Telstra Aims to Grow Dividends, Return Excess Cash to Shareholders -- Update
By Stuart Condie
SYDNEY--Telstra Corp. Ltd. aims to increase its dividend and
return excess cash to shareholders as key components of the
Australian telecommunications firm's new capital management
Australia's No.1 communications provider by market share said it
was confident of maintaining its current annual payout of 16
Australian cents (11.7 U.S. cents) per share, and was focused on
growing earnings to maximize dividend imputation. It aims to grow
the dividend over time.
Telstra said it was targeting annual underlying
earnings-per-share growth in the high teens from the 2023 fiscal
year through fiscal 2025, with underlying earnings before interest,
tax, depreciation and amortization growing annually in the
mid-single digits over the same period.
It said it would invest in growth and return excess cash to
shareholders. It listed share buybacks, capital returns and
unfranked dividends as examples of how it could redistribute
Telstra, which has flagged a return to underlying growth in
fiscal 2022, this year agreed to sell a 49% stake in its mobile
towers infrastructure, using the proceeds to pay down debt and
launch a A$1.35 billion share buyback.
It is looking at options for its fixed-line infrastructure,
which J.P. Morgan this week estimated could be worth A$31.7
billion. The investment bank said Telstra could generate post-tax
proceeds of A$14 billion with the sale of a 49% stake, using half
the cash to cut debt and the other half for a A$6.8 billion buyback
that could boost earnings per share by about 10%-11%.
Telstra's stock has risen 50% since June 2018 and is up 32% this
calendar year at A$3.93, fuelled by its asset monetization strategy
and return to growth following a period in which earnings were hit
by the roll-out of the government-owned National Broadband Network.
Communications firms buy access to the network and resell it to
Telstra is widely expected by analysts to bid for the NBN if it
is privatized, with the creation of an internal fixed-line
infrastructure unit seen as paving the way.
Telstra on Thursday said it was open to both organic growth and
"Organic growth opportunities could include a long-term or
nation-building infrastructure investment," Telstra said.
The company said it aimed to cut fixed costs by A$500 million
between fiscal 2023 and fiscal 2025. Telstra last month said it had
cut costs by A$2.3 billion since fiscal 2016 and was on track to
hit A$2.7 billion in savings by fiscal 2022.
Write to Stuart Condie at email@example.com
(END) Dow Jones Newswires
September 15, 2021 19:20 ET (23:20 GMT)
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