Telstra Group Limited

Thank you, Nathan, and good morning, everyone, and thank you for joining us. I'll make some comments related to Australia's productivity before I reflect on Telstra's overall performance and our outlook for the future. Michael will then cover the details of our financials. We welcome the national conversation on productivity, and we believe the telco sector has an important role to play. To unlock opportunities from technology, we've got to have the right foundation of digital infrastructure. That goes beyond data centres to connectivity, including the high capacity, low latency fibre and advanced mobile networks needed to support a tech-enabled, innovation-led economy. We need a national digital infrastructure plan for how we will enable Australia's digital future. It is the critical foundation for how we will realise the opportunities we see for individuals, businesses and the country to be more prosperous and competitive. As part of that, we need the right policy and regulatory settings to make sure we can roll out large-scale digital infrastructure projects more quickly and efficiently. This comes with having a pro-growth mindset to policy and regulation overall. We need a national spectrum strategy to make sure the country spectrum is being used to deliver the greatest possible economic and social value for all Australians. Certainty of spectrum is perhaps the biggest opportunity to unlock investment in network infrastructure and the benefits that come with better mobile services for consumers. The telco sector is ready to play our role, working with government, regulators and industry. What we need is a national vision and plan that we can all play our part in delivering on. Turning now to Telstra's performance for the year, FY25 was a strong year for Telstra as we continued to deliver for customers and shareholders. We celebrated the successful completion of our T25 strategy, delivered on our commitments to lift customer experience, build our reputation and drive sustainable growth. and announced our Connected Future 30 strategy, which will see us radically innovate in our core connectivity business. You can see a summary of our results on this slide. We delivered our fourth consecutive year of underlying growth, reflecting momentum across our business, strong cost control and disciplined capital management. Our reported growth this year is stronger than underlying growth because of significant one-off net costs totaling $715 million in the prior year. These costs discussed last year were mostly related to impairments and restructuring associated with the reset of our Telstra Enterprise business. In 2025, reported financial performance included EBITDA up 14% to $8.6 billion, profit up 31% to $2.3 billion, earnings per share up 34% to $0.189 and return on invested capital up 1.7 points to 8.5%. our underlying growth more accurately reflects our financial performance compared to the prior period. Excluding significant one-off items and other adjustments, underlying financial performance showed EBITDA up 4.6%, profit up 1.8%, cash earnings per share up 12% to 22.4 cents, and return on invested capital up 0.2 points to 8.5%. On the back of earnings growth, the board resolved to pay a fully franked final dividend of nine and a half cents per share, bringing total dividends for the year to 19 cents and representing a 5.6% increase on the prior year. In June this year, we completed our $750 million on-market share buyback, and today we have announced an additional on-market buyback of up to $1 billion. This has been enabled by growth in earnings and the strength of our balance sheet. The buyback support earnings and dividend per share growth over time, and along with increased total dividends, demonstrate the board and management's confidence in our financial strength and outlook. Looking now at our results across the business. We grew underlying EBITDA across our mobile, fixed consumer and small business, fixed enterprise, infra co-fixed and Amplitel businesses. It's been a dynamic year in the mobile industry with 3G closure, new satellite technology, pricing changes, and the migration of a significant volume of our customers to our new digital stack. In this context, our mobile business has continued to perform well with EBITDA growth of 235 million. Mobile's growth was driven by higher ARPU and customers continuing to choose our network and the value it provides. Mobile services revenue grew by 3.5%. Our fixed consumer and small business EBITDA grew by 109 million, reflecting ARPU growth and disciplined cost management. Pleasingly, our fixed enterprise EBITDA grew by $103 million, supported by decisive actions taken to reset this business and reduce costs. We remain committed to this reset, with further changes announced last month to remove complexity and cost, and set us up to deliver on our Connected Future 30 ambitions. Today, we also announced a strategic partnership with Infosys, a global leader in digital services and consulting, through the sale of a 75% stake in Versant Group. This is aligned with our Connected Future 30 strategy to focus on core connectivity and consistent with the reset of our enterprise business. Our international EBITDA declined by 96 million, with reductions across wholesale and enterprise and Digicel Pacific. As I mentioned briefly at Investor Day, we have completed a strategic review of this business and are now taking action, including to reduce costs, double down on connectivity and exit the majority of our NAS products. The wholesale and