A steady final and full year dividend as well as the mooted capital management program costing $1.5 billion can’t hide the fact that Telstra (TLS) struggled in 2015-16, especially in the final six months as a series of system outages cost it dearly in terms of customer engagement and support.
It also seems to have cost them earnings growth in the June half year which saw earnings before interest and tax fall by 9%.
The telco reported a net profit of $5.780 billion this morning for the year to June, up 23% from the $4.231 billion reported for the previous financial year.
But that was bolstered by the $1.8 billion profit on the sale of most of its Autohome stake earlier this year, meaning underlying earnings fell in the latest year.
The accounts back that up showing a 0.8% dip in earnings before interest, tax, depreciation and amortisation of $10.465 billion, down from $10.533 billion.
And Earnings Before Interest and Tax dropped 6.9% to $6.310 billion from $6.559 billion.
After reporting EBIT for the December half, up 1.3% to $3.372 billion, from $3.328 billion, Telstra saw a 9% slide in second half EBIT to $2.938 billion from $3.231 billion.
It was a performance that won’t make some in the market happy, hence the capital management moves of $1.5 billion – via both off-market and on-market buybacks.
The buyback was announced in may with the detail to be announced with the annual results today.
The final dividend was maintained at 15.5 cents a share, meaning a steady 31 cents a share payout for the year to June.
Revenue rose 1.5% to $25.91 billion (from continuing operations and excluding Autohome).
Telstra is forecasting low single-digital earnings before interest, tax, depreciation and amortisation growth in the 2017 financial year.
And it is is also saying it will invest $3 billion in its networks over the next three years. It sounds a nice round sum, but after the three or four outages so far this year, a couple of which shut the mobile network down for hours, you would be right in wondering if the figure is as much PR as an actual commitment.
It raises the question, why wasn’t the company investing heavily in its networks in previous years to maintain reliability?
