Telstra posts full-year $3.9 billion profit

Australia’s biggest telco impresses the market with a 12.9% increase in NPAT, but keeps its dividend at 28 cents.

Australia’s telecommunications giant, Telstra (ASX: TLS), has posted good full-year results across the group and has promising numbers for investors looking to get into the technology space with confidence.

A drive to improve customer service and cost-cutting has given the telco a leg up on its competition in a number of divisions. CEO David Thodey said, “Our strategy around improving customer service, as well as focusing on our growth businesses, is working”.

Mobile growth

Despite a tightening domestic market, the company has grown its number of customers substantially. Perhaps the company’s most promising forward-looking figure is the boom in mobile devices, including an additional 1.3 million retail mobile customers, taking the total number to over 15 million. Telstra’s 4G network is the premier network within Australia and it now boasts 2.8 million 4G devices – something that is only expected to grow in the near future.

NAS and international divisions power on

Telstra’s National Applications and Services portfolio grew an impressive 17.7% in the full-year to June 30 and has begun work on its $1.1 billion defence deal as well as “international agreements with Jetstar and Fitness First”.

International businesses grew revenue by 16.2% to $1.73 billion. This is another promising result for the company particularly as it continues to look for more growth outside Australia. The gain in revenue could be attributed to the uptake of 425,000 Hong Kong mobile customers, making a total of 3.9 million.

Key financials

Although some investors may be disappointed with the dividend announcement, the company has said it will return to the practice of considering dividends on a half-yearly basis in FY14. Key results include:

  • Total income increased 1.9% to $25.98 billion
  • EBITDA increased 3.9% to $10.6 billion
  • NPAT increased 12.9% to $3.865 billion
  • EPS rose 11.6% to 30.7 cents, bringing the dividend payout ratio to 91%
  • Capex to sales ratio came in as expected at 14.9% — a total of $3.79 billion spent.
  • Free cash flow decreased by 3.3% to $5.02 billion.

Total revenue and NPAT both exceeded this Fool’s expectations.


Investors (and contractors and the public for that matter) were concerned with Telstra’s NBN rollout and its asbestos problem. The company has announced that “remediation works will recommence from August 19 with additional safeguards in place”. For worried investors the company said, “there is no material financial impact at this point in time”.

Foolish takeaway

Telstra shareholders can rest easy knowing that its shaky past is behind it and a favourable future awaits it. Today’s results highlight a number of promising statistics, including the strong 12% increase in profit, a reliable dividend (which will likely increase), growing revenues and an increasing number of customers and devices on its wireless networks. Telstra remains one of the best blue chips on S&P/ASX200 (ASX: XJO) (^AXJO) and perhaps the question isn’t should I buy Telstra, but rather how much should I buy?

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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