enterprise international results include restructuring costs associated with this. These actions, together with the continued demand for connectivity, mean the business is better positioned for the future. Our infrastructure businesses continue to grow, reflecting strong customer demand. Across the business, we delivered strongly on costs through simplifying our operations, reducing some roles and improving our productivity, partly offset by cost inflation. Core fixed cost decreased by 4.7% or $306 million in the year. Cumulatively, we reduced our core fixed costs by $428 million since FY22. As we close out our T25 strategy, I'm pleased to reflect on the strong momentum and foundation we've built, which comes from continuing to improve and deliver for customers. A detailed summary of our performance by strategic pillar and overall scorecard is available in the appendix slides, so I'll keep it high level here. We set a high bar across our four T25 pillars to lift customer experience, extend our network leadership, deliver sustainable growth and value, and to be the place our people want to work. Thanks to the dedication of the Telstra team, we have exceeded the majority of our scorecard metrics, including successfully delivering on our financial growth targets across underlying EBITDA, EPS, ROIC and cost out. We achieved our objectives, but not always as expected, as a lot changed over the course of T25, including technology evolution and inflation. For this reason, I am particularly proud of the way our team has adapted and delivered and the focus and discipline they have shown. We've continued to invest in our mobile network, digital infrastructure and in bringing the latest technology to our customers. In FY25, we reached 3 million square kilometres of mobile coverage, now reaching 99.7% of Australia's population. We also expanded our 5G network to cover 95% of the population. In February, we announced we will invest an additional $800 million in our mobile network over four years within our business-as-usual capex. This is to deliver customers the most advanced, resilient and reliable mobile network in the country. We are building on our existing 5G leadership to deliver 5G advanced performance. And we're excited to be leading the market with technology innovations like automated carrier aggregation. But what does that really mean for customers? It means mobile connectivity that will be faster, more reliable and more efficient than the 5G of today. It also simplifies our network operations and brings us closer to our ambition of creating fully autonomous networks. At the same time, we're optimising how we use spectrum, and this included the closure of our 3G network in the year, so we could redeploy that spectrum to further improve 5G services with flow-on benefits to 4G services. Despite ongoing growth in demand for data, our expansion of 5G and use of additional spectrum has helped to increase the average speeds our mobile customers enjoy by around 11% since the closure of 3G. We established a 3G helpline to support customers with the transition, and we have provided nearly 19,000 free phones to customers in vulnerable circumstances across Australia who had not yet transitioned to a 4G device. In June, we reached a significant milestone as we began to switch on our intercity fibre network, which will give Australia a new fibre backbone for industries that rely on high capacity, low latency connectivity. Our Sydney to Canberra coastal route is now live. Canberra to Melbourne coastal will switch on next and will progressively switch on more routes over the next 12 months. Also in June, we launched Australia's first satellite to mobile text messaging product. This is an important step forward for remote areas, and we're seeing around 90,000 devices connect to our satellite to mobile service on average per day. The service will become available on more handsets in time, and as satellite technology continues to evolve to support voice, data and IoT applications, we will explore how we bring those services to our customers. Overall, we recognise that to remain a leader in connectivity, we need to be a leader in AI. And earlier this year, we announced a joint venture with Accenture. We stood up the joint venture in April and we are focused on accelerating our data and AI roadmap to reach our customer experience and network ambitions faster. We're also focused on helping our people build skills and confidence using AI through our data and AI academy and the largest deployment of co-pilot for Microsoft 365 licenses in Australia. For customers, while there is always more to do to improve the experience for them, I'm pleased to say we exceeded our T25 episode MPS target, achieving a 15-point improvement over the last four years. Digitisation has been a big contributor to this and to cutting customer complaints by more than 70% since FY21. It has significantly improved the experience for our customers. For example, customers activating a service on our new platform have an MPS up to 50% higher than customers using our legacy technology. Our journey on digitisation has been long and complex, but we're now within reach of completing the migration of consumer customers to our new digital stack. As you would expect with a complex migration like this, some of the most challenging services come towards the end. We have fully migrated around 98 per cent of our 7.7 million customers, with the remaining 150,000 expected to be migrated by the end of this half. Over the last 12 months, we've increased the price of some of our