Telstra records third consecutive year of underlying growth

Telstra has achieved its third consecutive year of underlying growth in its results for the 2024 financial year despite recording a hit to its reported net profit after tax (NPAT) of 12.8 per cent.

Over the 12-month period to 30 June, the telco recorded a 1 per cent increase in revenue, rising to just below $23 billion. Total reported income also rose by 1 per cent, to $23.5 billion, up from FY23’s $23.2 billion.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was up 3.7 per cent to $8.2 billion, but reported EBITDA was down 4.2 per cent to $7.5 billion.

Additionally, while underlying NPAT was up by 7.5 per cent to $2.3 billion, the reported NPAT decline of 12.8 per cent fell to $1.8 billion.

Despite this, Telstra CEO Vicki Brady declared in a statement published to the Australian Securities Exchange (ASX) that a “consistent and disciplined execution of our strategy” led to the underlying growth.

Out of its various market segments, Brady said Telstra’s mobiles business “has continued to perform very strongly”, which recorded EBITDA growth of over $400 million and an increase of product income of 4.5 per cent to $10.7 billion.

“This growth was driven by more people choosing our network, with more than 560,000 net new handheld customers, along with ARPU growth. Mobile services revenue grew by 5.6 per cent and our mobile business underpinned our overall underlying earnings growth,” she said.

The telco’s infrastructure business also grew, with InfraCo Fixed recording a 7.4 per cent increase in product income to $2.7 billion and Amplitel rising 13 per cent to $453 million. EBITA for these two arms grew by $150 million in aggregate.

Meanwhile, Telstra’s Fixed C&SB, Enterprise and Active Wholesale branches recorded losses in product income, falling 2.3 per cent to $4.4 billion, 2.7 per cent to $3.5 billion and 9.2 per cent to $366 million, respectively. In terms of underlying EBITDA, Fixed C&SB rose by 88.1 per cent to $254 million, while Fixed Enterprise was down 66.9 per cent to $136 million and Fixed Active Wholesale slipped 19.7 per cent to $94 million.

“While most parts of our business performed strongly, Fixed Enterprise is clearly a long way from where we need it to be,” Brady said. “We commenced action during the year to address challenges in our Enterprise business and took additional action on cost overall.

“These necessary choices and decisions in Enterprise, together with our additional action on cost, mean we are confident in achieving our $350 million cost reduction ambition by the end of FY25.

“Our reported earnings reflect these decisions and, combined with other adjustments, result in significant one-off net costs totalling $715 million.”

Looking ahead, Brady said Telstra’s T25 strategy is on track, which includes its ambitions in underlying EBITDA, earnings per share (EPS) and return on invested capital (ROIC).

The telco also laid out its guidance for FY25, aiming for underlying EBITDA of $8.5 billion to $8.7 billion, business-as-usual capital expenditure of $3.2 billion to $3.4 billion and strategic investment of $0.3 billion to $0.5 billion.

“In FY25, we must remain focussed on lifting customer experience; continue delivering financial growth and value from our world-leading mobile network and high-quality infrastructure; continue the reset of our Enterprise business; and keep delivering on our commitment to simplify our operations and improve our productivity,” Brady said.

“These actions are essential to support our sustainable growth and to put us in a position to deliver for customers now and in the long run.”

She added that Telstra is optimistic about opportunities in the future.

“Telstra’s digital infrastructure and network will be increasingly central to how Australians live and work and we are focussed on investing sustainably to deliver for our customers and our shareholders,” Brady said.

Telstra’s full-year results for FY24 come one day after it announced in a joint statement with rival telco Optus that it was pushing back its 3G network shutdown to October.