Telstra Group (ASX: TLS) Lifts Dividend, Adds $1 Billion Buyback

Telstra Group reported higher earnings and cash generation for financial year 2026, despite a modest decline in revenue.

Australia’s largest telecommunications provider also raised its annual dividend and announced another on-market share buyback. Cost reductions and mobile services growth offset weaker enterprise and international operations.

Earnings Outpace Revenue

Revenue excluding finance income fell 0.8% to $22.94 billion. Total income declined 0.9% to $23.41 billion.

However, profit attributable to Telstra shareholders rose 3.2% to $2.24 billion. Basic earnings per share increased 5.3% to 19.9 cents.

Underlying EBITDA after leases grew 4% to $8.34 billion. Cash EBIT increased 8% to $4.66 billion, landing within Telstra’s guidance range.

Cash earnings rose 11.6% to $2.88 billion. Cash earnings per share climbed 13.8% to 25.5 cents.

The stronger earnings reflected lower costs rather than top-line expansion. Underlying operating expenses fell $454 million, or 3%, to $14.47 billion.

Dividend and Buyback

Telstra declared a final dividend of 10.5 cents per share. That takes the annual distribution to 21 cents, up 10.5% on a cash basis.

The final dividend is 90.5% franked and will be paid on September 24. The record date is August 27.

Total dividends represent 106% of statutory earnings per share. They equal 82% of cash earnings per share, the company’s preferred measure of underlying cash generation.

Telstra completed a $1.25 billion buyback during the year at an average price of $5.08 per share. It repurchased and cancelled almost 246 million shares.

The board has now authorised another buyback of up to $1 billion during financial year 2027.

Meanwhile, net debt increased 5.2% to $17.3 billion. Debt servicing was 2 times, within Telstra’s stated comfort zone of 1.75 to 2.25 times.

Mobile Drives the Result

Mobile income rose 3.2% to $11.37 billion, while mobile services revenue increased 4.8%. Mobile EBITDA advanced 3.3% to $5.44 billion.

Higher average revenue per user supported postpaid and prepaid growth. Retail mobile services in operation increased by 1.08 million to 26 million.

Fixed consumer and small-business EBITDA rose 13.5%, despite a 2.8% income decline. Cost management and a growing contribution from 5G fixed wireless supported the result.

However, fixed enterprise EBITDA dropped 16.7%. International EBITDA declined 3.5%, while international income fell 11.3%.

Outage Remains Unquantified

The results cover the year ended June 30, before Telstra’s major network outage on July 8. The disruption affected some mobile calls, data services and Triple Zero calls.

Telstra has received one regulatory notice and expects it may receive more. Customer claims are being assessed, with payments continuing for eligible claims.

The company said regulatory outcomes and financial implications remain uncertain and cannot be reliably estimated. An external expert review is also underway.

Separately, Telstra constructed more than 8,500 kilometres of fibre for its Aura Network. Four new routes were ready for service at year-end, supporting its digital infrastructure strategy.