The Numbers Behind Telstra (ASX: TLS) Tell a Surprising Story

When people think about telecom companies, the narrative usually sounds the same: saturated markets, slow growth, and subscriber churn. But sometimes the numbers reveal a story that doesn’t match the headlines. That’s exactly the case with Telstra (ASX: TLS).

The company’s FY25 results show that behind the noise about mobile subscriber losses, Telstra is delivering stronger earnings, growing cash flow, and reshaping its business for the digital economy. For investors willing to look a little deeper, the numbers tell a surprisingly optimistic story.

Solid Financial Growth Amid Transition

At first glance, Telstra’s FY25 wasn’t about flashy headlines, but the financial results show resilience and momentum:

1. EBITDA grew 10% year-on-year to $8.56 billion. This growth wasn’t accidental—it came from disciplined pricing and tight cost control across multiple divisions.
2. Dividends increased to 19 cents per share, fully franked. That’s a 6% rise from the prior year, reinforcing management’s confidence in cash generation and commitment to rewarding shareholders.
3. Free cash flow also strengthened, up 6% after leases, providing the flexibility to both invest in growth and return capital.

For a company that some critics label as a “mature telco,” those are not the numbers of stagnation.

Strong Mobile Business Despite Subscriber Shifts

The mobile division attracted attention because postpaid subscriber numbers dropped by around 162,000. But this figure masks the reality: much of the decline was structural, not competitive. The 3G network shutdown, a cleanup of legacy prepaid SIMs, and reclassifications in IoT services all contributed to the dip.

When you strip out those structural adjustments, the story looks different:

1. Postpaid ARPU rose 3%. Pricing discipline and an improved product mix meant customers were spending more.
2. Prepaid ARPU jumped 8.4%. That’s a big step up in a segment that often struggles to grow.
3. Mobile EBITDA climbed 5% to $5.26 billion. Even with fewer reported subscribers, the mobile division is still delivering more profit.

The lesson? It’s not just about how many SIM cards are in circulation—it’s about the quality of revenue and profitability.

Revival in Fixed and Enterprise Segments

One of the most surprising aspects of FY25 was the improvement in Telstra’s fixed and enterprise businesses—areas that had previously been a drag.

• Fixed Consumer & Small Business EBITDA rose by $109 million. This was driven by ARPU growth and efficiency gains.
• Fixed Enterprise EBITDA jumped $103 million. Restructuring is starting to pay off, with costs coming down and services being simplified.

These businesses aren’t just stabilizing—they’re becoming growth contributors. Combined with investments in the Telstra T25 strategy and the Intercity Fibre Network, Telstra is positioning itself as a backbone of Australia’s digital economy.

The Intercity Fibre Network is particularly important. The Sydney–Canberra section is already live, with the Canberra–Melbourne section due soon. This infrastructure will provide faster, more reliable, low-latency connections—key for enterprise clients and data-heavy industries.

Strategic Milestones and a Digital Future

FY25 wasn’t just about improving existing businesses—it also included big steps into the future.

1. Satellite-to-mobile text messaging: Telstra became the first in Australia to launch this service, connecting around 90,000 devices daily in remote areas. This adds reach in regions where traditional towers are impractical.
2. 5G expansion: The company is on track to cover 95% of Australia’s population by 2025. This isn’t just about more bars on a phone—it’s about enabling higher speeds, lower latency, and meeting surging data demand.
3. New infrastructure: With new intercity fibre routes and backbone upgrades, Telstra is aligning itself with long-term demand trends in cloud, data, and enterprise connectivity.

These milestones show that Telstra is more than a phone company—it’s building the digital infrastructure Australia will rely on.

Cost Control and Cash Flow Strength

Cost discipline was a quiet but important theme. Telstra improved EBITDA margins thanks to tighter cost controls and positive operating leverage. At the same time, capital expenditure held steady at around $3.5 billion, in line with guidance.

Free cash flow after leases was up 6%, a strong outcome given both the dividend increases and ongoing investment. This balance of rewarding shareholders while still funding the future is a key part of why the financial story is better than the headlines suggest.

Market Reaction and Valuation

Despite the positives, Telstra’s share price dipped 2.7% on August 13, 2025, as markets focused on subscriber losses and restructuring costs. Analysts also noted that the shift to guiding earnings in “cash EBIT” terms makes comparisons less straightforward.

But step back, and the valuation case looks supported by three pillars:

1. Steady, fully franked dividends.
2. Ongoing investment in digital infrastructure.
3. Margin expansion potential in fixed and enterprise segments.

For income-focused investors, a growing dividend backed by strong cash flow remains a solid draw. For growth-minded investors, the fibre and 5G strategies add long-term optionality.

Why the Story Is Surprising

Telecom companies in mature markets are usually seen as ex-growth. Subscriber battles are brutal, regulation is heavy, and margins can get squeezed. But Telstra’s FY25 results show a different picture:

1. Earnings are growing, not shrinking.
2. Cash flow is strengthening even with elevated investment.
3. Fixed and enterprise businesses are turning from liabilities into contributors.

The dividend increase is the cherry on top, showing that this transformation isn’t just theoretical—it’s putting more money back into shareholders’ pockets.

What Investors Should Watch Next

Looking ahead, a few markers will show whether this positive trajectory continues:

1. Subscriber trends (excluding structural adjustments) to gauge true mobile momentum.
2. Execution of the Intercity Fibre Network, especially the Melbourne extension.
3. Margin expansion in the fixed enterprise segment after restructuring.
4. 5G monetisation—whether customers pay up for speed and new services.
5. Capex discipline, balancing digital infrastructure with shareholder returns.

Final Takeaway

The numbers behind Telstra’s FY25 results tell a story that’s easy to miss if you just look at subscriber counts. Beneath the surface, Telstra is strengthening its core, reviving previously challenged segments, and building the infrastructure that will underpin Australia’s digital economy.

For investors, the surprise is clear: Telstra is behaving less like a stagnating telco and more like a company in transformation. With rising dividends, robust cash flow, and new growth platforms, Telstra may not just be a safe defensive stock—it could be an undervalued growth story hiding in plain sight.

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