products and services, so we continue to improve the network and deliver for our customers. Similar to the investments and improvements I've already mentioned, I recognise that cost of living remains a challenge for some people and Telstra remains committed to offering our customers a range of options at different price points and flexibility to choose what's best for them. We also provide assistance for those who need it. And over the last four years, we've helped keep on average more than 1 million customers in vulnerable circumstances connected each year. We know cybersecurity remains a concern for our customers, and scammers are evolving fast. We're evolving too, investing in technology and partnerships to help protect our customers and make the digital world safer. This includes expanding our scam indicator partnership with the Commonwealth Bank to include Fraud Indicator. the introduction of Scam Protect to alert mobile customers to suspicious incoming calls, and our Cleaner Pipes work, which continues to block millions of scam calls, texts and emails from reaching our customers. For Australia, we reached our goal to upgrade more than 1,000 payphones in disaster-prone areas across Australia, with free Wi-Fi and backup power. We completed a significant program of work to improve the resilience of our assets to power failures. More than 800 sites were upgraded across the country with batteries, solar, generators and improved monitoring and security. Meaning our customers can stay connected for longer when power goes out. We also continue to make strong progress against our climate targets, and we've now supported investments in renewable energy projects worth $1.6 billion, helping to enable projects across Queensland, Victoria and New South Wales. These investments mean we're on track to enable renewable energy generation equivalent to 100% of our consumption by the end of 2025. As I look ahead now to the future, there's a lot that gives me confidence. In addition to our incredible team of passionate people across Telstra, trends indicate that demand for connectivity will only grow. Our core connectivity business is strong, with a unique set of competitive advantages that mean we are well placed to lead through this next period of technological change. And we have established a strong track record of disciplined delivery through T22 and T25. This has laid the foundation for our Connected Future 30 strategy, which will see us adapt and lead to shape the future of connectivity. We are focused on continuing to deliver value for our shareholders, importantly through our core business cash flow and also through active portfolio and investment management and disciplined capital management. Our ambition is to be the number one choice for connectivity in Australia and to continue delivering on our purpose to build a connected future so that everyone can thrive. I'd like to thank the Telstra team for the discipline and focus they have shown over FY25 and throughout our T25 strategy. We simply can't produce strong results without delivering for customers and continuing to improve customer experience. And our amazing team are fundamental to that. I'll now hand to Michael to take you through the results in detail.

Thank you. Thanks, Vicky. I'm pleased to present our financial results now for FY25. As Vicky said, we've had another strong year with continued growth on both a reported and an underlying basis. Reported net profit was up 31%. and earnings per share up 34%, primarily due to a $715 million pre-tax one-off of net costs in the previous year. In contrast, our underlying result had a small $14 million pre-tax adjustment from our reported result this year. Excluding these items, on an underlying basis, our EBITDA of $8.6 billion was 4.6% higher. Underlying earnings per share of 19.1 cents was up 3.2% as higher finance costs, tax and depreciation and amortisation, or DNA, tempered growth. Cash earnings growth was stronger on broadly flat BAU CapEx, demonstrating the cash generation of our operations. Cash EPS of 22.4 cents was up 12%. As we said at our recent Investor Day, our aim is to deliver sustainable and growing dividends, having regard to cash EPS and EPS and balance sheet strength. In line with this, the Board has declared total dividends for FY25 of 19 cents per share, fully franked, up 5.6%. While our strong preference is to continue to fully frank dividends, our franking balance is tight and we have an ongoing difference between cash and accounting earnings. We may consider partially frank dividends if growing fully frank dividends is not possible. Where we have additional capital return to shareholders, our preference is buybacks rather than unfranked dividends. However, we retain the flexibility depending on value and market circumstances. Our goal is to drive enduring shareholder value creation and accretive buybacks are consistent with this. Accordingly, we also announced today an on-market share buyback of up to $1 billion, reflecting the strength of our balance sheet. This follows the completion of our previously announced $750 million buyback in June 25, at an average share price of $4.43, reducing shares on issue by 1.5%. Looking at our underlying results in more detail on slide 13. While total income increased 0.7%, we reduced our operating expenses by double that percentage through an ongoing focus on cost discipline. This delivered underlying EBITDA growth of 4.6%. As previously indicated, DNA expense increased. It was up 4.7% or over 200 million, largely reflecting the ongoing shift to