---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 359810
conversation_id: be8cb73e-a88e-4737-ab14-4c2ade0acdd8
citations: 29
created: 2026-05-31 20:24:35Z
---

# Provide a one‑year narrative of Telstra, outlining how business performance, market conditions, and company actions shaped investor sentiment and valuation.

# Telstra Group (TLS.AU) — One‑Year Narrative: May 2025 to May 2026

Over the past 12 months, Telstra has transformed from a value/yield staple under a finishing T25 plan into a re-rated "growth + capital return" story, with a step-up in operating leverage, the launch of a new strategic framework (Connected Future 30), accelerated capital returns, and a generally constructive regulatory backdrop. The share price has moved from the high-A$3s a year prior into the A$5.10–5.36 range by May 2026 — repeatedly setting fresh 52‑week and multi‑year highs along the way.

---

## 1. Setting the Stage (May–July 2025): End of T25, expectations modest

Entering FY25 reporting season, Telstra was finishing its multi-year **T25 transformation**, with the market already focused on what would replace it. Internal sell-side framing was cautious: CLSA published "Telstra — HLD (Dreamtime journey)" on 27‑May‑2025, signalling that even after a strong H2 run-up, the risk/reward to a HOLD-rated yield-style telco was finely balanced [30]. The peer note "TPG — O‑PF (Vodafix)" on 7‑May‑2025 reinforced an intensifying mobile competitive backdrop centred on TPG/Vodafone [31]. Going into the August result, momentum was already evident: by the consensus preview window, TLS.AU had returned **+27.0% in H2 FY25 vs ASX 200 Comm Services +12.8% and ASX 200 +5.1%** [24].

---

## 2. The FY25 Result (13–14 August 2025): In‑line print, soft FY26 guide, A$1B buyback

The FY25 numbers came in essentially in line but on lower-quality earnings:

| FY25 Metric | Reported | StreetAccount Est. |
|---|---|---|
| Total income | **A$23.61B** | A$23.81B |
| Underlying EBITDA | **A$8.62B** | A$8.63B |
| NPAT attributable | **A$2.17B** | A$2.20B |
| Final DPS | **9.5c** (fully franked) | — |

Source: [11][29].

Segment‑level, **Mobile total income at A$11.02B undershot consensus A$11.21B, but Fixed Enterprise at A$3.45B beat A$3.36B** thanks to the enterprise reset, and International beat ($2.59B vs $2.52B). InfraCo Fixed lagged at A$2.71B vs A$2.83B expected [29]. Mobile services revenue grew 3.5%, Fixed C&SB EBITDA was up A$109M, and Fixed Enterprise EBITDA grew A$103M, supported by decisive restructuring; International EBITDA fell A$96M (Digicel + Wholesale) [8].

Two announcements alongside the result reshaped the narrative:

1. **FY26 guidance: Underlying EBITDAaL A$8.15–8.45B vs Street A$9.00B (12 est, A$8.73–9.11B); Cash EBIT A$4.55–4.75B vs FactSet A$4.25B** — i.e. EBITDA below the Street, Cash EBIT above [10].
2. **A new A$1B on‑market buyback**, to follow completion of a A$750M buyback in June 2025 [10].
3. **Disposal of Versent Group (75% to Infosys for A$233M)** — continuation of the international/non-core simplification [13].

The market reaction was sharp: shares closed -2.6% on the day at A$4.85 [12]. The sell-side response captured the divide that would define the next two quarters:
- **Jarden** downgraded to Neutral, TP A$4.80 (from A$4.90) citing weaker mobile mix and postpaid churn.
- **JPMorgan** downgraded to Neutral while raising TP to A$4.75 (valuation).
- **Goldman Sachs** held Buy but lowered TP to A$5.00.
- **UBS** raised TP to A$4.80, held Neutral [12].

Investor focus crystallised on **mobile mix shift** (migration from postpaid to prepaid/wholesale), elevated churn under cost-of-living pressure, and whether wholesale repricing could stabilise the segment [12]. Average sell-side TP held at A$4.90 (implying ~1% upside) with ratings 50% Buy / 50% Hold / 0% Sell [12].

