---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 203670
conversation_id: 29647d6e-95bc-445f-9fc1-ad64d8012d16
citations: 8
created: 2026-05-31 18:12:28Z
---

# What is Telstra’s core business franchise and the key components of its operating model?

# Telstra (TLS AU): Core Business Franchise & Operating Model

## 1. Core Business Franchise — "Australia's largest telco"

Telstra Group Limited is **Australia's leading telecommunications and technology company**, with a purpose "to build a connected future so everyone can thrive" [4]. Its franchise rests on **dominant infrastructure and scale** in the domestic market, with internationally-extending enterprise/wholesale reach.

### Scale & Market Position (FY24)
| Metric | FY24 datapoint |
|---|---|
| Mobile services (incl. IoT) | **>26m** [3] |
| Fixed households | **>3m** [3] |
| SMB customers | **>800k** [3] |
| ASX100 customers | **87%** [3] |
| Enterprise customers | **>2,500** [3] |
| Mobile network population coverage | **99.7%** (2.88m km²) [3] |
| Annual digital infrastructure capex/spectrum | **A$5b** in FY24; **A$42b over last 10 years** [3] |
| Intercity fibre in the ground (Aug-2024) | **>1,800 km** [3] |
| Subsea cable network | **APAC's largest** [3] |

The franchise is anchored by **(i) the largest Australian mobile network** (spectrum, RAN, 5G coverage), **(ii) extensive passive fixed infrastructure** (ducts, pipes, fibre, exchanges, data centres, subsea cables), and **(iii) the largest national mobile-tower estate** (Amplitel) [2][3]. Historically the franchise extends across "20 countries and territories outside of Australia" through Telstra International [4].

---

## 2. Operating Model — Corporate Restructure into Four Subsidiaries

Following the **T22** and **T25** strategies, Telstra executed a legal corporate restructure with **New Telstra Corp** as head entity and **four key operating subsidiaries** [5]:

| Subsidiary | Role |
|---|---|
| **ServeCo** | Owns/operates the **ServeCo Business** — products, services, customer experience, and **active** network elements (RAN equipment on mobile towers, **spectrum holdings**, fibre electronics, software-defined networking) [2][5] |
| **InfraCo Fixed** | Owns/operates the **passive physical fixed infrastructure** — ducts, pipes, fibre, **data centres, subsea cables, exchanges** — that underpins the fixed telecom network [2][5] |
| **Amplitel** (51% held via Amplitel HoldCo) | Owns/operates **passive mobile tower assets**, monetised via tenancy fees [2][5] |
| **Telstra International** | Owns/operates the **International Business** (enterprise/wholesale outside Australia) [5] |

Inter-Company Agreements (ICAs) govern infrastructure access between these entities. The rationale was three-fold: **(i) greater transparency** of infrastructure assets, **(ii) operational efficiency**, and **(iii) optionality** to crystallise value from infrastructure separately from the customer-facing business [2].

---

## 3. Reportable Operating Segments (current — 1H FY26)

Telstra now reports **six operating segments** (post the FY24 split of the legacy Telstra Enterprise (TE) into TEA + TI, and the carve-out of Telstra Business from the old TC&SB) [1][8]:

| Segment | Operations |
|---|---|
| **Telstra Consumer (TC)** | Telecom & technology products/services to **consumer customers in Australia** via mobile and fixed networks; contact centres, retail stores, **retail distribution network**, digital channels, **Telstra Plus loyalty program** [1] |
| **Telstra Business (TB)** | Products/services to **small- and mid-sized businesses** in Australia via **Telstra Business Technology Centres** and channel partner network [1] |
| **Telstra Enterprise Australia (TEA)** | Telecom services, advanced technology solutions, **network capacity & management, unified communications, cloud, security, industry solutions**, integrated/monitoring services to government and large enterprise/business customers in Australia [1] |
| **Telstra International (TI)** | International enterprise and wholesale telecom services (the carve-out from legacy TE) [1] |
| **Networks, IT and Product** | Combined segment of **Global Networks and Technology** + **Product and Technology** — provides support functions underpinning the customer-facing segments (combined because they share economic characteristics) [1] |
| **InfraCo (incl. InfraCo Fixed & Amplitel)** | Passive fixed infrastructure + mobile towers (per restructure above) [2][5] |

An **"All Other"** category captures non-material operating functions [1].

