Telstra meets forecast, on track with dividends
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Christine St Anne is Morningstar's online editor.
Telstra (TLS) on Thursday announced an adjusted fiscal 2012 net profit after tax of $3.6 billion, an increase of 9.7 per cent on the previous year and in line with Morningstar's estimate.
"It looks slightly above consensus. The market should be comfortable with the result, which met all guidance metrics," Morningstar head of equity research Peter Warnes said.
Tyndall Investment portfolio manager Michael Maughan said each business line performed as expected, with no huge surprises in the numbers.
The telco giant was also on track with its dividend payments. The company will pay a final dividend of 14 cents, bringing full-year dividends to 28 cents a share, fully franked. This was consistent with Morningstar's forecast for a payment of 28 cents a share.
While the company also announced $1 billion in excess cash - at the top end of company projections - no buybacks or special dividends were announced.
"As expected, no capital management initiatives are being entertained at present. That will come this time next year, for initiation in fiscal 2014," Warnes said.
Warnes said the cash reserves will build over the next few years, funding capital management initiatives (including higher dividends), expansion of the mobile network and spectrum acquisition.
Maughan said the relatively large cash reserves also mean the telco is on track to sustain its dividends.
"Telstra has generated sufficient cash to support its dividends payments. In fact, I wouldn't be surprised if it increases its dividends by the end of the year," he said.
Mobile stands out
Total revenue grew a slight 1 per cent from $25.1 billion to $25.4 billion.
Warnes said Telstra's mobile business was the standout feature for the group, generating more than one-third of group revenue.
The business posted a 9 per cent rise in revenue to $8.7 billion. Earnings before interest, tax, depreciation and amortisation margin bounced back to 36 per cent.
The number of households switching to purely mobile communications increased from 2 per cent to 14 per cent. There was also an increase of 1.6 million customers for the mobile business over fiscal 2011.