Telstra AGM
About the author:
- Author name:
- By Nick Harris
- Job title:
- Senior Analyst
- Date posted:
- 15 October 2013, 9:39 AM
- Sectors Covered:
- Telecommunications, Technology
Telstra Corporation (TLS) held their 2013 Annual General Meeting this morning, and have provided guidance which is inline with our forecasts.
Guidance is for 'low single digit total income and EBITDA growth' which is inline with CIMB estimates for 1.4% revenue growth and 3.4% EBITDA growth. Guidance was also provided for capex of ~A$3.8bn and free cash flow of A$4.6-$5.1bn. Both are inline with our forecasts.
CEO David Thodey noted that 'we believe there remains further opportunity to improve operational efficiency which growing new business opportunities'.
No guidance was provided with respect to the dividend but this is not a concern. Telstra is simply returning to normal policy of considering dividends on a half yearly basis. CIMB forecasts a small increase in the dividend to 29cps in FY14. This equates to A$3.6bn to be paid in dividends over the year which is comfortably covered by Telstra's free cash flow of ~A$5.0bn.
The NBN
With respect to NBN implications, Telstra noted;
"The Government will conduct a number of reviews of the NBN project to help determine the approach it will take, including an initial 60 day review announced by the Minister on October 3. Fibre to the Node could result in the renegotiation of some aspects of our Definitive Agreements.
In the meantime, Telstra will continue to fulfil the obligations set out for us in the existing Agreements, and continue to work constructively with the Government and NBN Co. and in the best interests of shareholders."
Our view
Telstra is well positioned for any potential changes around the NBN and we expect these could be mildly positive for Telstra shareholders. We retain our Neutral rating.
If you are interested in Telstra Corporation (TLS), please contact your nearest Morgans office.
Disclaimer: The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.