Telstra Group Limited

Thank you, Nathan, and good morning, everyone, and thank you for joining us. I'll make three comments reflecting on the year before turning to Telstra's overall performance and our outlook for the future. Michael will then cover the details of our financials. First, the pace of change over the last 12 months has been extraordinary, from geopolitics to policy and technology, with AI and global investments in digital infrastructure accelerating dramatically. Second, network resilience was brought into sharp focus. We experienced a significant network outage in July, which reinforced how much Australians rely on connectivity. And we know that reliance will only grow. Third, Australia is at a critical moment. We are laying the foundations for the next few decades of our economic growth, prosperity and resilience. We must position ourselves to drive and participate in the value created by AI and the digital infrastructure boom, with sovereign capability and assets working in our national interest. At the same time, Australians are concerned about the impact AI could have on jobs and society. As a country, how we build trust, skills and inclusion will have a significant impact on whether it delivers benefits to all Australians. Telstra's Connected Future 30 strategy positions us well to lead and adapt through this rapidly changing context. We remain committed to enabling Australia's digital future and to working with government to ensure benefits and opportunities are shared widely. Turning now to Telstra's performance for the year, FY26 was a strong year as we continued to deliver for customers and shareholders. We increased investment in our network and delivered ongoing earnings growth, reflecting momentum across our business and disciplined cost control and capital management. You can see a summary of our 2026 results on this slide. Reported financial performance compared to the prior period included EBITDA up 3% to 8.2 billion, net profit after tax up 2.7% to 2.4 billion, and earnings per share up 5.3% to 19.9 cents. Our underlying results provide a clearer view of financial performance cash EPS up 14% to 25.5 cents and underlying return on invested capital up 0.5 percentage points to 9%. Michael will take you through our financial performance in detail, including the drivers of our underlying EBITDA growth across mobiles, fixed consumer and small business, infra co-fixed and Amplatel. He will also detail the drivers of our cash earnings growth and positive operating leverage of two percentage points, which was in line with our Connected Future 30 targets. On the back of cash earnings growth, the Board resolved to pay a final dividend of 10.5 cents per share, bringing the total dividend for the year to 21 cents per share and representing a 10.5% increase in the prior year on a cash basis. The final dividend is 90.5% franked, with a franked amount of 9.5 cents per share and an unfranked amount of 1 cent per share. The final dividend is consistent with our capital management framework and our aim to deliver a sustainable and growing dividend. Our dividend is supported by strong cash earnings and our Connected Future 30 ambition remains to deliver mid single digit growth in cash earnings. In June this year, we completed our $1.25 billion on-market share buyback, and today we have announced a further on-market share buyback of up to $1 billion. This shifts our capital structure towards more debt and less equity, and has been enabled by earnings growth and the strength of our balance sheet. Importantly, these buybacks are alongside increased capex and strategic investment. Buybacks allow us to lower our cost of capital and manage our source of funding more efficiently. This approach also supports earnings and dividends per share growth, and together with increased dividends, demonstrates the Board and management's confidence in our financial strength and outlook. Turning to our Connected Future 30 strategy. Over FY26, we laid important foundations for its delivery. There is a detailed scorecard in the appendix that shows our progress. I won't go through that now, but I will call out some highlights. Customer engagement is becoming a stronger commercial advantage for Telstra. Over the last year, we've focused on making interactions easier, more personal and more valuable for customers. We now have more customer support available across more hours and channels, including 24 by 7 fault support. We have continued to add new functionality to our AI-powered digital assistant and digital self-service tools, and more customers are choosing these tools and having their inquiry resolved. We also introduced generative AI-powered search across Telstra.com and myTelstra app, as well as translation into 37 languages. For customers who prefer to call us, our average call handling time, our wait time, have reduced to two minutes. We completed the migration of our consumer customers to the new digital stack and decommissioned the old system last month, creating a stronger foundation to innovate in how we serve customers. For example, we rolled out Customer IQ in the year, bringing together millions of data points to better