The bottom line on Telstra’s cash flow

Suggestions that Telstra’s cash flow has been constrained are totally wide of the mark.

Summary: Telecommunications giant Telstra recently reported a decline in cash flow in the December half. But the company used cash reserves for shareholder dividends, to reduce debt and to fund operations, and has forecast a lift in the second half.

Key take-out: Telstra generated $4 billion of after-tax free cash flow over 2012, and its investments in working capital will generate double-digit returns in profitability and cash flow.

Key beneficiaries: General investors. Category: Income.

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