### Why the segment perimeter changed (FY24)

> "the leadership changes and focus on a reset of our enterprise domestic business resulted in a split of the Telstra Enterprise (TE) segment into two reportable segments, i.e. Telstra Enterprise Australia (TEA) and Telstra International (TI)" [8]

> "a sharpened focus on small and medium business customers led to the creation of Telstra Business (TB) as a new segment carved out from Telstra Consumer and Small Business (TC&SB)" [8]

---

## 4. Earnings Composition — The "Twin Towers"

Based on FY24 underlying EBITDA growth disclosed at the FY24 result, the engine of profitability is the **Mobile + Infrastructure (InfraCo Fixed + Amplitel)** stack [3]:

| Earnings driver (FY24 Underlying EBITDA delta) | Change |
|---|---|
| **Mobile** | **+A$424m / +9.2%** [3] |
| **InfraCo Fixed** (core fixed infrastructure) | **+A$96m / +5.8%** [3] |
| **Amplitel** (mobile towers) | **+A$51m / +16%** [3] |
| **Fixed-C&SB** | +A$119m / +88% [3] |
| **Fixed-Enterprise** | **−A$275m / −67%** (the structural drag) [3] |
| FY24 Underlying EBITDA | **A$8.2b** (FY22: $7.3b; FY23: $8.0b) [3] |

In **FY25**, the infrastructure pillars continued to compound: **"InfraCo Fixed core access EBITDA grew 5.1% with stronger operating leverage"** and **"Amplitel continued to benefit from strong demand for towers and new signings. EBITDA grew 7.5%"**, with the intercity fibre network rolling out (Sydney–Melbourne and Canberra–Melbourne routes) and material revenue contribution expected from FY27 [7].

---

## 5. Capital & Operating Framework — "Connected Future 30" Strategy

The current strategic framework is **Connected Future 30** (successor to T22/T25). Management frames the capital model around: **core business cash flow, active portfolio and investment management, and disciplined capital management** [6].

### FY26 underlying guidance (tightened at 1H26)
| Measure | 1H26 actual | FY26 guidance |
|---|---|---|
| Underlying EBITDAAL | A$4.2b | **A$8.2–8.4b** [6] |
| Business-as-usual capex (excl. spectrum, strategic invest, capitalised leases) | A$1.5b | **A$3.2–3.5b** [6] |
| Cash EBIT | A$2.5b | **A$4.55–4.75b** [6] |
| Strategic investment | A$0.2b | **A$0.3–0.5b** [6] |

Underlying ROIC is calculated as **Underlying NOPAT as a % of total capital (ex. guidance adjustments) less tax**, and management targets **positive operating leverage** (underlying income % growth > Cash EBIT cost % growth) as a structural KPI [6].

---

## 6. Putting It Together — How the Franchise Earns

Mechanically, Telstra's operating model is a **vertically-integrated telco where the asset base has been deliberately bifurcated** into:

- **A "ServeCo" customer franchise** — earning recurring ARPU from ~26m mobile services, ~3m fixed households, ~800k SMB and 2,500+ enterprise customers across TC / TB / TEA / TI [3], leveraging Australia's #1 mobile network and the Telstra Plus loyalty ecosystem [1][3].
- **A passive-infrastructure franchise (InfraCo Fixed + Amplitel)** — earning **infrastructure-style returns** from third-party tenancy on towers, dark-fibre/duct leasing to NBN Co and other carriers, intercity fibre, exchanges and subsea cables [2][7].
- **A central "Networks, IT and Product" function** — a shared services backbone underpinning all customer-facing segments [1].

The two "infrastructure-shaped" engines (Mobile economic share + InfraCo) sit behind ~85%+ of group EBITDA growth, while Fixed-Enterprise has been restructured down as a legacy headwind [3][7]. The Connected Future 30 strategy frames the **network itself as a product** monetised through new connectivity opportunities — though sell-side (CLSA, 27 May 2025 Investor Day note "Dreamtime journey") flags that **differentiation of the "core connectivity" offering remains the central risk to TLS achieving 2030 ROIC targets**, given LEO satellite (Starlink, Project Kuiper) and AI-driven competitive entry.

---

**Sources**

[1] Telstra Group Limited, H1 2026 Report — Segment information / six reportable segments definitions
[2] Telstra Corporation Limited — Analyst/Investor Day (T22 restructure announcement: ServeCo, InfraCo Fixed, InfraCo Towers)
[3] Telstra Group Ltd. — Q4 FY2024 Earnings Slides (FY24 results, scale metrics, segment EBITDA growth)
[4] Telstra Corp. Ltd. IR PPT — Q2 FY2022 Earnings Call ("Telstra at a glance" franchise overview)
[5] Telstra Group Limited, H2 2022 Annual Report — Four-subsidiary corporate restructure under New Telstra Corp
[6] Telstra Group Limited, H1 FY2026 Report — Connected Future 30 strategy, FY26 guidance
[7] Telstra Group Limited, H2 2025 Earnings Call — FY25 segment performance (InfraCo Fixed, Amplitel, intercity fibre)
[8] Telstra Group Limited, H2 2024 Annual Report — FY24 organisational changes (TE → TEA + TI; TB carve-out)

## Citations

- [1] **Telstra Group Limited, H1 2026 Report** · external
- [2] **Telstra Corporation Limited - Analyst/Investor Day** · external
- [3] **Telstra Group Ltd. Slide 1: Q4 2024 Earnings Call** · external
- [4] **Telstra Corp. Ltd. IR PPT: Q2 2022 Earnings Call** · external
- [5] **Telstra Group Limited, H2 2022 Report** · external
- [6] **Telstra Group Limited, H1 2026 Report** · external
- [7] **Telstra Group Limited, H2 2025** · external
- [8] **Telstra Group Limited, H2 2024 Report** · external

