Telstra Stock

Good morning, and welcome to Telstra's results announcement for the year ending 30 June 2026. I'm Nathan Burley, Head of Investor Relations.

I'm joining today from the lands of the Gadigal people. And on behalf of Telstra, I acknowledge and pay my respects to the traditional custodians of country throughout Australia and recognize the continued connection Australian's First Nations people have to land, waters and culture. We pay our respects to Elders past and present.

This morning, we will have presentations from our CEO, Vicki Brady; and our CFO, Michael Ackland. We will then open to questions from analysts, investors and the media.

I will now hand over to Vicki.

Thank you, Nathan, and good morning, everyone, and thank you for joining us. I'll make 3 comments reflecting on the year before turning to Telstra's overall performance and our outlook for the future. Michael will then cover the details of our financials.

First, the pace of change over the last 12 months has been extraordinary from geopolitics to policy and technology with AI and global investments in digital infrastructure accelerating dramatically. Second, network resilience was brought into sharp focus. We experienced a significant network outage in July, which reinforced how much Australians rely on connectivity, and we know that Reliance will only grow. Third, Australia is at a critical moment. We are laying the foundations for the next few decades of our economic growth, prosperity and resilience. We must position ourselves to drive and participate in the value created by AI and the digital infrastructure boom. With sovereign capability and assets working in our national interest.

At the same time, Australians are concerned about the impact AI could have on jobs and society. As a country, how we build trust, skills and inclusion will have a significant impact on whether it delivers benefits to all Australians. Telstra's Connected Future 30 strategy, positions us well to lead and adapt through this rapidly changing context. We remain committed to enabling Australia's digital future and to working with government to ensure benefits and opportunities are shared widely.

Turning now to Telstra's performance for the year. FY '26 was a strong year as we continue to deliver for customers and shareholders. We increased investment in our network and delivered ongoing earnings growth, reflecting momentum across our business, and disciplined cost control and capital management. You can see a summary of our 2026 results on this slide. Reported financial performance compared to the prior period included EBITDAL up 3% to $8.2 billion. Net profit after tax up 2.7% to $2.4 billion and earnings per share up 5.3% to $0.199.

Our underlying results provide a clearer view of financial performance. Our underlying EBITDAL was up 4% to $8.3 billion. Cash EPS up 14% to $0.255 and underlying return on invested capital up 0.5 percentage points to 9%. Michael will take you through our financial performance in detail, including the drivers of our underlying EBITDA growth across mobiles, fixed consumer and small business, InfraCo Fixed and Amplatel. He will also detail the drivers of our cash earnings growth and positive operating leverage of 2 percentage points, which was in line with our Connected Future 30 targets.

On the back of cash earnings growth, the Board resolved to pay a final dividend of $0.105 per share, bringing the total dividend for the year to $0.21 per share and representing a 10.5% increase in the prior year on a cash basis. The final dividend is 90.5% franked with a franked amount of $0.095 per share and an unfranked amount of $0.01 per share. The final dividend is consistent with our capital management framework and our aim to deliver a sustainable and growing dividend.

Our dividend is supported by strong cash earnings and our Connected Future 30 ambition remains to deliver mid-single-digit growth in cash earnings. In June this year, we completed our $1.25 billion on-market share buyback. And today, we have announced a further on-market share buyback of up to $1 billion. This shifts our capital structure towards more debt and less equity and has been enabled by earnings growth and the strength of our balance sheet. Importantly, these buybacks are alongside increased CapEx and strategic investment.

Buybacks allow us to lower our cost of capital and manage our source of funding more efficiently. This approach also supports earnings and dividends per share growth and together with increased dividends demonstrates the board and management's confidence in our financial strength and outlook.

Turning to our Connected Future 30 strategy. Over FY '26, we laid important foundations for its delivery. There is a detailed scorecard in the appendix that shows our progress I won't go through that now, but I will call out some highlights. Customer engagement is becoming a stronger commercial advantage for Telstra. Over the last year, we focused on making interactions easier, more personal and more valuable for customers. We now have more customer support across available across more hours and channels, including 24/7 fault support. We have continued to add new functionality to our AI-powered digital assistant and digital self-service tools. And more customers are choosing these tools and having their inquiry resolved.

We also introduced generative AI-powered search across Telstra.com and My Telstra app, as well as translation into 37 languages. For customers who prefer to call us, our average call handling time, wait time have reduced to 2 minutes. We completed the migration of our consumer customers to the new digital stack and decommissioned the old system last month, creating a stronger foundation to innovate in how we serve customers.

For example, we rolled out customer IQ in the year, bringing together millions of data points to better understand the experience of our customers. This is helping our team to proactively address issues and have better conversations with customers, supported by AI-powered tools to help them get up to speed quickly and improve complaints handling. These improvements are translating into better experiences and more customers choosing us and staying with us. In FY '26, strategic NPS increased to positive 20 and episode NPS to positive 49, the highest year-end results since we started measuring NPS.

Under our network as a product layer, we continue to invest to deliver Australia's leading mobile network. Over the last 5 years, we have invested more than $9.5 billion in our mobile network nationally with $3.8 billion of this in regional Australia. In total, we have invested more than $19 billion in overall CapEx and spectrum in the last 5 years. As our profit has grown, so too has our investment in our networks and digital infrastructure. In FY '26, it was around $800 million more than it was in FY '21.

Over FY '26, we upgraded nearly 1,200 mobile sites with 5G advanced capability. and built more than 150 new mobile sites to continue to improve the experience on our mobile network. We also upgraded more than 1,800 network sites with backup power. Every year, we experienced around 165,000 mains power interruptions across our fixed and mobile sites. And due to our investments in backup power around 97% of those had no impact on services to customers in FY '26. Overall, these improvements and others are translating into more consistent experiences for customers.

In FY '26, we lifted our network experience Index by 1.6 points, which is our measure of network reliability and performance. We also brought new services and value to customers. We chose to invest in satellite messaging, and we recently expanded this to include select satellite applications like maps, weather and Internet messaging. We continue to expand our product offerings for enterprise customers across mobile and fixed, including dynamic 5G to deliver tailored network performance and our Adaptive Network center, which provides our customers greater visibility and control over their network. We also introduced adaptive collaboration to help mid-market customers integrate calling and collaboration tools.

We know we let our customers down in July, and we have taken full accountability for this. We have an initial understanding of the root cause of the outage and have taken steps to address that. We are completing our investigation with an external expert and we will be transparent about the findings and the actions we take as a result. We take any disruption to our customers and Australians extremely seriously. When things do go wrong, we're committed to taking accountability, giving people clear information and fixing issues as quickly as possible.

As connectivity becomes increasingly critical, we're also committed to continuing our work to further strengthen the resilience of our network and the services Australians rely on. This includes working with key government and enterprise customers to identify critical use cases and ensure appropriate resilience, redundancy and safeguards are in place. In the digital infrastructure, we are seeing very strong demand signals for our digital infrastructure assets, and we are turning those into contracted value.

Some of the world's largest cloud and AI companies have signed long-term contracts across our Aura network, subsea cable or long-haul fiber assets, including Google, AWS, Fermis, and Microsoft as our foundational partner on our AURA network. We are over halfway through the build of our AURA network with more than 8,500 kilometers of fiber in the ground and 6 routes ready for service. We now expect the total strategic investment, including [ Fiacet ] to be around $1.8 billion through to FY '28. And compared with our previous estimate of around $1.6 billion. Michael will speak more to the ongoing management of the remaining build.

Our AURA sales pipeline has increased significantly over the last 6 months. This strengthens our confidence in the project's returns, including an expected mid-teens IRR and cash payback period of around 9 years. Over FY '26, we expanded our subsea cable capacity through partnerships with Google and Keppel, strengthening our international capacity and our offering to customers. We also completed the construction of 8 new satellite ground stations.

Turning to the enablers of our strategy. You can see the progress we're making against them in the appendix slide, and I will call out 2 highlights. The first is our investment in data and AI capability for our people with more personalized learning and tools. Over FY '26, we expanded our data in AI Academy with different learning pathways based on roll and more than 15,000 of our people completed at least 1 course. We were also one of the first in Australia to roll out Microsoft's personalized learning agent. 86% of our people with a copilot license used it weekly or more over June.and we also added the ability to build agents.

The second highlight relates to our technology leadership. We have been extremely disciplined about scaling AI with strong foundations, including reusable architecture, governance, security, cost management and simplifying our data ecosystem. Over FY '26, we reduced our data platforms by another 15. We have 17 today, and we're aiming for 3. We also implemented a company-wide control plan that provides a cemprtral view of how AI is being used across the business to help us control costs, monitor adoption, optimize performance, manage risks and ensure our AI is safe and compliant. We also have the ability to switch applications between AI models based on cost, speed and reliability.

Looking ahead, we are focused on continuing to deliver value for our customers, communities and shareholders. including through delivering on our Connected Future 30 targets around cash earnings growth, underlying ROIC and operating leverage.

Over FY '27, there are 5 things I would like to call out. One, we are accelerating our mobile transformation to further improve the experience on our network. This includes through increasing the density of our network and accelerating our rollout of 5G stand-alone, to provide an even more consistent experience, more capacity and lower latency for AI applications. Investment in mobile networks will be critical to unlocking national benefits from AI. As this is the way most people will use it. We're also increasing our investment in security to help keep our customers safe and taking the lessons from our outage in July.to further inform our already increasing investment in network resilience.

Two, we will continue to evolve our network as a product offerings and expand our mobile network APIs and enabling developers to integrate network capabilities into their applications. Together with progressing our products across mobile and fixed, this will bring us closer to our goal of creating more value for from our networks for customers and sharing in that value by reinventing commercial models.

Three, we will continue to help our people build data and AI capability and transform our business and customer experience with AI. This includes through accelerating progress on our cross-company AI transformational initiatives like Agentic Customer Care expanding fraud detection and prevention and improving fixed network planning and optimization.

Four, we will focus on driving revenue from our digital infrastructure assets, including our AURA network. We will also consider future needs to support Australia as an AI and digital innovation hub, and we are assessing a range of opportunities, including in subsea cable capacity. Our network and digital infrastructure leadership built over decades means we are uniquely positioned to deliver Australia's digital future, both under Connected Future 30 and beyond.

Five, we will also remain disciplined on costs, capital allocation and creating shareholder value. As we continue to invest in network resilience and growth, we will maintain our focus on productivity simplification and positive operating leverage.

As I close, I want to acknowledge and thank our customers for their patience and understanding during our network outage in July. We don't take this for granted. I'd also like to thank the Telstra team for everything they have delivered in the year and for the way they responded to the outage. It's never a situation we want to be in. but I want to recognize our team for the care and dedication shown and for the discipline applied to our investigation. It will help us deliver a stronger and more resilient network for our customers.

I'll now hand to Michael to take you through the results in detail.

Thanks, Vicki. FY '26 was a strong first year on the Connected Future 30. We delivered growth in cash earnings, improved operating efficiency and increased investments in our network and digital infrastructure. We also improved customer outcomes and delivered higher shareholder returns. Earnings per share increased 5% to $0.199, supported by growth in key products and our $1.25 billion share buyback program completed in the year in addition to the $750 million in the previous year.

Across the group, total income and operating costs declined. Our focus on improving operating leverage resulted in deliberate actions to continue optimizing our fixed enterprise and international portfolios with divestments and product exits during the year. Our reported results included $55 million of net noncash impairments and M&A impacts that are excluded from the underlying results.

Excluding these, underlying EBITDA after leases or underlying EBITDAL and increased 4% to $8.3 billion, in line with our guidance. When we look at these results after BAU CapEx, instead of depreciation and amortization or D&A, we see that cash EPS grew strongly to $0.255, up 14%. This is higher than EPS growth as BAU CapEx was broadly flat, while D&A grew, and we expect D&A to continue to grow.

As Vicki said, with stronger earnings, the Board announced FY '26 dividends of $0.21 per share, which are 90.5% franked. This is up 10.5% on a cash basis from last year and represents 82% of cash EPS. Turning now to cash earnings, where we delivered a strong result. Cash EBIT grew 8% to $4.7 billion, with growth in key products, strong cost management and BAU CapEx broadly flat. Finance costs grew 5% with higher lease costs and tax expense grew with a lower effective tax rate. With that, cash earnings grew 12% to $2.9 billion.

We also invested a further $457 million in strategic investments, including the AURA network. Looking at our product EBITDA performance. We delivered growth across mobile, fixed NSB, InfraCo Fixed and Amplitel. Fixed Enterprise and international results were partly impacted by the divestment -- the decisions to divest businesses and rationalize products as well as FX headwinds. Other EBITDA also increased with favorable bond rate and FX movements, the absence of an equity loss which occurred in the prior period and energy generation gains. Note that these product results include an additional $92 million of redundancy costs this year compared to last year as we continue to simplify our business.

Turning to our key products, starting with mobile where we are continuing to win in market. Mobile service revenue grew 4.8% with growth across all products, postpaid, prepaid and wholesale handheld, mobile broadband and IoT. Our focus continues to be on providing the best products in market so that we can continue to deliver sustainable growth for our mobile business.

Consistent with this, we delivered average revenue per user or ARPU growth across all categories, brands and segments. Growth in users and ARPU were stronger at the lower price points. Overall, handheld ARPU grew nearly 4% and grew -- and our users grew over 270,000 or 1.9%. Mobile EBITDA grew 3% with service revenue growth partly offset by higher costs similar to the first half.

Most of the increase in cost this year was driven by higher-than-usual remediation compensation and redundancy rather than underlying operating cost growth. Satellite and network-related costs represent a step-up in capability, supporting improved performance and new functionality. We expect ARPU next year to benefit from price rises -- price changes implemented in May 2026.

Turning to fixed consumer and small business. While this remains a highly competitive product and market growth is challenged, we grew EBITDA by 13.5% to $412 million through strong cost management. During the year, we continued to invest in our product proposition, including the launch of our Internet-only pans in November and our Smart Modem 4. More customers are in high speed tiers and fiber However, [ sia ] losses continued, and this remains an ongoing focus. ARPU grew 2.6% through price rises and planned mix. However, margin declined with price rises not enough to offset sale losses and wholesale input cost increases.

In fixed enterprise, we've continued to make strong progress to reset this business and focus on core connectivity offerings. Our data and connectivity or DAC EBITDA declined to $48 million, with a reduction in cost not enough to offset the impact of ARPU compression and customer service rationalization, largely in the first half. Pleasingly, we've had a positive reception to our product refresh, which we continue to scale. In network applications and services, or NAS, we delivered a broadly flat EBITDA of $151 million. This is despite lower revenue, which reflected deliberate decisions to focus on areas aligned to our strategy, divestments and product exits. In addition, the ongoing decline in calling products continued.

Our reshaping of this business and focus on portfolio management is ongoing. The sale of Alliance Automation and MT data completed in FY '26 and the sale of 75% of the Versant Group is expected to close in the first half of FY '27. Together, these businesses contributed $430 million of revenue in FY '26.

In our international wholesale and enterprise business, we've made significant progress to focus -- refocus on digital infrastructure. We announced the exit of selected NAS products, sold our household voice business and London Hosting Center. In addition, after the 30th of June, we agreed to sell our Hong Kong property assets with an estimated USD 60 million gain, which will be excluded from our underlying results in FY '27. We've also reviewed our portfolio and recognized noncash impairments, which are excluded from underlying EBITDA.

In addition, we had a number of benefits called out on this slide, totaling $33 million this year. Normalizing for these items, both this year and last year as well as FX, EBITDA declined 9%. This is due to the sale of the wholesale voice business, higher off-net product mix, partly offset by strong cost management. We're continuing to position the business to benefit from the increased demand in digital infrastructure.

During the year, we acquired capacity on several cable systems and have already on sold over half of this capacity to customers including hyperscalers. We're assessing further value-accretive investments, although new investments will take time to translate into earnings growth.

Turning to Digital Pacific. And while EBITDA declined 10% to AUD 293 million, largely due to FX impacts on a normalized constant currency basis, EBITDA grew 4%. Despite operating challenges in the first half, the recovery in trading momentum late in the second half was pleasing. Our infrastructure business continues to grow, supported by rising demand in the AI era.

For the year, InfraCo Fixed income grew 2.5% to $2.8 billion, with growth from NBN receipts in addition to copper asset sales, ground stations and dark fiber. This was partly offset by lower commercial and recoverable works and internal revenue, reflecting efficiencies and lower power recharge. Vicki also announced organizational changes to bring together our InfraCo international and field teams under Telstra digital infrastructure to create 1 trusted partner for our domestic and international customers to access our infrastructure assets. Following these changes and higher associated redundancy cost, EBITDA grew 3.3% to $1.8 billion. Amplitel, our mobile towers business continued to benefit from ongoing demand, partly offset by Markin related impacts. EBITDA grew 3.9% to $323 million, and we expected and we expect ongoing growth from contractual escalations and nonmobile operator demand.

Turning now to strategic investments. including our terrestrial fiber or a network. Over recent months, momentum has continued to build with a significant increase in the sales pipeline and more customer signings. This step-up in customer activity reflects the progressive rollout of service-ready routes. As Vicki said, we do expect total strategic investment to FY '28 of around $1.8 billion up from $1.6 billion.

This reflects sustained inflationary pressures as well as ongoing project-specific factors, including site and route conditions. We remain disciplined in the delivery of this long-life asset, and we'll continue to apply the learnings we've gained from successfully completing more than half the bill to date. Importantly, our strong progress and growing pipeline reinforce our confidence in delivering mid-teens our mid-teens IRR target. Our focus on operating efficiency continues. The reduction in operating costs reflects portfolio simplification, productivity improvements and continued cost discipline.

Around half of the cost reduction this year was a result of estimates and product rationalization in enterprise and international. At the same time, we continue to deliver efficiencies across labor, technology and other operating expenses. Our investments in technology are translating into efficiencies across customer service, retail and support functions, and as Vicki outlined, these initiatives are also helping improve customer outcomes.

As we further simplify the business and scale digital capabilities, we see ongoing opportunities to improve productivity and customer outcomes as well as supporting earnings growth. Lower sales costs were also a result of lower volumes in fixed NSP. Fixed costs were $129 million lower with lower labor costs despite higher redundancies and customer remediation and customer and compensation costs. Together, other productivity initiatives, together with other productivity initiatives, cash EBIT costs reduced by around $530 million, enabling us to deliver positive operating leverage despite inflationary pressures and increased network investment.

As Vicki said, stronger business performance enables us to invest in our future. As our profitability has grown, so too has our investment in networks and digital infrastructure, which was around $800 million higher in FY '26 than it was in FY '21. We maintained our strong capital position and liquidity supported by growing cash flow. On an underlying basis, net debt remained stable at 1.9x despite the completion of our buyback as higher debt was offset by EBITDA growth. We reduced our average cost of debt to 4.8% and grew underlying return on invested capital to 9%. Our balance sheet is strong and we remain committed to an A band credit rating. This has enabled our continued investment in our business as well as our buyback program with the announcement today of a further up to $1 billion on market share buyback.

Turning now to guidance, the basis of which is shown on this slide. We expect continued underlying EBITDA growth to between $8.5 billion to $8.8 billion, BAU CapEx of $3.35 billion to $3.65 billion. being with a lift in network investment, supporting leadership and ongoing growth. Our cash EBIT is expected to be between $4.75 billion and $4.95 billion and strategic investment is expected to be between $0.2 million and $0.3 billion.

In short, we've continued to deliver growth and value in FY '26 and in accordance with our strategy, with growth in core business cash flow, including 12% growth in cash earnings, portfolio and investment management, where we continue to execute and invest in line with our strategy and disciplined capital management. We remain confident in our ability to benefit from the critical role of connectivity and our strategy to achieve our FY '30 financial ambitions.

I'd finally like to thank the Telstra team for their ongoing efforts in delivering value for our customers, the community and our shareholders. And I'll now hand back to Nathan for Q&A. Thank you.

Thanks, Michael. We'll now start an investor and analyst Q&A. In addition to Vicki and Michael, we have a number of other Telstra group executives on the call today. We have Brad Whitcomb, Consumer; Oliver Camplin-Warner, Enterprise; Amanda Hutton, Business; Kim Krogh Andersen, Network Products and Technology; and Steven Worrall, CEO, Telstra Digital Infrastructure.

We also ask the analysts to keep themselves to 2 questions. With that, we'll go to the first question. And our first question is from Eric Choi. Go ahead, Eric.

Thanks very much, Nathan, and thanks, team in advance. My first question is just around probably the key short-term investor debate, which is what if postpaid mobile growth slows. And part of this is just mathematical given you had an extra month of effective price increases in FY '26. But I'm just wondering if that debate may be miss the forest for the trees because if I look at your guidance, you're guiding to $300 million of EBITDA growth in FY '27, which is exactly the same as what you did in FY '26. That suggests that you guys are pulling other levers or other levers that are accelerating. So I just wanted to check, to me, that could be prepaid wholesale, maybe less cost step-ups. So I don't know if that's right. If so, could you elaborate on those and add any other levers that I'm missing.

Thanks, Eric. Do you want to give us your other question as well?

Sure. Thanks, Vicki. So my second question is a bit longer term. So probably the key long-term debates are around satellite and mobile roaming. And I wanted to ask about 2 specific scenarios that investors are contemplating. So the first is if a satellite player picked up MSS spectrum and then became an MVNO for broader coverage. And then the second is if the [ ACCC ] declares that last 2% of population that Macon doesn't cover. So I'd love for you to talk through the offsets in these scenarios. So could you save on CapEx, do you get new roaming revenues? Is satellite going to remain pretty limited by FY '30. And ultimately, I'd like to understand when you guys wargame these scenarios. Can you hold your implicit targets for low single-digit mobile service revenue growth and your 10% ROIC by FY '30.

Okay. Well, thanks, Eric. You've gone short term and longer term. So that's a good mix of 2 questions. Why don't I make a couple of comments on the short term, but Michael will have a lot more, I'm sure, color to add there, and then we can come back and I'll talk a bit more about the longer-term question because there's a lot in that.

First, on the short term, just as we look at entering -- we're now into FY '27, First thing I'd say is we feel very confident in the mobile business. Again, you can see the strength of the mobile business in FY '26. As we enter this year, we enter with good run rates on ARPUs. And I think, of course, postpaid is a big driver in there, but we have a big portfolio of products and brands in our mobile business. And as you can see, we're seeing real strength across the board with mobile service revenue growth at 4.8% for FY '26, underpinned by ARPU growing across products and segments. And obviously, customer growth overall as well. So I think our mobile headed into FY '27, feeling positive about that. There's obviously then outside of mobile, we've got our infrastructure business. which continues to deliver those consistent long-term infrastructure-related growth, particularly, obviously, we've got NBN contract in there with the CPI link and then, we're seeing good demand across the digital infrastructure business across the various assets there.

I'd also say operating leverage is a big focus for us. we do enter the year. We made some changes. There are always difficult changes to make during FY '26. So we will have some flow-through benefits of those. they'd be some of the things I'd call out, Michael, there's probably a whole lot more maybe worth calling out lever wise for Eric.

Yes. I mean I think you can covered most of them I would -- Eric, I'd call out and reinforce Vicki's points on mobile. We think about that the mobile business as a portfolio and we're confident in our proposition and we're confident in our ability to continue to grow mobile service revenue, as you point out. I think the infrastructure business growth.

The other one I would call out is just to give a little bit more on costs. So if you look at the '26 result, we've called out higher-than-usual compensation and remediation costs that we called out at the half as well. We also spent around $206 million in FY '26 in redundancy. And if you look typically our redundancy spend has generally been closer to $80 million to $100 million. And then we'll also see the benefits of that redundancy spend come through. So on the headwind side, though, we -- I think international is probably worth calling out. We talked about $33 million of benefits that we saw in international and normalizing for those. The performance was different in international and then as well as the sale of the wholesale voice business will play through into '27.

And then other EBITDA was a bit higher than normalized due to the bond and FX revaluation impacts in there. So I think there's a few puts and takes, but very confident around that [ 300 ]. Think about mobile as a portfolio overall, infrastructure growth and then we are confident on when you look at FY '26 confident on continuing operating leverage contributing to earnings growth in '27.

Yes. Thank you. Thanks, Michael. Good question, broad ranging. And let me go to the longer term. Eric, and there's quite a lot in that one. And I think it really does reflect this moment in time where we're at, at the moment. You think about just how quickly technology is changing. You think about how quickly the market is changing. You spoke about satellite as one of those new technologies that's driving change.

So let me address it in a couple of ways. The first thing I'd say, just on satellite itself, we obviously made the choice to invest in bringing satellite to mobile services to our customers back in June last year with the texting or messaging service and more recently expanded that to select satellite applications. Why did we do that? We could see the benefit for our customers when they're outside the mobile footprint or as an extra layer of resilience. And we're definitely seeing our customers enjoy that.

It is -- again, it is outside the footprint or it's not dominating our use by any stretch. It's still relatively small in the scheme of our overall mobile business. And I would say one of the things we're focused on because this technology keeps moving. And today, the technology is providing benefit to customers outside our footprint. But it is a little bit of a clunky experience. It's not a seamless one. And there are other players in this space. The technology is moving fast. We're engaged with a lot of those players. And we're really focused on how do we make sure, obviously, in light of we've got the Universal outdoor mobile obligations, the proposed legislation from the government that obviously puts the obligation on the 3 mobile network operators to provide that outdoor service, which will mean outside our footprint.

We do need access to satellite to mobile technology. We're really focused on as this technology evolves, staying very close to the various players in it. And we are focused on making sure we can find solutions and technology that makes that experience a seamless one for our customers. So that's very much front of mind for us.

I would say our view right now, we do still see it as complementary. It is playing that smaller role at the edges outside of our footprint. We think it's an important role, particularly in a country like Australia, and we did make the choice to invest in bringing that to market because we could see the propensity for our customers, particularly those in regional rural and remote Australia, it could bring real benefit to them. And I think we'll see over time. We'll need different layers of connectivity. We still use a lot of fiber. Mobile keeps getting better. I'm sure we'll keep seeing satellite getting better and that will just continue as demand and needs change as the technology evolves.

