By Stuart Condie
SYDNEY--Australia's Telstra aims to cut more costs and increase debt leverage as the country's largest telecom provider pursues earnings growth and improved shareholder returns over the next five years.
Telstra, which provides about the same number of retail mobile services as there are people in Australia, will step up its focus on costs and aim for mid single-digit compound annual growth in cash earnings, Chief Executive Vicki Brady said Tuesday.
The ASX-listed company wants to grow underlying income at a faster pace than costs and core capital expenditure each year through to fiscal 2030.
With annual revenue having fallen almost 20% over six years through its last full fiscal year, Telstra has already slashed costs in a largely successful effort to support earnings.
It stripped out annual fixed costs of 3 billion Australian dollars, equivalent to about US$1.9 billion, since 2018. Telstra recorded 1,885 redundancies over the six months through December, reducing the number of people it employs to 31,876.
Telstra will still look to invest in strategic growth, but will focus on divestments in the shorter term, Chief Financial Officer Michael Ackland said.
It is already looking at potential options to simplify and streamline its network and services portfolio, Ackland added.
Telstra said the quality and resilience of its cash flows over recent years gave it confidence to raise its net debt to between 1.75 and 2.25 times earnings before interest, tax, depreciation and amortization.
Telstra, which previously targeted leverage of between 1.5 and 2.0 times Ebitda, wants to raise its underlying return on invested capital to 10% by fiscal 2030, up from its current 8%.
Telstra's so-called Connected Future 30 strategy also includes a sustainable and growing dividend, with any additional capital likely to be distributed to shareholders via share buybacks.
Write to Stuart Condie at stuart.condie@wsj.com
(END) Dow Jones Newswires
May 26, 2025 19:30 ET (23:30 GMT)
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