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Telstra share price: FY21 earnings preview

We examine some of the key things traders and investors need to know about Telstra before the telco reports its FY21 results this Thursday.

The last eight months have represented quite a purple patch for Australia’s leading telecommunications provider – Telstra (ASX: TLS).

In that period the stock has risen firmly, the interim results were received well, and management recently provided clarity on the implications of the company’s blockbuster InfraCo asset sale.

Telstra is set to report its full-year FY21 results this Thursday, August 12.

Telstra share price

From a share price perspective, the telco has gained 28.24% year-to-date, opening Tuesday's session around the $3.85 per share mark. At those levels, Telstra has outperformed the broader Australian market, and has an implied market capitalisation of close to $46 billion.

Despite that strong performance, analysts still remain bullish on Telstra overall, with the stock commanding a Buy rating on average, according to Market Index.

That consensus is made up of 9 Buy ratings, 4 Hold ratings and 1 Sell rating, also according to Market Index.

Towers sale

In a move that has likely helped Telstra’s share price performance, in late-June the teleco announced it would be selling a 49% stake in its towers business (Telstra InfraCo Towers).

That deal – which values the towers business at $5.9 billion – will see Telstra reap net cash proceeds of $2.8 billion, on a post transaction costs basis.

The reason this deal was likely so well received by investors was due to the fact that management said the intention was to return approximately half the proceeds to investors.

Here, Telstra's CEO – Andrew Penn – noted that the expectation was 'to return 50 per cent of net proceeds to shareholders. We anticipate providing further details about the manner in which we will return those proceeds, including a potential share buy-back in FY22, at our full-year results in August.'

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FY21 guidance

While investors will likely be keen to learn more about the telco’s capital management strategies this Thursday, whether or not Telstra meets it prior guidance will likely be of equal or greater importance to the market.

Briefly touching on the Telstra’s H1 results, across the six-months of FY21, the company report total income of $12 billion, earnings (EBITDA) of $4.1 billion and profits (NPAT) of $1.1 billion.

Speaking of the FY21 outlook, at the interim results Telstra updated a number of its full-year expectations.

Key expectations for the full-year include:

  • Telstra said it expects to report total income of between $22.6 billion to $23.2 billion
  • Telstra said it expects to book total underlying earnings (EBITDA) of between $6.6 billion to $6.9 billion
  • Finally, fresh cash flow, on a post operating lease basis, is expected to come in at between $3.3 billion to $3.7 billion – for the full-year

Watch this space, closely.

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