The Telstra Group Ltd (ASX: TLS) share price is in focus today after the telco reported its FY25 half-year result, announced a share buyback and an enlarged dividend.
FY25 half-year result
Here are some of the highlights of the FY25 half-year result compared to the first half of FY24:
- Total income up 0.9% to $11.8 billion
- Operating expenses down 1.8% to $7.6 billion
- EBITDA up 6% to $4.2 billion
- Net profit for Telstra shareholders up 6.5% to $1 billion
- Dividend per share up 5.6% to $0.095
- Share buyback of up to $750 million
Divisional breakdown
Telstra’s all-important mobile division experienced mobile service revenue growth of 3.1%, supported by handheld user price changes and the wholesale division, partly offset by mobile broadband. There was 2.5% (or 110,000) growth of mobile handheld users across postpaid, prepaid and wholesale.
Mobile average revenue per user (ARPU) grew 6.5% in prepaid handheld from price rises, there was around 6% growth in wholesale and it saw 0.8% growth with consumer and small business price rises from September 2024 offset by the Enterprise division.
The customer and small business fixed (broadband) division saw income decline 2% to $2.2 billion, while EBITDA soared 74.3% to $183 million thanks to price rises and margin expansion, as well as fixed wireless growth.
Fixed enterprise EBITDA grew 35.2% to $96 million thanks to cost reductions, while income dropped 1%.
International income fell 5% to $1.3 billion, but EBITDA increased 8% to $373 million. Within this division’s wholesale and enterprise, EBITDA improved 9% with improved product mix and cost savings. Digicel Pacific was impacted by headwinds in PNG, but reported EBITDA rose 8% (due to the release of the remaining earn-out provision), but underlying EBITDA fell 3% when looking at the earnings at the same exchange rates as last year.
InfraCo Fixed EBITDA rose 7% to $892 million thanks to higher revenue, with ongoing infrastructure demand, higher contractual income from the NBN and lower costs.
Share buyback
The telco announced a share buyback of up to $750 million Telstra shares. The company said this decision included its capital management framework and demonstrated the board and management confidence in Telstra’s financial strength and outlook now and into the future.
The company also reiterated its commitment to balance sheet settings consistent with an A band credit rating, with a ratio for the FY25 first-half debt to EBITDA of 1.9 times, within its comfort zone of between 1.5 to 2 times.
The share buyback is expected to start after 12 March.
Final thoughts on the Telstra share price
At the pre-open Telstra share price of under $4, I think the business represents very good buying for the long-term compared to many of the ASX’s other blue-chips. It’s growing net profit, it has defensive earnings, the dividend is growing and a share buyback increases the value of each share.
I think it’s a good long-term buy at the current valuation and would be one of my leading choices for dividends in the ASX 200.