understand the experience of our customers. This is helping our team to proactively address issues and have better conversations with customers, supported by AI-powered tools to help them get up to speed quickly and improve complaints handling. These improvements are translating into better experiences and more customers choosing us and staying with us. In FY26, strategic MPS increased to positive 20 and episode MPS to positive 49, the highest year-end results since we started measuring MPS. Under our network as a product layer, we continue to invest to deliver Australia's leading mobile network. Over the last five years, we have invested more than $9.5 billion in our mobile network nationally, with 3.8 billion of this in regional Australia. In total, we have invested more than $19 billion in overall CapEx and Spectrum in the last five years. As our profit has grown, so too has our investment in our networks and digital infrastructure. In FY26, it was around $800 million upgraded nearly 1,200 mobile sites with 5G advanced capability and built more than 150 new mobile sites to continue to improve the experience on our mobile network. We also upgraded more than 1,800 network sites with backup power. Every year, we experience around 165,000 mains power interruptions across our fixed and mobile sites. And due to our investments in backup power, around 97% of those had no impact on services to customers in FY26. Overall, these improvements and others are translating into more consistent experiences for customers. In FY26, we lifted our network experience index by 1.6 points, which is our measure of network reliability and performance. We also brought new services and value to customers. We chose to invest in satellite messaging, and we recently expanded this to include select satellite applications like maps, weather, and internet messaging. We continue to expand our product offerings for enterprise customers across mobile and fixed, including dynamic 5G to deliver tailored network performance and our adaptive network center, which provides our customers greater visibility and control over their network. We also introduced adaptive collaboration to help mid-market customers integrate calling and collaboration tools. We know we let our customers down in July and we have taken full accountability for this. We have an initial understanding of the root cause of the outage and have taken steps to address that. We are completing our investigation with an external expert and we will be transparent about those findings and the actions we take as a result. We take any disruption to our customers and Australians extremely seriously. When things do go wrong, we're committed to taking accountability, giving people clear information and fixing issues as quickly as possible. As connectivity becomes increasingly critical, we're also committed to continuing our work to further strengthen the resilience of our network and the services Australians rely on. This includes working with key government and enterprise customers to identify critical use cases and ensure appropriate resilience, redundancy and safeguards are in place. Under digital infrastructure, we are seeing very strong demand signals for our digital infrastructure assets, and we are turning those into contracted value. Some of the world's largest cloud and AI companies have signed long-term contracts across our Aura network, subsea cable, or long-haul fibre assets, including Google, AWS, Thermos, and Microsoft as our foundational partner on our Aura network. We are over halfway through the build of our Aura network with more than 8,500 kilometres of fibre in the ground and six routes ready for service. We now expect the total strategic investment, including FIASAT, to be around 1.8 billion through to FY28, compared with our previous estimate of around 1.6 billion. Michael will speak more to the ongoing management of the remaining build. Our Aura sales pipeline has increased significantly over the last six months. This strengthens our confidence in the project's returns, including an expected mid-teens IRR and cash payback period of around nine years. Over FY26, we expanded our subsea cable capacity through partnerships with Google and Keppel, strengthening our international capacity and our offering to customers. We also completed the construction of eight new satellite ground stations. Turning to the enablers of our strategy. You can see the progress we're making against them in the appendix slide, and I will call out two highlights. The first is our investment in data and AI capability for our people with more personalised learning and tools. Over FY26, we expanded our data and AI academy with different learning pathways based on role. And more than 15,000 of our people completed at least one course. We were also one of the first in Australia to roll out Microsoft's personalized learning agent. 