On the broader point, you mentioned the ACCC. They've obviously announced they're going to conduct an inquiry and it is mobile services inquiry. It is a broad look at the mobile industry. Obviously, the discussion paper is not out yet with all the finer detail. But certainly, from what we can see it is going to be a broad look at the mobile industry, including looking at new technologies and satellite does get mentioned in that context. And they are going to engage widely. The other thing I would call out, and we, of course, have been thinking about this, it comes into how we think about our business over the long run and the different scenarios we run. The ACCC chair did make a speech last week, and I think there were some really important elements in that speech, and she spoke about that as a regulator needing to find that balance in terms of how regulation can make sure it can keep supporting good outcomes for consumers, but also at the same time, give businesses and investors confidence to keep investing in long-term infrastructure and needing that confidence that, that will be recognized and reasonable returns will be made on it.

And I think that's an important point as we reflect on the mobile industry. You look at the Australian mobile industry over the last 2 decades, there has been a very competitive market and a lot of competition in infrastructure investment. And what has that driven for our country? It's absolutely driven us as operators to invest, to innovate, to try and differentiate, whether it's on coverage, on speed, on value and that's got great outcomes. I mean our mobile networks in the country benchmark globally in the top few. It's meant Australians have got 3G, 4G, 5G amongst the first few countries in the world.

So we think it is timely that the ACCC inquiry will happen. That will be a broad look at the mobile industry. They will do that in a very structured framework. And we think it's timely, given the technology change, given what's going on, the various dynamics. And I would call out in that sort of infrastructure-based competition in mobile, as I spoke about earlier, in the last 5 years, as Telstra, we've invested $9.5 billion in our mobile network. $3.8 billion of that has been in regional. And we've had every incentive to do that because that's part of how we differentiate.and compete in the market.

So I know, clearly, there's a lot of feedback. Regional Australia have high expectations as to all of our customers, and that's why I do think it is timely that the ACCC conduct this inquiry. To be clear, we do not support mandated domestic roaming. We support commercial roaming, but we believe mandated domestic roaming would take away that incentive for infra-based infrastructure-based investment and competition and would likely lead to worse outcomes in regional Australia.

We'll go to our next question, which is from Andre Raykovski from -- Partners.

Thanks, Nathan. So my first question is around mobile. I'm just curious where you think we are at the moment in the postpaid market cycle. And what I mean by that is do you think the postpaid market as a whole can continue to absorb higher prices from here? I mean I'm conscious the other MNOs have also increased prices recently as well. But then obviously, your Telstra branded subs are down, I think, about 47,000 CIOs in 2H. And then given that you're seeing growth in wholesale, can you perhaps talk about the margin differential between postpaid and wholesale, just to give us an idea of the wholesale growth that's required to offset any postpaid declines given that portfolio approach that you've spoken about? So that's my first question.

And then the second question around the AURA network. So the increase in ore network spend by $200 million. You've obviously spoken about confidence in returns. But just how do you think about the returns on that additional spend? And is there some compression given the inflationary pressures. But I suppose just to be clear there, I don't know if it's just inflation or whether there's any expansion factored into that increase? And just as part of the answer to that question, if you're able to talk about how you think about the timing of free cash flow coming from the project.

Great. Just on mobile, I'll make some comments and then Michael may want to jump in as well. I think the thing I'd say, overall, our focus in our mobile business is always how do we keep investing, innovating, delivering great outcomes and experiences and value for our customers. And that goes to the network, it goes to how customers engage with us, whether it's in store, online, over the phone whether it's our brand and our propositions.

So look, I think overall, the thing we keep seeing mobile more broadly, obviously, the utility and the reliance on that continues to grow. You've seen, yes, we have recently put pricing changes through. Obviously, that's important when we're continuing to invest to be able to deliver for our customers. And as you said, we do look at a portfolio of our business. Michael, I don't know if you want to add some more comments around mobile and the portfolio. .

Yes. I mean -- thanks, kind thanks, Enso. I'd probably point to a couple of things. so 1 is I think the trend that you point out, it's not recent. It's been -- we've seen that trend with the growth being at the lower end of the market for some time. And we've seen we're seeing considerable growth in our prepaid business off the back of that as well as in our wholesale and as well as in our Boost and Belong -- our Boost and Belong business, but we still remain very confident in the proposition that we're offering in postpaid. And we continue to invest in that proposition as we have with offering satellite as we have with the benefits with the loyalty program across our branded offerings with the store network and our investments in our digital channels and the improvements there.

If you do -- however, we are seeing strong growth in wholesale and you -- but that is on price and volume. And you see the wholesale ARPU growth 8.8% this year compared to our postpaid handheld ARPU growth of 3.8%. So we're continuing to manage that portfolio. I think it also points to our vision around that. And that one of our objectives there is to provide reasons, more reasons and other reasons and different reasons around network experience for customers. to choose us and to choose to buy plants that give them better and different experiences for their needs. And that is a core to our CF30 strategy. So absolutely, we recognize the trend. We are seeing ARPU growth at the bottom end that's going quicker than at the top end. And we are looking at part of our CF30 strategy, and that is about helping to create that differentiation and new differentiation into the future.

Thanks, Michael. And then so your question on the AURA network, as you called out, we have spoken today about that additional $200 million. Up to $200 million to complete the AURA network. And just to be clear, we did announce this it was back in February '22. We announced that we would embark on the Aura build. And through it, we've learned a lot. And through that, we've had to be disciplined and make choices and trade-offs. There are no additional routes.

Just to be clear inside that, it is inside the scope of the build we announced back in February '22. It's fair to say, yes, inflationary pressures have been there higher than we would have anticipated. We've obviously talked very openly about the ability to have to navigate a lot of approval processes and dynamics when you're rolling out build of this scale, almost 14,000 kilometers of fiber getting laid across the country. We've taken those lessons. The team have managed it in a very disciplined way.

But as we've got to just over the halfway market was the right point to say, okay, we think it is going to take a little bit extra to complete that build. But importantly, we have seen particularly the last 6 months, it is a significant lift in terms of our sales pipeline and the level of demand we're seeing. And so, we remain very confident in those mid-teens IRRs and around the 9-year payback. The incremental $200 million free cash flow will depend on deals. I don't know, Michael, if there's anything more to add on that?

No, not really. I mean I think what we've seen in show is that significant uplift in pipeline is more than enough to deliver the returns that we need on the additional the additional CapEx. As Vicki said, the cash flow on these can be very lumpy. The free cash flow can be very lumpy on these deals. As you probably understand in the way they work much like subsea cable. Many of these deals will involve a onetime charge in the first few years of ready-for-service that would represent a reasonable proportion of the total contract value. So the cash flow could be a little bit lumpy as it comes in, and we'll have to we'll manage that as those deals get signed, and we can disclose them.

We'll go to our next question which is from Suraj Ahmed from Citi.

I have 2 questions as well. Just first one, just on mobile, just following up, right? I mean, have you actually seen the churn trends stabilize in FY '27. I guess, second half, not surprising given the price increase. second part to that, a bit surprised that postpaid ARPU is actually down half-on-half. Can you elaborate on that? And how you think about ARPU growth next year. And second part, Vicki, just on the whole -- on the LEO sat and I guess, the threat from -- would you be able to split your -- I mean, you have an ARPU premium over your competitors. Can you understand if you can actually split that premium into how you think about network coverage versus quality versus brand or trust, would network coverage be the key part? And given -- and is your view that network coverage part could compress over time, but you can really expand the other parts?

Thank you Well, why don't I -- I might take the second question first, and then I'll hand over to Michael and I presume Brad as well might be good to contributing to the discussion, too, around what we're seeing in mobile, particularly churn, ARPU, various things.

So yes, just in terms of the -- I know it's a big topic of conversation. Obviously, LEO satellite. You're right. I mean we are the premium provider in the market in terms of mobile and have been over an extended period of time. Of course, we do monitor that. We understand our customer needs. We're always looking at making sure we're investing and delivering to be able to really demonstrate the value. And obviously, more customers continue to choose us and stay with us. So getting that balance right is obviously critical alongside our portfolio.

So we have the Telstra brand. We then have brands like Boost and Belong and we have our MVNO. So we do have a portfolio of brands because we know the premium Telstra experience may not be for everyone. And so to reach the parts of the market, we definitely need that. We also have different products, postpaid, prepaid, even under our branded portfolio show up differently. In terms of what drives that premium in our customers' minds, network plays a part absolutely those other things you mentioned, brand, trust, security. So the level of investment we put into our networks and keeping our customers safe and the protections we put in around scans and fraud.

There's a bunch of things that play into that. Michael referenced our network as a product, layer of our strategy. That's a really important one because we know that customers are depending more and more on their network and their connectivity and their mobile services. So how we keep making sure is we help create more value for them, we're also sharing in that through our reinvention of commercial models. That's an important element. So coverage plays a part. There are a lot of other elements, and that's our constant focus to make sure we're really delivering value.

Why don't I hand to Michael first on mobile and then we'll get Brad to add in.

Yes. Why don't I comment quickly on ARPU because I think -- and Brad will as well. But just to your specific question, in the second half, we did see more of those higher-than-usual remediation and compensation costs go through as revenue reversals. So refunds in the second half, and that did impact. ARPU without that, I think ARPU was broadly consistent as we went through, and then we should see the ARPU lift as we go into FY '27 from the May price changes. So maybe, Brad, I'll hand to you to talk more broadly.

Yes. Thanks, Michael. And maybe just to build on that a little bit. We talked about the impact of the price changes that we had. And just as a reminder, this year, we had 2 price changes. We had one that we put -- we announced back in May of 2025 and that came into effect in July. And then we had a second one, which we announced in March of 2026 and that one didn't come into effect until May. So in terms of an ARPU uplift, it's just a very small piece of the year that, that would be into effect.

Just kind of referring back to the earlier question around the CIOs. Just as a reminder, when we put through a price change like that, we communicate to our customers that then puts us in a period where we're dual quoting. We're establishing the pricing market. And while we've gotten very good at that, it does limit our ability to trade and put offers on a price that's about to change in the market. So that does tend to suppress our acquisition a bit. Also, whenever we communicate about price, that gives customers an opportunity to sort of reappraise and decide whether they want to stay with Telstra, whether they want to stay on the plant if they're on or move to one of our sub-brands or indeed move some place all together.

So that would have an impact on our CIOs. We look at all of that and we factor that into a yield, and we're very pleased with the yield. And in fact, the yield on price changes over the last -- 2 or 3 times we've done them has been improving. So less spend down and more of that ARPU is actually dropping back into the business. If I think about our confidence going forward, The first place I would look is customer sentiment and how they're feeling about us. And as Vicki mentioned, we have seen our episode NPS increased by 2 points. We're now at a record high. We've also seen our strategic NPS increased by 2 points as well, and that's at a new record. So our customers are telling us that they're happier than they've ever been with us. We do have more mobile customers than we've ever had in the retail business, if we look across pre and post and across our various brands.

And we do look at this as a portfolio. as both Vicki and Michael have said, that portfolio is becoming more and more important when we think about NAP. It's not just which brand, it's not just which product, but it's also the attributes that are associated with each of those.and we're starting to tile that out, I think, more and more effectively.

So we've seen an increase in ARPU. We've seen an increase in the number of customers. The customers have never been happier. And I think to me, that speaks to our overall value proposition. Probably the hallmark of that is being served by an absolutely brilliant professional frontline staff, which has got an eye-watering employee engagement score plus [ 86 ]. And from my experience, there's nothing better than being served by an agent who truly loves what they do and really cares about you. And then that underpin is underpinned by our ongoing investments in our network. -- world-class cybersecurity, the satellite messaging, which now includes apps, and I know from personal experience, being able to send a photo on WhatsApp on the Larapinta trail in the middle of nowhere. It is actually quite cool. So if you haven't had a chance to check it out, I would give that a try.

Our channels have never been stronger from our brilliant and beautiful retail stores to our very intuitive digital experiences. And then, of course, the customer experience you get when you call us, which in many cases now, you can get access 24/7, which I think is an industry first in Australia. So we're continuing to grow that value proposition. That's why we have confidence in the overall mobile business. And I would expect that, that ARPU would continue to rise as the price changes that we put through and may flow through the business.

We will go to our next question from Lucy Huang from UBS.

I've got 2 questions as well. So just on the mobile business, I was wondering you can see at the enterprise landscape a bit more. In the past, it's been a bit of a drag on ARPU. Just wondering the there's been a slight impact this time. And just given the competitors lag just a little color on how some of the tire trends of tracking in enterprise as well. Should I ask my second question? Or just...

Yes, if you ask both, Lucy, that would be great. .

Okay. Wonderful. And then just my second question is on the slightly higher I think on the call, you mentioned kind of the next focus is the rollout to 5G stand-alone. So just wondering if you guys can kind of give us some idea as to what better capability will 5G standalone provide for Telstra. And how could this impact, I guess, ARPU upside? Like what can you truly monetize that 5G stand-alone.

Excellent. Thanks, Lucy. So I'm going to get a couple more of the team up actually. So I think on the mobile business, that focus around enterprise and also I think mid-market is important in that context, what's happening in the enterprise and our mid-market space. So I might get Oliver and Amanda up. And then on the CapEx side, 5G stand-alone, I'm going to get Kim to come up as well and just talk about what that capability delivers, how that helps move us forward and obviously sits under our broader strategy. So Oli, why don't I hand to you first?

Yes. Thank you, Vicki. So now I'm pleased to share that the mobile business and Enterprise Group in the year. We're very pleased with that outcome. As you said, Historically, enterprise hasn't always been set up for win. We've been distracted too many priorities. But we put in place a number of changes, commercial guardrails, absolute focus, extra discipline in a few areas. And we're now starting to see that shine through. So we're really pleased with the mobile growth.

And also, if I may, maybe Vicki talk about enterprise more broadly. We've with Enterprise reset, been facing into a number of challenges. We've reset the cost base. We've made a number of divestments. We've seen huge change across the board. But the way I think about that is we're not at the finish line by any stretch of the imagination. We're just at the start line in some ways. And all the changes that we've made so far, this is all about setting us up for the next chapter and really growing moving forward.

So as pleased as I am with the mobile performance, I'm excited about what's ahead. We've launched new products in market. Vicki and Michael spoke about Adaptive Network Center on the fixed side. We've spoken a little bit about satellite to mobile, Brad, we've got a similar offering in enterprise. Some of our customers who have remote workforces are loving that capability now where their employees can connect in areas where there may not be a mobile network. So we've had fantastic response on the mobile side and we can't wait to get the next generation out there as well and be able to offer critical apps to those individuals in critical times. In terms of wins, we're winning in market as well, maybe just share a couple of quick customer wins. I love winning.

And I thought I'd share Bendigo Bank as one name that comes to mind. Bendigo is going through an incredible digital transformation at the moment. And I'm absolutely thrilled that they've chosen Telstra to be their strategic connectivity partner. So very excited to go on that journey together.

And then mobile, specifically, one that comes to mind will be Salesforce, where they've decided to award their mobile business to us. That has not been with Telstra historically. And we're in the progressin the process of migrating those services to Telstra as we speak. So I'm really pleased with the real performance last year. But as with the whole of the business, we're only just getting started and there's more ahead, and we're looking forward to the next chapter, and I think that opportunity is there for the taking.

Thanks, Oli. Why don't we get Amanda, just I think it's important, I know we talk about enterprise a lot, but the mid-market side of our business also is an important and dynamic part of the market. So AmanDataBank, do you just want to touch on the dynamics there?

Yes, sure. I might just also start with small business, which we've had a really strong year and very, very pleased with the performance in small business and many of the dynamics that play out in that segment, mirror the commentary that Brad made a little bit earlier. But we have seen also really strong performance in our mid-market customer base. So these are customers who typically have employees of about 500 or so or less. And we've started to bring some of the dynamics and focus that we have in small business, including price rises into that area, which we haven't typically done and really targeting very specific propositions to that part of our customer base. And seeing quite good responses already from customers.

And we've also spent in FY '26 a large focus on bringing together those propositions and products specific to that segment. And we're also seeing really positive momentum and feedback, particularly in our DAC side of our business. So some of the features that we brought to market, particularly through our adaptive network center. So the ability for customers to change the bandwidth on demand or observes how their products are performing are really important features. So imagine 1 of our key customers runs large-scale sporting events, and they need high-quality bandwidth, but they only needed a few times of the year. But when they do, they want it to work superbly, but they can now observe that and they can dial that up and down.

And what's most exciting, typically, these sort of products and features were really those really in the enterprise domain, highly customized, but now we've been able to bring that down and start to scale that more into that mass medium and larger business customer segment. So that's super exciting in our mid-market space. So lots of exciting things, especially to come.

Thanks, Amanda, appreciate that. And Kim, do you want to just touch on 5G stand-alone, those capabilities, what it means for customers?

Yes. Thank you, Vicki. Thank you, Lucy. I think -- so always great when we get network questions on these calls. And this one is a special one because the standalone the 5G standalone, that is such a critical part of our strategy. our NAP strategy is really about making it more tangible. What is premium, what is not premium and also ensure that we can move away from best effort to actually have network experiences that is fit for specific use cases. And that's exactly what standard loan do. We get that -- we get that opportunity to service define network for specific use cases. And you can imagine that you already have the dynamic 5G for our enterprise customers that have specific needs, but it could also be the premium branded experience versus the more discounted solutions. We can make it very clear what you get and with connectivity you need for the specific use you have.

That's the capability of the 5G standard loan. It is a broader part of the modernization we do in the network and our overall network leadership to ensure you can have the standalone experience, and you can do that separation of the experience. You both need the radio to be modernized and you also need the core to be modernized. So one of the things Vicki talked about was our overall network modernization, where we actually take the basebands we were introducing back in 2019 and upgrade that to the Neves baseband and then at the same time, transform our core, so we can ensure all our customers they can get to standard-alone experiences. That is critical now. But it's even more critical in the future where the use cases become more sophisticated, AI become more sophisticated, not only being generated AI, but also against AI.

That's why you need to have that ability to ensure the connectivity fit to the use case. We already now see that our Oplink, for instance, grew more than our downlink. That's just one example of the change in demand going forward. And the modernization is a critical part of that because there, we actually utilize the spectrum in a different way. the FDD spectrum we have plus the massive MIMO we are putting in, plus the standard loan, that's exactly what set us up not only to be a leader today, but also to be a leader in the future and ensure we can create these differentiated network experiences that underpin the premium experience and also our branded proposition in market.

So stand-alone is very critical for our strategy and also one of the promises that have been that long time for 5G that's finally getting to market now, and we are super keen on bringing that to our customers in all our segments. So stand-alone is here to really underpin our strategy.

We will go to our next question, which is from Liam Robinson from Jarden.

Thanks, Nathan. 2 for me. Unfortunately, not much variety, mobile and strategic investments. Just firstly on mobile, hoping to pin you down on this one. comfortable with the commentary around the multi-brand proposition holding up. I just want to get a sense of if you're concerned around the level of decline across all postpaid is that sustainable moving forward, particularly in the second half be down [ 47,000 ] for the second half? And then secondly, on strategic investments. I appreciate the color on elevated costs. I mean the elevated signings and sales do sound promising. But maybe one for you, Michael, I guess when can we actually expect to see that come through the P&L or some form of upfront cash realized? I'm just conscious to deliver that mid-teens IRR probably needs to be sooner rather than later.

Okay. Why don't -- Michael, we might go to you first on AURA if you're comfortable? And then just in terms of mobile and debt postpaid performance. I wonder whether Brad, in particular, might want to comment on the retail side. That feels like that might be a useful way to go, Michael?

Yes. Thanks, Liam. So we've got a number of routes that are now ready for service. So that was the first sort of milestone before we start collecting cash is that we had to have routes ready for service. So we're in a good place there. And then as we sign customers, we should see that -- we should see cash come in over the next couple of years. The P&L impact could -- is more likely to be a smaller impact over a longer period of time. But we'll be able to talk to more of that over time Liam, in terms of when we expect that cash, but we will do that as we announce very specific signings and projects rather than being able to forecast that exactly right now, but I hope that helps.

Yes. It might even after Brad spoken if Stephen wants to add a little bit more color on Ara and where we're at might be useful as well. So Brad, we'll go to you first...

Yes. So 1 SP-2 The question of CIOs, again, we do look at this as an overall portfolio. And so that is both post and pre and looking across the brand. So I don't look at that in isolation when we're making decisions around pricing. If you look at it overall, we did have, on a branded perspective in the second half, as you've pointed out, for postpaid, we did have a reduction in the number of subscribers, long actually grew -- in fact, Belong grew both halves. So that we're very pleased with that.

So again, on the back of 2 price rises within the 12-month period of time, the fact that we have that price establishment period that came in between March and May. And at a generally quiet period, we have end of financial year sale, but that's about the only big trading activity in the year. I'm comfortable and confident with where we sit right now. And again, I think what we've done to add to our overall value proposition provided we continue to create more and more value for our customers, and it does start at that postpaid branded, that's what we look at to be able to offer the maximum value, and then we tier down from that.

The other thing I'd say is if you look at the increase, whether it's the prepaid ARPU or the belong ARPU. Both of those in this year rose faster than the overall postpaid ARPU. So the gap between those 2 offerings or 3 offerings in the market is closing, and that was part of our strategy this year as well.

Thanks, Brad. Why don't we go -- Steven, do you want to just add a little bit on Ara. I know we've talked about the sales pipeline confidence and significant shift there over the 6 months, maybe a little bit more.

I would be happy to. And Liam, thanks for the question. And it sort of connects with the question that Anshu asked earlier as well. There's nothing more to say other than what Michael and Vicki have said in relation to the free cash flow projections that we've made for AURA and what we've reconfirmed today in terms of the mid-teens IRR. But I would love to add a little extra color in terms of what we're seeing. It's quite remarkable when you think about the beginning of the AURA program was 2022, and it was November 30, 2022, as you may recall, when ChatGPT was first launched. And so that's only 4 years ago, but in the tech world, that's a generation.

So a lot's changed. And indeed, the profile of the demand that we were looking at back then when we put that business case together has changed dramatically to the one we see today. As both Michael and Vicki have mentioned, that demand profile is substantially larger. It's also different in terms of composition because the profile of data center demand is changing literally in front of our eyes. Back when I was at Microsoft, the sort of contracts that we would have seen continue. But of course, we're also now seeing a new type of demand for what I'll describe as an AI factory gigawatt level type demand, which is a step change in the sort of data center capacity that the country is going to need to contemplate. And of course, we know that that's an issue for governments and communities around the country.

But it also connects with the Google transaction that we completed earlier this year that we think was highly consequential. In that Google in acquiring and now becoming our single largest client on AURA and then in turn us acquiring capacity on their subsea network points to the future of where you're going to see Australia play, I think, an increasingly important role in the information flows that we see around the Southern Hemisphere. And of course, it highlights just how important international route diversity is becoming. Not just for the future of AI inferencing and of course, low latency cloud delivery.

But of course, in relation to what sovereign digital infrastructure might look like in the future. And so we think as the government has pointed to recently, we think there's an important role for us to play in the delivery of that sovereign digital infrastructure. And as those data center projects. So we see all around us come online, you'll start to see the revenue flows that will follow from AURA. So thank you again, Liam.

We'll go to our next question, which is from Ware Kuo from Bank of America.

Just 2 questions from me, one actually related to the previous question, so on InfraCo. I think outside of the new fiber builds, to what extent is there an opportunity to, I guess, re-contracts on the existing InfraCo assets given that we are seeing growing sort of AI demand, more distributed workload. So I think the question is, could you recontract for higher pricing? And what role do you think some of those assets play in this environment? And secondly, just on cash capital allocation. With cash flow visibility, effectively, you've got a strong line of sight to FY '30. Is there anything preventing the adoption of maybe more explicit, let's say, FCF linked distribution policy that might give a little bit more visibility for the market to sort of move out distributions over time?

Yes. Thanks, Ware. Two very good questions. On InfraCo, why don't I make some brief comments, and I'll get Stephen to jump in again and then we can go to Michael on your second question. Just on the first one, I think it's a really great point. And over a number of years, we've talked a lot about the broad array of assets we have in our infrastructure business. And as Stephen just referenced, the world of AI is moving fast. And for a lot of years, there's been discussion about needing to put things closer out to where customers are out on the edge of the network. It's something we continue to monitor, engage in and understand. And it is fast moving. We've seen some of our peers around the world move and invest quite a lot of CapEx early that probably hasn't been in hindsight the right move.

So it is something we keep a close watch on and we do engage with many, many partners and customers. to make sure we're set up to be able to move if the time is right and our assets line up to be able to deliver that. But Steven, you've been doing lots of work with the team since you joined us almost a year ago now.

Indeed, I think coming up to the anniversary later this month, Vicki. So 2 thoughts there, I think, I'd like to share. The first is FY '26 was an important year in many, many ways. Not the least of which being that we in Telstra digital infrastructure now have our single largest client as NBN. And what that represents, I think, is a turning point in how we continue to think about externalizing the assets that we have within the Telstra Group.

In part, that was why we created Telstra digital infrastructure so that we could house in one entity, the international assets we have, but of course, the broad range of assets we have here domestically. And those assets, we talk a lot about fiber, but they, of course, include many other categories in the digital infrastructure world, data centers for argument's sake. Physical footprints actually become important as you think about our edge capability, towers, satellite.

And so there's a broad range of assets in the portfolio that we are increasingly thinking about how to best arrange those to meet the changing profile of the demand that I mentioned earlier, which sort of brings me into that second thought. There is so much change. And our clients, many of them from offshore looking to establish a footprint and a presence here in the region continue -- we're continuing to work very closely with them in regards to how best to meet their changing demands because the data flows that I referenced earlier are subject to the use of the AI services that will ultimately be delivered. And this is a work in progress.

As I mentioned, we're really 4 years into what is going to be a profound shift in the way in which technology is used around the world. And so many of these questions are still being answered. But to the heart of your question, we think there's great opportunity for us to arrange the assets we have to continue to release value. And we think importantly, for us to play the crucial role that we believe we play here, which is to deliver sovereign infrastructure that will allow economic value to be delivered here and retained here in Australia as we work with partners across the entirety of the digital supply chain.

Thanks, Stephen. And Michael, are you happy to take the second question?

Yes, sure. I mean on capital allocation and is there anything stopping us with doing a cash flow linked distribution. I would refer us back to our capital management framework, which is we're committed to the balance sheet settings. We think that's important. We're committed to disciplined making sure that we're continuing to support business growth and growing cash flows and then sustainable and growing dividend. And I think that we're -- that ability to have a sustainable dividend that continues to grow and to provide that consistency is a very important part of our capital management framework. We'll be disciplined on portfolio management. and strategic investment and obviously use. And we're using some balance sheet capacity for returns. I think when we think about that capital management framework, I think we are focused on retaining that flexibility and our balance sheet strength and earnings growth does give us that to both invest and to return value to shareholders and to go after opportunities. Our payout on our DPS was an 82% payout on cash EPS. We're not targeting a payout ratio at this point, but we remain committed to our capital management framework.