---

## 3. Continued De-risking & Regulatory Noise (Aug–Oct 2025)

Even with consensus tempered, the stock kept grinding higher:
- 5–6 Aug 2025: TLS hit a 52‑week high at A$4.96–4.98, +37% over the prior year [25].
- 18 Aug 2025: Google was fined **A$36M** by the ACCC for paying Telstra and Optus to pre-install Google Search on Android — an ESG/competition headline, but the cost sat with Google, not the telcos [27].
- 22 Aug 2025: TLS again on 52‑week-high list at A$5.05 (+32.6% 1Y) [22].
- 3 Sept 2025: **iBasis** announced the acquisition of Telstra International's wholesale voice/mobile/messaging customer contracts (including exclusive rights for Digicel Pacific), to close by year‑end 2025 — another step in the international simplification thesis [14].
- 3 Oct 2025: Federal Court ordered Telstra to pay an **A$18M penalty** for misleading 8,897 Belong customers on broadband speeds; remediation totalled >A$2.3M [15]. (Initial newswire framing reported the headline as A$12M [27].)
- 13 Oct 2025 (AGM): The board explicitly highlighted the share price at **"near nine-year highs"** [7], **reaffirmed FY26 underlying EBITDAaL guidance of A$8.15–8.45B and Cash EBIT A$4.55–4.75B** [16], and formally pivoted to the new **Connected Future 30** strategy, which "will see us double down on connectivity, radically innovating in the core of our business and step up our focus on being efficient and competitive" [9]. The board also flagged remuneration changes tied to disciplined capital management.

By mid-November, TLS.AU again printed fresh highs (A$5.09, +36.9% 52-week) [25].

---

## 4. Spectrum & Regulation as a Tailwind (Dec 2025 – Mar 2026)

A second leg of the re-rating came from regulation:
- **16 Dec 2025**: ACMA published its approach to managing expiring spectrum licences that underpin mobile and wireless broadband services — clearing a long-standing overhang [28].
- **25 Jan 2026**: JPMorgan **upgraded** TLS.AU and downgraded TPG.AU — a pair-trade endorsement of Telstra's relative competitive positioning into H1 reporting [17].
- **31 Mar 2026**: ACCC released a **draft NBN determination proposing lower regulated costs and revenue requirements** — generally helpful for retail margins on fixed broadband [22].
- **19 May 2026**: ACMA finalised preferred spectrum pricing at a **total market value of A$7.32B** for renewing licences [23] — a quantifiable, manageable cash call relative to Telstra's balance sheet.

---

## 5. The H1 FY26 Result (18–19 February 2026): The Pivot Point

The interim print became the clearest inflection in sentiment over the year:

| 1H26 Metric | Reported | 1H25 | Change |
|---|---|---|---|
| Revenue (ex finance income) | A$11,641m | A$11,602m | +0.3% |
| EBITDAaL (reported) | **A$4,162m** | A$3,966m | **+4.9%** [1] |
| Underlying EBITDAaL | **A$4,185m** | A$3,966m | **+5.5%** [5] |
| Cash EBIT | **A$2,478m** | A$2,174m | **+14.0%** [5] |
| Cash EPS | **14.0c** | 11.7c | **+19.7%** [5] |
| EBIT | A$2,016m | A$1,846m | +9.2% [1] |
| Profit for the period | — | — | +8.1% to A$1.2B [1] |
| Interim DPS | **10.5c** (90.5% franked) | 9.5c | **+10.5%** [1] |

**NPAT attributable came in at A$1.12B vs StreetAccount A$1.16B** — a slight miss on the bottom line [26], but the quality and capital-return overlay dominated.

Key drivers:
- **Mobile EBITDA +A$93M**, with mobile services revenue +5.6%, driven by higher ARPU (July 2025 post‑paid price rise, October 2024 prepaid price rise) and continued subscriber wins [4]. Customer NPS reached an "all-time high at plus 47" — a competitive signal in a market where TPG was reinvesting via the Vodafone arrangement [4].
- **Fixed C&SB EBITDA +A$37M**, helped by ARPU growth and the introduction of Internet-Only plans and the Wi-Fi 7 Telstra Smart Modem 4 [4][5].
- **Fixed Enterprise EBITDA –9.4% to A$87M** as the reset continued; NAS income fell 3.8% to A$1,291M [6].
- **InfraCo Fixed and Amplitel** both grew, reflecting "strong customer demand" [5].
- **Operating leverage of 3.1pp** delivered, fully consistent with Connected Future 30 targets; underlying opex was cut by **A$179m / 2.4%**, more than offsetting input cost inflation [5]. Telstra also consolidated its software vendor list "from 400 down to two" and quoted ~20% efficiency gains in software development [4].

Capital management was the surprise:
- **Increased buyback from up to A$1B to up to A$1.25B**, with **A$637M already completed in the half** [2].
- **FY26 underlying EBITDAaL guidance tightened to A$8.2–8.4B** (from A$8.15–8.45B), with other measures unchanged [3].

