Communication Services

Telstra reaffirms 7-10% earnings growth for FY23 but free cash flow to fall on outsized capex

Tue 11 Oct 22, 11:18am (AEST)
Telecom 5 mobile tower data
Source: iStock

Key Points

  • Telstra expects to post mid to high single digit earnings growth in FY23
  • Free cash flow is forecast to decline on bigger investments for mobile and infrastructure
  • CEO Vicki Brady reaffirms her commitment towards the T25 strategy for growth

Telstra's (ASX: TLS) new CEO Vicki Brady spoke at her first annual general meeting on Tuesday, where she reaffirmed the company's FY23 guidance and commitment towards the T25 strategy. The company's stock rose 0.9% as the market opened.

FY23 guidance at a glance:

Full year


FY23 Guidance

% change

Total Income ($bn)


23.0 to 25.0

4.5 - 13.6

Underlying EBITDA ($bn)


7.8 8.0

6.8 - 9.6

Capex ($bn)


3.5 - 3.7

16.7 - 23.3

Free cashflow after lease payments ($bn)


2.6 - 3.1

-22.5% to -35%

Source: Company Data | Table: Market Index

T25 in a nutshell

T22 was Telstra's initial, three-year transformation journey that simplified its product offerings, replaced legacy systems with digital experiences and improved the systems and processes for both customers and employees.

T25 is "a strategy for growth" said former CEO Andy Penn. It's core pillars and initiatives include:

  1. Provide an exception customer experience by moving small business and consumer voice calls to Australia and transitioning to wholly owned Telstra-branded licensee stores

  2. Provide leading network and technology solutions centered around 5G and improving 4G coverage

  3. Create sustained growth and value for shareholders

  4. Be the place you want to work

AGM highlights

Merciful comments about Optus: "Let me be blunt, however, and say that it is easy to be critical (on Optus) when it isn’t you in the firing line, and we should all avoid hubris because no-one can be complacent and no organisation can ever be 100% sure that it is completely protected and safe," said Chairman John Mullen.

Product simplification: "We have famously reduced the number of in-market products and services for our consumer customers from 1,800 to just 20 and stripped away the lock-in contracts, excess data and other charges that used to frustrate our customers," said Mullen.

Coverage dominance: "Our 5G network is the largest and fastest in the country, covering 80% of the population and it is among the very best globally. Our total network now covers 99.5% of all Australians and stands at over 2.6 million square kilometres," according to Mullen.

Mobile driving growth: "Underlying EBITDA on a guidance basis increased 8.4 per cent to $7.3b [in FY22], driven significantly by an outstanding performance in the year from our mobiles business," said CEO Vicki Brady.

Free cash flow falls on higher capex spend: Weaker cash flow is expected in FY23, reflecting an uplift in mobile investment and inter-city fibre/infrastructure projects.

TLS chart
Telstra share price chart


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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