Telstra shareholders should be happy after the telco filed an impressive financial report for the first half of 2014 (ending December 31) and increased its interim dividend by 3.6 per cent to $0.145, up about half a cent. Earnings per share increased to $0.137.
The first dividend increase in nine years was the highlight of a report that was full of positives with gains in virtually every area.
The telco reported that its total income increased 4.1 per cent to $12.8bn, while earnings before interest, taxes, depreciation and amortisation (EBITDA) grew seven per cent to $5.3bn.
Total net profit for the six-month period was $1.7bn, up 9.7 per cent from a year ago. The figure is the result of the addition of 739,000 domestic retail mobile customer services, taking its customer total for the category to 15.8m.
Just over four million of these are on Telstra’s 4G network, a number which chief executive officer (CEO), David Thodey, expects to grow following the telco’s $650m capital investment in mobile infrastructure in the half.
Thodey said Telstra will continue to rebalance its portfolio to reflect the changing nature of the business while investing further in emerging businesses.
Telstra’s decision to place greater focus on its Network Application and Services (NAS) business resulted in a revenue growth of 29 per cent to $821m.
“We continued to invest in NAS by building our capabilities and acquiring companies such as North Shore Communications (NSC) and O2 Networks,” Thodey said.
Thodey also said Telstra has been active and disciplined in its approach to portfolio management, referencing the sale of the Hong Kong mobile business CSL New World Mobility Limited and a 70 per cent interest in Sensis. The anticipated proceeds from the sales were incremental to Telstra’s guidance for free cash flow of $4.6bn to $5.1bn. The transactions are expected to be complete in the second half of the fiscal year.
According to Thodey, Telstra commenced negotiations with the NBN Co in the half on potential changes to the current agreements that may result from the Government’s intent to move to a multi-technology rollout.
“We are committed to acting in the best interests of our shareholders, and are focused on maintaining the value of the current agreements, achieving certainty of outcome as soon as reasonably possible and minimising any additional regulatory risk,” Thodey said.