Excellent. We'll go to the next question, which is from Andrew Gillies from Macquarie.

Two for me. First one on costs. We've seen quite a few businesses report higher than expected taking costs. I mean you've talked in the past the ability to achieve operating leverage from AI and you flagged sort of longer architectures this morning. But can you provide a little more detail on the investment you're making in technology and some of the drivers that continue your confidence in a strong cost performance in this landscape. And then the second one is just around a and Look, it continues to be a pretty competitive landscape, but there's been some different pricing strategies from some of your competitors. How do you think about that business in house positioned over the next sort of 12 to 36 months? .

Thanks, Andrew. Two great questions, going in different directions. So that's good. On the second one, I'll get Brad up to talk a little bit about fixed consumer and small business, how he sees us competitively positioned. Before that, though, I might grab Kim as well for this one. And it's a really important one. Andrew, I know there's a lot of conversations around AI. Will the cost outweigh the benefits and token costs, obviously, in the forefront of that discussion.

The one thing I think that has set us up incredibly well is the very disciplined and structured way. Our teams have approached how we would modernize and simplify our technology and also the architecture we put around it. making sure that it is decoupled, making sure we have flexibility, we don't get locked in. And Kim will be able to give you a good overview.

But the thing I would say overarching all of this, we're in a position right now where we're not facing blowout in token costs. The teams have done an excellent job in terms of enterprise agreements in terms of how we consume for example, under CoPilot, how we use AI embedded in some of our SaaS applications we use. And then finally, we have our own cloud environment, which is generating a lot of the tokens. And again, not only have we not seen costs rise in FY '26, we've seen those overall cloud costs actually come down 7%, whilst we've grown tokens. So I think I'm very grateful for the position we're in. I don't say that. It's a given. It's something we've got to keep managing and managing very tightly and be very clear, which we are on the commercial value we're delivering from AI use cases. And I feel confident about where we are and where we're headed.

But Kim, you've been the architect and the driver behind a lot of this. Do you want to talk a little bit about the approach?

Yes. First of all, I'm super proud of the team that tisle working on the technology leadership and also network leadership. And it is really great to see the result today and see how important that technology leadership is for our overall results and also to see the impact of it when my peers segment leaders here talk about both experience but also efficiency in their towns.

But -- all this is difficult because when you are a technology leader, a digital leader and also an AI-first company, there is a risk of cost blowing out, and we have managed to create a foundation to Vicki's point where that is not happening. But that's not something that come on night. That's not something you do or night. Some of you have been with us for many years, and you recall back to T22, which was really about simplification, digitization. We took that with us into T25 where we doubled down with API-first decoupled architecture. And all these things is the foundation we are building on today. We have the ability now if we have partners or vendors that don't treat us with the commercial respect, we believe we deserve, then we can actually engineer them out. If you don't get the right prices on hyperscalers, we can move traffic across. And we also have [ Bill opens ] capability that ensure we are efficient in the way we code and the way we use AI, et cetera. So all these things is fundamental for where we are today.

One example of that is, to Vicki's point is really our cloud infrastructure that has decreased 70% from a cost point of view this year. And that's despite our application, use have increased or compute have increased more than 17%. Our data storage more than 25% and the token have increased more than 275%. So we today actually use approximately 15 billion tokens a day. That's a big number. But the good thing here is we do that within that envelope and without increasing cost -- the other thing that I really like is that 56% of that token is used in our customer engagement layer. That's used to ask Telstra one sentence summary on our telstra.com on My Telstra, but also to our employees and that's really where we also see the returns. That's where we see the benefit, both from an experience point of view, but also from an efficiency point of view. 24% of the tokens they used in our software development. And both this year and last year, we talked about that flow efficiency we see in software. So 24% of the tokens are used there. 30% is used in our network. And that's, of course, an area where we really use it to support our ambition on autonomous network. So 12% of the tokens are used in the network and then 8% is used in our cyber and of course, our defense to avoid us being exploited to bad actors.

So that's really also the areas where we, from the beginning, identified there is big value pools. And that's where we spent the tokens, and we are seeing the returns. So for us, we have the right foundation in place we have the right prioritization where we use the token. So we believe we have a good setup. But to Vicki's point, we can't take that for granted. This is hard work every single day to ensure that we bring all the AI benefit back to Telstra back to our customers, back to our employees and to Australia and not let all that AI benefit end up in big U.S. companies revenue buckets. So that's our ambition, and we'll keep pushing hard on that.

Thanks, Kim. That was great. And Brad, do you want to touch on fixed consumer and small business, the competitive dynamic?

Yes. Happy to. Thanks, Vicki. So let me start by saying our value proposition when it comes to fix has absolutely never been stronger. And you can see this in the way we've improved our digital experience to be able to order there, our deployment of the nbn high-speed tiers and the fiber associated with that and how beautiful that was when it came to life. We've got an absolute industry-leading smart modem 4 with WiFi 7. If you don't have it, I highly recommend it. It's an entirely different experience when it comes to WiFi performance in your dwelling.

And then of course, we've also rolled out naked Internet or Internet only. So for customers that have their own motive or choose to acquire their own modem and just want the high-speed service, we offer that as well. plus all of the benefits that come with being a Telstra customer, which I've talked about, and then the benefits we've also picked up from our digital migration and we've seen an increase in our customer experience and also we've been able to drive down costs.

At the same time, and it may be a coincidence, the competition, as you pointed out, has never been more intense and in particularly around the price category. It's worth remembering, we do have the strongest acquisition engine in the market, and we added almost 400,000 new customers to our fixed business during the year. but we also have the largest embedded base, and therefore, we're subject to the most competitive pressure in the market, and that's why we've seen that net reduction in our CIOs for the year.

Of course, we're very mindful of subscriber numbers, but we are not going to chase them at any cost. And I think it's that discipline, which has allowed us to double the profitability of our CSB fixed business over the last 3 years. And if you take out legacy copper, it is now a business that's generating over $0.5 billion a year in profit. Of course, we're not done. And we're going to continue to innovate across the business.

And I think one thing I'd point out is the quality of our base is improving. And one thing to look at is the number of customers that are on the higher speed plans. And so at the beginning of the year, we sat around 21% of our base on 500 meg or above. That since climbed to 34% and as of today, about 3 out of every 4 customers that we acquire is on those higher speed tiers, and we're making great progress in moving customers across the fiber. So it is a healthy business. We are mindful of the CIO challenges that we've got. But we'll continue to innovate and continue to upgrade our game and perform in FY '27.

Great. We'll have a few more analyst questions before moving to media. [Operator Instructions].

We will go to Roger Samuel from Jefferies.

Probably 2 quick ones. Firstly, just can you please unpack the drivers of postpaid mobile ARPU going forward? Is it mainly going to be driven by price increases or perhaps it's going to be net as well when you offer premium differentiated services. Second question is just on your BAU CapEx, which is going up a little bit in FY '27 after being flat for the last 3 years. Have you taken into account potential after investigation into the network outage. And maybe just an explanation to that, any potential penalties that you can quantify?

Thanks, Roger. Thanks for those questions. So just on the first one, in terms of drivers of postpaid ARPU, I mean the first thing I'd say is, Brad spoke to the most recent price change that came through. So that flowed in, in May. So late in financial year '26, so that will flow into FY '27.

NAP, our network is a product strategy, as we've talked about, a big part of that is making sure as we invest in capability on our network that delivers better experiences for customers to be able to make sure we're sharing that value creation. And one of the first ways to do that, as you would know, Roger, having followed the industry for a long time, there's not a huge amount of incentive to go up to higher price plans today. If you look at our consumer plans in market. There's very big data buckets under all of the plans.

And so part of our NAP strategy in the first instance is giving people that reason to actually go up to a different plan because the experience I get is a better one. So that's some of the thinking and work going on in the background. But as we look at FY '27, we enter with some good momentum there in terms of ARPU. Michael might want to comment a little bit more in just a second. Just on the CapEx side because I will get Michael to comment on BAU CapEx. But let me take the questions that are outage related first.

In terms of the outage, the first thing I would say is that is not factored into that BAU CapEx. We're still, as you mentioned, the external investigation is still underway. And so we will see the findings out of that. As I spoke about, as I shared, what was the initial understanding of the root cause. It was not CapEx-related. This was an issue to do with processes on our side and then not acting on a software update. If those things had been in line, we expect the outage wouldn't have happened. But having said that, we've got to wait and see the findings from our expert that's doing the investigation at the moment. We're expecting those towards the later part of this month at this stage in terms of those findings.

And in terms of penalties, the ACMA has commenced an investigation and we are clearly engaged with them and providing them the information they need. It's just far too early. They are only at the initial stages of that. So it is far too early to speculate about what that could look like. They need to complete their investigations. And then just the other PC related that might be on people's minds, is where are we at with customers, and we've had a big focus on making sure we make it as easy for our customers as possible, who feel they were impacted to getting touch.

We've had about just over 30,000 customers getting touch with us. Right now, we've processed credits totaling just under $1 million, and they've been processed very quickly to customer accounts. And we're working with a handful of our enterprise customers, who, as you can imagine, have very specific services. They're on different contracts and have different service level arrangements depending on the services we're providing them. So just in terms of the outage, no, to be clear, we have not factored that into CapEx or any of the outlook or guidance numbers.

And as I said, far too early to speculate in terms of any potential penalties. But Michael, do you want to touch on either any more on ARPU or talk a little bit about BAU CapEx?

No, thanks, Vicki. I won't comment anymore on ARPU. I think you covered that very well. I mean, I think of it as mix, improving mix will be part of the ARPU story, and that's what we're looking for NAP to help us deliver. So I think you covered it well. On BAU CapEx, I do think it's worthwhile just looking at a little bit about how our BAU CapEx has evolved over the last few years. And so we have seen quite a significant reduction in our IT CapEx, particularly as we finished many of the big mass market digitization investments and how they've flowed through, but also the huge redesign of our software delivery operating model and the benefits from AI that Kim talked about earlier, making us more efficient in the delivery of IT outcomes.

We've got -- also got very focused and more efficient on how we invest in our data and access CapEx in servicing our enterprise customers. We're very focused on how we utilize the existing assets, and we've taken some steps to improve the profitability of that business, which has freed up CapEx. And that has gone into accelerating our investment into the active network capabilities, including mobile, including core across fixed and mobile and also in our commitment to digital infrastructure.

So what's interesting in digital infrastructure is when we -- often when we build the active fiber the passive fiber, which we're doing through AURA, for example, or when we get subsea cable, we will then line up that infrastructure for customers, and we've been investing in that. And we talked about that a little bit of that in the capacity that we've got in international.

So I would look at our BAU CapEx has been a trend over time. That big lift as profitability has improved from '21 through to now, the improving efficiency in our IT spend and the reallocation of that strongly into both our active and digital infrastructure side of networks, and we expect that to continue.

We'll take one more question from investors and analysts before we move to media. [Operator Instructions].

So our final analyst question will come from Scott Rimor -- Scott Ryall from Rimor. Sorry about that, Scott. Go ahead.

You're right. I've only got one question. Vicki, I wanted to ask you about the ability to I guess, grow with the market on digital infrastructure, particularly given there is just so much CapEx coming both here and offshore. In answer to one of the earlier questions, you talked about you some -- one of the other presenters talked about the infrastructure assets within the portfolio and looking at the potential to change the profile of those assets with the changing demand of your customers.

I guess obviously, the AURA network is really great because you've started that a few years ago, and that's really coming into a time now. Is there anything else you can do? And I guess, just as a less seals idea, clearly, power is a big issue. One of the few industrial companies I speak to, that's actually gone out and sourced 100% of your electricity consumption from renewable sources. I know it's not matched exactly with the usage, but at least over your consumption. So we've actually been in market and done a whole heap of enabling things in your business. What else can you do that's outside just the assets that you own now?

Excellent. Well, thanks, Scott, for that. That's sort of a broad-reaching question. And look, the thing I'd say is just to your comment, I mean, we do have a big portfolio of infrastructure assets. What we've been really, really clear on, though, is being incredibly disciplined about where our assets provide us an advantage and where our capability provides us an advantage. And you mentioned AURA is a great example. It was actually February '22, we announced that. So I am very glad that we made the decision back then to embark on the AURA build. To your point, it's coming into its own now with what's happening.

These are the sorts of investments in infrastructure that you can't decide today you need next month or next year or even 2 years' time, they take real time to build and invest in. We also, as we've spoken a little bit about today, we continue to assess opportunities in terms of other infrastructure investments, whether that's more routes here in Australia that would make sense if the demand and customers are there. We're also -- we did recently expand our undersea cable capacity through a deal. 2 deals, 1 with Google and 1 with Keppel in Singapore. We see undersea cable demand is another area, particularly connecting Australia to the U.S. and into Asia. We are definitely seeing shifts there and increasing demand.

So as we do that, we'll take into account our assets, our capability where we can truly differentiate and obviously, make good returns is a critical part of that, but also where we can partner. So undersea cable is a great example. I mentioned Google and Keppel in both of those. We did partnerships. So there is the ability to approach some of these things in different ways. But ultimately, we want to make sure we're there to deliver our customers, their needs not just today but partnering with them in a strategic way to make sure we're there, where we've got the assets and the capability to be able to support their future growth, the growth of Australia and does Steven spoke very well too, having Australian-based infrastructure and assets where we can invest where that helps generate economic value inside the country and help set Australia up to be not only utilize AI as a country, but how we might become a hub, whether that's Asia, whether that's for the Southern Hemisphere in terms of how things play out. I think there are opportunities there.

But I can assure you -- our focus is very much on being disciplined and where we have competitive advantages that we can leverage. And then, of course, partnerships and how we work with others is also an important element as we think about those things. But right now, I feel we're in a good position or a investment, please we made that call back in February '22. We've got to focus on finishing it, delivering all of the routes, making sure we've really utilize that capacity and have those deals in place. But yes, we continue to assess future opportunity as well.

That was our final analyst question. And we thank the analysts for their questions. We will now shift pause for a short break, after which we will start the media Q&A, which will be hosted by my colleague, Steve Carey.

Good morning, and welcome back to the Telstra Full Year '26 Results. We will now move to media Q&A. My name is Steve Carey, and I'm the GM of media here at Telstra. In this session, we'll have Vicki Brady, our CEO; and Michael Ackland, our CFO, addressing questions and available to address questions from the media. [Operator Instructions].

Our first question today comes from David Swan from the SMH and the Age.

Thanks very much. Thanks as guys for taking some questions. Got 3, firstly, I know obviously not captured in the results here, but I just wanted to ask if the July outage has cost you any retail customers since June [ 30 ]? And if so, to what extent? Secondly, Vicki, the Board do your STI by 20 percentage points over the outage. Your total remuneration still reached $6.8 million. Do you feel that a partial basis reduction, is it a sufficient parity for what was a nationwide outage that affected emergency calls. And third, I wanted to ask just about ARPU Alex covered this a little bit, but with average monthly mobile bill is up 3.8%. Is there a point in which retail customers reach a tipping point on price hikes, given that it seems your customer growth has come almost entirely from MVNOs on lower margins? And can customers still up price hikes when some of that network reliability is being caught into question.

Thanks for that, David. Appreciate those 3 questions. So let me take them one by one. Just in terms of the outage and impact on customers. First thing I wanted to just acknowledge was really to thank our customers for their patience and understanding during the outage. I know it was frustrating. It's not where we wanted to be and I do appreciate their patience and understanding. In terms of the impact we've seen in terms of customer numbers post the outage, of course, on the day itself, there was some small impact but we have now seen no material impact in terms of customers leaving us post the outage or customers choosing to join us. And again, I don't take that for granted nor do any of the team at Telstra. And we do, again, really appreciate our customers' understanding. And we're very, very focused on making sure all of the lessons from that outage. We take those lessons and we implement the changes to make sure we come out the other side with an even stronger and more resilient network. So no significant impacts there to date.

Second question, just in terms of my remuneration for the year. The first thing I would say at the outset, as I said, when I addressed the immediate shortly after the outage ultimate accountability risks with me for the outage. And you will have seen, as you referenced in our remuneration report, the Board did make some decisions, and I thought I'd share a little bit of how they reached their judgment. So first off, you will see that myself and the senior executive team did have remuneration reduced for FY '26.

For me, that was a 20-point reduction in short-term bonus and informing that view, the Board really looked at our initial investigation where we've been very transparent. There were things within our control that triggered the outage. And so they formed the view that it was appropriate to recognize that and accountability was taken in the form of adjustment to FY '26 remuneration.

The second thing I'd say is the expert investigation is still underway. And so as those findings are finalized as we have a chance to look at those, of course, if the Board see reason to have more accountability demonstrated through remuneration that will happen through FY '27.

And then the third thing I would say is we have set our targets for myself and the leadership team for FY '27. They are based on the corporate plan that the board signed off in June pre the outage. So there has been no allowance made in our FY '27 targets in terms of any lead way for the outage, which is entirely appropriate. So just sharing some of the thinking that went into the Board's decision around remuneration.

And then the final question, which comes to mobile average revenue per user. And as you said, it was a very big topic of conversation on the analyst call earlier today. I think what we're seeing, first thing I'd say is connectivity has never been more important for our customers and for Australians. That's clear, and we see that whenever there is an interruption to service just how critical it is really today in underpinning the digital ecosystem of the country and the way we work and operate the way we access education or health or critical services, it is a fundamental underpinning to that.

As you pointed out, we've seen for a little while now where the growth has been in the market has been at that more value-conscious end of the market. And that's why, as Telstra, we do have a range of products and brands and channels to market. And that's why, yes, we've seen strong growth with our MVNO partners. We've also seen very strong growth in our prepaid business. And we've always been committed to making sure we provide choice to customers. So we can reach different segments of the market with different products and different brands. And I think given how important mobile services are to Australians today, we continue to see people making those choices to make sure they've got a service. They want their service to operate at a high quality, and that does take investment. It does take cost to be able to deliver on that. And I feel our mobile business shows great resilience, and we again appreciate the understanding and support of all of our customers.

Thanks, Vicki. Thanks, David. Our next questions come from Sam Buckingham Jones from the AFR.

Thanks, Steve. Thanks, Michael, and thanks, Vicki. I've got a couple of questions as well. The first one is you're spending quite a lot of money on AI. The Accenture deal alone is a big one. And the annual report noted that Telstra wasn't in the top quartile of companies on AI adoption and maturity. And I can see that the Board has added AI impact as a new incentive target for you to achieve. Does this suggest the Board is not satisfied with the return on investment what Telstra has spent on AR so far? And are you happy with the way that joint venture is going? That was my first question.

And the second one is probably a slight overlap on what David asked before. But do you mind elaborating a little bit more? Do you think there will be any further impact on the salary or remuneration, sorry, of the executive team following from the outage, I just note that the cumulative amount that the company has paid out to all of its customers is about half of what the executives have lost which seems like an interesting balance there.

Thanks, Sam. Let me take the first question. So just in terms of AI. We see it as absolutely fundamental and enabler of our business. So firstly, how we adopt AI and use it inside the company to deliver better outcomes for customers to our teams up to be able to work and develop their skills in AI alongside, obviously, Telstra plays another role in AI, and that is the infrastructure, particularly our digital infrastructure to help support the country, leverage the benefits of it, and frankly, through our networks, including our mobile networks, a key way that people across the country will access AI in their business at home in their education will be over our networks, including our mobile network as one of the key ways to do that.

So AI is critically important. As you mentioned, we entered a joint venture with Accenture. That was all about taking our data and AI capability. So the teams that have those skills that flow to work across our business and support the various initiatives in the different functions of the business. It was to bring our teams together with Accenture teams to make sure we were absolutely at the forefront because there is no doubt, AI is a global game.

We wanted to make sure we're not an AI company, but we want to be at the forefront of applying AI inside our business. As part of that Accenture deal, one of the metrics we put in was we wanted to get to the top quartile in terms of AI capability as an organization. That is a global benchmark. We're sitting the second quartile today, and that's part of the joint venture goal and outcome it needs to deliveries to get us to that top quartile. In terms of how we're tracking, I'm actually really pleased with where we're at right now. We're a year into our Connected Future 30 strategy. So we've still got 4 years to go. We're in a better place today in terms of our AI capability than we would have been, I believe, if we had not done the Accenture joint venture, it's absolutely delivering for us, particularly foundational capability inside our business like our data and AI control plane, which gives us full visibility of AI use cases. It means we can monitor cost performance we can monitor their responsible use and safety of AI. And in fact, we're actually seeing that we're able to drive our usage of AI up whilst not growing costs.

And so that's a real credit to our teams who have worked over years to make sure we've got the architecture and the flexibility to be able to leverage AI and scale it without seeing the costs outweigh the benefit. So net, we're absolutely seeing benefits from AI and in our scorecard for FY '27, as you call out, we've put in some new AI metrics, and that's all about making sure we've got the focus around those most transformative pieces that we think during FY '27 are going to be critical to deliver better outcomes to our customers and the business overall.

Just to your second question on remuneration, as I mentioned a little earlier, the Board formed a view and held us to an account as a senior executive team by making an adjustment to FY '26 remuneration. The external expert investigation is still underway when those findings are complete, of course, the Board will consider those findings any further accountability needs to be demonstrated. That is something they will consider in light of our FY '27 remuneration outcomes. And as I said, our FY '27 scorecard does not give any leadway because of the outage it is set based on the plan we put to the Board in June of this year. You mentioned where we're at with customers. and where we are at. We've had a little over 30,000 customers reach out and contact us. We have, to date, processed just under $1 million of credits. And I would again encourage customers anyone who believes were impacted and hasn't been in contact with us. They should reach out our processes working smoothly, and we are getting through that very quickly. So again, I want to thank our customers for their understanding and patience through the outage. And as I said, yes, we're sitting at the moment, having processed credits of around just under $1 million.

Our next questions come from David Taylor from ABC.

Great. Vicki, just a question. We've had contacts from a current Telstra employee that makes the point that Telstra has a sort of inverted commas secret strategy of when someone leaves the organization, whether they retire or natural electrician going somewhere else, you replaced their job with our job in India and that this is part of Telstra's strategy to cut costs at your head office and basically replace a lot of the jobs that are done in your head office, whether they be through people and culture, HR or finance or marketing and replace those jobs with jobs in India to the extent that a lot of the work in the head office could be done in India. That employee says that that's correct. Can you confirm that?

David, I'm not aware of that particular allegation by an employee, but let me just talk about how we approach our workforce. So firstly, we have a large workforce here in Australia. We have workforce working in around 20 countries around the world. That does include -- so we actually have an innovation center in India. So our own teams employed in India. We also have teams in the Philippines. So we have, as a Telstra workforce, we do have workforce outside the country, including you take our Digicel business operating across the Pacific and our international business, which is headquartered out of Singapore.

So we absolutely have workforce out of Australia. In terms of are we deliberately, as someone leaves the organization, then replacing them in India with our team there or through a partner? No. we make very deliberate decisions on our workforce and we look at what are the capabilities needed, where can we best access those capabilities. And that's how we make those decisions. Any decision we make on our workforce where it has impact on people. We don't make those decisions lightly. They are very considered decisions about what will put us in the best position to be able to deliver for our customers. We're also investing heavily in our teams, particularly in capabilities around data and AI because we think that's critical. We want our teams to be really skilled and be able to adapt and adjust as the world changes with AI. So we are investing heavily in that also.

Are you in any discussions with any consulting firms here in Australia about how you can move more jobs out of your head office towards India?

Not that I'm aware of at the moment. David.

You're the CEO.

I am the CEO, David. And so as I said, we have very considered plans around how we manage and plan our workforce. And we do have teams in India and the Philippines as 2 big locations for us.

We'll move to Jared Link now from the Australian. Please go ahead, Jared. .

Your Connected Future 30 strategy is predicated on achieving cortile AI maturity by 2030 and shifting towards that autonomous programmable network as a product model. The outage, which was triggered by that failure of effectively IT hygiene, the undocumented design changed amid software update. I was just wondering, how do you reconcile the high-level addition to leading complex AI-driven infrastructure with the reality that your current change management and operational processes appear to execute standard maintenance without risking service failures.

So Jared, first thing just on the outage itself and what triggered it. As we've been very clear and accountable about. It was triggered by planned work on our network, and it was due to some undocumented design change that not being taken into account. And then also if a software update had been done, it is likely if those 2 things had been done properly, we likely wouldn't have had an outage. That's not acceptable. We have taken steps already from our initial investigation and we have an external expert doing a full investigation right now. And our commitment absolutely is -- we have to take the lessons from that and implement those so that we come out the other side with an even stronger and more resilient network and processes and controls inside the business.

So no one wants an outage. We don't want it. We didn't want to be in that place, but it did happen. And so now our focus is absolutely on supporting our customers, but also taking those and implementing them. In terms of where we're at, on our Connected Future 30 strategy, and you mentioned inside that, how we make sure we are really adopting AI, using that inside our business, using that inside our network. Because at the end of the day, it is our network, that's our core product to our customers. I'm actually very pleased with where we are at the end of the first year of that 5-year strategy.

You referenced a goal and ambition we have, and that's to get to the top quartile of companies being able to demonstrate and use AI. It is a global benchmark. That's a target we set with Accenture as we entered our joint venture with them. We're sitting in the second quartile, and our goal is to get to that top quartile and at the end of year, one of our strategy. We're making progress, and we will not be complacent because it's a fast-moving world, and that remains our ambition.

Our next call is Jacklin Robson from 7 Network.

Vicki, it's been 2 years of consecutive and aggressive price hike mobile and Internet customers. Are there any more to come? And should regular customers be left paying higher prices for services, which, as we've seen in July aren't reliable.

So Jacqueline, let me talk a little bit about mobile. It's obviously a really critical service for customers across the country. People are more and more reliant, and we know today, connectivity really does underpin the digital ecosystem of the country. We feel it, we know it, whether it's in work, your everyday life, that ability to have connectivity to be able to access platforms, access health, education, critical services. It's absolutely key.

Obviously, running a mobile network, it does take significant investment as does providing the level of service to our customers. And as we continue to invest, and you will have seen that -- we have grown our investment in our network and digital infrastructure over the last 5 years. We continue to invest in that. We do need to make sure we've got pricing set that we can continue to sustain that investment to deliver on those expectations of our customers.

