The commitment to expansion, alongside an updated capital structure management framework, will look to increase profit before tax (EBITDA) to mid-single digits, alongside lifting the compound annual growth rate (CAGR) into the high teens between FY21 and FY25.
In this commitment, the firm is confident that it will be able to maintain a 16 cent per share fully franked dividend, provided it is not impacted by unexpected material events.
Alongside this, T25 aims to build further value for shareholders by delivering $500 million in cost reductions, adding to the $2.7 billion committed through its T22 strategy, whilst also investing for growth.
“Our financial ambition is to maintain leading operating cost metrics for a full service telco through capex discipline and efficiency and cost reduction from completing the decommissioning or exiting of legacy IT systems,” said Telstra chief executive Andrew Penn.
“We will continue active portfolio management to unlock value and to manage balance sheet settings consistent with an A band credit rating, and create value through our capital management framework.”
Telstra will also continue to grow its health and energy businesses at scale.
In addition, Mr Penn said shareholders should expect further value in the group as the telco intends to push forward with the establishment of a stand-alone infrastructure business – the spin-off is said to further drive business performance and set up optionality.
This spin-off is an unfinished commitment from the T22 strategy.
Once the pivotal restructuring to set this up is completed, Mr Penn said that he is confident that the business will be well placed to act on T25’s monetisation opportunities.
The process of finalising this is expected to start next year, as the restructure’s implementation will require a shareholder and court-approved scheme of arrangement.
“Through T22 we have set the foundation for our future success,” said Mr Penn, highlighting how the strategy had already simplified the business structure and reduced costs.
“Today’s announcement of T25 marks our transition from transformation to growth, from a strategy we had to do, to a strategy we want to do to focus on.
“It is a strategy that builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people, our shareholders and [on] supporting the creation of a vibrant digital economy for Australia.”
Telstra’s new strategy is built on four pillars of improving customer experience, building on its 4G and 5G networks and making itself a more attractive place to work alongside boosting the company’s value to shareholders.
Telstra closed at $3.955 at 2pm on Thursday, up on its Wednesday close of $3.930.
