Telstra is looking to slash another $500 million from its cost base over the next three years in a stepped-up campaign to drive revenue and earnings.
The cuts are at the heart of the new T25 strategy, which will follow the T22 strategy and its $2.5 billion in cost savings and other measures which is due to finish at the end of 2022 financial year.
The new strategy, released at an investor day yesterday, saw Telstra shares top the $4 level (hitting a year high of $4.05) for the second time in a month and end at $3.95, up 0.5% on the day.
Telstra CEO Andy Penn said the new T25 strategy will focus on four areas: customer experience, technology, value for shareholders and creating a place where people want to work.
Mr Penn said that the new strategy will be one for growth to follow what he described as the “strategy of necessity” in the T22 plan.
“When we deliver T25, we will be a vastly different company, again,” a confident Mr Penn told investors.
Mr Penn launched the T22 plan in 2018, three years after becoming CEO of the then floundering telco.
T22 saw huge changes (much of which was driven by the advent and growth of the nbn) which included 8,000 job cuts, $2.7 billion in savings (by the end of this financial year) and a revamp of the company into four parts and the sale of 49% of its transmission towers to a group of superannuation funds for $2.8 billion, some of was returned in a special dividend for the June 30 year.
The T25 plan will see its 5G network extended to 95% of the population, while 4G and 5G regional coverage will also expand by a further 100,000 square kilometres.
Telstra says it is expecting mid-single digit underlying earnings growth to financial year 2025, and will look to grow its fully-franked dividend in that period (currently 16 cents a share).
As well Telstra said it will also seek to return excess cash to shareholders.
“Through delivery on its T25 commitments, Telstra is confident in maintaining a minimum 16 cent per share fully franked dividend, subject to no unexpected material events and the requirements of its capital management framework,” the company said on Thursday.
“T22 has been one of the largest, fastest and most ambitious transformations of a telco globally, and today we are a vastly different company,” Mr Penn said ON Thursday.
“This means we are poised for growth as our society and economy increasingly digitises and we all work, study, transact and get our entertainment online.”
