Telstra Group Ltd (ASX: TLS) shares are a popular option for Aussie investors.
This means that when the telco giant releases its half year results next week, there will be a lot of interest in how it performs.
Ahead of the release, let's take a look at what the market is expecting from this blue chip on 20 February.
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Telstra half year results preview
Goldman Sachs recently released a note and laid out its expectations for the telecommunications company.
The good news is that the broker is expecting a solid result from Telstra thanks to growth across its key businesses.
Goldman is forecasting a 4% increase in EBITDA to $4.18 billion, which is just a touch short of the consensus estimate of $4.19 billion.
The broker believes this puts Telstra on course to achieve the middle of its FY 2025 EBITDA guidance range of $8.5 billion to $8.7 billion. On this occasion Goldman is forecasting EBITDA a touch ahead of the consensus estimate at $8.61 billion (versus $8.59 billion) for the 12 months.
This half on half increase in EBITDA is expected to be underpinned by mobile price increases, its fixed enterprise restructure, and the cycling of mobile enterprise headwinds in the prior corresponding period.
As for dividends, Goldman is forecasting a 6% increase in the Telstra interim dividend to a fully franked 9.5 cents per share. This is just ahead of the consensus estimate of 9.4 cents per share.
What else should you look out for?
Goldman has provided the market with its expectations for Telstra's three major segments. The first is its key mobile business. It explains:
Mobiles (EBITDA +3% to A$2.58bn): We forecast postpaid/prepaid sub & ARPU growth of +45k/100k and +1%/3%, with EBITDA margins improving sequentially to 47.1% (1H/2H24 47.1%/46.6%) – noting enterprise mobile headwinds and higher cost allocations impacting 2H24, alongside 3G churn impact (TPG 23k or 0.4% of base). We will focus on competitive dynamics in early CY25 following TPG/Optus MOCN launch & Vodafone competitive activity across mobiles plans and handsets, and any commentary around pricing/brand strategy following Boost Mobile acquisition.
In respect to its Fixed business, Goldman said:
Fixed (EBITDA +16% to A$265mn): We forecast for trough Fixed Enterprise earnings (A$55mn vs 1H/2H24 A$71mn/A$65mn), with cost management and simplification benefits to be more skewed to 2H25, while Fixed Consumer will benefit from strong margin expansion (+3ppts to 7.8%) with price rises offsetting SIO declines (NBN broadband/voice -89k, FWA +25k).
Finally, the broker believes that InfraCo Fixed business will have a solid half. It said:
InfraCo Fixed (+5% to A$872mn): We expect solid NBN recurring revenue growth (GSe +4.5%) to more than offset any volatility in disposal of legacy network assets (1H24 A$60mn).
Should you buy Telstra shares?
Goldman currently has a buy rating and $4.50 price target on Telstra's shares.
Based on its current share price of $3.89, this implies potential upside of almost 16% for investors.
In addition, a 19 cents per share fully franked dividend is expected in FY 2025. This equates to a 4.9% dividend yield and boosts the total potential return beyond 21%.