I would also point out, we have a lot of choice for our customers because we fully appreciate and understand that cost of living is a big pressure on a lot of people in the country. That's why we do have no locking contracts on our postpaid plans. We have prepaid available. We also have different brands and through Aldis and Woolworths as examples to be able to support customers and give them choice alongside financial support for customers who are in particularly challenging circumstances. So mobile remains, I think, a really fundamental service that customers continue to prioritize and want access to high-quality services, and they are the decisions we need to make to be able to deliver for our customers ongoing.

Thank you, Vicki. And thank you, Jacqueline. Our next questions come from Brandon Howell from Capital Brief.

I just wanted to touch on a couple of topics from the analyst call as well. Sort of in the context of SpaceX earnings last week. We heard that StarLink mobile will -- is planning to go online from the end of 2027 and the sort of planning to take market share from the U.S. big 3 telcos, including in suburban and urban markets. I'm just curious, how is Telstra thinking about the potential threat to its mobile market share from 2028 onwards. And sort of on a sort of related point, with regards to the ACCC mobile services inquiry to the are considering LEO sat direct-to-device services. I'm just curious if Telstra has any position on whether or not there's a need for these types of services to be declared as wholesale?

Brendan, thanks for that. The first thing I'd say just on, yes, the SpaceX earnings call last week and conversations around StarLink Mobile, they were around the U.S.-based service. As you point out, obviously, dynamics and things are different in different markets, including spectrum access and various other parts of that. So that is an announcement relevant to the U.S. at this stage. Look, in terms of how we're approaching satellite. We made the decision to invest. We chose to invest in bringing satellite to mobile services to our customers here in Australia. We brought mobile messaging last June. And recently, we've now opened that up to provide access to select applications with a light data service over the StarLink satellite to mobile service that we've chosen to invest in and bring to our customers. So we see it providing an important layer of extra coverage when customers are outside our mobile footprint or an extra layer of resilience for our customers because we know connectivity is so critical to them.

You mentioned the ACCC having announced an inquiry into mobile services from what's been shared so far, and we -- there's still a discussion paper to come on the detailed scope, but it appears to have to be a pretty broad-ranging look at the mobile industry, and it does include emerging technologies like satellite. We think that's incredibly timely to be having that sort of inquiry through a very structured framework given the pace of change in technology given the different dynamics and how important connectivity is for Australians. We think that is timely.

I would point out that infrastructure investment and infrastructure as cotton has really been part of our mobile market here in the country for a couple of decades. And that infrastructure-based competition and that investment and innovation and ability to differentiate is why we've seen Australia be very early with 3G, 4G, 5G and have mobile networks that are amongst the top few in the world. In fact, as Telstra, over the last 5 years, we've invested $9.5 billion in our mobile network with $3.8 billion of that going into regional services. So we think it's timely for the inquiry to happen and, of course, we will engage with the ACCC as they progress through that.

We'd now like to welcome Josh Taylor from the Guardian to the call. Josh, please go ahead with your questions.

Just sort of, I guess, following up some of the other questions today. So looking at your ARPU off the back of 2 price increases and looking at your buffet and obviously, like the shareholder buyback and everything like that, when the -- happened in July, you faced a lot of criticism politicians basically saying that you're putting profits ahead of customers. would Telstra customers seeing how much profit you're making off them essentially, basically feel like they're sort of coming last, do you think it's adding to inflationary pressures? And I guess my other question would be as well, just in regards to the Spectrum pricing announcement recently, been quite critical of that, even though it's actually less than what you were charged last time. The government will probably be looking at this thinking you're a bit rich crying about this given your profit today. How do you sort of gate your complaints about spectrum pricing versus your profits?

Josh, so just to address a few of those questions. So first thing I would say, not only have we managed to deliver outcomes, and ultimately, our business will only be successful if we're delivering for customers. And so we've seen consistently now after -- over the last 5 years, we've been delivering improved outcomes for customers, and we're seeing that flow through in more customers choosing us, they are more customers staying with us alongside lift in our Net Promoter Score from our customers. In fact, we closed FY '26 with that at a record high.

As we have delivered those better outcomes, and we have seen our underlying profits grow. We have also grown our investment in CapEx into our network and our digital infrastructure. In fact, if I look at FY '26, We spent $800 million more in that year than we did in FY '21 on our networks and digital infrastructure. I know people will look at various elements of our results. And just to be clear, we did announce a further on-market share buyback. We are doing that alongside increase in CapEx. In fact, an on-market share buyback goes to how we -- our mix between equity and debt, it is not a trade-off between investing in our business -- in terms of spectrum pricing, yes, the ACMA formed a view on spectrum pricing ourselves along with the other mobile network operators in the country, all had very strong views on what the fair value of that spectrum is we believe it was priced higher than the fair value of that spectrum, in terms of valuing spectrum, you don't look backwards, you look forward and you benchmark to what has happened to various markets around the world more recently. We still hold the view we saw that at a lower value than was determined. However, the ACMA that is their role to determine that price, they have determined it, and we will proceed through the various spectrum renewals that sit under that over the coming years from 2028 through to about 2032.

Our next caller we have is Rowan Peace from Consta.

Unfashionable question around fiber -- you mentioned this kind of strong pipeline for AURA. I'm kind of interested in that context about some of the kind of demand or interest you're seeing in the REITs that you haven't made an investment decision on yet. Particularly, I guess, from hyperscalers. And whether there's kind of, I guess, a time line for ruling in or out some of those kind of optimal routes.

Thanks, Rowan. Yes, now, AURA, yes, it is exciting to see. As a reminder, we announced AURA back in February 2022. So it's great now to be more than halfway through it and have 6 routes live and ready for service. We've absolutely -- particularly the last 6 months, we've seen a significant lift in the sales pipeline for AURA capacity.

As you mentioned, when we announced back in February 2022, there were 2 additional routes that we did designs on, but were not part of the initial build. One of those was a in Brisbane and another one was [ Dawanto ] Perth along the coastal route through the Pilbara. They were 2 routes not included in the initial AURA project. Of course, our focus right now is on completing Aura. It is converting those sales pipelines into contracts and getting customers up and running on the network.

But of course, we will continue to assess if there is investment that's value accretive that is going to deliver for customers and their demand is there, that's something we will continue to assess, no time line on ruling that in and out if there is good investments to be made where we've got the capability and the differentiation to be able to do it alongside customer demand, then that's something we'll consider.

Our final question today comes from Amelia Torson from ABC.

Thanks for doing this briefing with media. Also just a follow-up to some questions that have already been asked. Telstra's results show that you're working with 1 regulator on the outage. Can you tell us who that is specifically? And also if you're bracing for potential action from the likes of ACMA who've actually dislodged action against Optus over one of its outages.

Thanks, Amelia. So ACMA is our key regulator, and it is ACMA that has commenced an investigation into our outage. It's in the very early stages. Of course, we are cooperating with that and providing all of the information they require. It's far too early to speculate around potential outcomes out of that investigation. So early stages, and we are cooperating fully with ACMA.

Thank you, Vicki, and thank you, Emilia. That wraps our media Q&A for today's full year results. Thank you to the media for joining us and also thank you to the analysts that joined us on the call earlier today, we will now wrap up formally our broadcast. Thank you very much.

Good morning and welcome to Telstra's results announcement for the half year ending 31st of December 2025. I am Nathan Burley, Head of Investor Relations. I'm joining today from the lands of the [ Gadigal ] people. And on behalf of Telstra, I acknowledge and pay my respects to the traditional custodians of country throughout Australia and recognize the continued connection Australia's First Nations people have to land, waters and cultures. We pay our respects to elders, past and present.

This morning, we will have presentations from our CEO, Vicki Brady and our CFO, Michael Ackland. We will then open to questions from analysts, investors and then the media. I will now hand over to Vicki.

Thank you, Nathan, and good morning, everyone, and thank you for joining us. I'll make some comments reflecting on Telstra's overall performance and our outlook. Michael will then cover the details of our financials.

The first half of FY '26 was a strong period for Telstra. We delivered ongoing growth in earnings, reflecting momentum across our business, strong cost control and disciplined capital management.

We also made a positive start to our Connected Future 30 strategy, which will see us double down on connectivity, drive growth and play a critical role in enabling a prosperous digital future for Australia.

In first half '26, reported financial performance compared to the prior period included EBITDAaL up 4.9% to $4.2 billion, EBIT up 9.2% to $2 billion. Profit for the period or NPAT, up 8.1% to $1.2 billion, earnings per share up 11% to $0.099, and return on invested capital, up 0.8 percentage points to 8.8%.

Our underlying growth more accurately reflects our financial performance compared to the prior period. Underlying financial performance showed underlying EBITDAaL up 5.5% to $4.2 billion, cash EBIT up 14% to $2.5 billion, cash EPS up 20% to $0.14, and underlying return on invested capital up 0.9 percentage points to 8.9%.

On the back of cash earnings growth, the Board resolved to pay an interim dividend of $0.105 per share. The interim dividend is 90.5% franked, with a franked amount of $0.095 per share and an unfranked amount of $0.01 per share. The interim dividend uplift and the level of franking applied is consistent with our capital management framework. And our aim to deliver a sustainable and growing dividend.

Our dividend is supported by strong cash earnings this half and our Connected Future 30 ambition remains to deliver mid-single-digit growth in cash earnings.

Today, we are also announcing an increase in our current on-market share buyback from up to $1 billion to up to $1.25 billion. This increase is supported by strong progress in completing $637 million of the buyback in the half, earnings growth and the strength of our balance sheet.

The on-market share buyback is expected to support earnings and dividend per share growth and along with the increased interim dividend reflects the board and management's confidence in our financial strength and outlook.

Now that we've completed our first half, we are tightening our FY '26 underlying EBITDAaL guidance to between $8.2 billion and $8.4 billion. Our guidance on other measures are unchanged.

Looking now at our results across the business. We grew underlying EBITDAaL across our mobiles, fixed consumer and small business InfraCo Fixed and Amplitel businesses. Importantly, our mobile business has continued to perform well, with EBITDA growth of $93 million.

Mobile's growth was driven by higher ARPU and more customers continuing to choose our network and the value it provides. Mobile services revenue grew by 5.6%. Our fixed C&SB EBITDA grew by $37 million reflecting ARPU growth and disciplined cost management. We introduced our Internet-only plans late in the half, and customers now also have access to our Telstra Smart Modem 4 with next-generation WiFi 7 technology. With these new offerings in place, we are focused on stabilizing customer numbers and driving growth.

Our fixed enterprise EBITDA declined by $9 million as we continue to reset this business, including through portfolio management and reduced costs. We remain committed to this reset with further changes proposed last week to continue removing complexity. Our international EBITDA declined by $2 million, but grew excluding one-offs. Michael will go through this in detail.

Our domestic infrastructure businesses across InfraCo Fixed and Amplitel continue to grow, reflecting strong customer demand. Across the business, we achieved 14% cash EBIT growth. This percentage growth rate is higher than the rate we expect at the full year, largely due to lower BAU CapEx in the first half.

Our full year cash EBIT guidance is equivalent to around 5% and to 10% annual growth. We delivered positive operating leverage of 3.1 percentage points, in line with our Connected Future 30 target. Given the low level of income growth in the period, we achieved operating leverage largely through strong cost discipline and efficiency gains. We reduced underlying operating expenses by $179 million or 2.4%, more than offsetting pressure from rising costs. This requires challenging but necessary decisions to reduce some roles and set us up to deliver on our Connected Future 30 ambitions.

We're also seeing efficiency gains flow from technology leadership as an important enabler of our strategy. This includes modernizing our software practices, relentless simplification strong adoption of AI and an API-first architecture.

For example, we've consolidated our software partners from 400 down to 2 and improved efficiency in our software development by more than 20% and sped up time to market and release cycles by 15% to 20%. And most importantly, we're seeing benefits to customers, which I'll come to shortly.

Turning to our strategy. Our ambition is to be the #1 choice for connectivity in Australia. Achieving that in a changing environment means radically innovating in the core of our business. You can see the layers and enablers of this strategy on this slide, which we covered in our last Investor Day. There is a more detailed scorecard in the appendix that shows our progress, so I won't go through that in detail. But I will make some comments on the importance of connectivity and call out some highlights from the half.

Connectivity is foundational to supporting national productivity resilience and security. As reliance on telco networks grows and service expectations rise, continued investment in digital infrastructure is fundamental to better delivering services to consumers and business. Investment needs to be supported and encouraged and the investment required across the sector will be large in the multibillions of dollars.

To do this well, we need to have a shared national vision for the digital future we want to create for Australia and a national digital infrastructure plan, our sector can align behind with government and regulators. This must include a plan to use spectrum to the greatest possible benefit to consumers and businesses.

To do that, we need certainty of spectrum allocation on fair terms at a fair market price. We also need better regulation designed for, but agnostic to the technology of today. We need forward-looking guardrails that both protect consumers and encourage innovation to deliver better outcomes for them and the nation.

We welcome the Productivity Commission's proposal for a deep dive review of regulation in the telecommunication sector. We want to work with government, regulators and the sector on a shared vision for Australia's digital future, so we can better align policy, regulation and decision-making with the goals we have as a country.

On investing in connectivity, we are driving significant momentum in the build of our Aura network and managing this large complex project with discipline. The network will be vast connecting our capital cities with ultrafast and reliable fiber and the ability to connect regions too. This week, we reached the halfway mark with 7,000 kilometers of fiber in the ground. Our Sydney to Melbourne Coastal via Canberra routes are now live and more routes are expected to be completed in FY '26, including Sydney to Melbourne Central via Canberra and Sydney to Perth.

We are on track to achieve a 1 point uplift in our Network Experience Index, which brings together network availability and speed across our mobile and fixed networks to measure the real experience our customers receive. The uplift is a result of our ongoing program of network optimization and early benefits from our additional investment over 4 years in 5G advanced capability.

It also reflects improvements in resilience. For example, we have invested to strengthen backup power across our network sites, which we're able to withstand more than 95% of the 165,000 planned and unplanned power interruptions we experienced over FY '25. While there's always more to be done, these investments and others contributed to Telstra receiving the 2025 Best in Test Mobile Network award from umlaut for the eighth year in a row, and with our highest score ever.

In June last year, we became one of the first operators in the world to launch satellite messaging. And while it's not a replacement for terrestrial networks, we're seeing it add another layer of resilience when terrestrial networks are disrupted. For example, when fire damage and power disrupted our network during the recent bushfires in Victoria. Particularly around Longwood and Harcourt, we saw a threefold increase in people connecting to satellite messaging, even though many people had evacuated this area.

On supporting customers, we have migrated more than 99.9% of our 7.7 million consumer customers to our new digital stack. We continue to work with around 4,000 of our customers who are the most complex to migrate, and we are managing that thoughtfully. Our team know these customers as individuals as we work through this with each of them, and we're committed to getting it done.

We're seeing significant improvements in customer experience from digitization and AI. 86% Consumer service interactions like billing, order tracking or prepaid recharge are now completed through our digital self-service instead of customers having to call us. In November, we launched an AI-powered assistant, which customers can access on telstra.com to get help with simple things like checking their plan, activating a SIM or how to reset a password. This is our first customer-facing generative AI assistant, and it has meant an almost threefold increase in customers being able to resolve their inquiry using AI. We plan to scale this AI-powered assistant across our -- my Telstra app over this quarter.

It is just one example that we have many more AI use cases across the business helping us serve customers better, strengthen network resilience, protect customers from scans and solve issues before they become problems. Overall, our investment in digitization and AI combined with our ongoing network and capability investment is helping to drive improvements in customer experience. Over the 12 months, we've seen strategic NPS increase by 5 points and episode NPS increased by 2 points.

At the same time, we have been laying the foundations of our Connected Future 30 strategy. And there are three things that I'll call out here. The first is innovating in core connectivity, capability and how we capture value. In mobile, our investment in 5G advanced is moving us towards a smarter, more adaptable and programmable network. In Fixed, we launched our Adaptive Network center in June last year, our self-service platform that empowers our enterprise customers, partners and Telstra teams to design, order, track, manage and monitor connectivity services, all in one place. These capabilities are both fundamental to enabling our network as a product layer and we continue to drive momentum.

The second is our work under our joint venture with Accenture to transform our business with AI. We made good progress we have made good progress since launch, including retiring legacy platforms, strengthening responsible AI governance, streaming data architecture, and opening access to global innovation via our Silicon Valley hub. We recently proposed changes that would see the JV tap into Accenture's existing resources and expertise to deliver on our data and AI road map more quickly. That means some roles would not be required. While decisions like this are never easy, over time, we expect it will deliver benefits to our customers and our business faster.

Third is our investment in upskilling our people. We continue to put AI tools into the hands of our people to help them learn and adapt. And over the half, more than 75% of our team who -- with access to those tools use them weekly or more often. We also continue to offer training through our data and AI Academy. In the first 6 months of FY '26, almost 9,000 of our people completed a course.

Looking ahead, we are focused on continuing to deliver value for our customers, communities and shareholders as we build momentum behind our Connected Future 30 strategy. This includes through our core business cash flows, active portfolio and investment management and disciplined capital management.

Our ambition is to be the #1 choice in connectivity in Australia and to continue delivering on our purpose to build a connected future so that everyone can thrive. I'd like to thank the Telstra team for everything they have delivered in the half in the care they have shown for our customers, particularly responding to the Victorian fires and Queensland floods over the summer.

I'll now hand to Michael to take you through the results in detail.

Thanks, Vicki. And as Vicki said, we've had another strong half with continued growth across all earnings and cash metrics, including our new guidance measures. This is in line with our goal to deliver resilient, predictable and consistent growth under our Connected Future 30 strategy. While total income across the group increased at 0.2% in the half, we've reduced operating expenses by 2.1% with our continued focus on efficiency. EBITDA after lease depreciation or EBITDAaL, was up 4.9% on a reported basis and 5.5% on an underlying basis, with the difference due to a $23 million impairment of the London hosting center.

We have delivered a profit to Telstra shareholders of $1.1 billion, up 9% and earnings per share of $0.99, up 11%. These results reflect growth in key products, especially mobile, ongoing strong cost management and reduced shares on issue from buybacks. Cash earnings were higher than reported earnings as depreciation and amortization is higher than business as usual, or BAU CapEx. We expect this trend to continue and continued growth in D&A.

In addition, cash EPS of $0.14 per share was up 20%, a higher growth rate than reported EPS as BAU CapEx was lower this half. As Vicki said, with stronger cash earnings, the Board increased the interim dividend to $0.105 per share, up 10.5% on a cash basis. This represents 75% of cash EPS.

With our tight franking balance and ongoing gap between cash and accounting earnings, partial franking in this period best supports a growing and sustainable dividend. We've also lifted our current buyback from up to $1 billion to up to $1.25 billion. $637 million was bought back in the first half or 1.1% of shares at an average price of $4.90 bringing us to a total of 2.6% of shares retired in the calendar year 2025.

Now given this is the first half, we are reporting on cash EBIT and cash earnings. Let me provide a little more detail. As a reminder, cash EBIT is a view of earnings after key cost buckets, including BAU CapEx, lease and spectrum amortization. Cash earnings is a further view after interest, tax and noncontrolling interest. Cash EBIT growth of 14% to $2.5 billion follows growth in our core operations, coupled with strong cost management and lower BAU CapEx. BAU CapEx of $1.5 billion was down 5% and largely due to timing. We expect a higher spend on digital infrastructure, including in our international business in the second half.

Despite a lower average borrowing rate, finance cost increased modestly. Tax was higher in line with higher earnings with an effective tax rate of 28.4%. With that, cash earnings grew 17% to $1.6 billion.

Turning to Slide 14 on product profitability. We delivered EBITDA growth across mobile, fixed NSB, InfraCo Fixed, Amplitel and other. Other EBITDA comprises costs not allocated to product. It improved with favorable foreign exchange movements, adjustments due to bond rate changes and the absence of equity losses following the divestment of our [ Foxtel ] stake last year. Health was flat with continued growth in revenue, offset by higher costs supporting new contracts and ongoing transformation. Other EBITDA would generally be around a $70 million loss per half, although this varies based on the nature of the items included.

Turning to our key products, starting with mobile, which continues to demonstrate strong performance. Mobile service revenue grew 5.6%, with growth across all product groups including postpaid, prepaid and wholesale handheld, mobile broadband and IoT. We delivered sustained average revenue per user or ARPU growth across all categories, brands and segments with disciplined commercial execution. Postpaid handheld ARPU grew 4.8%, Prepaid handheld ARPU grew 14.7%, although significantly lower on a unique user basis. And growth is due to the flow-through of October 2024 price changes. And wholesale ARPU grew 7%.

We achieved this ARPU growth while also growing postpaid, prepaid and wholesale customers. Our handheld mobile user base grew by 135,000 in the half. Mobile EBITDA grew 4% to $2.7 billion, with service revenue growth partly offset by higher costs, including higher-than-usual customer remediation and compensation sales costs, largely related to satellite, increased redundancy and a higher allocation of shared cost as mobile becomes a bigger part of our business.

We expect sequential mobile service revenue growth to be muted given the timing of past price changes and lower IoT revenue following the divestment of MTData.

Turning to fixed consumer and small business, where we continue to grow earnings by focusing on a portfolio of products and technologies and strong cost management. In the half, we grew NBN unit margin through price rises and plan mix, which offset sir losses and we continue to grow our 5G fixed wireless product. We continue to invest in our offering in the half. We launched our Internet-only plans and introduced the Telstra Smart Modem 4. However, [indiscernible] losses remain a challenge and a focus for our channel and marketing teams.

In fixed enterprise, we have continued efforts to reset the business and focus on connectivity and strategic growth areas. Starting with Data and Connectivity, or DAC, where income fell 9%. During the half, progress on product refresh and upselling to higher bandwidth was not enough to offset the impact of service rationalization and in-period customer credits. We delivered cost and CapEx reductions. However, DAC EBITDA declined to $25 million as cost reduction was insufficient to offset the revenue decline.

Turning to Network Applications and Services or NAS. Revenue declined 4% following deliberate decisions to focus on areas aligned to our strategy. and declines in calling products, with strong cost management, EBITDA increased to $62 million in the half. Our focus on portfolio management is ongoing. The sale of Alliance Automation and MTData are completed and the sale of 75% of Versant Group announced last August is expected to close this half. These businesses contributed $235 million in revenue in the first half of FY '26.

Turning now to international on Slide 18. While reported EBITDA fell 0.5%, we achieved modest growth, excluding significant one-offs. Starting with wholesale and enterprise while reported EBITDA of $232 million grew 20%. This included $45 million of one-off benefits, including deferred revenue recognition, other balance sheet releases and an equity accounted associate gain. Excluding these and one-offs in the prior period as well as FX impacts, EBITDA grew around 1%. This growth was delivered through strong cost management, following a strategic refocus of the business on DAC. This more than offset DAC margin pressure from higher off-net mix, ongoing declines in legacy voice, a business we expect to complete the sale of this month.

Looking forward, wholesale and enterprise EBITDA is expected to decrease significantly in the second half sequentially with the one-off items not expected to repeat, declines in NAS and voice and partially offset by ongoing cost discipline. Over the past few years, we're focused on maximizing utilization in our subsea cable assets.

We have been disciplined in our investments in new capacity. However, this has limited opportunities for new sales and growth. We now see promising investment opportunities in the second half of FY '26 within our BAU CapEx guidance.

Digital Pacific reported EBITDA declined 22% to $139 million as the prior year benefited from the release of the remaining earn-out provisions.

Excluding this and in constant currency, EBITDA grew 1.7% with ongoing cost reduction offsetting a challenging operating environment.

Turning to Infrastructure on Slide 19. InfraCo Fixed income was broadly flat at $1.4 billion, with growth from NBN CPI indexation and ground stations. This was offset by lower commercial and recoverable works reported legacy asset sales and internal revenue based on efficiency -- total revenue based on efficiencies and lower power charges.

InfraCo Fixed EBITDA grew 3.4% to $905 million, including a higher contribution from NBN, copper recovery, commercial works and cost efficiency, partially offset by the reduced internal income.

[ Amplitel ] continued to benefit from strong demand for towers and cost efficiencies. EBITDAaL grew 6.6% to $162 million despite the market impacts.

Regarding strategic investments, including the Aura network, which is our new name for our [indiscernible] City Fiber. We continue to expect spend of $1.6 billion above BAU CapEx across the project. Now while we expect the vast majority of this spend to occur by the end of FY '27, we now expect a small amount of spend and some routes to complete in FY '28. We continue to be disciplined in the build of this 30-year asset, including prioritizing routes in line with customer demand and returns. We expect a mid-teens IRR with strong revenue growth, especially from FY '28, in line with demand as routes come online.

Strong cost management is a key highlight of this result. Our proactive cost management and the benefits from technology adoption is helping us be more efficient, respond to structural challenges in some products as well as the impact of inflation and allow for reinvestment. And Lower sales costs were a function of lower fixed [ NSB ], international and [ ASCOs ]. Fixed costs were $76 million lower. Together with lower BAU CapEx and Cash EBIT costs reduced, delivering strong operating leverage of over 3 percentage points.

We've maintained our strong capital position with liquidity supported by strong operating cash flows. Net debt remained stable at 1.9x despite our buybacks as higher debt was offset by EBITDA growth. We've also reduced our average cost of debt to 4.8% and extended our maturity profile. Our balance sheet is strong, and we remain committed to an A band credit rating. This has enabled us to lift our current buyback. We've also improved our return on invested capital.

Turning to FY '26 guidance on Slide 22. Today, we are tightening our underlying EBITDAaL guidance to between $8.2 billion and $8.4 billion, with the midpoint unchanged. Our guidance on all other measures is reconfirmed.

In terms of EBITDAaL, there were a number of one-offs that have benefited the first half, including in international and other EBITDA. The second half will also reflect the loss of earnings from businesses we have divested. Offsetting these items in the second half, we expect ongoing productivity, including carry-in from prior years as well as InfraCo asset sales and net product growth. As previously noted, we also expect higher BAU CapEx in the second half.

These results demonstrate our value creation under our Connected Future 30 strategy. growth in core business cash flow, 17% growth in cash earnings supported by strong operating leverage. Portfolio investment -- portfolio and investment management where we continue to execute in line with our strategy to enhance returns and disciplined capital management, including the lift in dividend and buyback.

Finally, I would also like to thank the Telstra team for all of their ongoing efforts in delivering value, especially for our customers, the communities in which we operate and our shareholders. And I'll now hand to Nathan for Q&A. Thank you.

