The Telstra Group Ltd (ASX: TLS) share price is rising on Thursday.
At the time of writing, the telco giant's shares are up almost 1% to $3.90.
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Telstra share price higher on FY 2024 results
Investors have been bidding the company's shares higher this morning after responding positively to its FY 2024 results.
As we covered in detail here, Telstra reported a 1% increase in total income to $23.5 billion. This reflects growth across Mobile, International, InfraCo fixed and Amplitel.
Things were even better for its earnings, thanks largely to the key Mobile business. Mobile earnings before interest, taxes, depreciation, and amortisation (EBITDA) increased by 9.2% to $5,026 million due to high margin services revenue growth and cost-out.
This led to Telstra recording a 3.6% lift in underlying EBITDA to $8.2 billion and a 7.5% jump in underlying net profit after tax to $2.3 billion.
In light of this profit growth, the Telstra board elected to increase its full year dividend by 5.9% to a fully franked 18 cents per share.
Commenting on the company's performance, Telstra's CEO, Vicki Brady, said:
A consistent and disciplined execution of our strategy has delivered our third consecutive year of underlying growth, and positive momentum across many of our key indicators. Our mobiles business has continued to perform very strongly, with EBITDA growth of over $400 million. This growth was driven by more people choosing our network, with more than 560,000 net new handheld customers, along with ARPU growth.
Looking ahead, Brady revealed that Telstra is expecting further underlying EBITDA growth in FY 2025.
The company's guidance is for underlying EBITDA of $8.5 billion to $8.7 billion. This is narrowed higher from its previous guidance range of $8.4 billion to $8.7 billion.
Broker reaction
Goldman Sachs was pleased with the company's results, noting that its net profit came in comfortably ahead of expectations. It commented:
Income/EBITDA/NPAT of A$23.4bn/A$8.24bn/A$2.14bn, which was -1%/+0%/+7% vs. our estimates, and -1%/+0%/+7% vs. Visible Alpha consensus. Telstra's balance sheet gearing increased to 2.1x (1H24 1.9x) due to increased gross debt and seasonality in FCF, noting FY24 FCFaL improved 7% to A$3.0bn (FY23 A$2.8bn). A final dividend of 9¢ps was declared (fully franked) in-line with expectations (GSe/VA 9/8.9¢ps) implying an EPS/FCF payout ratio of 128%/95% (1H24: 107%/191%).
Another positive, which is likely to be lifting the Telstra share price, is that its guidance for FY 2025 was ahead of consensus expectations. Goldman summarises:
EBITDA range positively narrowed, as expected, while FCF guide appears strong, particularly given it includes 100% of restructuring (i.e. A$300mn). FY25 EBITDA Guidance upgraded to A$8.5-8.7bn (from A$8.4-8.7bn, i.e. in-line with GSe of A$8.595bn but marginally ahead of VA consensus – but likely in-line with Buy side expectations).
The Telstra share price is down 8% over the past 12 months.
