Our full year FY22 results included an increase to the total dividend, and show continued underlying growth and strong mobiles performance
Our T22 strategy has set the company up well to manage through the current uncertain economic climate and created the foundation for growth.
As a simpler, more agile, more efficient and more digitally-enabled business, we are delivering a better experience for our customers and employees.
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Increased total dividend
The Board resolved to pay a fully-franked final dividend of 8.5 cents per share, bringing the total dividend for the year to 16.5 cents per share.
This represents the first increase in the total Telstra dividend since 2015 and recognises the confidence of the Board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens EPS growth from FY21 – FY25, the strength of our balance sheet and the recognition of the importance of the dividend to shareholders.
As a result, we will return around $1.9 billion to shareholders from our FY22 results, on top of the successful $1.35 billion on-market share buyback we completed at the end of May.
Strong mobile business performance
Telstra CEO Andy Penn said Telstra’s core business performed strongly throughout FY22, underpinned by strong growth in mobiles. “Our mobiles result was outstanding, Consumer & Small Business Fixed grew sequentially in the second half, Enterprise returned to growth and we started to realise the benefits of setting up our infrastructure assets in our standalone InfraCo business,” Mr Penn said.
The mobiles business performed very strongly with $700 million EBITDA growth (+21.2 percent), 2.9 percent postpaid handheld ARPU growth and 6.4 percent mobile services revenue growth.
155,000 net retail postpaid handheld services were added, including 121,000 branded with a strong contribution from Enterprise. On top of this, one million IoT services were added, along with 218,000 Wholesale services.
Performance in Fixed for Consumer and Small Business customers was more challenged and continued to be impacted by the tail end of the nbn migration, however there is confidence EBITDA has bottomed.
A return to growth for Enterprise
Enterprise returned to growth at both the income and EBITDA level. Fixed Enterprise EBITDA increased 2.3 percent, with NAS EBITDA growth of $152 million offsetting declines in data access and connectivity.
In November, a five-year contract was renewed with the Australian Department of Defence to deliver critical network and telecommunications services in a deal worth over $1 billion – the largest ever customer contract signed by Telstra Enterprise.
EBITDA in the existing International business grew 15.2 percent in Australian dollars. In addition, the recently completed acquisition of Digicel Pacific, in partnership with the Australian Government, delivered 100 percent ordinary equity in a strategically and financially important asset in the Pacific with a very close alignment to Telstra’s core strengths.
Telstra Health had a strong year with revenue up 51 percent to $243 million after including the MedicalDirector and Power Health acquisitions. Telstra Health was also successful in being selected by the Government to deliver the 1800RESPECT service. It is on track to become a $500 million revenue business by FY25.
Clear successes from our T22 program
With the T22 transformation now over, Telstra is a very different business to before it was launched in 2018. “When we launched our T22 strategy four years ago, we were in part responding to the operational and financial headwinds created by the rollout of the nbn. We were also responding to the technology innovation we could see around us and the growing rate of digital adoption,” said Mr Penn.
“What we could not have foreseen was COVID and the other seismic economic, political and social changes that have unfolded.
“While we are by no means immune, the transformational changes we made through T22 have prepared us well to manage through the uncertainty – we are a much simpler, more agile, more efficient, leaner, more customer-focussed and more digitally-enabled business.”
Early progress on T25
FY22 also included a number of strategic announcements and early progress against some aspects of T25.
In mobiles, we signed a landmark network sharing agreement with TPG Telecom. Subject to clearance by the ACCC, this will be a win for regional Australia, providing more choice and additional capacity. We also committed $616 million to secure the maximum possible amount of low band spectrum to maintain our leading mobile network for customers, especially in regional and rural Australia.
Major infrastructure announcements included a partnership with global satellite communications company Viasat, to support its new Asia Pacific satellite constellation. We also announced a significant upgrade of our nationwide inter-city fibre network to enable ultra-fast connectivity between capital cities and improved regional connectivity, for which Microsoft was recently announced as an anchor tenant.
On the ESG front, we extended our 50 percent emissions reduction target to cover scope 3 emissions, which includes the emissions from suppliers and customers.
We also reached a number of new Enterprise Agreements that provide certainty on wages for a large proportion of employees for the next two years.
Finally, we have made good progress on finalising our proposed corporate restructure. Pending Court approval, we will shortly publish a scheme booklet that provides information on our proposed corporate restructure, an important element of which is the Scheme of Arrangement. This will be put to a shareholder vote at a Scheme Meeting anticipated to be held on the same day as our AGM in October.
Our key financial metrics
On a reported basis, total income declined by 4.7 per cent to $22.0 billion and EBITDA was down 5.0 per cent to $7.3 billion. NPAT fell by 4.6 per cent to $1.8 billion, and earnings per share was down 7.7 per cent to 14.4 cents.
Underlying EBITDA rose 8.4 per cent on a guidance basis to $7.3 billion, and underlying earnings per share rose 48.5 per cent to 14.4 cents – meeting our T25 ambition of an underlying EPS target of high teens CAGR from FY21 to FY25.
Thank you
These results are because of the hard work of Telstra employees and the continued support of our shareholders. We have weathered many challenges over the last few years, and T22 was a massive undertaking to position our business to be better equipped to face a very exciting digital future. After T22 we are a fundamentally different business, and we are well placed to capitalise on future opportunities.