Thank you, Michael. We're now open for questions from analysts and media on the call today, in addition to Vicki and Michael, we have other members of the Telstra Group Executive, including Brad Whitcomb, Group Executive Consumer; [ Stephen Worrell ], CEO, InfraCo Oliver Camplin-Warner, Group Executive Enterprise; Amanda Hutton, Group Executive Business; and Kim Krogh Andersen, Group Executive Product and Technology.

With that, I'll open to the first question, which comes from Eric Choi from Barrenjoey.

Thanks, Nathan. And congrats everyone on the result and lifting the dividend. I've got three questions, but can I please start my first question specifically on the dividend. And I just wanted to check the Board logic for potential FY '26 and '27 outcomes.

So if you look at FY '26, your first half cash payout was 75%, that your policy has been sort of 70% to 90% in the past. And just lodging out the second half. You can work out cash EPS will fall a little bit in the second half versus first half. So I guess, we just wanted to check you're happy to up that cash payout above that 75% to maintain $0.105 into the second half?

And then just beyond FY '26, you're clearly focused on cash earnings now. So if we think you guys can grow cash earnings by 5% or more, there's no reason why that DPS can't grow 5% or $0.01 again beyond FY '26. That's the first one. Do you want the rest or should give you a chance to respond?

Why don't we -- Eric, we might do it a little differently, given there's quite a bit in that first one, why don't we take it first off? I'll make a couple of comments, and then I know Michael will want to jump in as well.

So first off, this is obviously the first half where we've spoken a lot about in terms of dividend that under our capital management framework our focus is sustainable at growing dividend. Our preference is fully franked. But where that's not possible, we would consider unfranked. And so look, as the Board considers the dividend, the capital management framework is obviously the critical thing that they referenced.

As we spoke to this morning, the first half of this financial year, we've seen particularly strong cash earnings, and that supports the first half dividend. But yes, that sustainable and growing dividend is absolutely a key focus. We don't have any more a cash payout ratio that we're targeting. It's very much -- we focus on the capital management framework and look at it through that lens. But Michael may want to comment on some of the historic numbers, I'm not sure.

But Look, as we look forward, that's why we keep coming back, Eric. Our ambition under Connected Future 30 is really that mid-single-digit cash earnings. That's really critical and that's an important reference point. As you know, we work through and the Board makes its final decision on the dividend. But Michael, do you want to jump in with any further?

Yes. I mean I think Vicki is absolutely right. We don't have a policy on payout ratio. But if you look over the last few years, I think in FY '25, the cash on the same basis, the cash EPS payout ratio was 85%. It was 90% in FY '24, and it was FY '23. But as we're focused on that sustainable dividend and just recommit to our objective to deliver mid-single-digit growth in cash earnings, Eric?

Awesome. I'll try to be quick on met. But just number two, just in terms of balance sheet headroom for capital management, and I'm going to focus on [indiscernible] S&P, it looks like they've lifted your MAX gearing headroom to 2.4x now. So can I confirm on their measure you'd be tracking at 2.1 to 2.2, and that's before you conducted portfolio optimization. So basically, the question is, do you have plenty of headroom to increase both dividends and buybacks from the credit agency....

Excellent. Well, that's quite a detailed one. The my overarching comment is our balance sheet is strong. It's a core part of our capital management framework. You know that we're absolutely committed to those settings that are keep us in that A band credit rating. But Michael, do you want to get into any of the specifics there?

Yes. So we reported 1.9x. I think that's well within our conservatively framed outlook of 1.75 to 2.25. Moody's have a slightly higher top end to that range. They do use some slightly different methodologies, as you point out. We track both of them. But I think your conclusion is that the balance sheet is strong and that we do have strong capacity within that A band rating based on both [indiscernible] S&P is correct.

Just -- sorry, can I fit in the last one, sorry. Just a question on whether investors should think of Telstra as an AI loser or a winner. And I think you're implying you're an AI winner because to get to your long-term ROIC of 10%, you basically need to grow EBITDA, $1 billion or more from here. And like logically, you can see your mobile service revenue is $8 billion to $9 billion, your fixed cost base is $7 billion. If those two kind of grow in line with each other, they kind of offset each other. So you kind of need something else to fill that $1 billion-plus gap, and that's going to have to be through InfraCo cost efficiencies. And I also guessing that's going to have to be driven by AI. So you're essentially help saying AI helps you hit your long-term guidance.

Okay. Well, why don't I start off on that, Eric. There's quite a lot in that one. The first thing I'd say is Obviously, inside Telstra, there's a number of businesses, obviously, mobile key driver of value and growth right now. And we're super happy with our business. That's come through years and years of consistent investment and differentiation in what we deliver to customers, and that will obviously remain a focus.

If you look at our portfolio, I'll come to InfraCo in a second. But there are other elements of our portfolio. We're still working through Telstra Enterprise. We spoke a little bit about the international component of our business today as well. So there's still work to do in our portfolio in terms of getting those businesses in the right shape and supporting our ambitions.

On InfraCo, I mean there is no doubt the demand cycle we're in at the moment, the sort of investment that is going into AI infrastructure. We couldn't be more pleased that we embarked on Aura or intercity fiber as it was previously known quite a few years ago now and that build-out at the halfway mark, all of the demand signals would indicate growing demand there. So the infrastructure side of our business is obviously important long run.

We have also set in our ambitions positive operating leverage. And so yes, we've got to keep getting more efficient. And you see that, I think, Michael and I both commented today, we are seeing benefits from, again, years of investment in digitization, in pushing ourselves to be sort of at the front of how we apply AI inside our business. So they are important. The dynamics in the world is changing fast for us to be competitive for us to keep delivering on rising expectations, rightly of consumers and businesses we've got to be able to apply AI.

And so I'm really optimistic on what AI can deliver for us, both in terms of the demand signals in InfraCo, but also in how we use that inside our business, yes, to drive efficiency, but also drive better customer outcomes. So they'd be the big things I'd comment on in there. I don't know, Michael, if we want -- I might go because we've got Steven [ Worrell ]. Obviously, it's his first set of results with Telstra leading InfraCo. So I thought it might be a good chance because that winners and losers in AI, particularly from our infrastructure business. I thought, Stephen, if you're happy to make a few comments would be great.

Very happy to do that. Thank you, Vicki and good morning, everyone. It's great to be here. As Vicki said, my first results announcement with Telstra. And if you'll indulge me for a moment, I thought I might provide a little context that goes to the heart of the question, Eric, that you've posed. But also I think gives some direction in terms of where we're headed.

I think I'll just start with saying how excited I am to be here at Telstra at this time. It's an incredibly exciting time for our business, but it's also an exciting time in relation to digital infrastructure. We don't have to look too far pretty much every other day, there's an announcement of a new investment that's being made in data centers here in Australia. And Australia has emerged as one of the leading destinations for data center investment around the world as we've all seen.

Now of course, that's just one part of the digital infrastructure landscape. And as recently as last month at [ PTC ], which is a conference in Hawaii, where we engage with hyperscalers, of course, other players in the AI ecosystem, some of our existing clients. and many others who are eyeing the opportunities that this build-out of digital infrastructure is providing. We saw a very significant uptick in terms of our pipeline coming out of those discussions.

As Vicki mentioned, that's why we think Aura is such an important investment. It will provide the AI inferencing architecture that we think is so essential for our nation as we look to an increasingly digital future.

And while I'm excited about all of that and excited to be here, it's also a really important time for us as a nation. And I think Vicki also pointed to this earlier in her comments. Indeed, she made these comments at the Press Club last year in terms of the moment that we find ourselves confronted by. And that is in relation to how do we think about productivity going forward, how do we think about how we best participate in an increasingly digital world. and we think investments in Aura and the assets that we have give us the permission. And I think the logical role for us to play to help Australia best position itself.

Last quick thought. That's a long answer to your question. Of course, our international asset base is incredibly important as well. And Michael touched on this in his remarks. Telstra [indiscernible] operates more than 25% of the world's subsea capacity. And when you think about digital future. You think about connecting Australia to the global digital supply chain. It's that subsea network combined with the domestic and terrestrial assets that we have that we think sets us apart, and we think puts us in an incredibly important position. With all of the work ahead of us to ensure that we can capitalize on those commercial opportunities as, of course, we serve the country.

We'll go to our next question, which is from now Entcho Raykovski from Evans Partners.

Thanks, Nathan. Good morning, everyone. So my first question is around mobile costs in the period and they were a bit higher than the market expected. And Michael, you've provided us with some good color around what's driven that. My question is, to what extent were the higher cost driven by higher satellite costs as opposed to some nonrecurring items like remediation. I'm just trying to get a sense of the extent to which the cost increase is occurring. And I've got a couple of others, but I might hold off after this answer.

Yes. Thanks, Entcho for that. I know Michael spoke to sort of four major things that are in that cost increase. We don't break it down. We don't get into sort of cutting and dicing it into the pieces. But as you said, the first one mentioned was customer remediation and compensation. We are at the end of a program of work on historical sales practices. So that comes to an end at the end of this financial year. We have in part of business as usual, those costs exist, but they are higher in this half, and we would expect higher for this full year. But we don't break it down into the subcomponents. So I don't know, Michael, if there's any other comments you wanted to add?

No. I mean I think, Entcho, the satellite costs, we should consider those to be an ongoing change. And I think you rightly point out the others, we don't expect to be ongoing in this nature. The other one we referenced there is just the share -- the way that shared costs are allocated. And frankly, that's just a little bit that mobile is increasingly a bigger part of our business, as you can see in our numbers. And so that trend will continue as well. But frankly, it's against overall costs going down. So I think we should remain reasonably confident about ongoing operating leverage in that business, as we've committed to across our entire business as we move forward and look at this as -- there has been some more specific impacts this period.

Okay. That's helpful. And my second question is around the potential expected increase in spectrum renewal cost that was announced by ACMA in December. Does that impact your role targets to FY '30 in any way? I mean I noticed that on Slide 35, you've got a footnote referencing the new payment structure. I guess, does it have an impact on ROI and do you foresee a need to perhaps divert investment from elsewhere into spectrum purchases? Or how does that impact your decisions around pricing and the need to pass this cost on to consumers?

Yes. Thanks, Entcho. Obviously, it's an ongoing process at the moment, that process of spectrum renewals. I think on the positive, I mean, on the positive front starting there, ACMA has decided it is a renewal process. I mean, again, reinforcing this spectrum that will come up for renewal through 2028 to 2032, is about 80% of the spectrum that the mobile networks in the country rely on. So that's a positive.

And the process in terms of determining what is fair market price, that is the debate that's underway through that process. ACMA obviously put out some more information just pre-Christmas. We have a different view on what fair market price is -- for us, it's about -- at the moment, it would be, we believe, about $1.3 billion more than what we would see fair market price. So look, that will be part of our submission back. Obviously, that process is still ongoing. We'll put our views, our thoughts, our analysis work we've done into that.

Obviously, any additional cost that comes into the business, we've got to be incredibly thoughtful about as extra cost pressure comes there's constantly a balance of how much we invest into the network and the products and services we're delivering for customers. That might be things like satellite to mobile technology it's investment in our mobile network we keep making and our broader network.

So that will be something we'll have to think about. Obviously, increasing costs. We've then got to think about -- what does that look like in terms of what it means for pricing for customers because ultimately, for us to keep investing and being at the forefront to deliver high-quality connectivity services. We absolutely need to make a return on those investments so we can keep that investment going.

So look, it's part of the process. Our ambition on ROIC remains the same, that ambition under Connected Future 30 to get underlying ROIC to 10%. You did pick up that note. We wondered how quickly that footnote would get picked up. And as you can see, we've just been very transparent using the current pricing that they've put out as the interim pricing that's reflected in that footnote.

Our next question is from Bob Chen from JPMorgan.

A few questions for me. Maybe firstly just on the really strong ARPU result across the mobile business especially across the prepaid and wholesale. Like how sustainable do you think this is? And is this just the beginning of moving those customers onto higher prices?

Thanks, Bob. Did you have more than one question? Can I just check?

Yes, sure. Yes, I've got some others. So do you want me to...

Why don't we grab them all and then I'll make sure we manage to get to them all.

Yes, sure. Maybe just on the comments earlier around the or network. I mean obviously, we're seeing a lot of demand from your data centers being put into the region, like you guys mentioned, when you think about that sort of mid-teens IRR you're talking to, I mean, given the increased level of demand for data centers and connectivity, could that -- could the return profile of or be better than what you were initially expecting?

Okay. And is there a third one?

Yes. And then just on the ACMA spectrum renewal process. I think you expected some of the trade-offs you're sort of thinking about in terms of mobile network investment. But how does it impact maybe your capital management settings, if you don't see the gap between ACMA's pricing close with your views?

Great. Okay. So quite a few to cover off there. Why don't we -- just on Aura, my comment there would be -- we continue to have the same outlook in terms of or in terms of that financial profile. So that mid-teens IRR is absolutely what we continue to target. Of course, as you heard Stephen talk about earlier, we do see good demand signals. But obviously, we've only just passed the halfway mark of build. So our focus is absolutely completing the build and for the -- as the routes come online, making sure we're converting those demand signals into commitments and switching on revenue on the network. So right now, that financial profile stays as is. And I think we've put a slide in the appendix just as a reminder of what that looks like.

Just on the ACMA, look, as I said, that process is ongoing. If it does land with the pricing that's currently proposed, I think this is where you see the benefit of very disciplined capital management, a strong balance sheet. Obviously, as I said, we'll need to consider various trade-offs, but I think given the hard work over many, many years, obviously, the business is in that underlying earnings growth, we're seeing cash earnings growth. And spectrum is ultimately -- it's a critical element to delivering high-quality mobile services.

So I think as we stand today, we sit with the capacity, I think, to be able to navigate that period, and we just wanted to be really clear in that footnote and give you a view of how that might look like if the current pricing was to proceed as is in the interim proposal.

On ARPU, I think it might be worth getting a few comments on this one. I might get Michael just to make an overall comment because he can cover off the broader perspective, including wholesale. And then I might ask Brad to comment because you particularly mentioned prepaid and we've got good strong performance out of the consumer side of the business. So Michael, why don't I go to you on ARPU more broadly?

Yes, sure. Sorry, just a quick one on the -- your point around capital management and spectrum. I think it's a really good question. The way that I would think about it is we start with what's our return on how do we drive -- what's our return on invested capital. Are we getting an appropriate return on invested capital, and that's where all those trade-offs that Vicki talked about. And then the second one is capital management, which is our strong balance sheet. So I think just reiterating what Vicki said, but I wanted to Look, I think on mobiles overall, and I think hearing from Brad is going to be much more insightful than anything I could offer obviously.

But we're really happy with the way that our multi-brand strategy is playing out. We have a broad range of brands and offers and channels to market that are meeting more of the market, and we continue to grow that base. You can see that when you look at the revenue growth, the way that is spread and also the ARPU growth that we're seeing when you take all of our handheld customers in total. So we're really happy with the way that multi-brand strategy is playing out. Prepaid has been very specific highlight that you called out. And so maybe with that, we can get Brad to talk a little bit about how that's working and what's happening.

Yes. Thanks, Michael. Just to broaden it out a little bit. Yes, we're really happy with the performance for the first half. When we look at the mass market mobile. And as Michael pointed out, we do have a series of brands that we work with, boost, belong, main brand, and also our products on prepaid and post, and we work to tie those up so that we've got offers that are attractive to our customer segments.

I'm really pleased that we're able to see growth in terms of subscribers across all of those various aspects of the portfolio. And as you pointed out, also ARPU growth as well. The mechanics of that ARPU growth for prepaid, it was around price rise back in October of 2024, and for postpaid, including belong July 2025, price rises there.

But what we look to in terms of sustainability, I would look first at how happy are our customers. And really pleased that we're sitting, as Vicki mentioned, we're at an all-time high for our customer NPS at plus 47%. That's up significantly PCP. So that's a great trend for us.

I'd also look at our overall value proposition and what we're offering our customers, it's first and foremost, it is built upon having the broadest, deepest, most reliable network in the country and arguably in the world, world-class privacy spend protection and security for our customers. and then the intangibles around our brand, we see our brand moving from strength to strength. We're now the ninth strongest brand in the nation, which is consistent with one of our Connected Future 30 aspirations to stay in that top 10.

We've got brilliant frontline workers that are serving our customers, whether that's through our retail stores or in our contact centers. And you feel that when you engage with them that they're they like the work that they do. In fact, we've got across the consumer division, which is mostly frontline workers. We've got an employee engagement score of plus 85%. And when your employees are engaged, they just provide that much better service to the customer.

So hard to predict the future. It is a very, very competitive market, and we have to earn the right to serve our customers every day. But when I think about the sustainability of the value proposition that we have, like where we're standing right now.

We'll take our next question, which is from Lucy Huang from UBS.

I've got three questions. I just asked them [indiscernible] first. So just, I mean, good results on mobile ARPU. I just wanted to colonic some trends in churn in postpaid post the price rise that was implemented in July. And on the enterprise side in mobile [indiscernible], was that still a drag in the numbers this half? Or do we think that, that drug actually moderated moving forward?

And then secondly, just on intracity fiber. Again, I think you mentioned on the call that we expecting strong growth coming through in FY '28. What's the conversation like with customers on whether or not they want to pre-commit to capacity just to give, I guess, investors a bit more confident around the demand by longer term.

And then just thirdly on [indiscernible], early days since unbundling of the modem from the plant, but maybe if you could provide us with some color as to whether that's been driving a better outcome so far in scanning side decline?

Excellent. Well, thanks, Lucy, for those. I'm going to get -- I'm actually going to get Brad to come back up. and talk a little bit about postpaid churn and also cover off CNS fixed the Internet-only plans. And then I'll ask Oliver who's leading Telstra Enterprise. I know you had a question there on the mobile front. There's been some really great work out of Oliver and the team in Enterprise. So I'll get him to talk a little bit about where that's at and the trends we're seeing. And then Stephen, it might be worth you popping back up and just the discussions. As we've said previously, I think lease, with big builds like this, we find there's lots of good demand signals often until you're at RFS of certain routes. It's sometimes not the practice to pre-commit.

We obviously had Microsoft where we had a big strategic partnership there. They are an important foundation customer of intercity fiber or Aura now. But I might get Stephen can give a bit more color to how the dynamics are. So why don't we go to Brad, if you're comfortable to cover off those couple.

Yes. So if I start with the mobile churn, as you can imagine, before we make any price changes. We do quite a bit of work around elasticity, conjoint analysis, the customers that we're serving and where they might go, should they choose to move off the current plan that they're on. And as a reminder, we have no lock-in contracts. We don't have handset subsidies, and so customers can move very, very quickly if they want.

That's all the modeling that we do. And we look at that in terms of a yield, how many customers are going to stay where they were, how many people will down plan, will we have any customers churning. And I would say that this price change that we made in July we landed right about where we expected in terms of yield. So we are pleased with that.

Of course, that all then comes down to the trading on the floor and how we perform in terms of our peak trading windows, whether that's a flagship handset launches or Black Friday, Christmas and currently our end of summer sale, and I think the team is executing quite well.

So we never satisfied with churn. We want to keep customers within the portfolio, but we're right on track with what we had planned for.

In terms of fixed NSB, one thing I would like to underscore is the team has doubled the profitability of that business over the last 3 years. It's been a massive performance, and we're on track right now to deliver about $0.5 billion in profit when we exclude the legacy copper cost that's in that business. So very pleased about that.

As you mentioned, we've rolled out a number of new capabilities within that product suite, including the NBN high-speed tiers. We've got straight through digital processing to make it really easy for our customers to order digitally. We've got a beautiful new smart modem 4 which if you don't have it, you should get it, the WiFi performance in the house is exceptional. And then we've got now our Internet only.

It is early days. We launched Internet only right on Black Friday. And I will point out, as we've been migrating office and now on to console. We want to get about, what, a little less than 4,000 customers left on console. It meant we could move very quickly and we could meet that critical trading window of Black Friday.

Customer response has been good. That said, we remain in a very, very competitive market. We are focused on [ SIOs ], but we're not focused on [ SIOs ] at any cost. So that's how I would describe it. Now team very much focused though on the [ silo loss ].

That's excellent. And why don't we -- [indiscernible], are you comfortable to speak a little bit to TE and T-Mobile ARPU trends.

Yes. Thanks, Vicki. Thanks, Lucy, for the question. So yes, let me zoom out and start a little bit on the enterprise reset and how we're traveling there, and then I'll zoom in on mobiles. On enterprise reset, as Vicki reminds me, there's always more work to do, but I'm really pleased with the progress that we've made so far. Without doubt, by the end of reset, we will be a stronger, more customer-focused business, no question. We identified a number of critical initiatives at the start of reset, and those are progressing well. I'm pleased with where they are at. And pleasingly, most importantly for me, customer reaction has been positive as well, where we've seen an increase in NPS. .

Some of the key points to reset. First off, just that radical simplification of our product portfolio. It was absolutely critical that we're really focused on who we wanted to be moving forward, not trying to be everything to everyone. We've taken a long hard look at our cost base and facing some really tough decisions here, but we've made those calls and we do have a very different cost base across the business now.

Commercial guardrails, we've continued to tighten, which have had a good impact. We have an engaged workforce, like Brad spoke about earlier as well, who are now making a real difference. And then on the portfolio management as well, we've taken a long hard look at the various businesses that we've had.

As Michael touched on, we completed the divestments of empty data [ SAP ] and Alliance in the half, the partnership with [ Verst ] partnership, that's continuing on track, and we'll close out in the second half. So long story short, there's a lot in there.

A couple of weeks ago, we also announced the radical transformation of our service delivery business. where we'll look to prove the customer experience on the delivery front. So there's a lot there. I'm pleased with where things are at, but there's always more to do.

Just on mobile. So mobile without doubt has been the beneficiary of many of those actions that we have taken through reset. Commercial guardrails really celebrating the network that Brad spoke about earlier all those beautiful attributes. And pleasingly, we saw growth in the half, which I'm really thrilled with. It was great to launch satellite to our customers and especially those organizations who have a remote field workforce where having that connectivity in the air of need is absolutely critical. So for a good response there. You will note in the footnote just around the empty data divestment and how that will impact mobile in second half, but pleased with the mobile performance. But as always more work to do.

Yes. Thanks, Oli, for that. And just to add 1 comment to what Oli said on T-Mobile performance. Lucy, if you go to the very last -- I think it's a very last page in the presentation material in the appendix there, you can see Telstra Enterprise mobile performance, and you can see growth there. And so real credit to Oli and the team. He spoke about commercial guardrails. The team have been very disciplined, and we have seen think Michael mentioned ARPU growth across all products in all segments. So that's been a good outcome of that real focus and discipline.

Including business .

Including business, that's right. Every segment across mobile, which has been great to see. So why don't we come to Stephen? A little bit of color, Stephen, around those commitments from customers? Are they prepared to precommit.

Happy to. Thank you, Vicki. And Lucy, thanks for the question. There sort of two thoughts that might be helpful here. As Vicki mentioned, first and foremost, we need to build the network. So we're 7,000 kilometers into a 14,000-kilometer total build, and we have a couple of the routes ready for service and actually in use today, but most yet to get to that threshold. And so that obviously is the priority as we continue to have all sorts of conversations with players, both domestic and international.

The second thought I'd love to share with you is the thought that we are building, what I'll describe as AI infantry architecture for our nation and of course, connecting that architecture to what is increasingly being built out around our region and around the world. And in that context, what Aura presents to Australia, obviously, critical digital infrastructure for the nation, but it's infrastructure that will support us for a generation. And we're talking about a demand profile that we don't actually see just yet, with all of the investments that we're hearing regularly in relation to data centers.

Many of those are in the construction process and have yet to come online. And the sort of demand profile that those data centers will drive as one part of the digital supply chain is yet to arrive. And as you might expect, as a result, the commercial conversations with those operators in terms of precommits and their precise requirements in terms of connectivity, both domestically and through the region are conversations that we engage in regain. We're obviously moving many of them down the pipe very well, and we expect to have more to say on the topic in the future. Thanks very much.

Thank you. We'll take our next question from Liam Robertson from Jarden.

Three questions from me as well. Just firstly, on mobile, in particular, postpaid subs growth, looks like belong with the standout there, adding 21,000 in the half core base decline modestly. Michael, I think you touched on your multibrand portfolio already. Clearly, that remains well positioned. But I'm just interested in how you're seeing the market? And should we be thinking of belongers the key acquisition channel going forward? Or do you actually think you can also grow your core brand? And then just a follow-on from that. I mean, given that dynamic, have you got any concerns around your ability to grow postpaid ARPU moving forward? .

And then just my next question on the dividend. I might frame it slightly differently, just given you are clear on not having a targeted payout ratio. I don't think it was a coincidence that the $0.05 fully franked and then the 1 unfranked on a gross stock basis was similar to the $0.10 fully franked in expectations.

I guess, moving forward, should we now be thinking about growth of that dividend on a gross basis? And then you'll split between the Frank component and unfrank component will just be dictated by your available franking credits. I guess the inference there is that the unfranked component might actually need to accelerate just given your franking balance and the mismatch between tax paid and then cash earnings?

And then my last question, hopefully, just a really quick one on enterprise. Appreciate all the comments and color Oli, there around recent estimates, the cost base reset, some of the pockets of growth looks like mobile was strong. I guess my question is when can we consider that portfolio to be fully rebased?

Well, thanks, Liam, lots in there, some great questions. I might get Brad back in just a second because I think how the market is playing out, belong. My overall comment, as Michael spoke to earlier, our multi-brand approach is critical to how we address the market. There are very different needs in the market in terms of what different segments of customers are looking for. And so it remains a really important piece.

And of course, as you'd expect, we're always pushing. We want to make sure we're meeting those needs as best we can. And the Telstra branded proposition is critically important. It is our premium offer to market I might get Michael to jump in after Brad and just talk a little bit more about dividend. As you call out, this is the first time in a long time. It's not a fully franked dividend. So I'm sure there are many questions about how to think about it.

Again, I just come to cash earnings is an important piece as we consider as the Board goes through that process as they're thinking about the dividend in light of our capital management framework.

TE, it's a really great question on Reset. Oli and myself and the leadership team, we've been working through that at the moment. I mean, incredible progress, it was May 24, when we announced the reset of our enterprise business, as you just heard from Oli, some really pleasing progress. But there is still more to be done. And so that's part of our thinking as we come back for our full year results, we'll be able to share where we're at. But right now, the focus really is on making sure those pieces that are in work still now, and Oli spoke to some of those -- some of the changes we're driving to try and remove further complexity out of that business to really deliver on those rightly high expectations of our enterprise customers remains absolutely our focus along with finalizing some of those elements on the portfolio management side. But why don't I -- Brad, are you comfortable to jump in on the market, and then we'll come back to Michael on dividend.