shorter life assets. we continue to expect the trend of materially higher DNA to continue in coming years. Finance costs increased on higher debt levels and tax expense increased with stronger earnings and a higher effective tax rate of 28.5%. Pleasingly, we achieved growth across domestic connectivity and infrastructure products, including mobile, fixed CNSB, fixed enterprise, InfraCo fixed and Amplitel. However, we saw a decline in international and fixed active wholesale. Other EBITDA also declined, with a $34 million reduction in gains related to tower access agreements and a $17 million reduction in energy, partly offset by lower corporate adjustments. Turning to mobile. Our leading mobile network and customer focus proposition supported 5% EBITDA growth. Mobile service revenue grew 3.5%, driven by postpaid, prepaid and wholesale handheld, partially offset by a decline in mobile broadband. During the year, we increased prices across much of the portfolio. These actions contributed to a 2.1% increase in average revenue per user, or ARPU, supporting ongoing investments in network performance, differentiation and customer experience. This includes the launch of our satellite to mobile text messaging service, an Australian first, offering our customers an additional layer of connectivity, while also increasing our cost of goods sold going forward. Postpaid ARPU rose 2.5%, driven by consumer. while prepaid rose 8.4% and wholesale 5%. Overall, our handheld user base continued to grow, particularly in consumer and wholesale. Our reported SIOs do reflect the number of one-offs in FY25. there was 162,000 impact to postpaid from 3G closure, reclassification of some services to IoT, and deactivation of unused COVID-era pay-as-you-go SIMs, mainly in enterprise and mid-market. Excluding these, postpaid CIOs grew by 106,000, mainly in the first half and driven by consumer. We deliver this growth in spite of price changes and the disruptions of migrating consumer customers to our new digital IT stack. In prepaid, we made deliberate choices on our channel strategy to improve commercial outcomes. ARPU growth overwhelmingly offset the impact of SIOs and recent trading momentum is pleasing. Overall, we're confident in continuing to deliver growth and value with the benefits of our actions, including recent price changes flowing through into FY26. Turning to fixed consumer and small business, where our focus on profitability and a portfolio of technologies continue to deliver growth. EBITDA grew 43% to $363 million. Bundles and data ARPU grew 5.7% and price rises that came into effect in November 2023 and July 2024, delivering NBN margin expansion despite ongoing customer losses. Our portfolio of technologies, including 5G fixed wireless, which continue to scale, as well as our satellite home internet product, also supported EBITDA growth, while headwinds from legacy and voice decline continued. In fixed enterprise, we made strong progress in resetting the business. Our actions helped deliver EBITDA growth of 76% to 239 million, despite continued structural headwinds across parts of the portfolio. Data and connectivity, or DAC, remains impacted by ARPU compression and technology change. Income fell 9% while EBITDA decline was limited to 10% from cost actions. In network applications and services or NAS, revenue increased slightly with the contribution of prior year acquisitions, managed services and cloud growth. This was partially offset by fewer lower margin equipment sales, legacy calling and product exit decline in line with strategy. We have improved margin outcomes across much of NAS, including professional services, managed services, security, large deals and cloud. Growth in these areas more than offset ongoing legacy calling and product exit driven decline. This and our actions to reduce operating costs supported NAS EBITDA of 153 million. While these results are positive and customers are responding well, there's still more work to do to simplify our portfolio and improve outcomes. To this end, we announced further organisational changes in July and the sale of Versant Group, which includes Versant and parts of our NAS business. Our focus on portfolio management, however, is ongoing. Turning to international on slide 18. Wholesale and enterprise revenue continued to benefit from ongoing demand for our offshore infrastructure and subsea cable capacity. DAC grew 4.5%, partially offset by continued declines in legacy voice and NAS following our decision to refocus the portfolio. As Vicky mentioned, we've taken decisive action following our strategic review, including the exit of certain NAS products and a reorganisation of our teams. Accordingly, our results reflect significant restructuring costs, as well as timing benefits in the prior year that did not repeat this year. Wholesale and enterprise EBITDA fell to $351 million in Australian dollars, an 11% decline in constant currency. While the exit of products is expected to impact revenue further, these actions put us in a better position for the future. Digicel Pacific trading performance for the year saw SIO growth offset by a reduction in P&G ARPU. EBITDA was down 3.5% in cost and currency, excluding the impact of the earn-out release in the prior period, with the second half up sequentially in Australian dollars. Turning to our domestic infrastructure business, InfraCo fixed results continue to benefit from the demand for dark fibre and ducts for MB&Co and other customers, partially offset by lower commercial works and asset disposals. InfraCo fixed core