REG - Telstra Corp. Ld - Telstra continues to grow through H1 FY22

TelstraAnnouncement

17/02/2022 07:00

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RNS Number : 9358B  Telstra Corporation Ld  17 February 2022

 

 17 February 2022  Office of the Company Secretary

                   Level 41

242 Exhibition Street
 The Manager
MELBOURNE VIC 3000

AUSTRALIA
 RNS

                   General Enquiries  03 8647 4838

                   companysecretary@team.telstra.co (mailto:companysecretary@team.telstra.com) m

                   Investor Relations

                   investor.relations@team.telstra.com

 
 
ELECTRONIC LODGEMENT

 

Dear Sir or Madam

Telstra continues to grow through H1 FY22

In accordance with the Listing Rules, I attach a market release, approved by
the Board,

for release to the market.

 

 

Authorised for lodgement by:

 

 

 

Sue Laver

Company Secretary

 

 

MARKET RELEASE

Telstra continues to grow through H1 FY22

 ·  Reported EBITDA $3.5B (-14.8%), NPAT $0.7B (-34%) and EPS 5.9 cents    ·  EBITDA growth on a reported basis impacted by expected decline in    ·  Underlying EBITDA 1  $3.5B (+5.1%), Underlying EPS 2  6.2 cents (+55%)       ·  Strong mobile growth with EBITDA +25%, post-paid ARPU +5% and post-paid
 (-35.9%)                                                                  significant one-offs                                                                                                                                    services up 84,000

 ·  FY22 guidance reaffirmed

Thursday 17 February 2022 - Telstra today released its results for the first
half of financial year 2022, showing continued growth in its underlying
business, with particularly strong performance in mobiles.

CEO Andrew Penn said the results reflected the positive momentum delivered
through Telstra's T22 strategy and put the company in a strong position as it
transitions into T25.

"This was the second consecutive half of underlying growth," Mr Penn said.
"The results show we have stayed disciplined and focussed on delivering what
we said we would. The benefits of T22 are flowing through for our customers
and our shareholders.

"As the nation has developed an ever-increasing reliance on digital
connectivity, we are well placed to deliver the infrastructure, solutions and
security needed to support Australia's aspiration to become a world leading
digital economy."

Financial outcomes for HY22

Mr Penn said FY22 was a pivotal year for Telstra financially as it saw the
near final negative transitional effects of the nbn in its reported results,
but also the growing momentum in its underlying performance starting to show
through.

"Our reported total income includes declines of around $450 million in one off
nbn receipts and around $200 million in nbn commercial works, while our
underlying results demonstrate the benefits of our T22 strategy," Mr Penn
said.

"In addition to the impact of the nbn, the declines on a reported basis
reflect the one-off gains last year, including the sale of our Velocity and
South Brisbane exchange assets and the sale and lease back of our Pitt St
exchange."

On a reported basis, total income for the half decreased 9.4 percent to $10.9
billion and EBITDA was $3.5 billion, down 14.8 percent. NPAT decreased by 34
percent to $0.7 billion, and earnings per share was down 35.9 per cent to 5.9
cents.

Underlying EBITDA(1) increased 5.1 per cent to $3.5 billion, demonstrating the
positive momentum in Telstra's core business, with mobiles performance
reinforcing Telstra's clear leadership in 5G.

Underlying EPS(2) was up 55 percent to 6.2 cents. This growth represents a
strong start against Telstra's T25 ambition for underlying EPS target of high
teens CAGR from FY21 to FY25.

Telstra continued to make very strong progress in its productivity program,
with underlying fixed costs down $254 million and total operating expenses
down $644 million or 8 percent. Telstra is on track to deliver a reduction of
underlying fixed costs of approximately $430 million for the full year.

The Board has resolved to pay a fully franked interim dividend of 8 cents per
share, comprising a 6 cent ordinary and 2 cent special dividend, that will
return around $940 million to shareholders. Telstra also confirmed its
Dividend Reinvestment Plan had been reinstated.

During the half Telstra completed the part sale of its Towers business. The
share buy-back of up to $1.35 billion following this partial sale is expected
to be completed by the end of the financial year. At the end of the half, more
than 40 percent of the buy-back had been completed.

Guidance 3  for full year was reaffirmed across all measures.

Strong progress against strategy

The six months to December saw Telstra make strong progress against its T22
strategy, with more than 80 per cent of metrics now achieved or on track to be
delivered.

Mr Penn said Telstra's 5G network was now more than twice the size of
Telstra's next nearest competitor, with more than 77.5 per cent of the
population covered and almost 2.8 million 5G devices connected to its mobile
network.

"We continued to lead the market in the major mobile industry network
performance benchmarks in the year, including umlaut where we ranked #1 for
best in test and best in data."

Telstra's drive to simplify and digitise the business through T22 is having a
positive impact on customer experience.