Yes. So thanks for the call out on Belong. We're super proud of the performance of that business. And it's great to see them growing, both in terms of subscribers and also profitability. I think the team there is doing a fantastic job.

I will point out, we did have a fairly significant price rise within Belong back in July at the same time that we did the main brand price increases as well. So this isn't necessarily a pricing thing. We do see more growth at the lower end of the market. So from my perspective, it's not surprising that we would see long competing very well there and seeing that grow. But our primary focus is around our core main brand. and the other brands sit around that to support that main brand. And there's a number of attributes that you can only get with the Telstra main brand.

And one that I would point out, we've talked a little bit about today is the satellite messaging service. And for customers that are aware that we have satellite messaging, we see an NPS, which is a full 16 points higher than customers that aren't aware of it. So we're offering real value there, and our aspiration is to continue to grow that business both in terms of the profitability, but also the number of customers that we can serve.

Thanks, Brad. Why don't I just -- and thanks, Liam, for the question on dividends. I think I would a little bit like Vicki sort of spoke to. We have an ambition under Connected Future 30 to grow our cash earnings mid-single digit. It is those cash earnings that support the sustainable and growing dividend. And the level of franking within that is going to be determined by the growth in our Australian tax payments, which I apologize as an obvious statement, but it is going to be driven to the growth in our Australian tax payments, and that's going to be fairly closely linked to our growth in accounting earnings and EPS.

So we are -- as we said, we think that we do it -- our franking balance is tight, has been tight for some years. the partial franking in this period, we believe, was the best way to deliver on our commitment to a sustainable and growing dividend, and we look forward to continuing to achieve our ambition of mid-single-digit cash earnings growth that supports a sustainable and growing dividend in the future.

We'll go to Roger Samuel from Jefferies.

Might just stick to three questions as well, hopefully, quick ones. Firstly, just on your guidance. If we look at your performance in the first half, the underlying EBITDAaL grew by 5%. And if we assume that you can repeat that 5% performance in the second half. That implies that you can easily get to the top end of the $8.3 billion to $8.4 billion. But is there any issues that we should be aware of in the second half? I mean I know your divestments of some businesses -- but yes, there could be some cost up as well that you may do in the second half?

Second question is just on fixed can be obviously a very good result on the profit side. But Michael, you mentioned that you'd like to stabilize the NBN stops over time. And yes, if we look at this result, I think your NBN sub still declined by about 75,000. And yes, I'm just wondering what you can do to arrest this decline given that you've introduced Internet-only plans. You have moved your customers to a new technology stack. But if you look at what's been happening in the last 2 weeks, your competitors, especially the challenger brands have been doing some consolidation as well. So I'm just wondering what you can do to get you restat decline in NBN stops. And lastly, just a quick one on mobile ARPU.

You mentioned about network slicing in the past and how that could to mobile ARPU, especially in postpaid. How are you going about introducing that slicing to differentiate certain plans and the impact on ARPU, please?

Thank you. Thanks, Roger, for that. And we're getting the hurry out from Nathan, we're speaking too much. So let us see if we can fire through these three quite quickly. I'm going to come back to Michael, on guidance. I think he can give a very concise answer on that.

On C&SB fixed, I'd just say, first off, Look, the team have done a great job in that business, and Brad spoke to earlier just how much EBITDA profitability in that business has changed in a small number of years. But absolutely, our focus is now on stabilizing customer numbers. The Internet-only proposition only went into market in November. So our focus and Brad's focus with the team is absolutely in our channels, in our marketing because although we might all know about it, I'm pretty confident that a lot of customers in the market don't know about that proposition yet. So we will focus absolutely continuing to deliver a really high-quality experience for our customers that meets their needs. So that will be the focus there.

In terms of mobile ARPU and slicing, yes, we've got slicing product in market in our enterprise business. It is very early days, and Connected Future 30, a big part of that is network as a product. So how we build out how we make sure we have those network attributes, but we're reinventing the commercial models that go with those attributes. So as we create value for customers, we also share in some of that value creation. So very early days on that, but we remain optimistic. We've got the foundational investments going in, in network, systems capabilities to put us in a position over time to be able to make sure that level of sophistication in our network that can meet the level of sophistication of our customers' needs going forward. that we get that to work well together. So that's definitely our focus as we look at the business going forward. Michael, are you happy to cover off guidance of second half?

No, absolutely. And thanks, Roger. So yes, there is a few things sequentially that are impacting it. So one is we had around $45 million of one-offs in international that we don't expect to repeat. So we will see a significant sequential decline in international, not only that $45 million, but also the divestment of the wholesale voice business in international. So that will be a sequential decline.

We mentioned other EBITDA. In other EBITDA, there was, I think, around $20 million of bond and FX gains that we are not necessarily forecasting to repeat in the second half, which will provide a bit of a headwind. The second one is probably on redundancy. Redundancy is traditionally -- or sorry, traditionally, has over a number of years, been a tailwind on cost into the second half because we've done more redundancy in the first half than the second. We announced that we were consulting on some changes last week. If they were to go ahead, we would expect to see redundancy not be that tailwind into the second half. Of course, offsetting that, we have productivity flowing through as we talk to.

I think the other one, as we look into the second half is just based on the historical timings of some of the price rises across particularly in the consumer portfolio, whether that's fixed or mobile, we would expect to see some of that revenue growth sequentially to be a bit more muted. And then, of course, as I said, on top of the other divestments that we expect either have completed or we expect to complete in the [ NAS ] portfolio.

Excellent. Our next question is from Nick Basile from CLSA. Nick?

Just two questions. The first one is on AI. I think in your opening remarks, you talked about rationalization of software providers and deployment of AI across the coding team. So I'm just interested to understand or get a little bit more color on how that is benefiting you and how it helps you, I guess, deliver on the 2030 cost ambitions. And also just to what extent at all you've managed some of that vendor concentration risk now from a cost inflation perspective. So that's the first question. So there's a few add-ons.

And then the second one, is just on incremental returns on mobile investment. I guess with respect to the commentary around your investment in augmented services using satellite networks, just wanting to understand what the incremental margins on this capability is relative to selling services, leveraging your terrestrial mobile network.

Yes. No. Thank you. Thanks, Nick, for that. And a couple of great questions. Well, I'll take the second one first off and then make a couple of comments, but I might get Kim Krogh Andersen, who leads product and technology and is really -- has been the driving force between a lot of the pieces you mentioned on the software side.

So just on mobile. Obviously, satellite to mobile, I would think about that. It's a -- we are leveraging the capabilities of another of a third party. So it's I think about it like a reseller of a service. So obviously, the incremental margin on that sort of business is very different to where we own and operate the infrastructure ourselves and obviously, very different CapEx dynamic. We're not the one investing all of the money in launching [ LEOSat ], so we are a reseller of that service. So -- but it is, I think, as Brad spoke to, really important, it is a key element of our proposition, how we bring these services to our customers.

And again, as Telstra, we provide a premium experience under our Telstra brand in the market. And so being one of the first few operators globally to be able to bring that to Australian customers because we could see the service was could really serve a purpose here, whether it's when terrestrial networks are disrupted or when people in our very large country or outside mobile coverage. So that's how we sort of broadly think about that.

As you said on AI, I made some comments this morning because I think it is really important to understand there has been investment and work underway for years as we digitize our business as we're applying AI and particularly in software development is so critical in our speed to market and being able to deliver at the level our customers expect. But Kim, I might just get you to make a couple of comments, if you can, on those benefits, how it's being driven? And then how you thought about vendor consolidation risk.

Yes. Thank you so much, and thanks for the question. First of all, we have been modernizing our tech stack for a very long time, and tech leadership is a core part of our connected future strategy. Mike mentioned it, and I want to reinforce it, we have actually managed to decrease our cost intake over the last few years. And that's despite inflation, but as you mentioned as well, there is a lot of partners that really want to hike the price to justify and get return on their AI investment. So we have managed to combat that and ensure that we take the value of these digitization, simplification, AI, et cetera, instead of that become revenue in some of these partners' pockets. So that's important for us because we want that value to go to our customers and to Tesla to our shareholders.

I think Vicki mentioned that we have actually seen a 20% production improvement in our software deployment. And not only that, we are also shipping our software and releases faster, 15% to 20%. That comes from and more efficient software flow. So we have seen 12% improvement in EPIC flow. We have seen 29% improvement in our defect rates. So it's great to see when quality, time to market, but also our efficiency come together.

It is AI-enabled all of it. We have now most of our software engineers, they are using GitHub Copilot to really ensure they produce more code faster. We also use AI for testing. We use AI for quality assurance for architecture assurance, but also for change management and other things. We use AI for migration and all these things is a part of us really driving this. But we have consolidated partners that both applications. So we have done a lot of exits of application we don't use. We have consolidated our partners. Vicki mentioned, we have consolidated our SIs from more than 400 down to two. And these two cognizant emphasis, they're really incentivized to help us to simplify and help us to adopt AI as fast as possible.

So all these things is a part of us really creating the right foundation for us to drive this company forward. And it's hard work, and we're not done. We keep pushing hard. -- but we believe we have a foundation now where our segments, they can compete, where our channels, they have a good experience and our customer have a good experience. These have been very critical for software, but it's even more critical for AI.

We believe that if you don't get that foundation right, we will actually see the run cost of AI outperform the benefit of AI. So we are very focused on that foundation to get that in place. We have 380 use cases today. So we are at scale. We are deploying again tech now. So the whole reason for us doing the two joint ventures with Quantum and [indiscernible] was to ensure we have that foundation in place because we want to ensure as we have many sites, we are not an AI company, but to be a leader -- a leading telco, we really need to be a leader in AI and in software. And this is the foundation. And these partners, they keep pushing us forward. and really ensure that's in place. So we are pushing hard here, but there is a lot to do.

We'll go to Brian Han from Morningstar. Brian?

We will go to the next which is from Andrew Gillies from Macquarie. Andrew.

I'll keep it to one, just in the interest of time. Not to put too much of a finer point on it, but just on the AI and data strategy, just a little clarification. You mentioned kind of faster delivery on this. Should we be thinking about that as kind of a structural forward of the cadence of cost out.

I mean, Infosys was flagged before. Some of your outsourced partners are flagging really strong efficiency benefits, both internally for themselves, but also for the businesses that they work with -- more broadly, more recently, we've seen software vendors shifting from seat-based models to more of a value share-based model. Can you just clarify that that's all captured in your comments around cost on this call? And can you make a little comment on the cadence? And I presume you're going reiterate the medium-term EPS CAGR, but that would be great.

Yes. No, thanks, Andrew, for that. Just -- again, just to reinforce, as we work with our partners, whether it's Accenture under our data and AI joint venture, whether it's Infosys as a key software partner and also, obviously, we're planning to also use them more extensively to help us in terms of really simplifying the complexity in our enterprise service delivery for our customers.

Look, I think Kim sort of covered it briefly then. As we enter those arrangements, they are built on very much aligned incentives of delivering real efficiency in terms of our partners have to be able to really be leaning into using AI to drive the efficiency and the experience benefits under those arrangements that we've entered into. So as we look forward, yes, those partnerships are another element of how we make sure we're driving efficiency in our business.

Kim spoke to, our goal is like we did with the data and AI joint venture with Accenture, we're accelerating a 5-year road map we had into a much shorter time frame, but without driving cost up. And so we are very conscious of making sure that as we move forward, that alignment with our partners, we're both driving to get the efficiencies from the application of AI into our process systems and interactions is absolutely built in. And Michael, in terms of our forward sort of ambitions.

No. I think within our -- it's captured in our forward ambitions. It's covered in that commitment to operating leverage, which I think is really important to growing revenue faster than we grow costs, and that opens up those jaws. The one point I would make, and I think it's really core to our technology strategy and how we're going about it is we are very -- and Kim made the point, there is a risk here that you end up in software licensing in cloud costs and in paying the AI providers that you offset your benefits. And that is very much our focus.

We've made tremendous progress in the efficiency of our cloud costs. We're getting significant efficiencies around the way that we're focused on how we buy software. And that is embedded in our strategy to ensure that we're using an open architecture, modern software approach, and we're setting up the way that we're executing AI right now so that we can swap out vendors that we can move between LLMs and that we are really focused on the cost of both cloud and AI. And I think it's been a really important point around those technology costs. It's a great question, Andrew.

We'll take two more questions from analysts after which we will move to media. So got a media on the call, and you do wish to ask a question, please register by pressing star one. Our second last question comes from Fraser McLeish from Credit Suisse -- I got that wrong from MST.

Just two quick ones for me. Just -- Vicki, a fair bit of discussion on AI in relation to costs. I'm just wondering, and I be a competitive advantage for you in the marketplace in terms of being able to invest more and faster than competitors and customer tools and experiences or do you expect all players to broadly have the same capabilities.

And then second quick one maybe for Brad, just on fixed broadband. I mean are you expecting much spin-down from these new Internet to these new Internet-only plans? And what are you doing to minimize potential for that?

Thanks, Fraser, for that. Just on AI and where we're at. I think the thing that's front of mind for us is it's moving so fast. And so we are absolutely focused on. We can't be complacent. We've got to be pushing really hard because we do see ultimately for us to be a leading provider of connectivity. We're not an AI company, but we absolutely need to be a leader in how we are applying AI.

And that's because, yes, it affects all the obvious parts of our business, how do we make those customer interactions more efficient and better for customers. How do we enable our teams to be able to use AI and work smarter and have greater satisfaction. But it's also right in the heart of our business, the network itself. And if I look at where networks are headed, and we do have Mobile World Congress coming up shortly. So we'll get another injection of where everyone a year on sees things headed. We absolutely believe networks are headed to be much more autonomous. And the complexity of doing that, you absolutely need to have AI deeply embedded and being at the forefront. And so absolutely been at the forefront of delivering world-leading connectivity is absolutely at the core of our differentiation.

So moving fast, I think it's not just having it. I think it's moving at the pace and scale needed to make sure we maintain our differentiation. We do provide a premium experience in the market for our customers under the Telstra brand. And so we're very much focused on making sure we're moving fast enough. We are delivering those benefits to customers. We're helping our teams grow their skills and be able to use these tools effectively in the way they work.

And ultimately, yes, we see it as an important piece.

I mean long run, with any sort of technology, obviously, over time, I would expect it becomes more widely dispersed. But absolutely, we see it as important. The pace we move out here and really enabling our business with it is an important focus for us to deliver for our customers. On fixed broadband, I don't know whether Michael, you want to grab it or we want Brad just to quickly jump up and grab the spin down.

I'm happy for Brad to.

Yes, Brad please.

Just I can't resist on the AI as well. I think you mentioned that Telstra Virtual Agent, which we've deployed and that is, I think it's the start of a competitive advantage there. We've more than tripled the containment since we've launched our -- that AI agent to customers. So they're able to get their needs and that without having to go to a human agent.

And another one I'll mention, which is really cool is you can now -- using AI, you can change our entire digital experience into over 35 different languages. We've got about 30 -- or rather 70,000 customers already do that, and that just makes it much easier for them to engage with us. So that's an example, I think, of where it helps us addressing the customer.

In terms of the broadband only, there's a couple of areas that we're focused on there. One is opening up to customers that genuinely -- they have their own modem at home, and they're just looking for the broadband connection and not looking for that full experience. We think also though this gives us a softer entry point to have a conversation with a customer when they come in, they see a price point that they're comfortable with, and we talk about the value proposition and what equipment they do have in the home and to then talk about the advantages of things like our smart meter or smart modem 4.0 rather. So we're not anticipating significant spend out. We think those are two different segments of customers, but we will keep an eye on that.

Excellent. And we will take our last analyst question from Nicole Penny from Rimor.

And further detail on the Aura opportunities you're seeing. Just secondly, the CapEx on the ViaSat project remains ongoing. Could you provide more color on the expected completion time line and the likely earnings impact during this period as the project moves toward full operations let?

Okay. And Nicole is at the only one, have you got any others?

That's it. Thank you.

Fantastic. Thanks, Nicole, for that. Look, I'll make a comment, and then Michael may want to jump in. Just to be clear, and hopefully, the appendix, again, helps reinforce it in the material we've issued today. We think about Aura and ViaSat inside that $1.6 billion of CapEx spend and those overall returns are linked to that.

The profile is a little bit different. ViaSat is the smaller component inside that overall program of work, where we have been supporting with the build-out of ground stations and other infrastructure. So it's captured inside that broader financial profile that you can see. So it's intercity fiber or Aura, as it's now called, and ViaSat combined. I don't know, Michael, if there's any other color...

No, I don't think so. I mean the ViaSat has been delivered on an ongoing basis, and we've seen the revenue start to appear through both InfraCo but also into our Telstra Enterprise business. and that will continue for the life of that project, their long-term assets in terms of those -- the ground stations and well on track.

Excellent. That concludes our question time from analysts and investors. We'll now show a short video, which I suspect you do not want to miss because as Brad would say, it is pretty cool. So we'll show that. And after that, we will have time of questions from media.

[Presentation]

Thank you, and welcome back. Thank you, Nathan, for that handover. We hope everyone enjoyed the new ad. We will now commence our media Q&A. We are slightly early. So Apologies to some media who may be joining at 11, we will obviously drop you into the queue. In this session, we have Vicki Brady, our CEO; and our CFO, Michael Ackland, who will be available to address your questions that you have asked. [Operator Instructions] But we will move to questions. Our first question today comes from David Swan, from 9 Metro Publishing. So Swan, over to you for your first question, please. .

Because I'm on the call, but it sounded good. I'm sure I'll say what it is. I wanted to ask about spectrum strategy. I've got free questions all related to that, so I'll just fit those away. You've told ACMA the fair price is $1.4 billion, and they've come back at $2.7 billion. Is that number -- I guess what the number Telstra would accept without passing cost on to consumers? Is there a sort of landing zone there? Or is it a binary number.

I wanted to ask as well, you've said the trade-off of spectrum is between network investment and consumer pricing. But -- is there a third option, which might be absorbing the cost through lower returns to shareholders? Is that something that Telstra has or would consider?

And third, I wanted to ask about ACMA's renewal process I mean you didn't avoid a competitive option, which could theoretically cost more. Is the $1.3 billion gap you've complained about still cheaper than the alternative, a competitive option -- is that something that came to -- is a competitive option, I guess, some can to avoid?

Thanks, David, for that and some great questions on spectrum. So first thing I'd say is, as you called out, we absolutely agree we've got to pay a fair price for spectrum. It's a core part of delivering high-quality mobile services, and we see spectrum as 1 of those assets as a country, we absolutely need to be maximizing its benefits to consumers and businesses. We do think as a country, it would be helpful as part of a digital infrastructure plan to have a clear plan for spectrum long run. This process right now is renewal of spectrum. Obviously, there will be spectrum needed for 6G, for future satellite services for lots of other things as we look forward. So we do think having a really clear plan for how we maximize the use of spectrum to get the maximum benefit for consumers and businesses is super important.

Look, obviously, the process is still ongoing on the pricing of the renewal of the spectrum that's part of the ACMA process right now. We have a different view to ACMA. And that will be part of our submission back in as part of that process, as you call out, there's about a $1.3 billion difference in what we think the value -- fair market value of the spectrum that we will go through renewal on versus what the ACMA currently see as the fair market value for that.

Look, in running a telecommunications business like Telstra, you're constantly balancing up various things and various trade-offs. Importantly, Telstra, like all telcos is a big infrastructure business. we've got to invest a lot of CapEx into our business. And if you look globally, telcos have been challenged on getting reasonable returns because we need to be profitable to make sure that we can keep investing, and that means investing in our network in things like the 5G advanced capabilities or bringing services like satellite to mobile testing, the satellite messaging service we launched last year.

And we're seeing customers NPS is up. So we've got to keep investing because expectations also keep rising. We know we've got to keep investing to be able to attract and retain the best talent and investing their skills. And yes, we also need to deliver returns to shareholders. We've got an underlying return on invested capital at 8.9%. So through a lot of work, we've steadily seen that increase. It is above our cost of capital, but it's probably -- it's not at the level that our investors would ultimately hope for. So we do have an ambition to grow that to 10%, and I don't think that is unreasonable in any way.

Remembering our shareholders, we have more than 1 million shareholders. We've got the largest retail shareholder base in the country. And we know through things like superannuation, we estimate about 16 million Australians benefit from the financial outcome. So yes, there is absolutely a balance we need to achieve as we make choices and decisions, higher spectrum costs just puts again extra costs we need to consider, and we would have to think about the various trade-offs as part of that, but the process is still ongoing at the moment.

Thank you, David, for those questions. Next up, we have Jared Lynch from the Australian. Jared, please go ahead.

Questions for you. Telstra's first half profit was driven by strong cost control, and it's a strategy that you plan to intensify with the proposed job cuts in the current half. Just wondering, how will you ensure that prioritizing short-term cost savings and fine will not fundamentally undermine the in-house expertise and people-driven innovation necessary to deliver the long-term growth in service quality promised by your expected future early strategy?

And then just on the Connected Future 30 strategy. I'm interested to hear how will your investment in AI and data functions, including the JV with [ Essentia ] be deployed to solve 1 of the nation's most pricing challenges, whether it's climate resilience, health care accessible and access in regional areas or digital inclusion. And I guess what is the legacy that you want Telstra's new capabilities to create for the country?

Yes. Thanks, Jared. A couple of good territories there. So let me go firstly to first half. Yes, we've delivered a strong first half performance. And yes, as part of our strategy, given we have very small revenue growth to deliver positive operating leverage. We absolutely need to be driving cost and efficiency.

But as we think about our business and we think about the capability we need to be able to deliver a long run in this business. Absolutely, our internal teams are critical to that, and we keep investing in our teams internally, whether that is in things like their ability to be able to use and apply AI capabilities because we fundamentally believe for all of our team, they will be better positioned in the future, the better able they are to apply AI and use it in their jobs. So we're absolutely internal capability remains critical. It wasn't that long ago, for example, we brought back our retail stores, and we've heard Brad speak about this morning just the benefit that has driven in having such a highly engaged team of people out there servicing our customers face-to-face in our stores.

We also will partner with key partners and the couple of things you mentioned from last week. They are two examples of where we are partnering. First, in terms of our enterprise business, we've still got a load of complexity we need to get through in that business. So we did announce and propose some changes where we are partnering with Infosys to really be able to access their capability to help us simplify the complexity in that business in the way we serve and deliver for our enterprise customers. We also proposed changes in the Telstra Accenture data and AI joint venture. Again, that is about accessing Accenture's global capabilities to help us really accelerate our road map on data and AI to be able to deliver benefits to our customers and into our business more quickly.

So absolutely, it will be a combination. Our internal teams are critical and we keep investing in them. But we also to remain competitive and at the forefront, we've also got to leverage partnerships. And I can assure you any decision that impacts a role inside Telstra they are never taken lightly, and we support and work with our teams very, very closely as we work through anyone who has a role impacted as part of any of those choices and decisions.

Just in terms of Connected Future 30 and that ambition as we look forward. I think fundamentally, we see connectivity. It is a foundational piece for the country. You look to the future of inclusion of productivity of prosperity. Technology is going to play a key role and having a really solid foundation of bleeding edge connectivity that is there to deliver to all of those future needs is absolutely fundamental. You spoke about things like health care, I think about education. I see the way we work and connect regional communities. It's absolutely core to who we are as Telstra and the focus and delivery of our Connected Future 30 strategy. So absolutely, that core foundation of leading connectivity we think, helps enable the country in terms of those future ambitions of inclusion and of prosperity.

[Operator Instructions] We will move to our next question in the queue, and we will go to Graham Lynch from CommsDay, please go ahead, Graham.

I wanted to ask about spectrum renewals. I'll be following the debate around this quite closely now for a few months. And it seems to be missing the reality that over the next 15 years or so, which is the period we're talking about, 5G and then 6G is going to require a lot of new spectrum in addition to the renewing spectrum, but also Australia's population is probably going to grow by quite a few million over that same period, which means that telcos such as Telstra are going to have to install a lot of new capacity in cities to do build that extra population. Is this -- these two realities as to be missing from the discussion around spectrum? And are they informing sources posture on renewal prices and perhaps could Telstra be better articulating the issues that we'll be facing in coming years?

Yes. Thanks, Graham. And I know I've been reading some of your articles that you've been writing in your opinion pieces, you're incredibly well informed and understand our sector and how important spectrum is.

So look -- yes, no, I really appreciate it because it's a really important question where you've gone. Absolutely, renewal is important. As you well understand better than anyone it is 80% of the spectrum that our current mobile networks run on today that will go through this renewal 2028 through 2032. So the certainty of renewal is absolutely a positive. Obviously, we are debating with the ACMA what each of us think the fair market price of that spectrum is because we absolutely, we accept, understand we need to pay a fair market price on fair terms. So that's important.

But I think where you've gone is critical. And that's why we have been advocating that as a country, we do need a really clear vision for the digital future that has a very clear digital infrastructure plan that includes Spectrum. Because where you've gone as you look forward over 15 years, it's not just the renewal of spectrum. It is all of those new services, all of those new capabilities like 6G, like some of the satellite capability that is currently sort of forecast to be able to be delivered over that time horizon. I think as a country, we absolutely need to be thinking about how do we maximize the use of our spectrum so we get the best possible outcomes for consumers and businesses. And I think that's an important piece that needs to be brought into the thinking.

And again, that's not easy, and we are very happy to be part of that as Telstra and I think as a sector, alongside government and regulators as we think about how do we absolutely set up the country to maximize the use of spectrum to get the maximum benefits for consumers and businesses. So I think it is an important element right now, a lot of focus on renewal because that process is obviously well underway, but I think your broader point is incredibly important.

Next up, we have Jenny Wiggins from the AFR line. Please go ahead, Jenny.

Three questions on as well. Just with regards to AI. Can you give us any more examples of how exactly you accelerating Telstra's investment in AI other than what you're doing with Accenture. I mean, for example, is Telstra spending more money on AI investments in the current financial year.

Secondly, just more generally, do you have any views on how the federal government can productivity and economic growth in Australia. And thirdly, with regard to the ongoing problems with the 4G VoLTE networks, that's an issue for all network operators and device manufacturers. Do you think Telstra will ever be able to guarantee that in the future, all mobile phone devices that are sold in Australia, we'll be able to connect to 0 without any problems. So I mean, do you think your testing and talked with device manufacturing, we'll ensure that after the current slate of problems we've had.

