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Telstra shareholders reap benefits of its mobile division
Telstra (ASX:TLS) has posted a robust half-year result to December 31, 2024, demonstrating continued business momentum and delivering increased shareholder value through higher dividends and a new share buy-back program.
The telecommunications giant announced an on-market share buy-back program of up to $750 million, made possible by its strong fiscal discipline and robust balance sheet.
This initiative, combined with the increased dividend to a fully franked 9.5 cents a share – a 5.6 per cent increase compared with the previous corresponding period – translates into a payout ratio of 107 per cent of earnings per share, reinforcing the company’s commitment to maximising fully franked dividends to investors.
This shareholder largesse was on the back of a six per cent increase in underlying EBITDA to $4.2 billion, marking its fourth consecutive half of year-on-year underlying growth, while the interim net profit was up 7.1 per cent to $1.03 billion. Driving these results was strong execution across mobile, fixed infrastructure and enterprise segments.
Analysts say Telstra chief executive officer Vicki Brady’s strategy of focusing on the company’s core mobile and infrastructure businesses and cutting costs is paying dividends, to use a bad pun. The bottom line was also benefiting from higher prices in the mobile phone market as the big three telcos wind back their discounting.
“These are a strong set of results, delivering a fourth consecutive year of first-half underlying growth, reflecting momentum across our business, strong cost control, and disciplined capital management,” Brady told shareholders.
The money spent on its 5G network, boosting speeds and coverage in regional areas, would “absolutely cement and extend” its dominance, she added.
The mobile division remains a key driver of Telstra’s performance, with EBITDA increasing 3.7 per cent to $2.6 billion. Mobile services revenue grew 3.1 per cent, supported by continued customer growth and average revenue per user (ARPU) improvements. The company added 119,000 net new mobile handheld customers during the half, bringing its total retail mobile services in operation to 24.6 million.
Notably, postpaid handheld ARPU increased 0.8 per cent to $53.62, reflecting successful implementation of consumer and business price rises. The company’s 5G network reached 91 per cent of population coverage by December 2024, with 60 per cent of mobile traffic now carried on the 5G network.
Little wonder Brady is exuding optimism. But she knows Telstra is facing increased competition in the wake of the decision by Optus and TPG to begin sharing their regional networks. There will be no room for complacency, with a 10 per cent lift in the share price over the past year to close on Tuesday at $4.20 hardly suggesting investors are overly excited.
That said, Telstra continued to make significant progress on its T25 strategy, with several notable achievements during the half year, including expanding the mobile coverage to more than three million sq km covering 99.7 per cent of Australia’s population.
It also achieved 91 per cent 5G population coverage, advanced the intercity fibre network expansion with seven routes between major capital cities under construction, and announced collaboration with SpaceX’s Starlink for direct-to-handset text messaging.
Looking ahead to the full year to June 30, 2025, it expects solid increases in underlying EBITDA, capex, and free cash flow.
Brady emphasises the company’s focus on completing the T25 strategy while positioning for future growth. “Key priorities include lifting customer experience, delivering financial growth from mobile and infrastructure assets, and continuing the enterprise business reset.”
