Telstra shares drop 2.15% as FY20 guidance is revised
Telstra provided the market with updated 2020 guidance figures today after the NBN Co released its Corporate Plan for 2020 to 2023, last week.
NBN Corporate Plan 2020 and beyond
Late last week the National Broadband Network (NBN Co) – the company tasked with building and operating Australia’s national broadband network, released its Corporate Plan for 2020 to 2023.
Here it was pointed out that the company was on track to connect 11.5 million homes and business by the end of FY20, with the NBN Co specifying that it ‘is planning to activate an additional 1.5 million premises in FY20’.
This morning Telstra Corp Ltd. (ASX: TSL) announced that it had revised its FY20 guidance around a number of key metrics in response to NBN Co’s latest Corporate Plan.
Telstra’s share price fell in response, dropping 1.6% in the morning session, and as much as 2.15% as of 14:55 AEST – to A$3.64 per share.
The broader market was down just 0.53% by comparison, and Telstra’s competitors: TPG and Vocus for example, were down 0.45% and 1.08%, respectively – as of 14:55 AEST.
Telstra updates its FY20 guidance
Telstra Corp Ltd. today guided for lower FY20 income and free cashflow from operating leases, while underlying earnings (EBITDA) was actually guided higher.
Capital expenditure and restructuring costs are expected to remain the same in FY20.
On the top-line, total income was previously expected to come in at between A$25.7 to A$27.7bn. It has now been guided to between A$25.3 to A$27.3bn, down approximately A$400m from previous estimates.
Free cashflow after operating lease payments is now also expected to come in some A$100m lower, with a revised guidance range of between A$3.3 to A$3.8bn. Previous guidance was between A$3.4 to A$3.9bn
In saying this, FY20 underlying earnings (EBITDA) guidance, which was previously expected to come in at A$7.3 to A$7.8bn, was revised upwards A$100m, to between A$7.4 to A$7.9bn.
Finally, today’s media release highlighted the fact that:
‘Telstra no longer anticipates FY20 being the year of peak nbn headwind and now estimates this will occur in FY21.’
Telstra was keen to point out that the NBN Co’s latest Corporate Plan does not impact the telco’s previous comments concerning earnings growth in FY20.
Here, the telco maintained that ‘underlying EBITDA excluding in-year nbn headwind is expected to grow by up to $500 million in FY20.’
Telstra share price: final thoughts
Ultimately, even though Telstra delivered solid FY19 results, its share price has fallen around 8% since its full-year results were released in mid-August.
Mind you, Telstra has still outperformed the broader market since January, rising 32% YTD.
Telstra is set to hold its Annual General Meeting on October 15.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.