The Telstra Group Ltd (ASX: TLS) share price will be one to watch closely on Thursday after the telco giant released its highly anticipated half year results.
Let's see what the company reported for the first half of FY 2025.
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Telstra share price on watch following half year results release
- Total income up 0.9% to $11.82 billion
- Operating expenses down 1.8% to $7.56 billion
- Underlying EBITDA up 6% to $4.25 billion
- Profit after tax up 7.1% to $1.1 billion
- Fully franked interim dividend up 5.6% to 9.5 cents per share
What happened in the first half?
For the six months ended 31 December, Telstra reported a modest 0.9% increase in total income to $11.8 billion.
But thanks partly to a reduction in operating expenses, the telco's underlying EBITDA grew at a much quicker rate. It increased by 6% over the prior corresponding period to $4.25 billion.
Management notes that its underlying EBITDA grew across its Mobiles, InfraCo Fixed, Fixed – C&SB, Fixed – Enterprise, and International businesses.
Segment performance
The Mobiles business was a strong performer, with EBITDA growth of $92 million. This growth was driven by more people choosing its network with 119,000 net new mobile handheld customers in the half and average revenue per user (ARPU) growth. Mobile services revenue grew by 3.1%.
The InfraCo Fixed business grew its EBITDA by $58 million during the half, which reflects ongoing demand for its assets. Whereas its Fixed – C&SB business continued to grow, with EBITDA growth of $78 million. This reflects ongoing cost discipline and ARPU growth.
Another positive was that its Fixed – Enterprise business EBITDA grew by $25 million. Management advised that this reflects the decisive actions it has taken so far to reset this business, resulting in cost reductions.
Finally, its International business EBITDA grew by $29 million. This was due to strong growth in Wholesale and Enterprise from improved product mix and cost discipline. Its Digicel Pacific business continued to operate in a challenging environment.
Telstra dividend and buyback
In light of its profit growth, the Telstra board elected to increase its fully franked interim dividend by 5.6% to 9.5 cents per share.
But the returns won't stop there. Telstra has separately announced an on-market buyback of up to $750 million.
Telstra CEO, Vicki Brady, believes that the buyback demonstrate confidence in Telstra's financial strength and outlook. Commenting on the result and capital returns, she said:
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.
On the back of earnings growth, the Board resolved to pay a fully franked interim dividend of 9.5 cents per share, representing a 5.6 per cent increase on the prior corresponding period. Today we also announced an on-market share buy-back of up to $750 million, which is consistent with our capital management framework. Both the increased interim dividend and the buy-back demonstrate Board and management confidence in our financial strength and outlook.
Outlook
Telstra remains on track to achieve its guidance in FY 2025. It continues to target underlying EBITDA of $8.5 billion to $8.7 billion.
It also expects free cash flow (after lease payments) of $3 billion to $3.4 billion. Though, this will require a strong second half given that first half free cash flow was $1.1 billion.
