ASX:TLS
Telstra Group Ltd
Investment Summary
The fund managers believe Telstra Group Ltd has posted a strong first-half FY25 performance with underlying EBITDA climbing 6% year-over-year to A$4,248 million, exceeding market expectations. They note that while revenue growth is modest at 1% year-over-year, disciplined cost management has been pivotal in achieving this earnings beat. A notable highlight is the company’s A$750 million share buyback announcement. Looking forward, Telstra’s EBITDA guidance indicates a 3-6% growth for FY25, compared to last year’s 4% growth. The fund managers express confidence in Telstra’s potential for margin expansion through cost-cutting measures, including leveraging AI to enhance efficiency. Additionally, TLS shares have benefited during market volatility, showcasing their resilience. The ongoing share buybacks and balance sheet deleveraging solidify their positive outlook. They anticipate further details on strategic updates by the end of FY25, maintaining a favorable position for investors.
Commentary From The Managers
Endeavor Asset Management
31 Mar 2025
$4.21
- Telstra (TLS) was up 1.7% during March.
- Defensive stocks, especially in the Communications sector, are preferred during volatile markets.
- Endeavor Asset Management expects Telstra to outperform in the mobile and enterprise market.
- Monitoring for signs of rational pricing in the telco market.
- Endeavor Asset Management continues to hold Telstra due to ongoing share buybacks and deleveraging of the balance sheet.
Endeavor Asset Management
28 Feb 2025
$4.14
- Endeavor Asset Management notes Telstra (TLS) posted a robust first-half FY25 performance.
- Underlying EBITDA rose 6% year-over-year to A$4,248 million, exceeding market expectations by 1%.
- Revenue growth was modest at 1% year-over-year, with disciplined cost management playing a key role.
- A notable positive development was the A$750 million share buyback announcement.
- Looking ahead, Telstra’s midpoint FY25 EBITDA guidance indicates a 3-6% growth range for the full year.
- Despite trading ex-dividend, TLS shares gained 5% in February.
- Shareholders will receive a 9.5 cents per share dividend, translating to a 4.6% annualized fully franked yield.
- There is significant potential for further margin expansion through cost-cutting initiatives.
- Leveraging AI to replace offshore call center staff is one of the efficiency measures being considered.
- More details on these initiatives are expected in the company’s strategic update anticipated at the end of FY25.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.