Telstra delivers FY19 results in line with expectations,

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    with strong progress against T22 strategy
    • Strong progress on T22 strategy in first year
    o reduced the number of Consumer & Small Business plans in market from 1800 to 20
    o introduced no lock-in plans across fixed and mobile and removed excess data charges
    in Australia
    o launched commercial 5G service
    o 7.7 million (22 per cent) drop in calls to call centres
    • Total Income, EBITDA and NPAT in line with expectations
    • $456 million (6 per cent) reduction in underlying fixed costs
    • Continued customer growth, with 378,000 net retail postpaid mobile services added including
    181,000 from Belong
    • Final dividend of 8 cents per share, total dividend of 16 cents per share for FY19
    Thursday 15 August – Telstra today released its full year results for financial year 2019, which were in
    line with guidance and market expectations and showed strong progress against the T22 strategy.
    - On a reported basis Total Income1 decreased 3.6 per cent to $27.8 billion, EBITDA decreased 21.7
    per cent to $8.0 billion, and NPAT decreased 39.6 per cent to $2.1 billion.
    - On a guidance basis2 Total Income1 decreased 2.6 per cent to $27.8 billion, EBITDA (excluding
    restructuring costs) decreased 11.4 per cent to $9.4 billion.
    - Underlying EBITDA3 decreased 11.2 per cent to $7.8 billion.
    The largest reason for the decline in EBITDA was the impact of the nbn, with Telstra absorbing around
    $600 million of negative recurring EBITDA headwind4 in the period. Underlying EBITDA decreased
    approximately 4 per cent excluding the in-year nbn headwind. To date Telstra estimates the nbn has
    adversely impacted EBITDA by approximately $1.7 billion since FY16, and estimates it is around 50 per
    cent of the way through the recurring financial impact of the nbn.
    Strong momentum on T22 strategy
    Telstra CEO Andrew Penn said the results reinforced the importance of the T22 strategy one year in and
    Telstra was making strong progress on its implementation.
    “FY19 has been a pivotal year for Telstra. Notwithstanding the intense competitive environment and the
    challenging structural dynamics of our industry, it is a year in which I believe we can start to see the
    turning point in the fortunes of the company from the changes we have embraced,” Mr Penn said.
    “We completed our strategic investment program announced in 2016 to digitise our business and create
    the networks for the future, delivering over $500 million of EBITDA benefits. We passed the halfway mark
    of customers migrating onto the nbn network. We launched 5G, the next generation of telco technology
    and the platform for future growth for us and our customers. And at the start of the year we commenced
    our T22 strategy, where we have made very significant progress.
    “During the year we radically reduced the number of Consumer & Small Business (C&SB) fixed and
    mobile plans we have in market, moving from over 1800 plans to just 20. This simplification is good for our
    customers and it makes life easier for our people.
    “We became the first major telco in Australia to introduce no lock-in plans across fixed and mobile, and
    customer pain points such as excess data charges in Australia are also now a thing of the past across all
    of our new mobile plans. Already more than 820,000 customers are enjoying the freedom and peace of
    mind this brings.
    “We launched Telstra Plus, our loyalty program that rewards our customers for choosing to be with us.
    Already more than 770,000 customers are enrolled in the program.
    “Our customers can now enjoy the benefits of our leading position in 5G. We are the only provider in
    Australia to have commercially launched 5G services. We are rolling out 5G in 10 cities around Australia.
    PAGE 2/4
    Over the next 12 months we expect our 5G coverage to increase in area almost five-fold and reach into at
    least 35 Australian cities. Through our strong partnership with manufacturers, we were able to offer
    Telstra customers some of the world’s first 5G devices.”
    Mr Penn said good momentum had been achieved in reducing costs, with a $456 million reduction in
    underlying costs in the year.
    “This means we have achieved $1.17 billion in reductions since FY16 and we are on track to achieve our
    $2.5 billion net cost reduction target by FY22,” Mr Penn said.
    “Our cost out drivers have included simplification and digitisation and this has led to reductions in direct
    and indirect labour costs as well as non-labour related costs.
    “Examples include 900,000 fewer truck rolls over the year enabling us to reduce our fleet vehicles by 14
    per cent, and we have also reduced our property footprint by 8 per cent.”
    In line with its T22 strategy to monetise up to $2 billion of assets by the end of FY20, Telstra yesterday
    reached an agreement to sell three international data centres in Europe and Asia to global private equity
    firm I-Squared Capital, the owners of Hutchison Global Communications. The three data centres
    predominantly provide services to Telstra’s International Enterprise customers. The agreement is subject
    to a number of conditions precedent and if these are satisfied, Telstra expects the transaction to be
    completed in first half of FY20, with estimated proceeds from sale of approximately $160 million.
    Mr Penn said a critical part of delivering on Telstra’s T22 commitments was changing its structure and
