Over 40% of Australians Now Under the Wings of Telstra 5G

Over 40% of Australians Now Under the Wings of Telstra 5G

Summary

  • One of the worst crises experienced by various sectors, COVID-19 has been a boon to the technology sector.
  • 5G is one of the next-generation technologies that is all set to transform mobile networking. Telstra confirms that its 5G now covers more than 40% of the Australian population.
  • By June 2021, the company aims to reach nearly 75 per cent of the Australian population.
  • Telstra’s FY20 performance has been in line with guidance, and the company paid a full-year dividend of 16cps. 

2020, a year of unprecedented challenges, has been pretty hard on various sectors; however, technology has emerged as a winner during these tough times. The highly contagious COVID-19 crisis shook the entire world and forced everyone to become dependent on digital technologies.

Without the already evolved technologies, we could not have managed our day-to-day functions from working from home to education, shopping, digital payments and much more.

Before the coronavirus struck, next-generation technologies such as artificial intelligence, Internet of Things (IoT), big data and cloud were already making a mark and impacting our lives in a big way. However, keeping people connected while apart, a number of next-generation technologies gained momentum during the pandemic, which made digital transformation more meaningful for businesses.

Also read: Digital Trade: The Next Big Thing at Global Level

To tackle this level of digital dependency, the world needs a better network. That said, 5G is the 5th generation mobile network, designed to virtually connect everyone and everything together. The technology is capable of delivering massive network capacity, increased availability, higher multi-Gbps peak data speeds, more consistent user experience with ultra-low latency and more reliability.

© Kalkine Group 2020

 

Telstra 5G Covers More Than 40% of Australian Population 

 

In its recent annual general meeting, Telstra Corporation Limited (ASX:TLS) confirmed that Telstra 5G now covers over 40 per cent of the Australian population, an area where over 12 million Aussies work, live or pass through daily.

Telstra – A growth story or a value buy after the 5G rollout?

Despite a challenging year due to the COVID-19 pandemic and bushfires, Telstra 5G has managed to reach selected areas of 53 cities and towns. As the company aims to reach nearly 75 per cent of the Australian population by June 2021, it has accelerated the rollout process.

TLS Financial Report in FY20: Notwithstanding the impact of bushfires and economic turmoil due to the ongoing pandemic, its FY20 performance was in line with guidance.  

  • On a reported basis, total income for the year dropped by 5.9 per cent to AUD 26.2 billion, and NPAT declined 14.4 per cent to AUD 1.8 billion. 
  • Reported EBITDA stood at AUD 8.9 billion. After modifying for lease accounting on a like-for-like basis, EBITDA contracted 0.3 per cent to AUD 8.4 billion.
  • Underlying EBITDA on a guidance basis went down by 9.7 per cent to AUD 7.4 billion.
  • Excluding the in-year nbn headwind gives the most accurate view of the underlying business performance, as per the company. On this basis, underlying EBITDA for the year increased by nearly AUD 40 million.
  • The Board decided to pay a fully franked final dividend of 8 cents per share (cps) with a final ordinary dividend of 5cps and a final special dividend of 3cps. This brings the total dividend for FY20 to 16cps.

Must read: Global tech major Microsoft strengthens its ties with Telstra

TLS' operating highlights show continued growth in the number of services to clients. In the mobile business, TLS includes 240,000 net retail postpaid mobile services that comprise 154,000 from Belong and 86,000 branded. It also expanded mobile prepaid unique user base by 171,000. In wholesale, IOT, and net new retail bundle and data services, the company added 347,000, 652,000, and 80,000 services, respectively.

Belong has now become one of the largest operators in Australia with more than 730,000 services - over 400,000 mobile services and 330,000 fixed.  

T22 Strategy: Despite being a difficult year, 2020 highlighted the significance of connectivity. During the global virus crisis and after the pandemic, Telstra has a crucial role to play in digitalisation. The telco saw the real value of its T22 investments in 2020 to transform Telstra for the future as a more digital, simpler and agile business. 

While launching T22 in 2018, the company stated that it was disrupting Telstra, and what followed next was COVID-19, that disrupted the whole world. However, the approach helped Telstra through the unprecedented global crisis. It will also help in capitalising on various new growth opportunities in the future.

While moving further into FY21, the company is much closer to the finish of the T22 strategy.

FY21 Guidance: For FY21, the company expects total income in the range of AUD 23.2 to AUD 25.1 billion, underlying EBITDA between AUD 6.5 and AUD 7.0 billion. Net one-off nbn DA receipts - less nbn net cost to connect are expected in the range of AUD 0.7 to AUD 1.0 billion.

The anticipated capital expenditure is AUD 2.8 - 3.2 billion while free cash flow after operating lease payments is expected between AUD 2.8 and AUD 3.3 billion.   

As per the company, just like the rollout of 3G and 4G earlier, Telstra is already a market leader in 5G, highlighting that it has and will retain, by far the best network in Australia. During the current financial year, the company plans to extend its leadership in 5G.

 

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.

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