Telstra Holds AGM and Provides Financial Guidance for FY21
- The company outlines the growth in mobile and fixed service additions
- T22 service expansions in consumer and small business
- Impacts on underlying EBITDA due to Covid-19 and the nbn
Telstra Corporation Limited (ASX:TLS) holds its Annual General Meeting and provides guidance for the FY21 fiscal period. The company uses the meeting to outline financial results achieved in FY20, reiterating moderate declines in key financial metrics. Namely a 5.9 per cent drop in total income to A$26.2 billion, a 14.4 per cent decline in net profit after tax and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) on a guidance basis of A$7.4 billion, a 9.7 per cent drop.
On a different note, the company notes key highlights such as mobile service net adds. These include an additional 240,000 retail postpaid adds, of which 86,000 are branded and 154,000 falls under Belong. Moreover, the company reports 347,000 extra wholesale mobile service net adds, as well as 652,000 retail Internet of Things. In conjunction with this, the group outlines fixed service net adds of 80,000 retail bundle and data services, of which 79,000 also are under Belong. Interestingly, Telstra demonstrates that Belong is one of Australia’s largest service operators, with over 730,000 services. Further promoting positivity, is a 9.2 per cent decline in underlying fixed costs, to A$615 million.
As it relates to the company’s T22 service, 71 per cent of consumer and small business services are now executed through digital channels. This represents a 53 per cent increase in transactions via this channel. In addition to this, consumer and small business in market plans are cut to 20 from 1800, with over 4.8 million services on those plans. Moreover, the group’s 5G network now services 40 per cent of the Australian population, with the release of a fixed wireless product offering 5G connection with home broadband. Furthermore, savings for this aspect sit at A$1.8 billion, in line with the company’s target of reducing annual underlying fixed costs by A$2.5 billion by FY22.
Moving to the group’s guidance for FY21, the business aims for its 5G network to cover 75 per cent of the Australian population. Moreover, Telstra outlines total income guidance for FY21 to be between A$23.2 to A$25.1 billion. This represents an 11.45 and 4.19 per cent decline in total income respectively. In addition to this, the group estimates an underlying EBITDA in the range of A$6.5 to A$7.0 billion. These are declines of 12.16 and 5.40 per cent respectively. The company notes a Covid-19 impact on underlying EBITDA of A$400 million. In addition to this, an impact of A$700 million is estimated on the underlying EBITDA due to the in-year nbn headwind.
Despite outlining negative financial guidance for the FY21 period, the company’s move to expand its 5G offering, as well as mobile and fixed service additions, present positive growth prospects for the company moving forward.