The Telstra Group Ltd (ASX: TLS) share price looks like an excellent opportunity, in my view. It could be one of the most appealing S&P/ASX 200 Index (ASX: XJO) blue-chip shares.
The telecommunications business recently released its FY25 half-year result for the six months to 31 December 2024. Investors liked the report, sending the Telstra share price up more than 5% on the day.
There were a number of positives within the result which made me believe the business still has a very promising outlook. I think Telstra can keep rising in the coming years for the following reasons.
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Financial growth
The business reported ongoing growth in the first half of FY25, which is a key driver of the Telstra share price. Don't forget, it's profit that pays for the dividend too.
In HY25, Telstra grew its mobile handheld users by 2.5%, which was an increase of 119,000 in actual terms. This helped the business grow its total income by 0.9% to $11.8 billion, operating profit (EBITDA) increased by 6% to $4.2 billion, and net profit grew by 6.5% to $1 billion.
There was earnings growth across almost all of its products. Growth isn't guaranteed every reporting period, but this shows the business is going in the right direction.
Mobile operating profit rose 3.7% to $2.6 billion, thanks to growth in user numbers and average revenue per user (ARPU).
Fixed customer and small business (C&SB) operating profit rose 74.3% to $183 million, thanks to growth in ARPU and productivity.
Fixed enterprise operating profit grew 35.2% to $96 million, with growth following strong cost action.
International operating profit rose 8.4% to $373 million, thanks to growth in wholesale and enterprise and the release of the earn-out provision for Digicel Pacific.
The final positive was that the InfraCo fixed operating profit rose 7% to $892 million, with growth from ongoing infrastructure demand and operating leverage.
Strong returns for shareholders
Telstra has been paying pleasing dividends, and the dividend payment was hiked in the FY25 half-year result.
The ASX telco share's board of directors decided to hike the interim dividend per share by 5.6% to 9.5 cents per share. I was only expecting Telstra to pay a dividend per share of 9 cents in this result. At the current Telstra share price, that payment represents a grossed-up dividend yield of 3.3%, including franking credits. If it paid that dividend again in six months, the grossed-up dividend yield would be 6.6%.
Telstra also decided to announce a share buyback of up to $750 million, which can help increase the underlying value of each share and also help increase the potential for a higher dividend per Telstra share.
Leading network and continued investment
The business has continued to invest in its mobile network, and it has now expanded its coverage to more than 3 million square kilometres, reaching 99.7% of Australia's population. This is more than double that of Optus' network and three times that of the TPG Telecom Ltd (ASX: TPG) (including Vodafone) network.
With how Telstra is planning to further improve its network, I think it will get ahead of its competitors. Its network advantage may well be the best reason to like the company for the foreseeable future. It said the following in the result announcement:
Over the next four years, we will increase our mobile network investment by $800 million to extend our leadership and deliver customers the most advanced, resilient and reliable 5G mobile network in the country. This will be delivered within business-as-usual capex by directing a larger portion of overall capex to our mobile network.
Through our partnership with Ericsson, the first-of-its-king for any operator across Asia-Pacific, we will upgrade our radio access network (RAN) with next-generation Open RAN-ready hardware solutions and 5G Advanced software, and implement AI and automation to optimise network management through self-detection and self-healing capabilities.
This will help us evolve our offering and improve the efficiency of how we use our spectrum so we can continue to build capacity on our 5G network to deliver better consistency of performance, reliability and speed to millions of customers. Our customers will start to notice improvements to their speeds and overall experience from later this calendar.
With that in mind, I think the future is bright for Telstra shares.
