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Telstra Corporation: Disappointing results, but well positioned for a strong future

Telstra Corporation Limited (ASX: TLS) today released financial Results for the Half Year ended 31 December 2011.

Total revenue rose 1.1 per cent to $12.4 billion, with attributable net profit after tax up 23 per cent to $1.5 billion. Free cashflow was down 11 per cent to $1.8 billion. Crucially, especially for the many Mum & Dad investors, the interim dividend was maintained at 14 cents per share.

Telstra reaffirmed its full year guidance, expecting total revenue growth and EBITDA to be in the low single digits, free cashflow of $4.5 to $5 billion, and a maintained full year dividend of 28 cents.

The Telstra business continues to evolve, focusing on the growth markets of mobile, broadband and NAS (Network Applications and Services), all the while the traditional fixed line business continues its slow and steady decline.

Source: Telstra 2012 1H analyst presentation

Motley Fool Investment Analyst Dean Morel, who back in August, when the shares were trading at around $2.90, named Telstra as his number one ASX 20 pick for the long term, saying it provides excellent cash returns, limited downside and reasonable upside potential.

It’s clearly been a great call, with the shares rising almost 14 per cent, plus investors pocketed a 14 cent dividend, versus a flat S&P/ASX 200 Index.

Today, Dean says…

“Telstra’s results were slightly disappointing. But the strategy remains sound and continued growth in mobile and new market such as NAS (Network Applications and Services) is positioning company for a strong future.”

He went on to say, “accelerating growth” are the two best words in investing! See if you can spot them in the slide above…

Telstra shares have fallen a little today, down 7 cents to $3.37, probably on the back of a bit of profit-taking. The shares still trade on a dividend yield of 8.3 per cent, which looks safe for some time to come. When compared with cash in the bank, Telstra is still a good bet.

Attention: Looking for an even better bet? This fast growing telecommunications company is cheap, and pays a good dividend. Motley Fool readers can click here to request a new free report titled The Motley Fool’s Top Stock For 2012.

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Bruce Jackson and Dean Morel have an interest in Telstra shares. The Motley Fool’s purpose is to educate, amuse and enrich investors. Click here to be enlightened by The Motley Fool’s disclosure policy.

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