Telstra lifts dividend after profit jumps 31 per cent
In its full-year results on Thursday, the nation's biggest telco reported an annual net profit of $2.34 billion - up 31 per cent year-on-year - and said it had cut operating expenses by 6 per cent. Telstra last month announced it would slash more than 500 jobs.
Alongside the earnings release, the company announced a sale of a 75 per cent in Versent Group, its cloud computing business, to Infosys in a deal worth $233 million. Telstra will retain a 25 per cent stake, and around 650 staff will move to Infosys as part of the transaction.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) climbed by nearly 5 per cent to $8.6 billion, and Telstra declared a full-year dividend of 19 cents per share, up 5.6 per cent year-on-year.
Telstra's mobile unit also performed strongly, with revenues up 3.5 per cent as customers purchased more expensive smartphones.
Chief executive Vicki Brady said it had been a strong year for the company.
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'We delivered our fourth consecutive year of underlying growth, reflecting momentum across our business, strong cost control and disciplined capital management,' she told investors on Thursday morning.
Brady also announced Telstra would launch an additional on-market share buyback of up to $1 billion worth of shares, which comes after a $750 million buyback in June. The buyback will start after September 8 and run through the financial year, she said.
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Herald Sun
2 days ago
- Herald Sun
Beyond Telstra, small cap telcos ring up the profits
Don't miss out on the headlines from Stockhead. Followed categories will be added to My News. 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. Originally published as Criterion: Telstra rings up profit growth, but it may be time to look for better value elsewhere
News.com.au
2 days 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.
The Age
2 days ago
- The Age
Friend or foe? The AI bloodletting has begun in Australia
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The Australian Council of Trade Unions has demanded that employers guarantee workers' job security before introducing artificial intelligence to protect against jobs carnage. Local academics used research by the International Labour Organisation to translate its findings on AI job losses to Australia. They came up with a startling forecast of Australia's AI future in 2050: 32 per cent of current jobs in Australia could be done by AI. 'But that doesn't mean 32 per cent of people will lose their jobs overnight,' Victoria University academics Janine Dixon and James Lennox said in a report posted to The Conversation last week. 'It will take time for AI capabilities to be installed, giving people time to train for alternative careers. Much of the impact is likely to be years away.' This timeframe gives AI a lot of time to move beyond relatively low-level tasks, like replacing basic call centre work, to replacing white-collar jobs – like the software developers who make it. Loading So what does Atlassian co-founder Mike Cannon-Brookes think the impact will be of the AI transformation on the company he built alongside Farquhar? It is in a frenzy of AI upgrades of its own products and surely looking at the productivity benefits. Cannon-Brookes sees a bright future despite AI's coding adeptness. It appears that the famously prescient 2011 claim by US billionaire venture capitalist Marc Andreessen that 'software is eating the world' still holds. 'Do I think there will be far less developers in the world five years from now? No, I don't think so,' Cannon-Brookes told investors on the company's earnings conference call last week. 'And yes, we're still hiring lots of engineers and developers with the growth of the business.' Cannon-Brookes' argument is simple: the world will need far more software and AI means it will be cheaper and easier to extend its development beyond corporate tech teams to the actual business itself. 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'There's a really great opportunity for the Australian economy with AI,' Munnelly says. Loading But the interesting stuff is already happening further up the wage chain – like KPMG's new AI tax tool that allows its executives to vastly accelerate the delivery of first-draft advice to clients. 'What used to take us two weeks to go and prepare – if a client's in the middle of a deal – now we can literally get it out the door in a day,' Munnelly says. It was left to KPMG chief executive Andrew Yates to address the conundrum this poses. What will this KPMG employee do with the nine days that would have previously been spent on this work? 'I think our current hypothesis is that what we do will change. But AI and the technology we've got will generate so much more data that our work will change from collating that data to really assessing, analysing, presenting, interpreting much more data than is currently available,' he says. 'There will be a real need for that insight and technical understanding of all the data that's produced.' As for the analysts trying to make sense of the AI talk which is starting to creep into earnings season speeches and rising costs, there is a more prosaic question. 'Companies have been keen to point out their investments in AI, but when will we see it translate to the bottom line?' asked UBS strategist Richard Schellback. Even Comyn, who packed more than a dozen AI references into his introduction to the bank's full-year results, came up with a cautious answer. He foresees a more effective workforce, producing higher quality work with both revenue and cost out opportunities. But he does not expect this to come easily. 'You can imagine that there are some much more efficient ways of delivering some of the things we currently do. But I do think that's going to take some time, like some years to work through some of the accuracy and quality that's required.'