    ways of working to allow its people to collaborate more quickly and easily to deliver better and faster
    outcomes for customers.
    “We have made good progress on our commitment to remove hierarchies and silos and have redesigned
    our organisation from the ground up. We have already removed three management layers and are on
    track to reduce up to four management layers in the organisation,” Mr Penn said.
    “Around 75 per cent of the net 8,000 direct workforce role reductions we announced as part of our T22
    strategy have now been identified. We have also made progress creating 1,500 new roles in areas like
    cyber security and software engineering.”
    An important milestone for the year was the establishment of Telstra InfraCo and its operation as a
    standalone infrastructure business unit within Telstra. Its financial performance is separately provided to
    the market to give a greater understanding of the value of its assets and to drive better returns.
    Telstra’s T22 strategy is built on the foundation provided by the strategic investment program announced
    in 2016 to create networks for the future and digitise the business. This investment program enabled the
    business to enhance the capacity, capability and reach of its networks while radically simplifying products,
    eliminating customer pain points and creating great digital experiences.
    Mr Penn said Telstra’s digital experience now accounted for 16.8 per cent of sales for its C&SB customers
    and more than half of service transactions, including account management, prepaid product and billing
    related enquiries.
    “Simpler products and processes and more ways for customers to self-serve saw calls to our C&SB call
    centres drop significantly, with nearly 7.7 million (22 per cent) fewer calls in FY19,” Mr Penn said.
    Customer and services number growth
    More than 378,000 net retail postpaid handheld mobile services were added during FY19, including
    181,000 from Belong, taking retail mobile postpaid handheld services to 8.2 million.
    Over 230,000 wholesale MVNO mobile prepaid and postpaid services were also added during FY19,
    bringing total wholesale services for the company to over 1.2 million.
    Telstra also added 107,000 net new fixed-line retail bundle and data services, including 51,000 from
    Belong. This brought total retail bundle and data services to over 3.7 million. During the year Telstra
    added 659,000 new nbn connections with an estimated nbn market share (excluding satellite) of 49 per
    PAGE 3/4
    Telstra’s Internet of Things (IoT) business exceeded industry growth rates, with revenue growth of 19.4
    per cent. On average 2,000 things are being connected to Telstra’s IoT network every day including
    vehicles, machines, infrastructure, smart meters and a wide array of other sensors.
    Returns to shareholders
    The Board resolved to pay a total fully franked final dividend of 8 cents per share, comprising a final
    ordinary dividend of 5 cents per share and a final special dividend of 3 cents per share. Combined with
    the total interim dividend paid in February 2019, shareholders will receive a total dividend of 16 cents per
    share for FY19, returning more than $1.9 billion to shareholders.
    The ordinary dividend represents a 59 per cent payout ratio on FY19 underlying earnings5, while the
    special dividend represents a 63 per cent payout ratio of FY19 net one-off nbn receipts6. The FY19
    ordinary dividend is below the payout ratio of 70 to 90 per cent of underlying earnings, which is one of the
    principles in our capital management framework. In our updated Capital Management Framework7
    underlying earnings now explicitly exclude guidance adjustments8 as well as net one-off nbn receipts. In
    determining the FY19 final ordinary dividend, the Board has taken into account a number of factors
    including the overall capital management framework objectives, including maintenance of financial
    strength and retaining financial flexibility.
    FY20 guidance
    Telstra released guidance for FY209, with Total Income1 in the range of $25.7 to $27.7 billion, underlying
    EBITDA10 in the range of $7.3 to $7.8 billion, restructuring costs of around $300 million, capital
    expenditure of $2.9 to $3.3 billion, and free cash flow after operating lease payments11 of $3.4 to $3.9
    Telstra expects net one-off nbn DA receipts6 (less nbn net cost to connect (C2C)) of between $1.6 billion
    to $2.0 billion. Telstra also expects FY20 to be the biggest in-year nbn headwind12 to date, with between
    $800 million to $1 billion expected from the recurring impact of the nbn. The clearest view of future
    financial performance of the business is provided by looking at underlying EBITDA, excluding the
    recurring in-year headwind of the nbn, which in FY20 is expected to grow by up to $500 million.13
    Mr Penn said that although the reported financial trends in FY19 were challenging, underlying trends were
    expected to improve over the course of FY20.
    “Returning our business to growth will take time. However, I have great confidence that our strategy can
    arrest the decline in our earnings and create opportunities for growth.
    “Today we are already a very different, much simpler and more customer focussed organisation than we
    were a year ago and we are well positioned for the era in which we are about to head – the 2020s.
    “I’d like to thank our employees who have made fantastic contributions during a very challenging period.
    Their efforts have made our progress against T22 possible,” Mr Penn said.

