Own Telstra (ASX:TLS) shares? Here’s what to look for during reporting season

You won’t want to miss this telco giant’s full year results…

| More on:
a woman smiles widely while using an old fashioned hand set telephone with dial.

Image source: Getty Images

The Telstra Corporation Ltd (ASX: TLS) share price will be one to watch next month when it releases its highly anticipated full year results.

Ahead of the release, I thought I would look to see what is expected from the telco giant.

Why are Telstra shares on watch during reporting season?

There are a few things for investors to look out for during reporting season if they own Telstra shares. These include its profits, dividend, guidance for FY 2022, restructure update, and capital return plans.

In respect to its profits, Telstra is expecting to report underlying earnings before interest, tax, depreciation and amortisation (EBITDA) in the range of $6.6 billion to $6.9 billion. This includes an assumed in-year NBN headwind of approximately $700 million.

From this, a final fully franked dividend of 8 cents per share is expected to be declared. This will bring its full year dividend to 16 cents per share, which is flat year on year. Based on where Telstra shares currently trade, this will mean a yield of 4.25%.

FY 2022 guidance

It has been a long time since Telstra dared talk about growth. But that has all changed recently, which goes some way to explaining why Telstra shares have been in such good form this year.

When Telstra released its half year results in February, the company’s CEO, Andy Penn, revealed that he was aiming for EBITDA growth in FY 2022 and then further growth in FY 2023.

He said: “To get the real benefits from all the effort we’ve already made, Telstra needs to be bold. I’ve set an aspiration for mid to high single-digit growth in underlying EBITDA in FY22 and $7.5 to $8.5 billion of underlying EBITDA in FY23. I am confident we can deliver this if we remain focused.”

Telstra’s restructure

It is possible Telstra will also provide an update on its restructure plans with its full year results.

This restructure will see Telstra split into three separate entities – InfraCo Fixed, InfraCo Towers, and ServeCo.

Mr Penn believes the new legal structure will be an important milestone in Telstra’s T22 strategy and comes at a significant inflection point in the company’s history.

Telstra shares being bought back?

Also giving Telstra shares a boost recently has been the prospect of capital returns in the near future. This follows the recent sale of 49% of its Towers business for $2.8 billion.

Completion of the sale is expected in the first quarter of FY 2022, with Telstra intending to return approximately 50% of net proceeds to shareholders.

Mr Penn has suggested that a share buy-back is likely to be the way these funds are returned. But all will be revealed with its results release.

So there you go. A lot to look out for and a lot that could move Telstra shares during reporting season.

Should you invest $1,000 in Telstra right now?

Before you consider Telstra, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Telstra wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Communication Shares