Thanks, Jenny. Well, lots in those three questions. So let me take them one by one. In terms of AI, when I talk about accelerating our data and AI road map, that's absolutely about accelerating the use cases and the benefits and scaling those across the business.

In terms of where we're seeing some of that acceleration, we're absolutely through our data and AI joint venture with Accenture. That's really helped us accelerate some of the fundamental pieces like really streamlining the number of data platforms that we rely on. So we're absolutely seeing acceleration there. We're not talking about accelerating spend. So one of the things we're really clear on is, as we make choices on partnering or going into joint ventures, how do we align our ambitions and incentives so that it is about being at the leading edge of being able to apply these capabilities into our business, but do it in a way where we do manage our costs because we're very conscious of that. It's an easy area to spend a lot of money and that to grow fast. So we're very conscious of those and thoughtful in how we set up those partnerships and how we architect the technology inside our business to make sure we have choice so that we can both get the benefits, accelerate those benefits but also not see our costs grow beyond where we are comfortable with that being.

Just on the productivity agenda for the country, I think it's such an important discussion. One of the things we've been strong on is we do think, as you look forward for our country, whether it's productivity and prosperity of the nation, there's no doubt technology is going to play a big part in that. And we think something that isn't always at the top of the list is that technology, whether it's AI or data centers, it does need to be connected. And so having a really clear digital infrastructure plan for the country. So that as a sector, we can align behind that with government, with regulators, so right policy decisions are made, the right investment decisions are made. The regulatory environment is set up to, yes, protect customers, but also encourage innovation. So we think that's a really big piece as we look forward. And we're really optimistic about what technology and the important role that connectivity can play in helping to enable that for the country.

On the third one, where you're talking about triple 0. And yes, obviously, there's been a lot of focus on triple 0. The first thing I'd say, it is a very complex ecosystem to ensure triple 0 works from the devices themselves through to the networks and the different softwares and protocols that are running over networks through to getting the calls through to emergency services who operate across around the country, state-by-state, territory by territory.

Look, our focus, this is a complex ecosystem, and I think everyone in that ecosystem is working to try and make sure it works absolutely as well as it can. And I would say, obviously, any call that doesn't get through is too many. But the large majority of that ecosystem does work well. There are some complexities in devices you're spot on. And obviously, devices come into the country. device manufacturers have to accredit those. We do testing on our network, but it is a dynamic area where devices are changing, software is getting updated, networks are changing. And so we work really hard to make sure we meet our obligations to be monitoring devices and obviously, as part of some of those obligations, it does mean blocking devices if we find they cannot make triple calls. And so I think it requires work right across that ecosystem to make sure Australians continue to trust and they should trust our system to be able to get help in an emergency.

Our next question comes from Rayna Bosch from SBS.

We might be having some issues there. So we might go to David Taylor from ABC. David.

Well, thanks for your presentation. It's quite a trial what Telstra is doing. The ABC has spoken to both employees, current employees of Telstra but also previous employees of Telstra. And those who have been contracted by companies to be also employed by Telstra. And there's a real sense of fear around how your AI investment in AI rollout is affecting jobs.

So can you give me an idea of -- so it's a 2-pronged question, I suppose, over the past 12 months, what proportion of jobs could have been lost within Telstra are related to your AMI rollout? And how many -- what proportion of jobs are going to be lost, at Telstra up to 2030 based on AI.

Okay. And thanks, David, for that. So first off, I mean, the pace of change in AI is quite extraordinary. And when I'm engaging with our teams internally. Yes, one of the questions is what does it mean for my job going forward? And I think the thing we're focused on is absolutely none of us can predict that future. It is changing so fast. I look back over the last couple of years, just how fast it's changed. None of us, I think, predicted that.

So the thing we're focused on with our teams -- in an environment where it is uncertain how AI will be used, I think the most important thing is skilling our teams. And so we invest heavily in the tools available to our team members. We invest heavily in also the training and skills of our teams through our data and AI Academy because irrespective of what the future is and how it plays out, we firmly believe that our people who have better capability in being able to use and apply AI will be better positioned for future jobs.

So we're very much focused on that. And I do understand it is a question top of mind for our teams and as I engage across the country and travel internationally, it feels like a very common theme. The world is moving fast. So our focus is on how do we scale enable our teams, give them access to the tools. And we are seeing our team members who have access to our AI tools, which is the large, large majority are using those tools on a weekly -- 75% of them are using them at least weekly and often a lot more often as it becomes part of the way they work and operate.

So as we look at impacts on our business, and yes, any decision to impact a role is a difficult one. We have had to face into those decisions. They are necessary decisions to put us in a position to be competitive to be able to deliver at the level we need to for our customers. Those benefits. Today, there's not a role I could say, has directly been taken by AI, but of course, our investment in digitizing our business, our investment in applying AI is generating a more efficient business for us. And that's why, as I said, our focus is absolutely on working with our teams that investment in the tools and that investment in their skills.

Thank you, Vicki. Our next caller is Brandon Howl from Capital Brief.

Just wanted to touch on an earlier comment that was made during the analyst call. I think it was like that because of Telstra's disciplined capital management, it would be able to navigate the upcoming structural real fees if they would just go through as they currently proposed. I was just curious if that means that there's unlikely to be significant disruptions to existing investment plans, at least out to 2032. And just wanted to touch on a separate point as well. It was revealed -- Telstra revealed earlier in the year to the 0 service outage inquiry. That suffered about -- more than 5,200 mobile tower outages last year. I was just wondering what commitments are you making to ensure that this is brought down.

Yes. Thank you. Thanks, Brandon, for those couple of questions. Look, this morning on the call with analysts, the question was around our capacity to be able to if those spectrum renewal cost come in as is currently proposed, how would we be able to navigate that. .

One of the things about Telstra, we're very focused on is ensuring the business is in the right position to be able to continue to sustain investing in the business. And we've worked over many years now to steadily improve our overall returns in the business. They're still not super high. They are above our cost of capital however. And obviously, if that cost does land higher than what we think the fair market value is, and that process is still ongoing, then that will be a consideration we need to consider. As we think about various trade-offs, where we're investing our money, how we're positioning and pricing in market. So there are a whole lot of factors we would need to consider.

The point this morning is are we set up to be able to navigate that as a company. And I look at where we're at, financially, our ability to keep investing in the CapEx needed to support the business our balance sheet capacity as a business. So it was a broader comment about being able to navigate through that.

Just in terms of triple 0. Obviously, there's been a huge amount of triple 0 focus, particularly through the latter part of last year. Telstra takes its obligations incredibly seriously. We do have two sets of obligations. We run the emergency answer point for the country. When someone calls triple 0 under a contract with the federal government. It is a Telstra person that answers that call and passes it then on to the relevant emergency services, and we have our obligations as a telecommunications company, including as a mobile operator. We invest huge amounts of our CapEx into the resilience of our network. These are large complex networks. And they will have issues over time, particularly, I spoke this morning about the investment in power backup systems. The single biggest thing that impacts the resilience of our network is power outages. So we do invest in power backup. However, there are situations where power is out for extended time, it could be that equipment fails, they're not infallible. And so we absolutely invest heavily in resilience of our networks.

We also invest in things like new technology, bringing satellite messaging to customers just as another form, if there is an issue on the terrestrial network, there's another layer. We also encourage our customers who are heavily reliant on being connected to think about multiple technologies rather than relying on just one. So there are many things we do. These are large complex networks, and they're not infallible, and we invest huge amounts in their resilience.

Thank you, Vicki, for that. Our final caller for today is Andrew Cole from IT News.

Can we have an update on Telstra's lease of OneWeb last constellations and the issues you're having with complaints about the performance of small cell base stations. As you tell at provided an update on when it might be able to fill coverage gaps in its constellation over Australia to eliminate the voice service roots when using those lower sets or backhaul on those installations?

Yes. Thank you, Andrew. And so yes, as you well understand, you understand this technology well. We have rolled out using OneWeb's LEO satellite constellation backhaul over their satellites to some of our remote sites. And their rollout of their satellite constellation hasn't gone as planned on their side. So it does mean today, there are some issues, particularly impacting voice.

However, in terms of data performance, we have seen significant improvements by being able to access that LEO satellite service. We are working through that, working closely with communities and our customers to figure out we have rolled it out to a relatively small number of sites to date. That rollout is not going further right now as we work out what is the right balance to find here.

It does provide real benefits, much more capacity, much better performance in terms of data over those sites. However, as you call out, there have been some issues around voice dropouts given where that constellation is at. So that's something we continue to work through with OneWeb. And our teams, as I said, closely engaged with customers and communities that rely on those small cell services.

Ok, I have one more question. What I'd be able to ask, you've sought some delays to the Universal Outdoor mobile application to push it back a year. Is the federal government given Telstra any indications it's open to doing that. Or rolling back the legislation for further consultation?

So just in terms of the universal outdoor mobile obligation legislation. So first thing I'd say is we're absolutely at the forefront of rolling out those services in the country. We've already got satellite messaging that we launched in June last year in market. So commercially, we absolutely see the benefits of these services.

Under that legislation, it looks at then future services, voice, data. Some of that is dependent on brand new constellations, brand-new capability that is not commercially available today. So as we've thought about that, and we've given input, that's just an important element. Some of this technology is very early, some of it not in market yet. So obviously, that's going to be an important factor, but we're absolutely at the forefront of bringing those services to Australians because we see them as important services, an extra layer of resilience in the event a terrestrial network has an issue. And also that ability in a country as large as Australia when people are outside of mobile network coverage, that ability to stay in touch.

Thank you, Andrew, and thank you, Vicki. We do have one final question. Jared Lynch, just had a follow-up question. So Jared, just over to you for your follow-up, please.

Thanks, Steve. Vicki, today, other business leaders were on that with our productivity gains that this is as good as it gets after real wages failed for the first time in more than 2 years. I'm just interested about capacity constraints at Telstra and whether you're changing investment as a result of inflation or capacity constraints and are being delayed?

Okay. I must admit, Jared, I did see some headlines this morning. I haven't read the transcripts and understood the full context of some of those comments. But in terms of where we're at, we're having to navigate -- obviously, there are inflationary pressures on some of our costs. That's why I've been at the forefront of how we really drive efficiency and better outcomes for our customers is at the forefront.

We're navigating that. We are very focused on what we call positive operating leverage. So we're in an environment where we're not seeing top line growth at any large level. So we've got to continue being efficient to be competitive to be able to deliver at the level we need to for our customers. So right now, we are navigating that, you will have seen in terms of our overall result, we did reduce overall costs. So we're able to offset that inflationary pressure that yes, we feel like consumers and businesses across the country feel. We've been able to offset through some of the hard work, the discipline and the gains that we found particularly through technology investment.

Thank you, Vicki. Thank you, Jared, and thank you to all the media and analysts that have joined our call and Q&A today. Thank you for your time and investment in today's call. We will now wrap up the half year results update. Thank you very much, and have a lovely day.

Dear shareholders, I am Nathan Burley, Head of Investor Relations, and it is my pleasure to be your emcee today for our 2025 Annual General Meeting.

Before we start official proceedings, I would like to welcome to the stage Elder Tony Garvey.

Can we try that again for the traditional owners here today? First of all, I'd just like to thank you for that very warm welcome, and thank you all for inviting me here today. I think it's very important we walk this journey together. Now we are a multicultural society.

I'll start the event off with saying Wominjeka, Wominjeka to everyone. Wominjeka. Wominjeka in the Wurundjeri Woiwurrung language means welcome. So welcome to all indigenous and nonindigenous people here today.

I'd also just like to say I'm very proud and honored to be here today standing tall for my people once again, like I have done for 36 years, and I will continue to do so for the rights of our own country. My great grandfather was the last leader for Wurundjeri. Ngurungaeta in the Wurundjeri Woiwurrung language means last head tries leading our mob out on the mission at Coranderrk, where I live today with my family. He took over from my great, great uncle. My great, great uncle was King Barak. King Barak was our fearless leader that took on the government for land rights in the 1800s, right up to 1903 when he passed. My great grandfather took over leadership of Wurundjeri from there, and he led our mob from 1903 right up to 1924 when the mission was closed due to colonization and being forced out into the white community and to also build the township of Healesville.

The Wurundjeri people, they are also a part of the Kulin Nation. So, Kulin means man. In the Kulin Nation, we had our five language groups. We had the Wathaurong to the West, the Kurung, who are the Westleigh neighbors to the Wathaurong, Taungurung to the Northeast, Boonwurrung to the Southwest and the Woiwurrung of Wurundjeri territory that we stand on here today. The Wurundjeri lies within the cities of Melbourne. It extends from the mountains of the Great Dividing Range, south of the Birrarung to the Mordialloc Creek, west to the Werribee River and East to Mount Baw Baw. The Wurundjeri people, they have a social totem. It is Bunjil, the Eagle. Bunjil represented spiritual powers throughout many parts of Australia. Bunjil taught all the laws about life, behavior and ceremonies to make sure that our culture would continue for all walks of life throughout Australia. So Bunjil was referred to as the creator of mankind. Bunjil created great people from the land. That is why we call the land our mother or the mother of creation. Never can the land be taken away. So land will always belong to aboriginal people as we are part of the land and the land is part of us.

Our story is similar to the European people. Theirs is by their chosen faith, ours is by the dream time. We both have creators and beliefs and ours is Bunjil. It is a traditional custom of the Australian aboriginal communities to be asked and to give permission for people to enter their lands. And today, you've now joined with me to honor the spirits of my ancestors past, present and emerging, who have nurtured these lands for over 60,000 years. And we, as the owners of the lands, off your heartly welcome to the lands and hope that together as citizens of this beautiful country, we can build, develop and unite stronger nations for all peoples.

We'll close in the Woiwurrung language, which is Wominjeka, Wominjeka Wurundjeri balluk yearmann koondee biik, which means you're most welcome to the land of the Wurundjeri people.

Before I jump down and get that loud applause I am expecting, yoo-hoo, I just want to touch on all the people that supported the native title, all the people that supported the treaty. This country is the only country in the whole wide world without a treaty. So it is time to come to the fore. It's time to walk this journey together and respect all cultures in this country today. There's no room for racism, and we don't accept it as Wurundjeri people. I'd like to thank you all for having me here today. Cheers.

Thank you, Elder Tony Garvey. I'll add my welcome to everyone here in the sovereign room, and I'd also like to welcome everyone who is viewing the live webcast of our AGM online from wherever you are located.

There are a few procedural and housekeeping matters to run through before we get underway. For those in the room, we'll be serving a light lunch at around 11:30. However, if the AGM has not finished by that time, we will not be adjourning for lunch. We request that no food is brought back into the meeting room.

You will have been given a card when you registered this morning. Yellow cards are for shareholders who may speak and vote, and blue cards are for shareholders who may speak but not vote. You will need your card to ask a question or to reenter the meeting. A slide is going up behind me, which explains how to vote. If you have any queries about how to vote, please speak with one of our team members in the room or in the shareholder registration area outside who will be happy to assist you.

I will now like to outline the process for asking questions. For those here in the room, the Chair will invite questions from the floor from each item. Please move to the reservation area behind one of the microphones, show your card to the microphone attendant and give your name. The attendant will invite you to the microphone when it's your turn. Please only ask one question at a time and keep your questions and comments to no more than two minutes. Shareholders who are viewing the live webcast and wish to submit a question, please click the ask-a-question button on your screen and follow the prompts.

In terms of how we'll manage the questions, for each session, we will rotate between taking questions from online and in the room. We may have quite a few questions to get through, so we please ask shareholders to be patient. We will start with online questions to allow shareholders in the room time to move to a microphone. I'll read the questions as they have been written by shareholders. If we can't answer your question fully or we can't get through the questions today, we'll respond to any unanswered questions after the meeting, either directly or through the answers to common questions, which we will put on our AGM website.

Shareholders, if you have an individual customer or shareholder-related question, please see one of our customer service team members here today. For shareholders submitting questions online, if your question relates to an individual customer or shareholder-related matter, our customer service or registry staff will be in touch with you after the meeting. For shareholders viewing the live webcast, the online platform is open and you may submit your questions now.

With those procedural matters out of the way, I'll hand over to our Chair, Craig Dunn.

Thank you, Nathan. Good morning, ladies and gentlemen. It's my great pleasure to welcome you to Telstra's 2025 Annual General Meeting. Thank you for joining us today and for your continued investment in Telstra. This meeting is being webcast, so a very warm welcome also to the many shareholders who've chosen to join us online.

A quorum is present, and so I formally declare today's meeting open. A notice of meeting has been distributed to shareholders setting out the business and resolutions to be considered today, and I propose to take that notice as read.

The items of business on today's agenda are now being shown on the screen. Voting on Items 3 to 5 will be conducted by poll, and that poll is now open. Instructions on how to participate in the poll were distributed prior to the meeting and assistance is available at any time. There are two points related to these items that I will touch on briefly now. First, to better balance workloads and to meet growing regulatory and reporting demands, during the year, we expanded from three to four Board committees. The former Audit and Risk Committee was replaced with two new committees, the Audit Committee and the Risk and Sustainability Committee. There have also been some changes in committee membership to align with the change roles of the committees and to allow for appropriate cross membership of relevant committees. And second, I will comment on some important changes to our remuneration structure when I speak about our new strategy, Connected Future 30 later in my address.

I'm pleased to be joined by -- on stage by my fellow Board members, except Roy Chestnutt, who is an apology. Also joining us on stage is our Company Secretary, Craig Emery; and our Chief Financial Officer, Michael Ackland. Today, Eelco Blok is standing for reelection and David Lamont is standing for election, and we'll hear from them both shortly. I'm also standing for reelection, and so I'll ask Elana Rubin to take on the role of Chair for that part of today's meeting. Members of the senior management team are also present in the audience.

I'd now like to share some perspectives on our financial performance, some overall reflections on the last 12 months and comment on our Connected Future 30 strategy as we look ahead. After the successful delivery of T25, we move into the future with more confidence and as a better positioned company. And you can see that through ongoing growth in underlying earnings and the dividend. We met our financial commitments, including growth in underlying earnings before interest, taxes, depreciation and amortization, earnings per share and return on invested capital. At the same time, we continue to deliver for customers. We exceeded our T25 customer experience target and further improved our reputation score as independently measured by RepTrak. Importantly, we have continued to invest very significantly in our network and infrastructure to remain a leader in connectivity and which I'll touch on more a bit later.

We've delivered value to shareholders through dividend growth and the $750 million on-market share buyback completed in June. We've also commenced an additional on-market share buyback of up to $1 billion, which we announced in August. These buybacks are supported by the strength of our balance sheet and the underlying cash generation of the business. The Board believes they are an effective way to manage Telstra's capital base and support growth in earnings and dividend per share by reducing the number of shares on issue. Overall, we have delivered reliable and consistently improving returns, supported by a strong market position, valuable infrastructure assets and growing earnings. And pleasingly, that has been reflected in Telstra's share price, which is at near nine-year highs.

Before I reflect on the last 12 months, I'd like to make a brief comment on the recent incidents impacting the ability of some customers of another network operator to contact Triple Zero, noting that Vicki will add more detail on this important point when she speaks shortly. Incidents like this reinforce the significant reliance Australians place on their telecommunications providers, especially in Triple Zero emergencies. Large, complex networks are not infallible, nor are they available in every part of a vast country like Australia. But we also know Australians need to be able to trust Triple Zero. We take this obligation very seriously, and this extends to the important and unique role we play in delivering the Triple Zero service with our team members working around the clock to facilitate emergency calls. When issues like the recent Triple Zero incident happen, our focus is on understanding what we can learn from them so that we can also continue to improve. And we're very committed to working with the government, regulators and the broader sector to strengthen the resilience of Australia's emergency call service.

Looking back on the last 12 months now, there are three big things that really stand out for me. First, we've continued to improve the experience for our customers. We have now moved nearly all of the customers in our consumer segment to a new digital customer service platform, which has been a big contributor to lifting customer experience and cutting customer complaints by more than 70% since FY '21. We've also continued to invest in technology and partnerships to help protect our customers from scams and cybersecurity threats. And we lead the market in blocking millions of scam calls, text and e-mails from reaching our customers each and every month. We know the cost of living remains a challenge for many Australians, and we continue to provide assistance to those customers who need it. This includes our prepaid top-up program, which offers up to six months of essential phone services to Australians facing financial challenges. Over the last four years, we've helped, on average, more than 1 million customers in vulnerable circumstances stay connected each year.

Second, we've continued to invest in and evolve our network and digital infrastructure. Over the last seven years, we've invested $12.4 billion in our mobile network nationally with $4.7 billion of that invested in regional areas. In February, we announced an additional $800 million investment over four years to deliver the most advanced mobile network in the country, and we've expanded our 5G network to cover 95% of the Australian population. Part of that has involved optimizing how we use spectrum. Spectrum is used to deliver a range of services to Australians through the airways like broadcast TV and radio and mobile services. It's a scarce natural resource and is vital to delivering and improving mobile services.

The closure of our 3G network meant we could redeploy that spectrum to further improve 4G and 5G services, services that are faster, more secure and more reliable. This also meant we could retire aging and energy-intensive equipment, reducing our carbon emissions. We know the transition from 3G has not been straightforward for some customers, and we've been working to assist those customers who faced such issues.

We're also well progressed with the rollout of our intercity fiber network. We've now constructed more than 1/3 of this significant digital infrastructure project for Australia. And we've brought the latest satellite technology to Australia, including home and business fixed Internet rather and satellite to mobile messaging, which has been a big step forward for regional and remote areas.

Third, we've seen developments in artificial intelligence or AI move incredibly fast with enormous potential to benefit both the country and Telstra. To deliver the best possible connectivity and experience for our customers, we need to be a leader in how we deploy AI across our business. We're using it today to enhance how we serve our customers, how we protect them from scams and how we improve the reliability and resilience of our network, for example, by identifying and solving problems before they become an issue for customers. Already, we're seeing AI change how work is done and the value that comes from people and AI working together. People, of course, will always be a fundamental part of how we serve our customers at Telstra and getting that balance right will be important. As we do that, we're investing in our people to help them to learn and adapt. This includes 21,000 Microsoft Copilot licenses and more than 20,000 of our people have now completed at least one course in our data and AI academy.

As we look ahead to Connected Future 30, the Board and I are confident Telstra has the right strategy to remain a leader as technologies and connectivity continue to evolve. As with the Postmaster General's department, Telecom and then Telstra, one of our enduring strengths has been leading and adapting as technologies change. We have transformed the connectivity Australians rely on several times over with the unwavering purpose of building a connected future so everyone can thrive. Technology and connectivity are transforming once again. Customers' needs are changing. Connectivity is becoming increasingly critical to everyday life and new technologies are driving the demand for our network even higher. Connected Future 30 is about innovating and adapting to remain a leader in a rapidly changing environment. You will see us double down on connectivity, radically innovate in the core of our business and step up our focus on being efficient and competitive. As we do that, our commitment to operate responsibly and sustainably remains, including our environmental commitments.

Earlier, I mentioned some changes to our remuneration structure. These are aligned with the focused delivery of our new strategy and how we best create enterprise value, which is in the interest of all our stakeholders, particularly shareholders. A key part of this is disciplined capital management. The new remuneration structure is designed to recognize and reward that discipline while continuing to do the same for further improvements in customer experience and reputation.

Connected Future 30 will also see us play an even bigger role in Australia's digital future. Vicki spoke recently at the National Press Club of Australia about the role that connectivity will play in Australia's future prosperity. She called for a shared national vision for Australia's digital future, and this is a call the Board strongly supports. We want to partner with government to develop that shared vision and the policy and regulatory settings that will encourage the investment and innovation necessary to realize it.

So as we look back on T25 and move forward into our new strategy, the Board is pleased with the progress of the company. Our core business is strong. We've delivered recurring growth in underlying earnings and the dividend, and we have a highly capable leadership team and workforce. We've done a lot of hard work. And while there's more to do, we are strongly positioned to take advantages of the opportunities that lie ahead as demand for data and connectivity continues to grow. This is thanks to the disciplined focus of management and the entire team right across Telstra, and I'd like to thank them for their efforts.

And on behalf of the Board, I'd like to conclude by thanking you, our shareholders, for your continued investment in Telstra. Our focus remains on delivering value for our customers, for our people, for our shareholders and for our communities.

Thank you for listening, and I'll now pass across to Vicki.

Thank you, Craig, and good morning, everyone. I'm delighted to be here for my fourth AGM as CEO. I'll cover three things today: Telstra's overall business performance for FY '25, the investments we're making in Australia's digital future, expanding on some of Craig's comments and our Connected Future 30 strategy, including the role that connectivity plays for our country.

Turning now to Telstra's performance for the year. FY '25 was a strong year for Telstra as we continue to deliver for customers and shareholders. We celebrated the successful completion of our T25 strategy, delivered on our commitments to lift customer experience, build our reputation and drive sustainable growth and announced our Connected Future 30 strategy, which will see us radically innovate in the core connectivity business.

You can see a summary of our results on this slide. We delivered our fourth consecutive year of underlying growth, reflecting momentum across our business, strong cost control and disciplined capital management. Our reported growth in FY '25 was stronger than underlying growth because of significant one-off net costs totaling $715 million in the prior year. These costs discussed last year were mostly related to impairments and restructuring associated with the reset of Telstra Enterprise business. In 2025, reported financial performance included earnings before interest, taxes, depreciation and amortization or EBITDA, up 14% to $8.6 billion, profit up 31% to $2.3 billion, earnings per share up 34% to $0.189 and return on invested capital up 1.7 points to 8.5%.

Our underlying growth more accurately reflects our financial performance compared to the prior period, excluding significant one-off items and other adjustments. Underlying financial performance showed EBITDA up 4.6%, profit up 1.8%, cash earnings per share up 12% to $0.224 and return on invested capital up 0.2 points to 8.5%.

On the back of earnings growth, the Board resolved to pay a fully franked final dividend of $0.095 per share, bringing total dividends for the year to $0.19 and representing a 5.6% increase on the prior year.

Looking now at our results across the business. We grew underlying EBITDA across our mobile, fixed consumer and small business, fixed enterprise, InfraCo Fixed and Amplitel businesses. It has been a dynamic year in the mobile industry with 3G closure, new satellite technology, pricing changes and the migration of a significant volume of customers to our new digital stack. In the context of this, our mobile business has continued to perform well with EBITDA growth of $235 million. Mobile's growth was driven by higher average revenue per user and customers continuing to choose our network and the value it provides. Mobile services revenue grew by 3.5%.

