The Telstra Corporation Ltd (ASX: TLS) share price has come under pressure on Thursday.
At the time of writing, the telco giant's shares are down over 3% to $3.94.
Why is the Telstra share price falling?
Investors have been selling down the Telstra share price following the release of its half year results.
In case you missed it, for the six months ended 31 December, Telstra reported a 4.4% decline in revenue to $10.5 billion but a 5.1% lift in underlying EBITDA to $3.5 billion. This reflects one-off benefits in the prior corresponding period, solid growth in the mobile business, and a 6.7% decline in operating expenses to $7.4 billion.
In respect to dividends, the telco has declared a fully franked interim dividend of 8 cents per share. This was flat compared to the prior corresponding period.
Looking ahead, management has reaffirmed its FY 2022 guidance. This includes full year underlying EBITDA of $7 billion to $7.3 billion and free cash flow after lease liabilities of $3.5 billion to $3.9 billion.
How does this compare?
The team at Goldman Sachs was pleased with the result and notes that its "strong mobile beat offsets fixed declines." In fact, despite what the Telstra share price performance today might indicate, the company's earnings actually came in ahead of the broker's expectations.
Goldman commented: "Telstra has reported underlying 1H22 Income/EBITDA/NPAT of A$10.7bn/A$3.5bn/A$825mn, which was -2%/+2%/+16% vs. our estimates. Cash conversion was strong with GOCF = 97% of EBITDA. Balance sheet gearing decreased marginally to 1.9X ND/EBITDA at 1H22 (vs. 2X at FY21, comfort bands 1.5-2X). An interim dividend of 8¢ps was declared (GSe 8¢ps), comprising a 6¢ps ordinary and 2¢ps special."
The broker was particularly pleased with the performance of the key mobile business.
It said: "Mobile again the standout, with EBITDA +8% vs. GSe on strong mobile service revenues (+1% vs. GSe). We note although postpaid ARPU growth and subscriber growth were largely in-line with GSe, TLS was also impacted by a $1.50 (3%) ARPU accounting impact which would have a stronger revenue outcome & hence explains the EBITDA beat."
Goldman currently has a neutral rating and $4.40 price target on the Telstra share price. Though, that could change once it has fully digested the result.
Overall, a solid result from the telco giant but some investors appear to have been expecting even better.
