2021 was a significant year for Telstra, building momentum against our financial aspirations and tracking towards a return to full-year growth in FY22. We’ve achieved what we said we would deliver in transforming our organisation, we see green shoots in our growth businesses, and we have the capabilities in place to take advantage of the opportunities ahead.
We’re positioned for growth
We’re maintaining the momentum that’s been delivered by our T22 strategy and we expect our business to return to full year growth in FY22.
Our balance sheet remains strong, we’ve paid down debt, retained our A band credit rating and monetised more than $2 billion of assets.
We’re now in the final year of our four-year T22 strategy and the bold decisions we have taken to transform the business for the future have paid off.
More than just a telco
We’ve been on a journey to be more than just Australia’s leading telco. That’s why we’re focused on growing a number of other businesses in our portfolio.
Telstra Health recorded a six per cent increase in revenue and is expected to see revenue growth of high teens in FY22. Telstra Ventures is now one of the most successful corporate backed venture firms globally and we’ve seen our investment increased by almost $300 million. And we’re making progress on Telstra Energy’s entering the retail energy market.
Maintaining our 5G leadership and network strength
Our competitors like to talk up their 5G networks, but they’re not in the same class. Our 5G network is now more than twice the size of our nearest competitor.
We’ve rolled out 5G to more than 200 cities and towns in selected areas right across Australia. More than 75 per cent of the country’s population is now covered by 5G and around 1.6 million 5G devices are connected to the Telstra network.
Improving the experience of our customers
We have 8.8 million services on our new 20 simplified fixed and postpaid mobile Consumer and Business plans. These plans offer no lock in contracts and give customers the flexibility move between plans to suit their budget and needs.
More than 73 per cent of all service interactions are now handled through our digital channels and we’re on track to have all in-bound calls from our Consumer and Small Business customers answered in Australia by June next year.
Keeping an eye on costs
We’ve reduced operating expenses by more than 10 per cent for the year and fixed costs declined by $490 million. Since FY 16, we’ve achieved around $2.3 billion worth of net productivity gains and are on track to meet our target of delivering $2.7 billion by the end of FY22.
Here’s the numbers
On a reported basis Total Income1 decreased 11.6 per cent for the year to $23.1 billion. NPAT increased 3.4 per cent to $1.9 billion.
Reported EBITDA decreased 14.2 per cent to $7.6 billion. After adjusting for lease accounting on a like-for-like basis, EBITDA decreased 11.5 per cent to $7.4 billion.
On a guidance basis2 Underlying EBITDA decreased 9.7 per cent to $6.7 billion. Underlying EBITDA included an in-year NBN headwind3 of $650 million and an estimated $380 million financial impact from COVID. Excluding the in-year NBN headwind, underlying EBITDA in the year declined by approximately $70 million.
Delivering for shareholders
Shareholders will receive a fully-franked final dividend of 8 cents per share, including an ordinary dividend of 5 cents, and a special dividend of 3 cents. This brings the total dividend for the year to 16 cents per share, returning approximately $1.9 billion to shareholders.
We’ll also be returning up to $1.35 billion of the net cash proceeds from our recently announced Telstra InfraCo Towers transaction to shareholders in FY22 after receipt of proceeds upon completion of the transaction via an on-market share buy-back.
We continue to make progress towards implementing the proposed corporate restructure of our organisation. It’s complex and involves the creation of separate subsidiaries and we continue to work very closely with our partners, our people and stakeholders throughout this process as we navigate the range of existing commercial, regulatory, and operational requirements.
We expect the restructure to be undertaken by way of scheme of arrangement. While it had been our intention to seek shareholder approval of the scheme at this year’s AGM on 12 October, we’re now aiming to do so at a separate general meeting before the end of the year.
So what’s next?
In FY224 we expect our underlying business to return to full-year growth with:
- Total Income of $21.6 billion to $23.6 billion.
- Underlying EBITDA5 of $7.0 billion to $7.3 billion.
- Capex6 of $2.8 billion to $3.0 billion.
- Free cashflow after lease payments (FCFal)7 of $3.5 billion to $3.9 billion.
And on September 16 we’ll tell the market about our plan for the future beyond our T22 strategy focusing on growth and leveraging the strong foundation we have built.
1. Total income excluding finance income.
2. FY21 guidance assumed no impairments in and to investments or non-current tangible and intangible assets, and excluded any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum, and excluded the impacts of Pitt St exchange sale and leaseback. The guidance was based on management best estimates of nbn impacts including input from the nbn Corporate Plan currently published at time of issue of this guidance. Refer to Full-year results and operations review – guidance vs reported results reconciliation (set out in our ASX announcement titled “Financial results for the full year ended 30 June 2021” lodged with the ASX on 12 August 2021).
3. In-year nbn headwind defined as the net negative recurring EBITDA impact of the nbn on our business for the reporting period.
4. FY22 guidance excludes material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as determined by the Board and management.
5. Underlying EBITDA excludes net one-off nbn DA receipts less nbn net C2C and guidance adjustments. FY20/21 underlying EBITDA also includes depreciation of mobile lease right-of-use assets.
6. Capex is measured on an accrued basis and excludes spectrum and guidance adjustments, externally funded capex, and capitalised leases.
7. Free cashflow after lease payments defined as ‘operating cash flows’ less ‘investing cash flows’ less ‘payments for lease liabilities’, and excludes spectrum and guidance adjustments.