Owners of Telstra Group Ltd (ASX: TLS) shares may like to know what's expected for the FY24 result. The telco has gone through an exciting turnaround in the last few years, and the 2024 financial year report could show more good progress.
Telstra is scheduled to report its earnings results next Thursday, 15 August. So investors don't have long to wait before they find out how Australia's biggest telecommunications company performed during FY24.
The company has already announced some news relating to the upcoming result including a restructuring of its enterprise division, including the possibility of up to 2,800 jobs being removed.
Broker UBS has outlined some of the numbers it expects Telstra to deliver in FY24.
FY24 forecasts
UBS forecasts that Telstra could make $23.66 billion of revenue, an increase of 2.1% compared to FY23. That's total revenue across all of its different divisions, the mobile division may have delivered materially stronger growth.
The higher revenue could help the ASX telco share grow its earnings thanks to the operating leverage within the business model.
UBS predicts Telstra could make earnings before interest and tax (EBIT) of $3.66 billion, which would be year over year growth of 7.8%.
The broker also expects Telstra to deliver net profit after tax (NPAT) growth of 6.2%, reaching $2.05 billion. That could be an important factor in the Telstra share price, as investors often value businesses based on profitability.
With that profit generation, the telco company is projected to pay an annual dividend per share of 18 cents. That translates into a fully franked dividend yield of 4.7% and a grossed-up dividend yield of 6.7%.
UBS suggests Telstra's balance sheet ended FY24 with net debt of $12.8 billion.
At the current Telstra share price, it's valued at 21x FY24's estimated earnings, according to UBS.
What about FY25 for Telstra shares?
The broker notes the recent decision by Telstra to increase its mobile prices at a rate faster than inflation.
Despite that, UBS research showed overall consumer 'churn intentions' across the industry remained "stable (and low)" despite consumers expecting to continue to pay more for telco products over the next 12 months. The broker suggested the churn was "likely confined to the more price-sensitive end of the market".
In terms of the negatives for Telstra shares, the broker is looking at how bad the decline for the enterprise division can get from here, competition for its 'fixed' division, cost inflationary pressures and interest expense risk.
UBS expects further growth across the board for Telstra in FY25.
The broker predicts that in FY25, the ASX telco share could make $24 billion of revenue, $3.7 billion of EBIT and $2.06 billion of NPAT. It's also projected to pay a dividend per share of 19 cents, which would translate into a fully franked dividend yield of 4.9% and a grossed-up dividend yield of 7%.
The UBS said it remains "comfortable around mobiles being a primary driver of industry ROIC recovery over the next few years."