access EBITDA grew 5.1% with stronger operating leverage. Lower overall power consumption contributed to lower internal charges also to InfraCo. Amplatel continued to benefit from strong demand for towers and new signings. Ebertdale grew 7.5%, excluding the gains from customer contracts last year. We continue to make progress with our inner-city fibre network, with one route ready for service late in the year. The next route, Canberra to Melbourne Coastal, is expected this half, linking Sydney and Melbourne with this world-class technology. We expect more significant contribution to revenue growth from FY27 in line with opening more routes. We delivered a significant reduction in operating expenses in FY25. Our strong performance was achieved through productivity and lower sales cost, despite inflationary pressures and growth from acquired businesses. This included $306 million reduction in fixed cost core this year, and $428 across T25. We achieved cost decline this year through reductions in our direct and indirect labour, including those linked to restructuring costs in FY24, lower commissions and power costs with reduced consumption, and other productivity more than offsetting salary increases, inflation, and higher business as usual redundancies. Our focus on efficiency also extends beyond operating expenses to leases and BAU capex. Cash EBIT costs declined, delivering operating leverage of 1.8 percentage points, including due to the restructuring in the prior period. Consistently growing revenue faster than costs to deliver positive operating leverage is the focus of our cost commitments under Connected Future 30. Our cash generation is strong. This slide shows the walk from underlying EBITDA to cash EBIT. We are increasingly focused on this measure and we've provided guidance on this basis for FY26. Cash EBIT grew 9.5% on higher EBITDA and broadly flat BAU CapEx leases and spectrum amortisation. Free cash flow after leases before strategic investment increased 5.7% to 3.4 billion, driven by that higher cash EBIT. Working capital and other investment in FY25 reflects our management of receivables and inventory offset by a 300 million cash flow related to the FY24 restructuring. We also expect around 250 million working capital outflow in FY26 associated with an NBN true up payment as we've previously indicated. This strong cash generation supported shareholder returns and strategic investment. Strategic investment for the inner city fibre project was $325 million and we also received proceeds from portfolio management, including the $131 million loan repayment from the sale of Foxtel. In all, this supported dividends and buybacks of $2.9 billion this year. In addition, our capital position and liquidity remains strong. Net debt remains well within the comfort zone at 1.9 times and our average cost of debt remained at 5%. We've also improved our underlying return on invested capital to 8.5% through earnings growth and capital discipline. Our connected future 30 target is 10% by 2030. Turning to guidance for FY26, which is on slide 24. You'll see here that we've reflected the metrics we outlined at our recent Invest Today as we focus on driving cash earnings as part of our strategy to create value. Underlying EBITDA has been replaced by underlying EBITDA after lease amortisation, or EBITDA, reflecting a broader measure of costs in our business. For FY25, we reported underlying EBITDA of 8.62 billion, less 600 million of lease amortisation, giving us 8.02 billion of EBITDA. Our FY26 guidance range is 8.15 to 8.45 billion. We expect lease amortisation to remain broadly the same, around 600 million in FY26. As I mentioned earlier, we are guiding on cash EBIT in FY26, which is made up of underlying EBITDA, business as usual capex and spectrum amortisation. Cash EBIT is a close proxy for free cash flow and drives management focus on all of these costs. We remain focused on free cash flow and we will continue to report on working capital performance. Our FY26 cash EBIT is expected to be between 4.55 and 4.75 billion. This is equivalent to growth of between 5.5 and 10% on FY25, demonstrating the cash generation of our operating business. BOU CapEx of 3.2 to 3.5 billion further demonstrates our disciplined approach to CapEx. Strategic investment is expected to be between 0.3 and 0.5 billion in FY26, reflecting the continued rollout of our inner city fibre project. Our results and FY26 guidance for strong cash EBIT growth is a clear demonstration of our shareholder value creation under Connected 30. One, growth of our core cashflow led by mobiles and digital infrastructure coupled with cost and BAU CapEx efficiency delivering positive operating leverage. Two, portfolio and investment management to optimise returns. And three, disciplined capital management is where we maintain balance sheet strength and deliver flexibility and deliver a strong and growing dividend and reduce shares on issue with accretive buybacks. Finally, I would like to thank the Telstra team for their ongoing efforts in delivering for our customers, the community and our shareholders. I'll now hand back to Nathan for Q&A. Thank you.

Thank you, Michael. We'll now begin a question and answer session, beginning with investors and analysts. Vicky and Michael are on stage. Also present in the room today are Brad Whitcomb, Head of Consumer, Oliver Camplin-Warmer, Head of Enterprise, Amanda Hutton, Head of Business, and Brendan Riley, CEO of InfraCo. We'll begin with our first question, which comes from Eric Choi from Baron Joey. Go ahead, Eric.