Telstra dials up buyback as interim profit tops estimates, narrows outlook

By Shivangi Lahiri

Feb 19 (Reuters) – Australia’s Telstra Group reported better-than-expected first-half profit on Thursday, driven by robust growth in its mobile business income, and said it would expand its ongoing share buyback by A$250 million ($176.08 million).

Shares of Australia’s top telecom firm jumped over 3% in early trading to A$5.130, their highest since mid-November.

Telstra’s Mobile business, its top money-making division, reported a first-half income of A$5.77 billion, ahead of the Visible Alpha consensus of A$5.72 billion. That was largely on the back of customer growth and higher mobile plan prices.

Over the past year, Telstra pursued earnings growth by refocusing on core mobile and broadband businesses, lifting its mobile plan prices, and restructuring its enterprise unit to cement its lead in Australia’s tightly contested three-player telecom market.

These decisions helped Telstra report a 9.4% rise in first-half profit attributable to A$1.12 billion ($788.03 million), edging past Visible Alpha’s A$1.11 billion consensus estimate.

The firm also narrowed its full-year underlying EBITDA after lease amortisation (EBITDAaL) guidance to a range of A$8.2 billion to A$8.4 billion, compared to its earlier forecast of between A$8.15 billion and A$8.45 billion.

It also expanded its A$1 billion share buyback, announced last August, to up to A$1.25 billion.

“The on-market share buyback is expected to support earnings and dividend per share growth,” said Chief Executive Vicky Brady.

The company declared an interim dividend of 10.5 Australian cents per share, higher than the 9.5 Australian cents apiece declared last year.

“Outside of AI and tech upgrades, Telstra remains one of the most defensive names on the ASX,” said Zavier Wong, market analyst at eToro.

“In an environment where the Reserve Bank of Australia has just hiked again, a growing fully franked dividend with buyback support is a compelling proposition.”

($1 = 1.4198 Australian dollars)

(Reporting by Shivangi Lahiri and Nikita Maria Jino in Bengaluru; Editing by Alan Barona)