australia, says businesses globally are showing resilience despite the economic uncertainty.
