Telstra is able to satisfy those three objectives because it is generating strong growth in cash flows and earnings. Profit was up 14. 6 per cent and free cash flow, thanks to the sales of the CSL mobile business in Hong Kong and most of Sensis, rose almost 50 per cent to $7. 5bn.
Another insight into the evolving nature of Telstra’s revenues and earnings came with the 27. 8 per cent increase in the income of its network applications and services business, on which Thodey is placing increasing emphasis and for which he has significant regional ambitions.
In a nutshell, Thodey is pursuing a capital allocation strategy that balances the need to develop new growth vehicles with maintaining its dominance of mobiles in the domestic market while also sharing the benefits of its improving financial condition — and the growing streams of cash from its NBN deals — with shareholders.
However, last year Telstra was able to slow the rate of revenue decline to only 0. 8 per cent, with growth in data revenues almost matching the rate of decline in voice services.
While, without CSL, Telstra’s outlook for the 2015 financial year is for low single-digit income growth and for earnings before interest, tax, depreciation and amortisation to also be flat, it still expects to generate free cash flow of between $4. 6bn and $5. 1bn.
Read more here: Business Spectator