Everything to know about the Telstra (ASX:TLS) $1.35bn share buyback

More than a billion dollars will be returned to Telstra shareholders. Here’s how…

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The Telstra Corporation Ltd (ASX: TLS) share price is moving upwards in morning trade on Thursday following the release of its full-year results. At the same time, the company unveiled a juicy $1.35 billion share buyback for Telstra shareholders.

It appears the market is sufficiently pleased with the increase in earnings from the telco giant compared to the previous year. As a result, shares in one of Australia’s largest companies are currently fetching $3.95 apiece.

What is getting investors excited?

Despite total income falling 11.6% to $23.1 billion for the company, investors seem relatively pleased with today’s results. Cost reductions and increased revenue from its mobile business helped Telstra along to a slight increase in the bottom line.

Moreover, the commentary from CEO Andy Penn was rather positive. For instance, Penn noted that Telstra delivered on its guidance, marking a turning point in its financial trajectory.

An important one for long-term shareholders, the CEO suggested that Telstra’s underlying business would return to full-year growth in FY22.

The Telstra share buyback

Drawing much excitement for shareholders, Telstra also announced it would be undertaking a $1.35 billion share buyback as a means of returning capital from the InfraCo Towers transaction. The cash splash is undoubtedly lighting up dollar signs in investor’s eyes this morning.

Furthermore, the buyback will be conducted on-market during FY22. However, the exact dollar figure and timing is said to be dependent on market conditions.

Commenting on the capital return, Penn said:

When we launched T22, we committed to establishing a standalone infrastructure business unit for three reasons: to give transparency of those assets, to bring a harder commercial edge to how we operationalise them, and to create optionality with a view to maximising shareholder value.

This share buy-back is a clear demonstration of how we are creating additional long-term value for our shareholders.

The proposed start date was specified as 17 September 2021 in another document released to the ASX.

At the time of writing, the Telstra share price is trading at $3.95, representing an increase of 3.13%.

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Motley Fool contributor Mitchell Lawler 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.

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