"We have radically simplified our business reducing the number of Consumer
& Small Business plans from 1800 to 20. We have four million customers
signed up to our rewards program, Telstra Plus. The number of calls coming
into our Consumer & Small Business contact centres has fallen by 70
percent and by the end of this financial year we expect to answer all of these
calls in Australia. We are also well progressed on the arrangements to bring
our licensee stores back in house," Mr Penn said.

Customer complaint levels are at their lowest level since the migration to the
nbn began. Last week the TIO reported Telstra's complaints in the last quarter
of 2021 had halved versus the same quarter in the prior year.

"Confirming our continued improvements in customer experience, Episode NPS
improved eleven points in the last 12 months and five points in the last
six.  Strategic NPS declined two points in the last 12 months and four points
in the last six, although remains up 13 points since the launch of T22."

Mr Penn said Telstra was well progressed with its proposed legal restructure
and noted the changes to legislation consistent with this.

"There are still a couple of steps we need to conclude and we anticipate
announcing the details of the scheme process by the end of this quarter."

Early progress against T25

Mr Penn said while there was more to do to finish the job on T22, Telstra had
also started to make early progress against its T25 scorecard.

"Earlier this month we announced two major telecommunications infrastructure
projects - Viasat and the national fibre build - to support the nation's
digital economy and enable unprecedented levels of connectivity across
Australia," Mr Penn said.

"In October last year we announced the acquisition, in partnership with the
Australian Government, of Digicel Pacific adding 2.5 million customers and
leading mobile businesses in PNG, Fiji, Vanuatu, Tonga, Nauru and Samoa to our
International business.

"Last month, Telstra Health was selected to deliver 1800RESPECT for an initial
five years at an estimated contract value of around $200 million, which adds
to recent health acquisitions.

"Telstra Energy received the final license approvals for Victoria In December.
This adds to earlier licences in Queensland, New South Wales, and South
Australia and we are now trialling the product with our first customers.

"In November we announced our intent to form a new joint venture to bring
together Quantium's market-leading data science and AI capabilities with our
customer, product and network data assets. This unique partnership is a key
enabler for our T25 data and AI ambitions."

 

 

Operational highlights - simplified plans helping to boost growth

Telstra continued to see growth in the mobile market on the back of its
investment in customer-centric plans and unparalleled network leadership.

"Our continued focus on mobile network leadership and building value resulted
in five percent post-paid handheld ARPU growth, 6.3 percent mobile services
revenue growth and $392 million mobile EBITDA growth," Mr Penn said.

"We added 84,000 net retail post-paid mobile services including 62,000 branded
with a strong contribution from Enterprise. Our branded performance reinforces
the benefits of our clear leadership in 5G.

"InfraCo Fixed income was $1.2 billion for the half, increasing 1.5 percent
excluding commercial works."

Mr Penn said Telstra Enterprise returned to income and EBITDA growth, and was
on track to deliver growth for the full year, in line with Telstra's
previously communicated aspiration.

"NAS income and EBITDA grew in the half by 2.4 percent and 67 percent
respectively.

"Telstra Enterprise also recently signed a major contract with the Department
of Defence.

"Telstra Health also had a strong half both operationally and strategically -
revenue was up nine percent or 37 percent including acquisitions.

"Our performance in C&SB Fixed has been more challenged particularly as we
are now at the tail end of the migration to the nbn and dealing with the most
difficult cases.  Net new retail bundles were negative 50,000, however bundle
and standalone data ARPU increased 0.5 percent," Mr Penn said.

 

 ENDS 

 

Telstra media contact: Steve Carey, General Manager Media

M: +61 413 988 640

E: media@team.telstra.com (mailto:media@team.telstra.com)

Reference number: 017/2022

 

Telstra investor contact: Nathan Burley, Investor Relations

T: +61 457 529 334

E: investor.relations@team.telstra.com
(mailto:investor.relations@team.telstra.com)

 

 

 1  Underlying EBITDA excludes net one-off nbn DA receipts less nbn net C2C
and guidance adjustments (guidance adjustments defined in footnote 3). FY20/21
underlying EBITDA also includes depreciation of mobile lease right-of-use
assets.

 2  Calculated as Profit After Tax after Minority Interests (PATMI)
attributable to each share, excluding net one-off nbn receipts and guidance
adjustments (guidance adjustments defined in footnote 3).

 3  This guidance excludes material one-offs, such as mergers and
acquisitions, disposals, impairments, spectrum, restructuring costs and such
other items as determined by the Board and management. Refer to half year
results and operations review - guidance vs reported results reconciliation
which details the adjustments made for the current and comparative period to
reflect performance on the basis on which we provided guidance to the market
for FY22 (set out in our ASX announcement titled "Telstra Corporation Limited
- Financial results for the half-year ended 31 December 2021" lodged with the
ASX on 17 February 2022).

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