Telstra financial year 2025: the turnaround is turning

Telstra financial year 2025: the turnaround is turning

While Telstra’s share price is up about 80 per cent since the lows of Covid in 2020, the shares are trading at about where they were in 2003, and they are down 26 per cent from their 2015 highs and 45 per cent lower than their all-time highs in 1999.

Telstra has been a case study against investing for the long term, or maybe a case study in sticking to quality if you are going to invest for the long term. Time is the friend of the wonderful business, and the enemy of a business with poor economics.

This time, Telstra has posted a standout financial year 2025 (FY25) with a 31 per cent rise in statutory net profit, reaching A$2.34 billion, helped in part by an absence of one-off items, and driven by strong mobile earnings and disciplined cost control. Showing faith in the future and perhaps signalling they believe the shares are good value, Telstra’s management extended its share buyback program by A$1 billion, after completing A$750 million earlier in the year.

Financial performance

Underlying Earnings Before Interest, Taxes, and Amortization (EBITDA) rose roughly five per cent to around A$8.6 billion, in line with guidance and analyst expectations.

Mobile segment remained the earnings backbone, with service revenue growing circa 3–3.5 per cent, thanks notably to rising postpaid plan prices (up A$3–5/month).

Operating expenses dropped between 5–6 per cent, and the company achieved this through cost-reduction efforts including headcount reductions – 3,208 roles cut, reducing the workforce to approximately 30,553.

One-off costs absence: The FY24 figure had been burdened by a A$715 million hit from restructuring and writedowns, which didn’t recur in FY25, helping underpin the profit surge.

Dividends and capital returns

Telstra declared a final dividend of 9.5 cents per share, up from 9 cents – a 5.6 per cent increase, aligning with enhanced shareholder returns.

Together with the A$1 billion buyback, the higher dividend reflects confidence in cash flow and capital strength.

Strategy

Telstra will sell 75 per cent of Versent, its cloud services unit, to Infosys for A$233 million, including A$175 million upfront, with earn-outs contingent on performance. The sale is expected to complete by March 2026.

Enterprise performance remains under pressure, as customers shift away from traditional voice services. A A$50 million impairment on its London Hosting Centre highlights some legacy challenges.

Job cuts continue into FY26 with an additional 550 roles targeted, affecting approximately two per cent of the workforce, primarily to simplify and restructure the Enterprise division. The company noted these losses are not attributed to artificial intelligence (AI).

Forward-looking outlook

Telstra forecasts FY26 underlying EBITDA between $A8.15 billion and A$8.45 billion, compared to A$8.02 billion in FY25.

While broadly positive, the guidance sits slightly below the consensus estimate of A$8.44 billion, prompting some analyst caution.

Additional strategic context & “Connected Future 30”

Telstra is working towards its “Connected Future 30” strategy, aiming to lead into the 6G era with a self-optimising “Autonomous Network,” enhanced digital infrastructure capability, AI integration, and “network as a product” initiatives.

This strategy underscores Telstra’s commitment to evolving beyond traditional telcommunication services toward infrastructure-driven digital leadership.

What was missing?

Interestingly, the company has previously emphasised ambitious 5G goals under the T25 strategy – such as covering 95 per cent of the population, and migrating 80 per cent of mobile traffic to 5G by FY25. However, these targets and the narrative around accelerated 5G adoption weren’t reiterated in the FY25 earnings updates.

The current discourse leans heavily toward AI, and digital infrastructure, without revisiting those earlier quantitative network targets.

In other words, Telstra seems to have downgraded public discussion of 5G traffic milestones and shifted its focus toward profitability, cost discipline, and AI-driven transformation.

Main takeaways from FY25 results

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Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.

Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances. 

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