By Poonam Behura
(Reuters) -Australia’s Telstra shelved plans on Thursday to sell a stake in its physical infrastructure unit, sending its shares about 2.5% lower, even as the telecom firm forecast higher underlying core earnings after a 14% jump in fiscal 2023 profit.
The country’s largest telecoms firm decided against selling a stake in InfraCo Fixed, saying the unit “plays an important role” in achieving its long-term goals.
Shares of Telstra fell about 2.5% to A$4.15, as of 0017 GMT, with Marcustoday Financial Newsletter analyst Henry Jennings saying the market was disappointed with the decision.
“After thoroughly examining alternatives, we have concluded that the greatest value to be created for shareholders is by maintaining the current ownership structure of InfraCo Fixed, for at least the medium term,” Telstra CEO Vicki Brady said.
InfraCo Fixed posted a 4.1% rise in annual income to A$2.56 billion ($1.64 billion), contributing 11% to Telstra’s total income of A$23.25 billion.
Telstra is targeting net cost reductions of A$500 million and mid-single digit underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) growth through to FY25.
It expects underlying EBITDA between A$8.2 billion and A$8.4 billion for fiscal 2024, higher than A$7.86 billion in the previous year.
“While our cost-reduction ambition is being challenged by high inflation, we still expect to achieve the large majority of this by FY25. We remain absolutely committed to delivering our FY25 underlying EBITDA and EPS growth ambitions,” Brady said.
The earnings report came days after the telecom firm decided against appealing an Australian Competition Tribunal decision to block an asset transfer deal with rival TPG Telecom.
Telstra’s income from mobile business rose 8.3% to A$10.26 billion, with the postpaid handheld services revenue up 6.9% at A$5.39 billion. Profit attributable was A$1.93 billion, compared with A$1.69 billion a year earlier.
The company declared a fully franked final dividend of 8.5 Australian cents per share, the same as last year.
($1 = 1.5635 Australian dollars)
(Reporting by Poonam Behura and Ayushman Ojha in Bengaluru; Editing by Anil D’Silva and Subhranshu Sahu)
