Australian earnings preview – Telstra

Australia

Full-year earnings preview:

Telstra (TLS) is Australia's largest telecommunications provider offering fixed-line internet services, mobile phones, mobile networks as well as pay television (Foxtel) in a joint venture with News Corporation. It reports its full-year numbers on the 13th of August.

Telstra is one of the few defensive stocks to have benefitted from the impact of the Coronavirus. Social distancing and lockdown measures have driven a huge increase in internet and data usage due to a sharp acceleration towards digitization in activities like telehealth, online learning, remote working, and e-commerce.

Rationalisation within the Australian telecommunications landscape is resulting in less aggressive price competition. Along with cost-cutting within Telstra and no foreseeable end to rolling lockdowns and travel restrictions, the medium-term outlook for Telstra is as appealing as it has been for many years.

In the current environment of low-interest rates and vastly reduced dividends, Telstra offers investors an attractive fully franked 4.7% dividend yield. Consensus statutory EPS estimate is around 46 cents per share, with total income expected to be in the range of $25.3 to $27.3 billion and underlying EBITDA in the range of $7.4 to $7.9 billion.

Technically, Telstra is trading within an upward sloping trend channel following the March $2.87 low and the rally displays corrective characteristics. Solid resistance is viewed $3.55/$3.60 area with a break/close above here needed to signal a rally towards $4.00 is underway. On the downside, buyers would be expected to support prices on dips towards the $3.30/$3.20 area.

Australian earnings preview – Telstra

Source Tradingview. The figures stated areas of the 31st of July 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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