Telstra hits 6-month high on upbeat 2025 forecast

By John Biju and Ayushman Ojha

(Reuters) -Top Australian telco Telstra raised its earnings forecast for fiscal 2025 on Thursday, prompting investors to overlook a 13% decline in annual profit and sending its shares to a six-month high.

Telstra lifted the bottom end of its underlying earnings before interest, taxes, depreciation and amortization (EBITDA) guidance range for 2025 to A$8.5 billion-A$8.7 billion ($5.63 billion-$5.76 billion), from its previous A$8.4 billion and A$8.7 billion.

This follows the company's decision to increase the rates on most of its mobile phone plans last month. The revised prices will be effective from Aug. 27 for customers with monthly postpaid mobile plans, while prepaid plan users will see an uptick from Oct. 22.

Brokerage UBS said the tightened lower end of the guidance helps Telstra support a dividend payout of 19 Australian cents per share into fiscal 2025, one cent higher than the prior year.

Telstra's shares rose as much as 3% to A$3.985 after the announcement to hit their highest level since Feb. 14, shrugging off a profit plunge triggered by higher costs, most notably from writing down the value of its fixed-line enterprise unit and laying off up to 2,800 workers.

"We've also been challenged by higher than-expected inflation and costs, which have made it tougher to meet our cost reduction ambitions," CEO Vicki Brady said.

The telecom firm's net profit for the fiscal year ending June 30 was A$1.78 billion, down from A$2.05 billion a year ago.

A 9.2% growth in earnings from its mobile business, supported by the addition of 560,000 net new handheld customers, lifted Telstra's underlying EBITDA by 3.7% to A$8.2 billion. It declared a final dividend of 9 cents per share.

($1 = 1.5101 Australian dollars)

(Reporting by John Biju and Himanshi Akhand in Bengaluru; Editing by Shilpi Majumdar, Jamie Freed and Rashmi Aich)