No one in the corporate world has quite the same opinion on the performance of outgoing Telstra CEO Andy Penn. But when he delivered final results on Thursday at his best job, he must be deeply pleased to have pushed aside his detractors and left the telecom company with top earnings.
His parting gift to Telstra – the first dividend increase in seven years – is especially meaningful because it all speaks to the confidence the Telstra board has about the company’s prospects for increasing earnings.
Aspirations and guidance from any company are flexible and subject to change, but the fact that Telstra is paying more in dividends than earnings is at least a clear boost of confidence about future earnings growth this year. It’s a manifestation. Underlying earnings guidance for fiscal 2023 increased from $7.3 billion to $7.8 billion to $8 billion in 2022.
Telstra’s earnings before interest, taxes, depreciation and earnings declined by 5% and 4.7%, respectively, while underlying earnings results increased by 8%. And it’s a basic metric free of many distorting influences, including NBN, that allows investors to take a closer look at the company’s ongoing performance.
This is especially important from this point on, as Telstra’s final customer migration to NBN has been completed. This anchor of his $3.6 billion earnings has now been cut.
Penn produced an impressive final act, but one marked by a few stumbles, sidelined by issues beyond his control, most notably COVID-19 and recent hyperinflation. It was a roller coaster performance.
That said, this year also marked the completion of Telstra’s T22 strategic overhaul. It was a massive undertaking that included simplifying mobile plans, rolling out 5G, cutting costs by $2.7 billion, selling part of the tower business, and introducing a new level of digitalization.
Cost reductions and productivity gains had a positive impact on most divisions’ earnings, even those that underperformed.
Every year Telstra achieves different achievements from its business units, and this year it was just that.
Telstra finally ends its NBN revenue anchor and can chart its own revenue trajectory
Source link Telstra finally ends its NBN revenue anchor and can chart its own revenue trajectory