Telstra Corporation Limited (ASX: TLS)- Knocked Down on Multiple Factors

Telstra shares fell on lower profit

Telstra tumbled on ASX by 4.025% to $3.100 on 31 August 2018 (5:58PM AEST) after the company released annual report along with the release stating that the impact of nbn corporate plan on FY19 outlook is yet to be ascertained by the group.

As recently declared in financial results, TLS recorded reduced net profit after tax of $3.5 billion for the year ended 30 June 2018. This reflects a decline of 8.9% on previous year NPAT, due to nbn rollout and lower average revenue per user.

Telecommunication giant reported that EBITDA failed to achieve the threshold performance as it declined to $10.12 billion from $10.67 billion in FY17. However, total income grew 3% to $29.0 billion for the 12 months ended 30 June 2018, which is mainly attributable to significant growth in its mobile and fixed broadband customers. Total segment income includes change of -0.3%, 1.7%, -3.5%, 5.7%, 55.4% in Telstra Consumer and Small Business, Telstra Enterprise, Telstra Wholesale, Telstra operations, and others, respectively.  

To lead the intense competition prevailing in telecommunication industry, the group has unveiled new business strategy Telstra 2022 which aims to improve customer experience while bringing down the cost. Furthermore, in FY18 Telstra has launched second generation of Telstra TV, opened 5G innovative centres and launched world’s first 5G-enabled Wi-Fi hotspots.

The Board of Directors declared final dividend of 11 cents per share, fully franked, payable on 27 September 2018. This takes total FY18 dividend to 22 cents per share, including special dividend of 7 cents. Group’s basic earnings per share declined to 30 cents per share, compared to 32.5 cents per share in FY17.

In response to accounting standards adjustment FY19 income guidance has decreased by $100 million and EBITDA guidance has increased by $100 million.

As of now Telstra’s stock continues to move down as there seems to be some profit booking at current trading levels while TLS traded ex-dividend lately.

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