Telstra (ASX:TLS) slashes costs in T25 growth plan

Company News

by Melissa Darmawan

Telecom giant Telstra (ASX:TLS) is set to slash $500 million of costs in a bid to focus on growth after it unveiled its T25 strategy and its plans around future payouts to shareholders.

The new strategy is built on a blueprint of four pillars, including customer experience, network and technology solutions, shareholder growth and value, along with employee engagement.

Telstra is eyeing a compound annual growth rate of mid-single digits for EBITDA and high-teens for underlying earnings per share from FY21 to FY25. Additionally, it plans to lift its underlying return on invested capital to 8 per cent by the 2023 financial year.

As part of its vision, it is looking to turn its loyalty program Telstra Plus, which has 3.5 million customers, into a full sales and marketing channel under T25. Cybersecurity, cloud products and other telco products will also be in focus.

It also plans to have 80 per cent of all mobile traffic to be on its 5G network by 2025. Early planning has already commenced on what it will take to support 6G networks.

The telecom giant is looking to maximise fully franked dividends and seek to grow them over time, to invest for growth and to return excess cash to shareholders through its capital management framework. Through delivery on its T25 commitments, it is confident in maintaining a minimum 16 cents per share fully franked dividend.

“We are poised for growth as our society and economy increasingly digitises and we all work, study, transact and get our entertainment online. These fundamental shifts, together with T25, will underpin our future growth and shareholder value,” said Mr Penn.

Shares in Telstra (ASX:TLS) are trading 0.8 per cent higher at $3.96.

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