86% of our people with a co-pilot license used it weekly or more over June. And we also added the ability to build agents. The second highlight relates to our technology leadership. We have been extremely disciplined about scaling AI with strong foundations, including reusable architecture, governance, security, cost management, and simplifying our data ecosystem. Over FY26, we reduced our data platforms by another 15. We have 17 today and we're aiming for three. We also implemented a company-wide control plane that provides a central view of how AI is being used across the business to help us control costs, monitor adoption, optimize performance, manage risks, and ensure our AI is safe and compliant. We also have the ability to switch applications between AI models based on cost, speed, and reliability. Looking ahead, we are focused on continuing to deliver value for our customers, communities and shareholders, including through delivering on our Connected Future 30 targets around cash earnings growth, underlying ROIC and operating leverage. Over FY27, there are five things I would like to call out. One, we are accelerating our mobile transformation to further improve the experience on our network. This includes through increasing the density of our network and accelerating our rollout of 5G standalone to provide an even more consistent experience, more capacity and lower latency for AI applications. Investment in mobile networks will be critical to unlocking national benefits from AI, as this is the way most people will use it. We're also increasing our investment in security to help keep our customers safe and taking the lessons from our outage in July to further inform our already increasing investment in network resilience. Two, we will continue to evolve our network as a product offerings and expand our mobile network APIs, enabling developers to integrate network capabilities into their applications. Together with progressing our products across mobile and fixed, this will bring us closer to our goal of creating more value from our networks for customers and sharing in that value by reinventing commercial models. Three, we will continue to help our people build data and AI capability and transform our business and customer experience with AI. This includes through accelerating progress on our cross-company AI transformational initiatives, like agentic customer care, expanding fraud detection and prevention, and improving fixed network planning and optimization. Four, we will focus on driving revenue from our digital infrastructure assets, including our Aura network. We will also consider future needs to support Australia as an AI and digital innovation hub, and we are assessing a range of opportunities, including in subsea cable capacity. our network and digital infrastructure leadership built over decades means we are uniquely positioned to deliver Australia's digital future both under Connected Future 30 and beyond. Five, we will also remain disciplined on costs, capital allocation and creating shareholder value. As we continue to invest in network resilience and growth, we will maintain our focus on productivity, simplification and positive operating leverage. As I close, I want to acknowledge and thank our customers for their patience and understanding during our network outage in July. We don't take this for granted. I'd also like to thank the Telstra team for everything they have delivered in the year and for the way they responded to the outage. It's never a situation we want to be in, but I want to recognise our team for the care and dedication shown and for the discipline applied to our investigation. It will help us deliver a stronger and more resilient network for our customers. I'll now hand to Michael to take you through the results in detail.

Thanks Vicky. FY26 was a strong first year under Connected Future 30. We delivered growth in cash earnings, improved operating efficiency and increased investments in our network and digital infrastructure. We also improved customer outcomes and delivered higher shareholder returns. Earnings per share increased 5% to 19.9 cents, supported by growth in key products and our 1.25 billion share buyback program completed in the year, in addition to the 750 million in the previous year. Across the Group, total income and operating costs declined. Our focus on improving operating leverage resulted in deliberate actions to continue optimising our fixed enterprise and international portfolios with divestments and product exits during the year. Our reported result included 55 million of net non-cash impairments and M&A impacts that are excluded from the underlying results. Excluding these, underlying EBITDA after leases or underlying EBITDA, increased 4% to 8.3 billion in line with our guidance. When we look at these results after BAU CapEx, instead of depreciation and amortization or DNA, we see that cash EPS grew strongly to 25.5 cents up 14%. This is higher than EPS growth as BAU CapEx was broadly flat while DNA grew. And we expect DNA to continue to grow. As Vicky said, with stronger earnings, the board announced FY26 dividends of 21 cents per share, which are 90.5% franked. This is up 10.5% on a cash basis from last year and represents 82% of cash EPS. Turning now to cash earnings, where we delivered a strong result. Cash EBIT, grew 8% to 4.7 billion with growth in key products, strong cost management and BAU capex broadly flat. Finance costs grew 5% with higher lease