Investors will be disappointed with the failure of the Telstra (TLS) board to boost interim dividend to an expected 16 cents as the telco revealed a 20% plus surge in interim net profit to $2.08 billion.
The interim dividend was set at 15 cents a share, up half a cent from a year earlier. But it is unchanged from the 15 cents paid as the final for 2013-14.
There has been rising speculation in the past 10 days that the company could boost its interim payout to 15.5c a share, or even 16 cents.
Total income edged up to $12.72 billion, and earnings before interest, tax, depreciation and amortisation rose half a per cent, to $5.3 billion, or a gross profit margin of a fat 40% plus.
Telstra shares have enjoyed a strong last 12 months,rising 27% and outperforming the wider market.
The shares hit a 14-year high of $6.735 earlier this month and closed on Wednesday at $6.49.
TLS 1Y – Telstra boosts profit, interim div up, but no special div, and the DRP is back
The better result came from another strong performance from the company’s mobile business.
Revenue from Telstra’s mobile business jumped 9.6%, to $5.3 billion while fixed data revenue rise 7.8%.
The number of local mobile subscribers rose 366,000 to 16.4 million in the half year.
Instead of a higher dividend, Telstra is re-opening its dividend reinvestment program (DRP).
Telstra chief executive David Thodey said in this morning’s statement: “We have listened to our many shareholders who told us they would like to see the DRP return,” he said. The reactivation of the DRP will provide our shareholders with an easy and cost effective way to increase their shareholding.”
The company expects shares allocated to participants under the DRP for the final dividend to be sourced through an on-market purchase and transfer of shares to participating shareholders.
For the rest of the year, the company left guidance unchanged for full-year sales and earnings to be “broadly flat.”
Mr Thodey said the group still expects low single-digit income and earnings before interest, tax, depreciation and amortisation (EBITDA) growth to offset the absence of CSL (the Asian business sold last year) operating revenue and EBITDA.
TLS results video
