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Telstra calls a turning point

On Thursday Telstra released its results for the first half of the 2021 financial year, showing the business building momentum towards growth in its underlying business.

On a reported basis, Total Income for the half decreased 10.4% versus the prior corresponding period to $12.0 billion, while NPAT decreased 2.2% to $1.1 billion.

Underlying EBITDA decreased by 14.2% to $3.3 billion. The largest two contributors to this decline were the estimated impact from the in-year NBN headwind of $370 million and estimated $170 million impact from COVID-19. Excluding both these, underlying EBITDA was broadly flat compared to the first half of FY20.

The Board resolved to pay a fully franked interim dividend of 8 cents per share, returning

approximately $950 million to Telstra’s shareholders. The Board also said it expected to pay a fully franked final dividend of 8 cents per share, bringing the total dividend for FY21 to 16 cents per share.

Telstra has also issued revised financial guidance for several aspects of FY21. The range for Total Income was adjusted from $23.2 billion - $25.1 billion to $22.6 billion - $23.2 billion, a $1.2 billion reduction at the mid-point from prior guidance. The large majority of the change was due to low-margin hardware and other equipment sales. Telstra also provided guidance for second half Underlying EBITDA in the range of $3.3 billion - $3.6 billion, compared to $3.3 billion in the first half.

CEO Andrew Penn said the results showed Telstra’s financial performance was at a turning point ahead of an anticipated return to growth in underlying EBITDA. “After a decade of disruption following the creation of the NBN, and with its rollout now declared complete, we can clearly see the path to underlying growth ahead of us. We responded strongly to the financial headwinds created by the NBN through our T22 strategy. Our investment in innovation and technology, digitisation and networks, improving our customer experience and being disciplined in our capital management, mean that at the start of this decade, as Australia digitises its economy, Telstra is in a strong position to grow."

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