costs and tax expense grew with a lower effective tax rate. With that, cash earnings grew 12% to 2.9 billion. We also invested a further 457 million in strategic investments, including the Aura network. Looking at our product EBITDA performance, we delivered growth across mobile, fixed CNSB, Infracofixed and Amplatel. The decisions to divest businesses and rationalise products as well as FX headwinds. Other EBITDA also increased with favourable bond rate and FX movements, the absence of an equity loss which occurred in the prior period and energy generation gains. Note that these product results include an additional 92 million of redundancy costs this year compared to last year as we continue to simplify our business. Turning to our key products, starting with mobile, where we are continuing to win in market. Mobile service revenue grew 4.8% with growth across all products, postpaid, prepaid and wholesale handheld, mobile broadband and IoT. Our focus continues to be on providing the best products in market so that we can continue to deliver sustainable growth for our mobile business. Consistent with this, we delivered average revenue per user or ARPU growth across all categories, brands and segments. Growth in users and ARPU was stronger at the lower price points. Overall handheld ARPU grew nearly 4% and our users grew over 270,000 or 1.9%. Mobile EBITDA grew 3% with service revenue growth partly offset by higher costs, similar to the first half. Most of the increasing costs this year was driven by higher than usual remediation, compensation and redundancy rather than underlying operating cost growth. Satellite and network related costs represent a step up in capability, supporting improved performance and new functionality. We expect ARPU next year to benefit from price changes implemented in May, 2026. Turning to fixed consumer and small business. While this remains a highly competitive product and market growth is challenged, we grew EBITDA by 13.5% to 412 million through strong cost management. During the year, we continued to invest in our product proposition, including the launch of our internet-only pans in November and our Smart Modem 4. More customers are on high speed tiers and fibre. However, sire losses continued and this remains an ongoing focus. ARPU grew 2.6% through price rises and plan mix. However, margin declined with price rises not enough to offset sire losses and wholesale input cost increases. In fixed enterprise, we've continued to make strong progress to reset this business and focus on core connectivity offerings. Our data and connectivity or DAC EBITDA declined to 48 million with a reduction in cost not enough to offset the impact of ARPU compression and customer service rationalization, largely in the first half. Pleasingly, we've had a positive reception to our product refresh, which we continue to scale. In network applications and services or NAS, we delivered a broadly flat EBITDA of 151 million. This is despite lower revenue, which reflected deliberate decisions to focus on areas aligned to our strategy, divestments and product exits. In addition, the ongoing decline in calling products continued. Our reshaping of this business and focus on portfolio management is ongoing. The sale of Alliance Automation and MT Data completed in FY26 and the sale of 75% of the Versant Group is expected to close in the first half of FY27. Together, these businesses contributed 430 million of revenue in FY26. In our international wholesale and enterprise business, we've made significant progress to refocus on digital infrastructure. We announced the exit of selected NAS products, sold our wholesale voice business and London hosting center. In addition, after the 30th of June, we agreed to sell our Hong Kong property assets with an estimated US dollar 60 million gain, which will be excluded from our underlying result in FY27. We've also reviewed our portfolio and recognised non-cash impairments which are excluded from underlying EBITDA. In addition, we had a number of benefits called out on this slide, totalling 33 million this year. Normalising for these items, both this year and last year, as well as FX, EBITDA declined 9%. This is due to the sale of the wholesale voice business, higher off-net product mix, partly offset by strong cost management. We're continuing to position the business to benefit from the increased demand in digital infrastructure. During the year, we acquired capacity on several cable systems and have already onsold over half of this capacity to customers, including hyperscalers. We're assessing further value accretive investments, although new investments will take time to translate into earnings growth. turning to Digicel Pacific. And while EBITDA declined 10% to 293 million in Australian dollars, largely due to FX impacts on a normalized constant currency basis, EBITDA grew 4%. Despite operating challenges in the first half, the recovery in trading momentum late in the second half was pleasing. Our infrastructure business continues to grow, supported by rising demand in the AI era. For the year, InfraCo fixed income grew 2.5%, 2.8 BN with growth from NBN receipts in addition to copper