A straight bat
1H23 RESULT
Need To Know
- All mobile metrics up: rev +9.5%, EBITDA +13.3%, ARPU +4.5%, postpaid subs +68k net
- FY23 guidance unchanged
- Interim dividend 8.5cps, up 0.5cps on 1H22
New CEO Vicki Brady has played her first result announcement with a straight bat delivering an in-line result with a nice dividend flourish to finish. Mobile was once again very strong showing the benefits of a more mature market.
Mobile revenue increased 9.3% comprised of services revenue +9.3% and hardware +12.2%. EBITDA jumped 13% to $2,217m. ARPU increased 4.5% to $50.47 partly due to the return of international roaming and some price rises. Subscriber growth was modest in postpaids (+68k net) but better in prepaids (+138k) and budget brand Belong (+24k).
Fixed and International earnings were in-line with market expectations. It’s business as usual with the overlay of T25 initiatives that will eliminate $500m of cost by FY25f.
Investment View
Mobile once again was the bedrock of the result. The mobile market is benefitting from a period of measured competition and rational decision-making that is generating good returns. The Optus mishap earlier in the period did not really benefit TLS or we might have seen a much stronger subscriber growth figure. Even though mobile hardware revenue grew solidly, customers are holding onto phones longer and this will see hardware revenue soften this year.
We had been expecting the dividend increase and this was duly delivered. Further capital management initiatives are dependent on the monetisation process of the InfraCo Fixed business (no update on timing).
FY23 guidance is unchanged although income is now expected to be at the low end of the range due to softer mobile hardware and fixed product revenue growth. EBITDA guidance for FY23f is still $7.8-8.0bn and capex is guided to $3.5-3.7bn. The market is at $7.9bn
The recent ACCC decision to oppose the TLS/TPG mobile network and spectrum sharing agreement is being appealed. A decision is expected by June this year.
This result was clean and had few surprises for the market, but it did reinforce our positive view on the stock.
Stock Overview
Share Price
Company Overview
Telstra is Australia’s largest telecommunications provider in both mobile and fixed line services.
Disclaimers and Disclosures
Issuer
The information and opinions contained within Sandstone Insights Research were prepared by MST Financial Services Pty Ltd (ABN 54 617 475 180, AFSL 500557) ("MST").
Reliance
Whilst MST make every effort to use reliable, comprehensive information in the construction of its reports, MST make no representation, warranty or undertaking of the accuracy, timeliness or completeness of information in this report. Save for any statutory liability that cannot be excluded, MST and MST employees, representative and agents shall not be liable (whether in negligence or otherwise) for any error or inaccuracy in, or omission from, this advice or any resulting loss suffered by the recipient or any other person.
General Advice
Any advice contained within Sandstone Insights Research is general advice only and has been prepared without taking into account any person’s objectives, financial situation or needs. Any person, before acting on any advice contained within Sandstone Insights Research, should first consider consulting with a financial adviser to assess whether that advice is appropriate for their objectives, financial situation and needs.
General Disclosures
This report should be read in conjunction with MST Disclaimers and Disclosures and is published in accordance with MST Conflict Management Policy which are available on the MST website: https://www.sandstoneinsights.com.au.
Currency of Research
The recommendations made in a Sandstone Insights Research report are current as of the publication date. If you are reading a report materially after publication, it is likely that circumstances will have changed and at least some aspects of the analysis may no longer hold.
Access and Use
Any access to or use of Sandstone Insights Research is subject to the Terms of Use. By accessing or using Sandstone Insights Research you hereby agree to be bound by our Terms and Conditions and hereby liable for any monies due in payment of accessing this service. In addition you consent to us collecting and using your personal data (including cookies) in accordance with MST Privacy Policy, including for the purpose of a) setting your preferences and b) collecting readership data so MST may deliver an improved and personalised service to you. If you do not agree to MST Terms of Use and/or if you do not wish to consent to MST use of your personal data, please do not access this service.
Equities Research Methodology
Please click here for information about MST equities research methodology.
Related Reports
Stateside
CAR made a presentation on its US business, Trader Interactive (TI) detailing the growth opportunity.
One eye on AI
A much improved second half year saved News Corporation’s blushes to the point where the share price has overcompensated, in our view. We lower our recommendation to Sell.
Below reserve
Domain’s trading update did not contain any positive short term news. However, the residential property market, on which its earnings depend, is exhibiting signs of improvement that will support an earnings jump in FY24f for DHG.