The market reaction was unambiguous: **TLS.AU +4.5% on the day** to A$5.19 on "better costs and higher dividend than expected" [19]. The Street recognised the inflection in cash EBIT, EPS and capital returns even as some legacy concerns lingered — **Jefferies downgraded to Hold from Buy** the same day, taking profits on valuation/reset completion [20]. The broader takeaway captured by sell-side was that the result confirmed the operating leverage thesis embedded in Connected Future 30 [26].

---

## 6. Spring 2026: Price Power, Spectrum, and Multi‑Year Highs

Through March–May 2026, the narrative kept compounding:
- **24 Mar 2026**: Telstra announced **mobile price increases** — direct evidence of pricing power and the second consecutive annual rise after July 2025 [21]. Shares traded at A$5.36 on the day [21].
- **Mar–May 2026**: TLS.AU appeared on the ASX 52‑week highs list in March, April, and May 2026, multiple times — visible momentum tied to FY26 earnings revision cycle and friendly regulatory news flow [25].
- **31 Mar 2026**: ACCC's NBN draft determination removed a tail risk on regulated fixed‑line margins [22].
- **19 May 2026**: ACMA spectrum pricing finalised at A$7.32B (industry total), an outlay the balance sheet can comfortably absorb [23].

---

## 7. Putting Investor Sentiment & Valuation Together

The 12-month arc:

1. **May–Aug 2025**: T25-era valuation extending; H2-FY25 outperformance (+27% vs ASX 200 +5.1% [24]); August result a "tactical reset" with weaker Mobile mix and soft FY26 EBITDAaL guide (vs Street A$9.0B) [10][12]; stock initially -2.6% on the day [12].
2. **Aug–Oct 2025**: Despite consensus markdowns, investors rewarded **A$1B buyback + A$750M completion + Versent/iBasis divestments**, with the share price reaching "near nine-year highs" by the October AGM [7].
3. **Oct 2025–Feb 2026**: Connected Future 30 strategy gave the market a fresh narrative emphasising **mid-single-digit cash earnings growth**, disciplined capital management, and step-changes in productivity (software, AI, opex reduction) [9]. JPMorgan upgrade in late January [17] front-ran the H1 print.
4. **Feb 2026**: H1 FY26 was the **pivot** — Cash EBIT +14%, Cash EPS +20%, interim DPS +10.5%, buyback raised to A$1.25B, guidance tightened. Shares +4.5% to A$5.19 [3][19]; Jefferies took profits to Hold [20], but average TP and ratings drifted up.
5. **Mar–May 2026**: Mobile price rises, NBN regulatory relief, and confirmed spectrum costs reinforced the "predictable earnings + accelerating capital returns" thesis. Stock settled in a A$5.10–5.36 range, repeatedly touching 52-week highs.

**Valuation context**: At the FY25 print, TLS traded at **NTM P/E 22.9x vs 5-year average 22.0x (range 15–33x), EV/EBITDA 7.7x vs 5-year average 7.0x (range 6–8x)** [12]. The re-rating since has been driven not by multiple expansion above prior ranges, but by upward revisions to underlying earnings, EPS accretion from buybacks, and a higher confidence factor on dividend growth and capital returns under Connected Future 30. Forward EPS for FY26 sat at ~A$0.21 and FY27 ~A$0.23 [12].

---

## 8. What the Internal CLSA Note Was Saying

CLSA's coverage was a measured HOLD ("Dreamtime journey", 27‑May‑2025) [30] entering FY25 reporting. The weekly Australia strategy products (e.g. 26-May, 1-Jun, 16-Jun, 23-Jun, 27-Jun, 30-Jun, 18-May 2025) repeatedly referenced TLS in market overviews [32–37], consistent with the desk treating Telstra as a defensive/yield core rather than a high-conviction Outperform. The pair-trade framing CLSA highlighted around **TPG (O‑PF, "Vodafix")** [31] and the cautious tone on Telstra captured the H2 FY25 setup well — but did not anticipate the magnitude of capital-return acceleration and cash EBIT leverage that emerged in H1 FY26.

---

## 9. One‑Line Summary

Telstra spent the year converting the back end of T25 into the front end of Connected Future 30 — using cost-out, divestitures, spectrum certainty, and step‑up buybacks to translate flat top-line growth into double‑digit cash EBIT and EPS growth, double-digit dividend growth, and a steady drumbeat of multi-year share-price highs — even as sell-side oscillated between profit-taking and re-engagement.

