Telstra Posts Higher Profits Due To Strong Mobile Business In Three Years

Telstra has posted a $2.1 billion net profit due to strong mobile revenue growth in three years. The Australian telecommunications company is expected to re-launch a plan to allow shareholders to reinvest dividends back into the company.

The first-half profits of the telecommunications provider soared 22.4 percent and kept dividends at 15 cents after having raised it twice over the past year. Sydney Morning Herald reports that the first half dividend will be paid on March 27.

As of Feb. 11, Telstra shares were slightly down at $6.48. The company stock has enjoyed a strong run in the last 12 months as shares pushed 27 percent higher with more investors choosing high-yielding stocks. Telstra’s shares reached a 14-year high of $6.735 earlier in the month.

Telstra chief executive David Thodey said the company has not yet reaped many of the cash benefits of the renegotiated contract amid shareholder demands for higher dividends. He added that the company is still in its “early stages.” Thovey said Telstra had a slow start on NBN than what the government previously forecasted.

The Telsta chief believes the returns of the dividend reinvestment plan will be welcomed by shareholders as one way to increase their holdings in a cost-effective method. The company’s $2.1 billion net profit is higher than the $1.7 billion earnings in the previous period. According to Telstra’s earnings report, net profit from continuing operations climbed 7 percent from $2 billion to $2.1 billion.

Telstra’s mobile revenue increased 9.6 percent to $5.3 billion. The high growth rate is the company’s strongest in three years. The number of subscribers rose 336,000 in the six months leading to December 2014. Telstra currently has a current customer base of 16.4 million. The company’s revenue growth is driven by subscribers’ increasing their mobile spending. Thodey said more customers have chosen to increase their data plans.

In December, Telstra had negotiated a multibillion-dollar deal with NBN Co to sell its copper and hybrid fibre-coxial networks. A four-year deal worth up to $390 million was also signed to help NBN in planning and designing the national broadband network.

Meanwhile, AAP reports that Telstra said Australian businesses want the Abbott government to move on from the recent challenge in the prime minister’s leadership to plan for the future. Thodey remarked that businesses want a stable government so policy-making can move forward. Prime Minister Tony Abbott survived the challenge after the motion to declare leadership positions vacant was defeated after a vote of 61-39.

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