Telstra Corporation Limited

Significant YTD returns: Australian telecom giant, Telstra Corporation Limited (ASX: TLS) announced that the former Group Executive of the consumer and small business Mr. Vicki Brady will be entitled to a new role of Chief Financial Officer and Head of Strategy. It will be applicable from 1 July as mentioned by CEO Andy Penn. Further, Acting Group Executive Michael Ackland will permanently lead the Consumer and Small Business function.


Results Half-Year ended 31-December 2018 (Source: Company Reports)

The EBITDA of the company stood at $4.3 billion in 1HFY19, down by 16.4 per cent, and NPAT stood at $1.2 billion, down 27.4 per cent driven primarily by NBN impacts.The company significantly reduced costs and is in line to meet FY19 targets as part of the goal of achieving $2.5 billion net productivity improvement by 2022. The company’s performance remained decent excluding the impact of the NBN.

EBITDA guidance: In FY19, the company expects a total income of $26.2 billion - $28.1 billion and EBITDA (excluding restructuring costs) of $8.7 billion to $9.4 billion. The company expects the capital expenditure to be within a range of $3.9 billion and $4.4 billion while itexpects the free cash-flow to be within $3.1 billion and $3.6 billion.

Driven by continued growth in the customer numbers along with significant progress on the 5G spectrum front and the progress in executing T22 strategy, the outlook of the company remains decent.

Moreover, the stock generated a YTD return of 19.91% and its 3-months return stood at 14.93%. We expect the stock to rally in the short-medium term continuing its momentum on the back of the 5G network implementation around the corner in Australia. Hence, by looking at its decent business outlook amidst certain challenges, we maintain our “Hold” recommendation on the stock at the current market price of $3.310 per share (up 0.608% on 11 April 2019).
 

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