Telstra shares fall after mobile miss

Shares in telco giant Telstra dropped by 2.6 per cent on Thursday with investors unimpressed by lower than expected mobile numbers.

In its full-year results on Thursday, Telstra posted bumper profits and raised its dividend after slashing costs and selling the majority of its cloud computing unit to Indian tech giant Infosys.

The nation’s biggest telco reported an annual net profit of $2.34 billion – up 31 per cent year-on-year – and said it had cut operating expenses by 6 per cent. Telstra has cut around 3200 jobs over the past financial year, including 500 announced last month.

Alongside the earnings release, the company announced the sale of a 75 per cent in Versent Group, its cloud computing business, to Infosys in a deal worth $233 million. Telstra will retain a 25 per cent stake, and about 650 staff will move to Infosys as part of the transaction.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) climbed nearly 5 per cent to $8.6 billion, and Telstra declared a full-year dividend of 19¢ a share, up 5.6 per cent year-on-year.

Telstra reported revenue up 3.5 per cent for its mobile unit as customers bought more expensive smartphones. The performance of the mobile business missed the expectations of some analysts, however. The company lost 56,000 mobile postpaid subscribers over the financial year, in part due to the deactivation of services no longer in use.

“The second half has been a very competitive and dynamic period,” CEO Vicki Brady said, referencing a recent network sharing deal between Telstra rivals TPG and Optus. “But we’re pleased with how we’ve competed and traded through that period.”

Brady said that overall it had been a strong year for the company.

“We delivered our fourth consecutive year of underlying growth, reflecting momentum across our business, strong cost control and disciplined capital management,” she told investors on Thursday morning.

Brady also announced Telstra would launch an additional on-market share buyback of up to $1 billion worth of shares, which comes after a $750 million buyback in June. The buyback will start after September 8 and run through the financial year, she said.

The move comes after last month’s decision, first reported by this masthead, to slash more than 500 jobs.

“These changes are largely driven by the ongoing reset of our Telstra Enterprise business, as well as improvements to the structure and processes of other teams across our organisation, to reduce complexity, create efficiencies and respond to changing customer needs,” a spokeswoman said at the time. She said the changes were not a result of AI adoption.

Last year, Telstra slashed 2800 jobs, a move Brady said at the time would save up to $350 million and help the telco stay competitive amid rising inflation and energy costs.

Josh Gilbert, market analyst at eToro, said investors would now be watching to see if investments in AI and infrastructure can translate into top and bottom-line growth.

“AI can be hyped endlessly, but if we don’t see it monetised while other businesses are driving huge growth, patience will wear thin,” he said.

“Telstra will also need to prove it can drive earnings organically, not just through efficiency gains. That means growing through those AI ambitions and defending mobile margins, as competitors turn to sharper pricing to win market share.”

In May, Brady unveiled Telstra’s new five-year strategy, alongside price rises for most of the company’s mobile and internet plans of between $3 and $5 a month. Other telcos have lifted their prices by a similar level.

Telstra’s new strategy, dubbed “Connected Future 30”, emphasises an increased reliance on artificial intelligence processes and data centres amid what Brady described as “unrelenting” demand for data and connectivity. The strategy aims to lift returns from 8 to 10 per cent a year.

Telstra has a market share of about 41 per cent of the mobile market. Its shares are up more than 20 per cent so far in 2025.

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