- Telstra interim broadly as expected
- Mobiles a driver, Sensis still struggling
- Minor changes to broker estimates post the result
- Broker opinion remains divided on the stock

By Chris Shaw

Interim earnings from Telstra ((TLS)) were broadly as the market had expected, the company delivering solid mobile revenue growth and subscribers but continuing to struggle with the Sensis division.

The result was accompanied by management maintaining full year guidance, which implies low single digit growth in EBITDA (earnings before interest, tax, depreciation and amortisation). Driving the growth will be solid underlying demand for mobile services, while RBS Australia also sees a more stable pricing environment and benefits from Telstra's continued network advantage.

Given full year guidance has been maintained and the interim result contained no major surprises, stockbrokers have made relatively modest changes to earnings estimates. For RBS this meant a minor increase to its earnings per share (EPS) forecast for FY12 and no change to FY13 numbers, while Citi lifted numbers this year by about 4% but cut FY13 estimates by 3%.

Consensus EPS forecasts for Telstra according to the FNArena database now stand at 28.1c for FY12 and 29.6c for FY13.

Despite Telstra's result coming in largely as expected there continue to be a range of views on the outlook for the company. The FNArena database reflects this, showing Telstra is rated as Buy four times, Hold three times and Sell once.

In the Buy camp sits UBS, who argues valuation remains compelling at current levels. On UBS's numbers Telstra is trading on an earnings multiple of 8.5 times in FY13 and a yield of 8.2% fully franked, with potential capital management a further positive.