---

**Sources**

[1] Telstra Group H1 2026 Report — interim_report (1H26: EBITDAaL +4.9% to A$4.2B; Profit +8.1% to A$1.2B; interim DPS 10.5c)
[2] Telstra Group H1 2026 Report — interim_report (buyback increased from A$1B to A$1.25B; A$637M completed in 1H)
[3] Telstra Group Q2 2026 Earnings Call, 18‑Feb‑2026 — FY26 underlying EBITDAaL guidance tightened to A$8.2–8.4B
[4] Telstra Group Q2 2026 Earnings Call, 18‑Feb‑2026 — Mobile EBITDA +A$93M, ARPU growth, July 2025 price rise, customer NPS +47
[5] Telstra Group H1 2026 Report — interim_report (Underlying EBITDAaL +5.5%; Cash EBIT +14%; Cash EPS +20%; operating leverage 3.1pp; opex -A$179m/2.4%)
[6] Telstra Group H1 2026 Report — interim_report (Fixed Enterprise EBITDA -9.4%; NAS income -3.8%; International -6.0%)
[7] Telstra Group Annual General Meeting, 13‑Oct‑2025 — share price "at near nine-year highs"; A$750M buyback completed Jun, additional A$1B buyback announced Aug
[8] Telstra Group Annual General Meeting, 13‑Oct‑2025 — FY25 review: mobile services revenue +3.5%, fixed C&SB EBITDA +A$109M, fixed enterprise EBITDA +A$103M, international EBITDA -A$96M
[9] Telstra Group Annual General Meeting, 13‑Oct‑2025 — Connected Future 30: "innovating and adapting to remain a leader"
[10] StreetAccount — Telstra Group guides FY26 underlying EBITDAaL A$8.15–8.45B vs Street A$9.00B; launches A$1B share buyback (13‑Aug‑2025)
[11] StreetAccount — Telstra Group reports FY NPAT attributable A$2.17B vs SA A$2.20B (13‑Aug‑2025)
[12] StreetAccount — Street Takeaways: Telstra Group FY Earnings; shares -2.6%; Jarden/JPMorgan downgrades, Goldman/UBS TP changes; NTM P/E 22.9x (14‑Aug‑2025)
[13] StreetAccount — Telstra to sell 75% stake in Versent Group to Infosys for A$233M (13‑Aug‑2025)
[14] StreetAccount — iBasis to acquire Telstra International's wholesale voice, mobile, and messaging customer contracts (3‑Sep‑2025)
[15] StreetAccount — Federal Court orders Telstra to pay A$18M penalty for misleading Belong customers on broadband speeds (3‑Oct‑2025)
[16] StreetAccount — Telstra Group reaffirms FY underlying EBITDAaL guidance A$8.15–8.45B (13‑Oct‑2025)
[17] StreetAccount — JPMorgan upgrades TLS.AU; downgrades TPG.AU (25‑Jan‑2026)
[18] StreetAccount — Telstra Group increases on-market share buyback to up to A$1.25B from prior A$1B (18‑Feb‑2026)
[19] StreetAccount — Quick Take: Telstra Group +4.5% on better costs and higher dividend than expected (19‑Feb‑2026)
[20] StreetAccount — Telstra Group downgraded to hold from buy at Jefferies (19‑Feb‑2026)
[21] StreetAccount — Street Takeaways: Telstra Group mobile price increases (24‑Mar‑2026)
[22] StreetAccount — ACCC proposes improved NBN service standards, lower regulated costs in draft determination (31‑Mar‑2026)
[23] StreetAccount — ACMA releases preferred pricing for expiring spectrum licences; total market value A$7.32B (19‑May‑2026)
[24] StreetAccount — Telstra Group FY Earnings consensus preview; TLS.AU +27.0% H2 since 19‑Feb vs ASX 200 +5.1% (11‑Aug‑2025)
[25] StreetAccount — TLS.AU 52‑week high A$5.09 (+36.9%); recurrent on 52‑week-high list (12‑Nov‑2025 and throughout Mar–May 2026)
[26] StreetAccount — Street Takeaways: Telstra Group H1 Earnings (19‑Feb‑2026)
[27] StreetAccount — Themes APAC Headlines: Google A$36M fine for Telstra/Optus Android pre-install deals (18‑Aug‑2025)
[28] StreetAccount — ACMA releases approach to manage expiring spectrum licences (16‑Dec‑2025)
[29] StreetAccount — Metrics Recap: Telstra Group FY Earnings segment totals (13‑Aug‑2025)
[30] CLSA — Telstra — HLD (Dreamtime journey), 27‑May‑2025 — 607960654LinqAlpha.PDF
[31] CLSA — TPG — O‑PF (Vodafix), 7‑May‑2025 — 607958214LinqAlpha.PDF
[32] CLSA — Australia strategy (Weekly wrap), 30‑Jun‑2025 — 607963013LinqAlpha.PDF
[33] CLSA — Australia strategy (Monthly Market Review), 2‑Jun‑2025 — 607960992LinqAlpha.PDF
[34] CLSA — Australia strategy (Weekly wrap), 23‑Jun‑2025 — 607962529LinqAlpha.PDF
[35] CLSA — Australia strategy (Weekly wrap), 16‑Jun‑2025 — 607962033LinqAlpha.PDF
[36] CLSA — Australia strategy (Weekly wrap), 1‑Jun‑2025 — 607960983LinqAlpha.PDF
[37] CLSA — Australia Strategy (Weekly wrap), 26‑May‑2025 — 607960486LinqAlpha.PDF

