ASX-listed Telstra Group Limited (AU:TLS) reported strong profit numbers in its 2023 earnings report, mainly driven by the strong performance of its mobile income. With improved travel activity contributing to a surge in its mobile revenue, the company has outlined projections for yet another increase in fiscal year 2024.
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Telstra Group is an Australian telecommunications company that provides a range of communication and technology services designed to meet a variety of customer requirements. The company’s mobile segment is the largest in Australia in terms of users and coverage.
Strong Numbers and Outlook
The company delivered 14% growth in its net profit of AU$1.93 billion. The mobile income grew by 8.3% to AU$10.26 billion, along with a jump of 62% in its international income of AU$2.43 billion. These numbers were well supported by its price hikes and increased roaming revenue with the revival of global travel demand. The revenue from its fixed network was down by 0.6% to AU$4.5 billion.
The revenue for the year grew by 6.7% to AU$22.7 billion. On an underlying basis, it reported AU$8.0 billion in EBITDA, aligning with the upper limit of its projected range of A$7.8 billion to A$8.0 billion.
For the fiscal year 2024, it anticipates underlying EBITDA to fall within the range of AU$8.2 billion to AU$8.4 billion. It expects its total income to range between AU$22.8 billion and AU$24.8 billion, in contrast to the AU$23.245 billion recorded in fiscal 2023. Telstra also aims to achieve net cost reductions totaling AU$500 million by 2025. Even though the company is facing challenges in reducing its costs, it remains confident that it will realize a significant portion of these savings by FY25.
InfraCo Stake Sale Plan Put on Hold
Following the release of its results, Telstra Group also revealed its decision to temporarily halt its plan to divest its stake in its infrastructure arm, InfraCo Fixed. The company’s InfraCo plays a vital role in enhancing connectivity for both fixed and mobile networks in the country, providing access to an extensive network of 400,000 kilometers of cables.
Is it Good to Invest in Telstra?
Today, UBS analyst Lucy Huang expressed her positive outlook on the full-year numbers and upheld her Buy rating for the stock. Her projected price target of AU$4.75 suggests a potential increase of 14.87% in the share price.
According to TipRanks, TLS stock has received a Strong Buy rating backed by three Buy and one Hold recommendations. It is expected that more analysts might follow in Huang’s footsteps and reaffirm their Buy ratings on the stock.
The average target price is AU$4.84, which represents a growth of 17.15% from the current price level.
