Telstra profit rises 3.2%, unveils $706m buyback
Australia's largest telecom returned cash to shareholders through a new $706 million buyback after posting a modest annual profit increase driven by tariff hikes and mobile growth.
Telstra Group reported a 3.2 percent increase in annual profit to A$2.24 billion and announced a new share repurchase programme worth up to A$1 billion ($706 million). The Australian telecom giant completed a separate A$1.25 billion buyback just two months ago in June. Management attributed the continued capital returns directly to underlying earnings growth and an optimised balance sheet.
The attributable profit figure for the year ended June 30, up from A$2.17 billion a year earlier, fell short of market expectations. Analysts polled by Visible Alpha had forecast a higher profit of A$2.30 billion. For institutional investors tracking the stock, this earnings miss highlights the pressure on the company to extract maximum value from its existing customer base rather than relying on rapid top-line expansion.
Telstra's ability to fund substantial buybacks despite missing profit targets stems directly from its core mobile operations. Revenue in the mobile segment grew 3.2 percent to A$11.37 billion. As the company's largest division, mobile accounts for approximately 44 percent of total group income.
The growth in this key division was not volume-driven but rather a product of successful pricing strategies. Telstra implemented a series of tariff increases throughout the year that directly bolstered mobile service revenue. Crucially, these price hikes did not trigger a customer exodus, as average revenue per user rose across all brands, categories, and segments.
Beyond the headline buyback announcement, the company increased its final dividend to 10.5 Australian cents per share, up from 9.5 cents in the prior year. This combination of a larger dividend and an additional A$1 billion in share repurchases signals strong confidence from management regarding future free cash flow generation.
Looking to the 2027 financial year, Telstra provided specific earnings guidance to anchor market expectations. The company forecast EBITDAaL between A$8.5 billion and A$8.8 billion. Additionally, it projected cash EBIT to land in a range of A$4.75 billion to A$4.95 billion. These figures will serve as the immediate benchmark for evaluating whether the current capital return programme remains sustainable.
