This morning, Telstra Corporation Ltd (ASX: TLS) reported in line with previous guidance, with total income falling 5.9% to $26.2 billion and net profit down 14.4% to $1.8 billion.
The company’s results remain as messy as ever as the transition away from the NBN continues, however, the most important announcement was that the dividend was maintained at 8 cents per share.
Despite seeing earnings contract due to NBN installations, Telstra still garners 46% market share of new connections and has used the payments for its copper wires to bring forward its leading 5G network. Some 10 million people are now covered by ultra-fast 5G and CEO Andy Penn brought forward his intention to increase this to 75% of the population by June 2021.
Management has clearly identified the ‘acceleration in the digital economy’ and how critical Telstra is to the eventual economy recovery, particularly as working conditions change.
The mobile businesses added 240,000 new customers for the year and ‘internet of things’ products grew even faster, with 652,000 new additions.
Although primarily viewed as an income play, Telstra is showing signs of growth, growing earnings by $40 million when the NBN losses are stripped out. This is even after an estimated $200 million in COVID-19 related costs. The company also announced it has been 100% carbon neutral in 2020.
In my view, there are good signs for this digital infrastructure business.
For a more in-depth take on Telstra’s report, check out this article from Rask Media’s Jaz Harrison: Telstra (ASX:TLS) share price drops on FY20 result
This report was written by Drew Meredith, Financial Adviser and Director of Wattle Partners. To get in contact with Drew, click here to visit the Wattle Partners website.