asset sales, ground stations and dark fibre. This was partly offset by lower commercial and recoverable works and internal revenue reflecting efficiencies and lower power recharge. Vicky also announced organisational changes to bring together our InfraCo international and field teams under Telstra Digital Infrastructure to create one trusted partner for our domestic and international customers to access our infrastructure assets. Following these changes and higher associated redundancy cost, EBITDA grew 3.3% to 1.8 billion. Amplitel, our mobile towers business, continued to benefit from ongoing demand, partly offset by Moken-related impacts. EBITDAO grew 3.9% to 323 million, and we expect ongoing growth from contractual escalations and non-mobile operator demand. Turning now to strategic investments, including our terrestrial fibre Aura network. Over recent months, momentum has continued to build with a significant increase in the sales pipeline and more customer signings. This step up in customer activity reflects the progressive rollout of service ready routes. As Vicky said, we do expect total strategic investment to FY28 of around 1.8 billion up from 1.6 billion. This reflects sustained inflationary pressures, as well as ongoing project specific factors, including site and route conditions. We remain disciplined in the delivery of this long life asset, and we'll continue to apply the learnings we've gained from successfully completing more than half the build to date. Importantly, our strong progress and growing pipeline reinforce our confidence in delivering our mid-teens IRR target. Our focus on operating efficiency continues. The reduction in operating costs reflects portfolio simplification, productivity improvements, and continued cost discipline. Around half of the cost reduction this year was a result of divestments and product rationalization in enterprise and international. At the same time, We continue to deliver efficiencies across labour, technology and other operating expenses. Our investments in technology are translating into efficiencies across customer service, retail and support functions. And as Vicky outlined, these initiatives are also helping improve customer outcomes. As we further simplify the business and scale digital capabilities, we see ongoing opportunities to improve productivity and customer outcomes, as well as supporting earnings growth. Lower sales costs were also a result of lower volumes in fixed CNSB. Fixed costs were 129 million lower with lower labour costs despite higher redundancies and customer remediation and compensation costs. Together with other productivity initiatives, cash EBIT costs reduced by around 530 million, enabling us to deliver positive operating leverage despite inflationary pressures and increased network investment. As Vicky said, stronger business performance enables us to invest in our future. As our profitability has grown, so too has our investment in networks and digital infrastructure, which was around 800 million higher in FY26 than it was in FY21. We maintained our strong capital position and liquidity supported by growing cash flow. On an underlying basis, net debt remained stable at 1.9 times, despite the completion of our buyback as higher debt was offset by EBITDA growth. We reduced our average cost of debt to 4.8% and grew underlying return on invested capital to 9%. Our balance sheet is strong and we remain committed to an A band credit rating. This has enabled our continued investment in our business as well as our buyback program with the announcement today of a further up to one billion on market share buyback. Turning now to guidance, the basis of which is shown on this slide. We expect continued underlying EBITDA growth to between 8.5 to 8.8 billion, BAU CapEx of 3.35 to 3.65 billion with a lift in network investment, supporting leadership and ongoing growth. Our cash EBIT is expected to be between 4.75 and 4.95 billion and strategic investment is expected to be between 0.2 and 0.3 billion. In short, we've continued to deliver growth and value in FY26 in accordance with our strategy. with growth in core business cashflow, including 12% growth in cash earnings, portfolio and investment management where we continue to execute and invest in line with our strategy and discipline capital management. We remain confident in our ability to benefit from the critical role of connectivity and our strategy to achieve our FY30 financial ambitions. I'd finally like to thank the Telstra team for their ongoing efforts in delivering value for our customers, the community and our shareholders. And I'll now hand back to Nathan for Q&A. Thank you.

Thanks, Michael. We'll now start an investor and analyst Q&A. In addition to Vicky and Michael, we have a number of other Telstra Group executives on the call today. We have Brad Whitcomb, consumer, Oliver Kaplan-Warner, enterprise, Amanda Hutton, business, Kim Crow Anderson, network product and technology, and Stephen Worrell, CEO, Telstra Digital Infrastructure. We also ask the analysts to keep themselves to two questions. With that, we'll go to the first question. And our first question is from Eric Choi. Go ahead, Eric.