A look through FY18 results - Telstra Corporation Limited!

  • Sep 11, 2018 AEST
  • Team Kalkine
A look through FY18 results - Telstra Corporation Limited!

Bottomline impacted due to NBN rollout and intense competition: Telstra Corporation Limited (ASX: TLS) is a well-diversified telecommunication company with the principle activity of providing mobile phones, mobile devices, home phones and broadband internet services in Australia market.  The company has five main business verticals, i.e., consumer and small business segment, Enterprise, Wholesale, Operations, and Others which contributed around 51%, 28%, 10%, 4%, and 7% revenue in total revenue respectively, in FY18.

FY18 was a challenging year for the company as its product mix segment demonstrated lower earnings than expected due to rise in competition for mobile customers and the impact of NBN rollout. As a result, Profit attributable to the equity shareholders of Telstra was down by 8.4% to $3,563 million against $3,891 million in FY17. Moreover, EPS contracted for the FY18 at 30.0 cents per share compared to 32.5 cents per share in FY17. Based on the performance, the Board of Director reduced its fully franked full-year dividend from 31 cents per share to 22 cents per share in FY18, equating to a payout ratio of 65% of net profit after tax including net one-off nbn receipts. However, the group has consistently distributed stable dividends with healthy payout ratios. We expect that the company is likely to continue its high dividend payout policy in years to come. The company has the annual dividend rate of 4.82%. 

Lately, the group announced that there will be no change to its capital management framework and it forecasts its Capex to sales ratio in the range of 16% to 18% in FY19, while Capex to sales ratio is expected to be around 14% over the medium term. As per the management, the company witnessed the subdued performance in 2018 because of the stiff competitive pressures and is expecting the same to continue in 2019. Importantly, the company has not commented on FY20 impact from the new NBN plan, thus, there might be a possibility that Telstra will be a bit back on track in FY20 and thereafter.

We are of the view that the company has a potential to perform better in the long run as they have recently introduced Telstra 2022 Strategy which could be a game changer for the company. Hence, we expect that the company will rebound its growth momentum fuelled by improving fundamentals, and support from top management structural changes, simplification of product portfolio, and continuous product innovation.

Technical View: TLS has performed well over past three months generating a positive return of 13.84% and shares may move higher from the current level. The stock price has rebounded in a sharp V pattern after taking support at the level of $2.981. A potential breakout is in sights above the resistance level of $3.220. 14-day Relative Strength Index (RSI) looks in line with the price movement not highlighting any sign of fading of the prevalent momentum in the price. We believe that slew of positive developments and FY19 outlook can fuel the stock higher from the current levels of $3.205.

Dividend Stocks To Buy

The Income available from dividends remains attractive for many investors.

We take a look at the best yields on the market and assess what they say about a company’s prospect.

One Thing is certain, though, Australia interest rates are still low, making income difficult to come by and keeping the focus for many investors on high yielding stocks. Kalkine’s team of analysts bought you handpicked report for “Top 25 Dividend Stocks For 2018.”

ASX-relevant Special Reports are published year-round to provide a detailed analysis into an investing opportunity or a potential risk to your portfolio.

Click here to get your free report.


The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people. Kalkinemedia.com and associated websites are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376). website), employees and/or associates of Kalkine Pty Ltd do not hold positions in any of the stocks covered on the website. These stocks can change any time and readers of the reports should not consider these stocks as advice or recommendations.


All pictures are copyright to their respective owner(s).Kalkinemedia.com does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.


There is no investor left unperturbed with the ongoing trade conflicts between US-China and the devastating bushfire in Australia.

Are you wondering if the year 2020 might not have taken the right start? Dividend stocks could be the answer to that question.

As interest rates in Australia are already at record low levels, find out which dividend stocks are viewed as the most attractive investment opportunity in the current scenario in our report.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK