Why the Telstra share price is dialling higher today

Posted: 12 August 2021 1:43 pm

Shares in the telecoms operator have climbed 15% over the last 12 months.

Shares in Australia’s biggest telecoms operator Telstra (ASX: TLS) are among the most traded stocks on the ASX. The stock hit a fresh 52-week high of $3.96 on Thursday. At the time of writing, the shares were still up 2.9% to $3.94.

What is driving up the Telstra stock price?

Telstra on Thursday announced full-year results in line with analyst expectations.

The company reported net profit of $1.9 billion, up 3.4% from a year ago even as total income fell 11.6% for the 12 months to June, and earnings before interest, taxation, depreciation and amortisation (EBITDA) slid 14.2%.

The telco will pay a fully franked final dividend of 8 cents per share.

Of more interest to investors, Telstra said it will return up to $1.35 billion to shareholders through an on-market share buyback. The decision follows its recent sale of a 49% stake in its towers business for $2.8 billion.

The shareholder buyback is expected to commence after 16 September and will be conducted in the ordinary course of trading, with the exact timing to be dependent on market conditions.

Turning point?

Despite the tepid results Telstra CEO Andy Penn says the telecoms giant has reached an important “turning point” in its financial performance.

“2021 was a really significant year for Telstra. We delivered results in line with guidance and we are seeing the focus and discipline on T22 pay off,” he said in a statement.

“It represents a turning point in our financial trajectory…We are clearly building financial momentum and I am very pleased to be able to say that our underlying business will return to full-year growth in FY22.”

The company’s second half underlying earnings were up on the first half and it is guiding for mid-to-high single-digit growth in FY22, with underlying EBITDA expected between $7.0 billion and $7.3 billion.

The mobile business was a key driver of its improving performance, with mobile service revenue up 3.7% in the second half of the year. It expects further growth in the segment in FY22. Telstra also saw an underlying fixed-cost reduction of $490 million and is forecasting further cost cuts of $430 million in the current financial year.

That should bode well for the stock, which has already crept up 15% over the last year.

Think Telstra shares are a buy?

If you are looking to buy Telstra shares, consider investing through an online share trading platform.

Not all platforms offer the same list of stocks. Some trading platforms offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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