    courtesy of Bell Direct

    ( DYOR )

    i hold TLS ( but they are for sale at the right price )

    will study this later before deciding if i keep these

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    You know sal I use to pay $60 a month for a mobile phone service now I only pay $9:90.

    There is a part of me that thinks this sector would be great during an inflationary period, wages anyone?

    1 like
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    I don't know about wages, but I do know about robbery.....Both two telecom majors are grossly overpriced......whether it is mobiles or internet......Look, before the NBN, I had no choice but to get Telstra cable in our location, since we were too far out for ADSL from the exchange....So when NBN came to our area...I expected Telstra - to give us a good price to continue - especially since we had been with them for several years.....No such luck.....Got an offer to reduce my bill by $ get the same speed from cable.....Not good enough.....I got an offer from Vodafone....somewhat slower speed, but high-speed 4G backup when the NBN goes down., it does.......for $40 dollars less.....per month......Telstra really needs to grow up and be competitive.....Happy, no - doing cartwheels - with the Vodafone price and customer service.....

    1 like
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    Telstra reaches $1 billion in asset monetisation

    Friday 16 August – Telstra today announced the establishment and part sale of an unlisted property trust
    to own 37 of Telstra’s existing exchange properties.
    As part of the transaction a Charter Hall-led consortium will acquire a 49 per cent stake in the new trust for
    $700 million, reflecting a capitalisation rate of 4.4 per cent and valuing the entire property trust at $1.43
    Telstra CEO Andrew Penn said the agreement showed further progress against the fourth pillar of the
    company’s T22 strategy.
    “When we announced our T22 strategy in June 2018 it included the goal of monetising up to $2 billion of
    assets to strengthen our balance sheet,” Mr Penn said.
    “Since then we have been working to unlock the true value of some of our assets and today’s agreement,
    when completed, will take us to around the $1 billion mark.”
    Telstra will retain ownership of a 51 per cent controlling interest in the property trust and retain operational
    control of the properties. Telstra will sign long-term triple-net lease arrangements with the property trust,
    providing it with a stable flow of payments. The leases will have a weighted average lease expiry of 21
    years, with multiple options for lease extension to accommodate the business’ ongoing requirements. The
    transaction is expected to be completed by the end of August.
    As announced at its Full Year Results presentation yesterday, Telstra has also reached an agreement to
    sell part of its portfolio of data centres in Europe and Asia to global private equity firm I-Squared Capital,
    owners of HGC Global Communications. The three data centres predominantly provide services to
    Telstra’s International Enterprise customers.

    HGC Global Communications, who will become the operator of these data centres, is the second largest
    fixed line telecom operator in Hong Kong, with an existing data centre presence in Asia, an in-country
    network in Hong Kong as well as an international connectivity business.
    The agreement is subject to a number of conditions precedent and if these are satisfied, Telstra expects
    the transaction to be completed in first half of FY20, with estimated proceeds from sale of approximately
    $160 million.
    Combined with recent changes to Telstra Ventures, the sale of the Edison Exchange building in Brisbane,
    and other smaller transactions, the agreement announced today brings the total value of assets
    monetised as part of T22 to around $1 billion.

    courtesy of Bell Direct
    ( DYOR )

    ( i hold TLS , but the holding is up for sale .. at a price )

    not the ann. i have been waiting on

    but i will still continue looking for a graceful ( profitable ) exit here

    i only skimmed through this but did not see any mention of debt reduction with the proceeds

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