## Citations

- [1] **Telstra Group Limited, H1 2026 Report** · external
- [2] **Telstra Group Limited, H1 2026 Report** · external
- [3] **Telstra Group Ltd., Q2 2026 Earnings Call, 18-February-2026 5** · external
- [4] **Telstra Group Ltd., Q2 2026 Earnings Call, 18-February-2026 5** · external
- [5] **Telstra Group Limited, H1 2026 Report** · external
- [6] **Telstra Group Limited, H1 2026 Report** · external
- [7] **Telstra Group Ltd., Annual General Meeting, 13-October-2025 6** · external
- [8] **Telstra Group Ltd., Annual General Meeting, 13-October-2025 6** · external
- [9] **Telstra Group Ltd., Annual General Meeting, 13-October-2025 6** · external
- [10] **Telstra Group guides FY26 underlying EBITDAaL A$8.15-8.45B; launches A$1B share buyback** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4370297&_doc_date=2025-08-13&_doc_product=SA>
- [11] **Telstra Group reports FY NPAT attributable A$2.17B vs StreetAccount A$2.20B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4370289&_doc_date=2025-08-13&_doc_product=SA>
- [12] **Street Takeaways - Telstra Group FY Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4372040&_doc_date=2025-08-14&_doc_product=SA>
- [13] **Telstra to sell 75% stake in Versent Group to Infosys for A$233M** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4370260&_doc_date=2025-08-13&_doc_product=SA>
- [14] **iBasis to acquire Telstra International's wholesale voice, mobile, and messaging customer contracts** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4392929&_doc_date=2025-09-03&_doc_product=SA>
- [15] **Federal Court orders Telstra to pay A$18M penalty for misleading Belong customers on broadband speeds** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4415130&_doc_date=2025-10-03&_doc_product=SA>
- [16] **Telstra Group reaffirms FY underlying EBITDAaL guidance A$8.15-8.45B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4421375&_doc_date=2025-10-13&_doc_product=SA>
- [17] **JPMorgan upgrades TLS.AU; downgrades TPG.AU** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4528521&_doc_date=2026-01-25&_doc_product=SA>
- [18] **Telstra Group increases on-market share buyback to up to A$1.25B from prior A$1B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4564325&_doc_date=2026-02-18&_doc_product=SA>
- [19] **Quick Take: Telstra Group +4.5% on better costs and higher dividend than expected** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4564583&_doc_date=2026-02-19&_doc_product=SA>
- [20] **Telstra Group downgraded to hold from buy at Jefferies** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4566306&_doc_date=2026-02-19&_doc_product=SA>
- [21] **Street Takeaways - Telstra Group mobile price increases** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4608615&_doc_date=2026-03-24&_doc_product=SA>
- [22] **ACCC proposes improved NBN service standards, lower regulated costs in draft determination** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4615449&_doc_date=2026-03-31&_doc_product=SA>
- [23] **ACMA releases preferred pricing for expiring spectrum licences; total market value A$7.32B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4687353&_doc_date=2026-05-19&_doc_product=SA>
- [24] **StreetAccount Consensus Metrics Preview - Telstra Group FY Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4363562&_doc_date=2025-08-11&_doc_product=SA>
- [25] **StreetAccount Summary: Australia and New Zealand Stocks reaching new 52-week highs** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4469429&_doc_date=2025-11-12&_doc_product=SA>
- [26] **Street Takeaways - Telstra Group H1 Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4566762&_doc_date=2026-02-19&_doc_product=SA>
- [27] **StreetAccount Themes APAC Headlines - Google A$36M fine for Telstra Android pre-install deals** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4375024&_doc_date=2025-08-18&_doc_product=SA>
- [28] **ACMA releases approach to manage expiring spectrum licences** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4504161&_doc_date=2025-12-16&_doc_product=SA>
- [29] **StreetAccount Metrics Recap - Telstra Group FY Earnings** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4370298&_doc_date=2025-08-13&_doc_product=SA>

