---
endpoint: analytics
pattern: Telecoms
status: done
latency_ms: 233316
conversation_id: f1974a7f-db4d-4e0e-833f-1a21df1f864d
citations: 14
created: 2026-05-31 20:50:44Z
---

# What catalysts could drive upside/downside for Telstra in the next 12–18 months?

# Telstra (TLS AU) — Catalysts for the Next 12–18 Months

**Setup**: Telstra closed at **A$5.52 on 19-May-2026 (new 52-week high, +26% over 12 months)**, well above CLSA's last published HLD target of A$4.10 (set 27-May-2025) [8]. The stock has re-rated on better-than-expected H1 FY26 cost-out execution and a buyback expansion [12], but the next leg of catalysts is heavily skewed toward (1) the mid-2026 NBN regulatory reset, (2) the 2H 2026 spectrum renewal, (3) FY26 result and FY27 guidance, and (4) competitive read-throughs from TPG/Optus and emerging LEO/SDN technology.

CLSA explicitly frames the catalyst set as: "peer results locally and offshore as well as updates on new technology (such as Low Earth Orbit (LEO), Software defined Network trends and macroeconomic conditions to be key catalysts for Telstra in the next 6 to 12 months, including the upcoming FY25 result and FY26 guidance" [1].

---

## I. Upside Catalysts (Bull Path → re-rate toward A$5.50–6.00+)

| # | Catalyst | Timing | Mechanism |
|---|----------|--------|-----------|
| 1 | **Mobile ARPU acceleration / spectrum cost pass-through** | Jul–Dec 2026 | Carriers explicitly told the AFR they "will have to raise mobile plan prices" in response to ACMA's preferred A$7.32B renewal pricing — a direct ARPU lever on top of June CPI-linked re-pricing [13] |
| 2 | **FY26 result (Aug 2026) + FY27 guidance upgrade** | Aug 2026 | H1 FY26 already showed Mobile ARPU growth across post-paid, pre-paid AND wholesale, with cost-out from AI/vendor consolidation/headcount running ahead of plan; Morgan Stanley raised TP to A$5.40 (OW), JPM to A$5.30 (OW) on this [12] |
| 3 | **Capital management — buyback expansion + dividend growth** | Continuous | H1 FY26: expanded on-market buyback and higher interim DPS signalled balance-sheet confidence [12]. CLSA models DPS rising from A¢18 (FY24) → A¢19 (FY25CL) → A¢21 (FY26CL) → A¢22 (FY27CL), payout ratio ~94–98% [9] |
| 4 | **InfraCo / Intercity fibre AI re-rating** | 12–18m | Morgan Stanley calls intercity fibre a "strategic upside" — connectivity bottleneck for AI/data-centre buildout positions Telstra as an *indirect* AI infra play the market is under-appreciating [12]. CLSA also flags "major EPS-accretive acquisitions" as an upside risk [2] |
| 5 | **Cost-out beating plan (AI-led)** | 12–18m | Management's AI/vendor consolidation execution viewed by the Street as a "durable second earnings lever alongside Mobile"; Jarden specifically cites "AI execution exceeding prior expectations" [12]. CLSA models EBITDA margin expansion from 32.1% (FY24) → 36.1% (FY25CL) → 37.2% (FY26CL/FY27CL) [9] |
| 6 | **FY25 guidance reiteration / further upgrades** | Aug 2025 / Feb 2026 | Reiteration was an important near-term anchor [4]; subsequent H1 FY26 result delivered the upgrade [12] |
| 7 | **NBN access-cost relief** | Final ruling Jun 2026 | ACCC's draft determination proposes ~18% lower NBN capex (A$6.9B vs proposal) and lower revenue requirements for FY27–29 — would lower Telstra's wholesale input costs on its NBN resale [14]. Note: directionally net-positive for retailers, with NBN Co also committing to 25/10 Mbps pricing parity with 25/5 from 1-Jul-2026 [14] |

## II. Downside Catalysts (Bear Path → de-rate toward A$4.10)

| # | Catalyst | Timing | Mechanism |
|---|----------|--------|-----------|
| 1 | **Mobile competitive intensity from TPG–Optus network share** | Continuous | TPG's "double the network" campaign (launched late-Jan 2025) and the Optus network-sharing agreement is "beginning to improve churn and network connections, including post-paid subscriptions" — a structural improvement in TPG's brand positioning *at Telstra's expense* [10]. CLSA labels TPG's outlook "extremely catalyst rich over 2025 and 2026" given ACCC green-lighted asset sale + rate-cut tailwind [11] |
| 2 | **Spectrum renewal cost outlay** | 2026–2027 | ACMA market value A$7.32B is industry-wide, but Telstra's share is the largest — explicit cash outflow risk to FCF and dividend headroom [13]. CLSA already calls out "mobile spectrum auction costs" as a DCF risk [3] |
| 3 | **LEO satellite encroachment (Starlink, Amazon Kuiper)** | 12–24m | CLSA's named downside risk: "technology risk from LEO satellite or network modernisation" — direct threat to Telstra's regional/rural moat where ARPU is high [2] |
| 4 | **Software-Defined Networks (SDN) reducing infrastructure moat** | Structural | CLSA's central thesis-risk: rising adoption of 3rd-party software to manage networks dynamically puts incumbents like TLS "on a collision course with operators with greater software buying scale" and reduces the relative importance of ground infrastructure [5]. Aduna partnership flagged is "not exclusive" — Singtel and Vodafone are also parties, limiting differentiation potential [6] |
| 5 | **2030 ROIC target slippage** | Continuous (data points per result) | Management targets ROIC >10% by 2030 [7]; CLSA models 8.2% (FY25CL) → 9.2% (FY26CL) → 9.5% (FY27CL), still short of target [9] |
| 6 | **Customer mix shift / wholesale brand cannibalisation** | Continuous | Jefferies (downgrade to Hold, Feb 2026): "evidence of customer mix shifting downward" toward value/wholesale brands — pressures the sustainability of headline ARPU momentum [12] |
| 7 | **Valuation already pricing in the improvement** | Now | Stock at A$5.52 is +35% above CLSA's A$4.10 TP [8] and trades NTM P/E 24.1x vs 5-yr avg 23.0x, EV/EBITDA 8.1x vs 5-yr avg 7.0x [12]. Multiple compression risk if any negative surprise lands |
| 8 | **Macro / rate cycle reversal** | Continuous | Defensive yield bid (4.0–4.6% div yield) [9] is partly a rate-cut play; sticky inflation that delays RBA cuts could unwind the bond-proxy bid |
| 9 | **Higher capex / DCF impairment** | Continuous | "Significant increase in capex" and "high cost growth" cited as downside risks; capex/sales projected to step back up from 14.7% (FY25CL) to 15.7% (FY27CL) [2] |

