2025-05-26-Jefferies-澳大利亚电信（TLS）_2025年投资者日_回归基础_12页_603kb

Investor Day 2025: Back to Basics Summary

Core Content

Telstra Limited (TLS) is focusing on its T30 strategy, which emphasizes core connectivity in Mobile and Digital Infrastructure, leveraging its competitive advantages in these areas. The company aims to achieve cost efficiencies and operating leverage through the integration of AI, which is expected to significantly impact key cost areas such as customer service, network operations, and software development.

Financial Targets

TLS has set the following financial targets for FY30:

• Positive operating leverage
• Mid-single-digit cash earnings CAGR over FY26-FY30
• ROIC of 10%, up from approximately 8% in FY25

The company has also expanded its gearing comfort range from 1.5-2.0x to 1.75-2.25x Net debt/EBITDA, indicating a more flexible approach to debt management.

Top-Line Growth

TLS is projected to achieve top-line growth in its key segments:

• Mobile: Price increases and consistent subscriber growth will drive revenue, with 61% of EBITDA coming from this segment in FY25e. Despite pressure in Enterprise mobile, the overall segment is expected to grow.
• Digital Infrastructure (Amplitel, InfraCo): Majority of revenue is from long-term contracts and inflation-adjusted terms. This segment accounts for 25% of EBITDA.
• Inter-City Fibre: Anchor tenant Microsoft (MSFT) is expected to drive strong demand, with the Syd-Melb route opening in Q1 FY26. TLS may consider divesting NAS if issues persist in Fixed Enterprise.

Cost Efficiency and AI

The implementation of AI is central to TLS's cost-efficiency strategy. The company is expected to reduce costs in:

• Customer service: $2bn
• Network operations: $1.5bn
• Software development: $1bn (capex + opex)

TLS plans to have a smaller workforce in 2030, and is partnering with Accenture to implement AI across the organization, which is expected to enhance its ability to achieve operating leverage.

Cash Earnings and Dividend Yield

• Cash earnings yield is projected to rise from 6.2% in FY26E to 7.2% in FY30E
• Dividend yield is expected to increase from 4.0% in FY25E to 4.3% in FY30E
• Dividend per share (DPS) is forecasted to grow from 19.0 cps in FY25E to 20.4 cps in FY30E

Investment Thesis and Price Targets

• Price Target (PT) has been raised to AUD5.30 from AUD4.70, reflecting upgraded EBITDA forecasts and positive outlook on operating leverage
• 52-week high-low is AUD4.78 - AUD3.40
• Float is 101.6%, with ADV MM (USD) at 142.71
• Market Cap is AUD53.7B or $34.8B

Earnings Forecast Changes

• FY25E: No significant change in revenue forecasts, with underlying EBITDA slightly increasing from $8,646m to $8,649m
• FY26E: Revenue forecast increases slightly to $24,254m, with underlying EBITDA rising to $9,059m
• FY27E: Revenue and EBITDA are expected to grow further, with underlying EBITDA at $9,367m

Dividend Coverage

• Free cash flow (FCF) is expected to cover rising dividends, with a dividend coverage ratio of 1.4x to 1.5x in FY26E and FY27E
• Surplus/(deficit) is projected to increase from 799m in FY25E to 1,153m in FY26E, with a slight decline in FY27E to 643m

Key Financials

Earnings Revisions

Valuation and Risks

TLS is valued using DCF and SOTP methodology. Key assumptions:

• WACC: 7.7%
• Beta: 1.0
• Risk-free rate: 4.5%
• Market risk premium: 5.0%
• Terminal growth rate: 2.25%

For the breakup valuation, the following multiples are assumed:

• Amplitel: 18x
• InfraCo Fixed: 15x
• Mobile: 7.5x
• NAS: 6x
• Fixed Consumer: 4x
• Fixed Wholesale: 4x
• Data & Connectivity: 7x
• International (ex-Digicel): 6.5x
• Digicel: 6.0x

Key Risks:

• Increased competition in fixed enterprise and consumer markets
• Higher inflation on operating expenses and capital expenditures

Sustainability Matters

TLS is the first Australian telco to achieve carbon-neutral status and aims to reduce absolute emissions by 50% by 2030, with a long-term goal of net zero by 2050. The company is also focused on:

• Closing the digital inclusion gap
• Improving regional and remote connectivity
• Committing at least $15.9m (FY21-FY23) to the Telstra Foundation

Company Goals

• Employee engagement score target: 84 in FY23
• Female representation: 35% in Workforce and Executive Management
• Group Episode NPS: +32
• Strategic NPS: +7

Catalysts

• Strong postpaid mobile subscriber net additions
• Mobile margin increase and ARPU decline subsiding
• Contract wins in Enterprise segment

Investment Recommendation

• Rating: Buy
• Price Target: AUD5.30
• Expected Total Return: 15% or more within 12 months
• Analyst: Roger Samuel, CFA

Analyst Certification

Roger Samuel and Lucy Krimmer, both analysts at Jefferies (Australia) Pty Ltd, certify that the views expressed in the report reflect their personal opinions and that they are not directly compensated for the recommendations or views.

Company Specific Disclosures

Jefferies expects to receive or seek compensation for investment banking services from:

• Accenture plc
• Microsoft Corporation

Summary

TLS is focusing on core connectivity through its T30 strategy, leveraging AI for cost efficiencies and achieving positive operating leverage. The company is expected to see growth in Mobile and Digital Infrastructure, with a strong emphasis on long-term contracts and anchor tenants like MSFT. Financial targets include a mid-single-digit CAGR in cash earnings, rising dividend yield, and improved ROIC. The price target has been raised to AUD5.30, with a dividend yield forecast to increase to 4.3% in FY30E. Key risks include increased competition and inflation, while sustainability goals and ESG initiatives are a significant part of the company's long-term vision.