---

## III. Forensic Read — Where the Bull and Bear Cases Collide

The single most important catalyst is the **interaction between spectrum renewal costs (bear) and the carriers' ability to pass them through to mobile ARPU (bull)**. The AFR's reporting that telcos *publicly stated* they will raise plan prices [13] is highly unusual — it's effectively pre-committed pricing power, and is the cleanest 12-month bull setup for Telstra's earnings. The market appears to be discounting this: TLS hit a new 52-week high the day of the ACMA news.

CLSA's HLD case, written 27-May-2025 at A$4.54, has already been overtaken by events. The valuation discipline ("low confidence in the outlook" justifying the 6.4x EV/EBITDA multiple [9]) was anchored to (1) pre-H1-FY26 cost-out execution uncertainty, (2) pre-spectrum-pricing-clarity, and (3) pre-Jefferies-style ARPU-mix concerns being articulated. **All three of those uncertainties have now resolved more constructively than CLSA expected**, which is why consensus has migrated to a A$5.18 average TP (33% above CLSA) [12].

**Net assessment**: Over the next 12–18 months, the upside catalyst list is more **near-dated and contractually pre-committed** (FY26 result Aug 2026, NBN final determination Jun 2026, spectrum settlement window, buyback continuation), while the downside catalysts are **slow-burn structural** (LEO, SDN, mix shift) that play out over multiple years. The asymmetry favours owning into the FY26 result; the bear case becomes more compelling beyond FY27 once one-off cost-out and spectrum-pricing benefits anniversary.

---

## IV. Calendar of Hard Catalysts

| Date / Window | Event |
|---|---|
| **Jun 2026** | ACCC final NBN determination [14] |
| **1-Jul-2026** | NBN 25/10 = 25/5 pricing parity takes effect [14] |
| **2H CY2026** | Spectrum licence renewal cash outlay / pricing finalisation [13] |
| **Aug 2026** | FY26 full-year result + FY27 guidance + capital management update [1] |
| **Continuous** | TPG/Optus mobile share data (key competitive read-through) [10] |
| **mid-2027** | 25/10 Mbps becomes entry-level NBN product [14] |

---

**Sources**

[1] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Catalysts section, chunk 55 — 607960654LinqAlpha.PDF
[2] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Investment risks, chunk 57
[3] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Investment thesis, chunk 54
[4] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Outlook / FY25 guidance, chunk 12
[5] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — SDN risk, chunk 29
[6] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Aduna not exclusive, chunk 30
[7] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Investor Day 2030 ROIC target, chunk 11
[8] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — HLD A$4.10 TP, chunk 10
[9] Telstra - HLD (Dreamtime journey) — CLSA (27 May 2025) — Earnings changes/valuation, chunk 13
[10] TPG - O-PF (Vodafix) — CLSA (7 May 2025) — TPG/Optus network sharing, chunk 10
[11] TPG - O-PF (Vodafix) — CLSA (7 May 2025) — Investment risks/upside, chunk 18
[12] Street Takeaways — Telstra Group H1 Earnings — StreetAccount (19 Feb 2026)
[13] ACMA releases preferred pricing for expiring spectrum licences — StreetAccount (19 May 2026)
[14] ACCC proposes improved NBN service standards — StreetAccount (31 Mar 2026)

## Citations

- [1] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [2] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [3] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [4] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [5] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [6] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [7] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [8] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [9] **607960654LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/05/607960654LinqAlpha.PDF>
- [10] **607958214LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607958214LinqAlpha.PDF>
- [11] **607958214LinqAlpha.PDF** · clsa — <s3://ext-linq-rms-clsa/2025/04/607958214LinqAlpha.PDF>
- [12] **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>
- [13] **ACMA releases preferred pricing for expiring spectrum licences; sets total market value for renewing licenses at A$7.32B** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4687353&_doc_date=2026-05-19&_doc_product=SA>
- [14] **ACCC proposes improved NBN service standards, lower regulated costs and revenue requirements in draft determination** · news — <https://my.apps.factset.com/viewer-fusion/?_doc_id=sa_story_4615449&_doc_date=2026-03-31&_doc_product=SA>