Our fixed consumer and small business EBITDA grew by $109 million, reflecting average revenue per user growth and disciplined cost management. Pleasingly, our fixed enterprise EBITDA grew by $103 million, supported by decisive actions taken to reset this business and reduce cost. We remain committed to this reset with further changes announced in July to remove complexity and cost and set us up to deliver on our Connected Future 30 ambitions. Our international EBITDA declined by $96 million with reductions across Wholesale and Enterprise and Digicel Pacific. We have completed a strategic review of this business and are now taking action, including to reduce costs, double down on connectivity and exit the majority of our network applications and services products.

The wholesale and enterprise international results include restructuring costs associated with this. These actions, together with the continued demand for connectivity, mean the business is better positioned for the future. Our infrastructure businesses continue to grow, reflecting strong customer demand. Across the business, we delivered strongly on costs through simplifying our operations, reducing some roles and improving our productivity, partly offset by cost inflation. Core fixed costs decreased by 4.7% or $306 million in the year. Cumulatively, we reduced our core fixed costs by $428 million since FY '22.

As I reflect on T25, I'm pleased with the strong momentum and the foundation we've built. We set a high bar across our four T25 pillars to lift customer experience, extend our network leadership, deliver sustainable growth and value and to be the place our people want to work. Thanks to the dedication of the Telstra team, we have exceeded the majority of our scorecard metrics, including successfully delivering on our financial growth targets across underlying EBITDA, earnings per share, return on invested capital and cost out. We achieved our objectives, but not always as expected as a lot changed over the course of T25, including technology innovation and inflation. For this reason, I'm particularly proud of the way our team has adapted and delivered and the focus and discipline they have shown.

We have continued to invest in our mobile network, digital infrastructure and in bringing the latest technology to our customers. In FY '25, we reached 3 million square kilometers of mobile coverage, now reaching 99.7% of Australia's population. As Craig mentioned, we are investing an additional $800 million in our mobile network over four years within our business-as-usual CapEx. This is to deliver customers the most advanced, resilient and reliable mobile network in the country.

We have now completed 5,000 kilometers of our intercity fiber network. And in June, we reached a significant milestone with the switch on of our Sydney to Canberra coastal route. Our Canberra to Melbourne coastal route will go live this month and will progressively switch on more routes over the next 12 months. Also in June, we launched Australia's first satellite to mobile text messaging product, and we're seeing around 90,000 devices connect to our satellite to mobile service on average per day. And earlier this year, we announced a joint venture with Accenture, focused on accelerating our data and AI road map to reach our customer experience and network ambitions faster.

For customers, while there is always more to do, I am pleased to say we exceeded our T25 episode Net Promoter Score target, achieving a 15-point improvement over the last four years. Digitization has been a big contributor to this, and we're now within reach of completing the migration of our consumer customers to our new digital stack. As you would expect with a complex migration like this, some of the most challenging services come towards the end. We have now fully migrated more than 99.5% of our 7.7 million consumer customers, and we are working with the remaining just under 30,000 to manage their migration as smoothly as possible.

We know cybersecurity remains a concern for our customers and scammers are evolving fast. We're evolving to and investing to help protect our customers and make the digital world safer. This includes expanding our scam indicator partnership with the Commonwealth Bank to include fraud indicator, the introduction of scam protect to alert mobile customers to suspicious incoming calls and our cleaner pipes work, which continues to block millions of scam calls, text and e-mails from reaching our customers.

As Craig mentioned, we play a critical role in delivering the Triple Zero service for all Australians. We have been answering and connecting emergency calls since 1961 as the designated emergency call person, which means a Telstra team member answers first when someone calls Triple Zero for help before they are transferred to emergency services for response. We understand how critical this service is, and it is managed with a high level of discipline. Our team members answer around 32,000 emergency calls each day and the platform we use to deliver this service is very resilient and reliable.

It's important to differentiate between the Triple Zero contact center we operate on behalf of the Australian government and the networks which carry Triple Zero calls to the contact center. No network is infallible and outages can occur due to a range of factors, including severe weather, power loss, technical faults and planned upgrades. Our focus is on minimizing the risk of disruptions, being quick to communicate when they do occur and resolving issues as quickly as possible. We continue to focus on the reliability of the Triple Zero service and the resilience of our own networks. We're always looking at what we can learn to improve our own systems and processes, and we are working with government, regulators and the broader industry to strengthen the resilience of Australia's emergency call ecosystem.

Turning to guidance for FY '26. You can see on the slide the ranges along with the conditions upon which we have provided them. We've reflected the metrics we outlined at our May Investor Day as we focus on driving cash earnings as part of our strategy to create value. Underlying EBITDA has been replaced by underlying EBITDA after lease amortization or EBITDAaL, reflecting a broader measure of costs in our business. Our FY '26 guidance range is $8.15 billion to $8.45 billion.

We've introduce EBIT cash, which is made up of underlying EBITDAaL, business-as-usual CapEx and spectrum amortization. We are guiding on this in FY '26, which we believe is aligned with growing shareholder value and drives management focus on all of these costs. Our FY '26 cash EBIT is expected to be between $4.55 billion and $4.75 billion. This is equivalent to growth of between 5.5% and 10% on FY '25, demonstrating the cash generation of our operating business. Business as usual CapEx of $3.2 billion to $3.5 billion further demonstrates our disciplined approach to CapEx. Strategic investment is expected to be between $0.3 billion and $0.5 billion in FY '26, reflecting the continued rollout of our intercity fiber network project.

As I look ahead now to the future, there's a lot that gives me confidence. In addition to our incredible team of passionate people across Telstra, trends indicate that demand for connectivity will only grow. Our core connectivity business is strong with a unique set of competitive advantages that mean we are well placed to lead through this next period of technological change. And we have established a strong track record of disciplined delivery through T22 and T25. This has laid the foundation for our Connected Future 30 strategy, which will see us adapt and lead to shape the future of connectivity. Our ambition is to be the #1 choice for connectivity in Australia and to continue delivering on our purpose to build a connected future so that everyone can thrive.

We have three goals to help us achieve that, to lead in how we anticipate and deliver on the connectivity needs of our customers, to build and operate Australia's leading network and reinvent how we capture value from it and to be Australia's leading digital infrastructure provider. We're also focused on continuing to deliver value for our shareholders, importantly, through our core business cash flows and also through active portfolio and investment management and disciplined capital management. Through the delivery of this strategy, I believe we will play an even larger role in Australia's digital future and the future prosperity of the country.

As Craig mentioned, I spoke recently at the National Press Club about working with government to help create the right environment for investment so we can continue to deliver for Australia and for our shareholders. I'd like to thank the Telstra team for the discipline and focus that they have shown over FY '25 and throughout our T25 strategy. We simply can't produce strong results for our shareholders without delivering for customers, and our amazing team are fundamental to that. Thank you.

Thank you, Vicki. We'll now move to the formal part of the meeting. The items of business are now being shown on the screen. Nathan outlined at the start of the meeting how you can ask a question and vote. Shareholders participating online may also submit questions through the online portal. As I mentioned earlier, voting on items 3 to 5 is being conducted by poll. Mr. Chris Healy of MUFG Corporate Markets, Telstra's share registry, is acting as returning officer in relation to the poll. We've received proxies from over 11,400 shareholders and direct votes from over 9,900 shareholders. When we come to an item, we will display on the screen the proxy and direct votes recorded for and against that resolution. The four numbers include proxies received and available to be voted by the Chair of the meeting.

I'll now turn to Item 2 on today's agenda, which is to discuss the company's financial statements and reports for the year ended 30 June 2025. This item provides shareholders with the opportunity to ask questions about our 2025 financial statements and reports as well as the business, operations and management of Telstra. You can also ask questions of our auditor, Deloitte. An important reminder, the purpose of this item is to allow shareholders to ask questions about the performance of the company and not to address individual customer service queries. If you have a question about a customer service issue and you would like to address that issue now, we have high-quality customer service people in the room who are ready to assist you. Customer-related queries received online will also be responded to by our customer service team.

If a topic has already been addressed or questions are repeated, I won't cover them a second time. This will ensure we make the most of our time together today. So shareholders in the room, I invite you to move to a microphone to ask a question. For shareholders viewing the webcast online, please submit your questions through the online portal. To ensure there is an even spread of questions from shareholders in the room and online, I will rotate between the two. To allow shareholders in the room, time to move to the microphone, we'll begin with online questions if we have any. Otherwise, Nathan will begin in the room.

Over to you, Nathan.

We have no online questions. So we'll start with a question from a microphone. We can go with microphone #1 down here.

Good morning, Chair. I'd like to introduce Mr. Mike Robey from the Australian Shareholders' Association.

Good morning, everybody. My name is Mike Robey as stated. I'm a volunteer monitor for the Shareholders' Association, which is an association that stands up for retail shareholders. I hold approximately 17.5 million proxies or about 84 million in shares today. May I first start by thanking Ms. Brady and her team for what has been a very good year for our shareholders, in particular, for keeping Telstra out of trouble, unlike its main competitor. And we particularly like the fact that the company has shed some of its outdated enterprise data services, which have well past their use by date, which is mentioned by the Chair and Vicki, I think, in her speech. And also that we have lost the distraction of a part ownership in Foxtel, which I'm sure occupied too much management time for too little return.

My first question really concerns profitable growth for Telstra. They're credible analysts, and by credible, I mean they don't actually sell network equipment. So they have no vested interest in their analysis. who have assessed that in developed countries like Australia, the demand for both mobile and fixed data is tapering and that by 2030, we'll be flatlining. In other words, growth that we've seen in the past in the data services in both mobile and fixed looks like it's actually going to reach saturation. It seems that customers or users can only stream so much TV at any one time. And in large part, they're doing what they need to do already. In addition, the report states that the current 4G and 5G speeds are entirely adequate for most of their users for the foreseeable future. So maybe we don't have to invest in 6G when that comes along.

Given that Telstra has reverted to being a focused network company, rather like a utility, if you'll pardon the use of the word because effectively, that's, I think, what it's become now with Vicki's very sensible shrinking of some of the services. Where are the growth opportunities for Telstra then? Customers don't apparently need greater speed. They apparently don't need more data, and they're satisfied with their current usage. So will Telstra look to, for example, buying into less developed countries such as the Digicel acquisition in order to actually buy into countries that still have some growth runway or basically retire some debt? That's my question.

Thank you, Mr. Robey, and thank you for all you do for the Australian Shareholders' Association. That's a very important association, and we enjoy interacting with you.

It's a very good question. So this is a question that, in a sense, underlies our approach to our new strategy, Connected Future 30. It is true that growth rates in data have been very high over the last five years or so, and there may be some tapering off of them. But we do believe that the technologies around AI and AI indeed itself are going to lead to dramatic and significant growth in the use of our network, and that will foster ongoing growth in data. We do believe it will create new opportunities to use devices that perhaps people don't even foresee today. So we do think there's strong growth in the network.

And part of the Connected Future 30 strategy is network as a product. And that's about using advances in 5G, and there's further advances to come in that technology to further differentiate the service we add or provide to our customers, both in consumer business and the enterprise space, which, again, we think will provide opportunities for growth.

So part of the reason we're so confident and comfortable in very much doubling down on the core, if you like, and on connectivity because of the opportunities we think we continue to see in growing the business in that area and delivering value for shareholders.

Chair, I'd like to introduce Mr. Ian Hamilton.

Good morning. There's a couple of points I'd like to point out that things that you should be aware of, but probably aren't. With the standard issue house telephone model number, T1000S, T1000C designed and manufactured in Australia for Telstra, the handpiece does not properly fit into the main body of the phone. So with elderly people in bed or someone recovering, the weight of the flexible phone cord can just dislodge the handpiece off the phone. So they think it's on but it isn't. And with the old-fashioned phones gravity used to feed the handpiece onto the phone. Now the weight of the cord makes the phone off. It needs to be redesigned so that works properly.

The priority assist phone has the same problem. With this phone and with the normal phone service that people taking even though they were happy with the copper wire service for the last 70 years, the power disruption, the service does not work. The priority assist phone has a recharge battery, but that charge just last 12 hours. So say the power goes off at 3 p.m. a.m., the phone is dead. Is there any solution to that?

With printed phone books, I tried to get one, two years ago, and I went through the details phone number address, then it said e-mail, which I didn't have one. Therefore, no phone book. A phone books still available. Now Telstra has removed all public telephones from the platforms of the Melbourne underground railway platforms and also from many suburban shopping centers. What is the reason for this? And they are public assets that Telstra took control of when it was privatized and they're meant to maintain them and they're useful for emergencies. And with the AAA service breaking down, are there alternative telephone numbers to ring to directly contact people with the emergency services?

And the final question is, social media companies make a lot of money out of using your service. Are you able to get some more of that off them to help your profits?

Well, thank you, sir. You've got an extensive list of questions there, so I'll try to deal with them as best I can.

Regarding your comment on the various handsets, I'm not familiar with that, but they're important, very important points you've raised. So I'll commit to taking that on Board and reviewing that with Vicki and making sure if there are improvements we can make, we'll do that. I understand how important Priority Assist is to many Australians. We take that very seriously. So thank you for bringing that to my attention, sir.

On phone books, I understand that some are still printed and they're available. So perhaps we can speak to you after the meeting and let you know how you can take advantage of those books.

Public telephones are very important, and we've actually committed very seriously over time to improving their reliability and availability. That's a free service now that's made available by Telstra. Usually, they have free WiFi available to them. And we've also done work recently to improve their resilience with backup and so forth. So that is very important to us. I think I've covered most of your points, sir.

On Triple Zero, as Vicki and I have both said, that's something we take very seriously. Power outages are a matter of importance and are critically significant. It's a good point that you raise. It's probably the biggest risk we face with our network. We have more than 160,000 power outages a year. 90% of those outages don't impact our service because of the backup batteries and that we provide at mobile towers and the like. But that is a management -- that is an issue that we have to keep managing going forward, and it's something that we're very focused on. So thank you for your questions.

More, Craig, around social media.

I, sorry, sir. Well, that's a good suggestion. We'd certainly like to be able to do that. It's a competitive market. We compete for their business, and that's the way the market works.

We'll take our next question back from microphone one again.

Chair, I would like to introduce Dr. David Karoly, who comes as a proxy to the meeting.

Thank you very much. And what I'd like to do is, first of all address a topic that hasn't been talked about very much, but appears to be very important for Telstra, and that is the important emission reductions as part of the sustainability objectives that are reported in the annual report for 2025, showing ongoing decreases in emissions by Telstra operations. And it's very important to see that because what has been happening elsewhere in the world and in Australia has been growth in greenhouse gas emissions associated with operational activities. And it's really important that Telstra has been committed to current and future reductions in greenhouse gas emissions.

I should introduce myself. My name is David Karoly. I'm an Honorary Professor at the University of Melbourne. I'm a climate scientist who's been very much involved in looking at reductions in greenhouse gas emissions and the impacts of global warming in Australia and elsewhere in the world. I was the leader of the Earth Systems and Climate Change Hub in the Australian government's National Environmental Science Program, a lead author in the assessment reports of the Intergovernmental Panel on Climate Change for more than 20 years and have also been a former member of the Australian government's Climate Change Authority.

The question that I want to put today will come after a little bit more preamble, but in particular, focuses on the apparent disconnect between Telstra's sustainability objectives and Telstra's membership of the Business Council of Australia. The world's leading bodies on climate change science assessment, including the intergovernmental panel on climate change and on emissions reductions needed to meet the Paris Agreement, such as the International Energy Agency state that to limit global warming, consistent with the Paris Agreement agreed in 2015 to limit global warming to a maximum of 1.5 degrees requires no further expansion in fossil fuel use, not only in Australia but around the world.

At current rates of increases in greenhouse gas emissions, we have less than three years before globally, we exceed the emissions reductions consistent with a carbon budget that will breach the target of 1.5 degrees. We need faster action to limit global warming, not only in Australia but around the world. And it is around the world that new record high emissions were reached last year in 2024. It is clear that to meet the Paris Agreement targets, we need to have no new investment in increasing extraction of fossil fuels from new projects, not only in Australia, but elsewhere in the world. The Business Council of Australia has supported ongoing extraction of fossil gas from the North West Shelf and other activities to expand the extraction of fossil gas. That appears to be inconsistent with the objectives under sustainability for Telstra.

So my question then is, Telstra has said that it has -- is committed to emission reductions consistent with the Paris Agreement. And that appears to be that limiting global warming to 1.5 degrees is one of the objectives of the Paris Agreement. But the Business Council of Australia, on which Telstra sits on the Board, has a very different objective, which is to support ongoing extraction of fossil fuels. So how does Telstra honor its commitment to reduce its emissions while still being a member of the Board of the Business Council of Australia.

Great. Thank you, sir, for that important question. So firstly, on the Business Council of Australia, obviously, this is not a Business Council Australia meeting. But we think it's important for shareholders and for the company for large businesses in Australia to have a voice on critical public policy issues particularly as we work through the productivity debate in our country at the moment, which is so important to our future prosperity. So we think it's very important that we participate in that debate through the Business Council of Australia. The Business Council of Australia makes comments on a whole range of issues, as you would know, sir. Some of those we will support. Some of those will have a different view and some of those we simply won't take a view because we don't think we're in a position to give a view.

At Telstra, we believe we have a very proud record on the environment and the commitments that you talked about. We believe the best way we can deliver to Australia's commitment through the targets you mentioned is by actions in our own right. Our targets for Scope 1 and 2 emissions, as you know, are very meaningful at 70% reduction by 2030, which is consistent with the 1.5-degree Celsius limit that you talked about around the world. I think we were one of the first large companies to commit to a Scope 3 emissions target of 50% by 2030.

Both those targets are included in the remuneration scorecard for Vicki and her team, which reinforces how important they are to Vicki and her team and the Board. And you'd also probably know, sir, that as a part of our commitment to the country's shift to renewable energy, we've also now committed to, I think it's seven power purchase agreements that support investment of around $1.6 billion in wind and solar power. And by doing that, we've got a commitment by the end of this calendar year to deliver renewable power through those arrangements that's equivalent to 100% of our own consumption.

You'll also probably note, sir, that in our annual report, we've got very extensive climate reporting. That's consistent with the international accounting standard that was introduced some years ago. Obviously, we've got a new Australian accounting standard, which will comply within the future. We regularly and I meet with investors and other stakeholders around the country, we regularly get complemented on the extent and detailed disclosure in that document. This year, in addition to the climate targets, we've also included further information on nature and biodiversity, and we've done a deep review on water usage and how we can commit to that.

So I suspect we're going to agree to disagree. I understand your point on the Business Council of Australia, but we think we have a very enviable record on climate. We're very committed to it, and we continue to do so. Thank you, sir.

Take our next question online, and this question comes from [ Joe Alvaro ].

The question is, Telstra's charges fees for paper bills with minimal exceptions, which appear to be profit-making exercise. Many organizations don't charge for paper bills. Has the Board reviewed these fees under consumer protection laws given their potential illegality? How does Telstra adept digital exclusion, especially for vulnerable groups and others who prefer paper bills? With limited exception, these customers face discrimination and fraud risks. What measures protect and support them? Shouldn't these unfair fees be scrapped?

Thank you, sir, for your question. So just on paper bills, I think we charge $2.50 per bill, and that's because it's more costly for us to deliver bills in that form. It's not right to say there are minimal exceptions. We provide exceptions for a whole range of different groups like pensioners and people in more difficult financial positions. So I think around 70% of the paper bills that we provide are fact-free and not charged for.

On digital access, that's a really important point that you've raised. We're very committed to it. It's a key plank of our sustainability strategy. And Vicki, do you want to make any comments on the sorts of procedures or approaches we have in place around digital access?

Sure. Yes, I can make some comments on that because I think it is -- the point raised is an incredibly important one. And when it comes to digital access to being able to have access to those services, it is something we take as a very important and key focus areas. In fact, each year, we've been supporting the Australian Digital Inclusion Index now over an extended period of time because we made the decision over a decade ago now, I believe, that actually to be able to support digital inclusion, we needed a good fact base. So we've supported that research. The next round of that will actually be out in November. in the coming weeks. And out of that, we look at all elements. So access plays a role, affordability plays a role and digital ability plays a role in closing that digital gap, and we actually have programs and support a range of activities across all of those to be able to help do our part to ensure we reduce that gap.

Questions online. This question is again from Joe Alvaro. Given Telstra's ongoing high volume of complaints, as highlighted by the Telecommunication Industry Ombudsman, ACMA and online reviews, does the Board acknowledge that competent frontline staff are key to driving improvements? What concrete steps is Telstra taking to better support and train staff to reduce complaints and enhance the customer experience? How is the company addressing root causes like billing disputes and service and what measurable targets or time lines ensure real progress?

Thank you again for that question, sir. So improving the customer experience has been an absolute core focus of the company since we first rolled out our commitments under T22 and then T25. And that's involved a whole range of initiatives like the movement to a new digital stack, the move from 800 to 20 plans, so much more simplified and relevant plans for our consumers. We've brought our -- most of our call centers back onshore. We've taken ownership of all our retail stores. We're very committed to training our people. We've actually introduced some AI support that further improves that capacity to deliver our customer experience.

And as I mentioned in my opening remarks, again, while there's always more to do, as Vicki commented on, the number of complaints to the external ombudsman has reduced by 70% since FY '21. Our Net Promoter Scores, which is our way of measuring the customer experience has significantly improved over the period since T22 and T25. So we take customer experience very seriously. It's also included in the targets on which we measure management's performance and the remuneration. So if you look at the scorecard for FY '26, which is how we'll measure Vicki and her team's performance and the broader organization, there are clear targets on episode NPS and also strategic NPS. So we take it very seriously. We're not perfect. There's more work to be done, but we've made very considerable progress.

Question from microphone #1.

Sorry about that, everyone.

Chair, Mr. Donald Walker has a question for you.

My topic is text and SMS messages. I have a prepaid plan for 180 days and have 200 text messages. However, one text message can be up to three or more SMS messages, and it does not take while before all the text are used up. I discovered that a standard SMS has 160 characters and increased in multiple parts, each being 153 characters. Unicore SMS has a limit of 70 characters limit increase in multiple parts of 67 characters. It only needs one technical symbol to be added when it becomes a unicore message. And one letter, yes or no is a standard SMS. This is done when you are asked to confirm an appointment. The cost is the same for character SMS as is for 160 character SMS.

Question. Why does Telstra not put information on SMS and character used in your advertising? Question two, please, can you tell me where in the annual report under what heading do you show revenue from SMS messages?

Thank you, Mr. Walker. So on that second question, obviously, our disclosures in our annual report on revenue are consistent with what's required by law. There's a whole range of different revenues that we generate from all the services we operate in Australia. So it's not appropriate for us to disclose every line item. but we disclose what we're required to by the accounting standards.

Under your point on broader SMS messages, I'm sorry, sir, I didn't completely understand the point you were making.

I'll go over again. The SMS messages, there's the standard SMS, you have 160 characters, right?

Right.

Then after that split up into 153 characters and that's what happens. And one SMS, one text can be three or four or five, it could be as many as you might.

Yes.

And the cost goes up. It's -- when you split it up, you've got to say the first SMS is $0.60. The second is $0.60. The third is $0.60 and the cost goes right up. And you're looking at millions. How many -- there's 20 million or 30 million text today. How is that -- how much is that costing? How much revenue you get out of that?

Well, we -- as I understand it, we offer unlimited text messaging to our customers. So it's part of a bundled service that we provide in our plans. So that's just a functional utility that you get if you're a Telstra customer.

But I have a cash for 180 days. But yes, I've seen where you go. We have Telstra we have plans. Now that is costed. The text messages will be costed as part of that plan. Am I right? As part of a plan, you've got to put the cost of an estimated amount of text that customer is going to use. Is it right?

So, again, as I understand it, our plans provide unlimited text messaging. Years and years ago, you used to pay for a text message. So it's a cost we bear and it's a level of functionality or utility that we provide in our plans.

So you're saying it's a cost you bear?

Yes.

It worth millions.

Well, there's a range of benefits we provide to Telstra customers. I mean that's the benefit of being a Telstra customer. We've also introduced, as Vicki mentioned in her commentary, for Telstra-branded plans, satellite text messaging services when you're out of our normal network area, which is an important benefit to customers. So it's just a decision we make in the marketing capacity about what we think is appropriate to provide in our plans, and that's a decision management make from time to time and a whole range of things.

What I've got is I pay $200, right? It could be finished by -- if it's not careful to having text to you. But I thought you made money out of that. And I thought you made a lot of money out of the text plans.

No, we don't, sir. But I'm very happy if someone -- if you would like to speak to someone from our customer service team, they can perhaps help you better understand your plan and how that works for you. Thank you for your question, Mr. Walker.

Microphone one.

Chair, I would like to introduce Ms. Solaye Snider with a question.

Hello. My name is Solaye Snider, and I'm a campaigner at Green Peace Australia Pacific. Green Peace is here today because we think Telstra's investors and shareholders deserve to know about Telstra's fossil fuel lobbying via the Business Council of Australia, of which your CEO sits on the Board.

We're concerned that Telstra is dodging its responsibilities via its industry association policy by not taking a clear position on fossil fuels and gas expansion. And that by refusing to do that, it's taken as an endorsement of the BCA's lobbying on your behalf. We don't believe you have to agree with everything that the BCA does, but you do need to take a position one way or the other because your industry association policy requires you to be engaging with BCA's leadership if a misalignment does exist. So by not taking a position, it's received by the public and the government as an endorsement of the BCA's advocacy for further gas expansion.

So I want to ask again quite directly, does Telstra accept the science which states that support for new gas projects is incompatible with the goals of the Paris Agreement, which you say you're committed to?

Thank you for your question. And I don't want to go into detail and repeat my answer from the earlier question. But as I said before, there will be some issues on the BCA that we support, some issues we have different views on, some issues we don't have a view on. In our view, the greatest contribution we can make to the environment and a better climate outcome in Australia is by actions and not words. And the actions that we're taking on climate through our reduction in Scope 1 and 2 emissions, Scope 3 emissions rather, our action on investing in power purchase agreements, which promote greater renewable energy equivalent to 100% of our energy consumption by the end of this year and so forth.

In our view, the best way for us to deliver an improved environmental outcome for the country. And I think Telstra shareholders have every right to be proud in the environmental record that we have as a company.

Thank you. Yes. I'd like to add that in 2019, Telstra actually did threaten to quit the BCA because of its inconsistent climate positions. And in that process, he created this industry association policy, which requires you to regularly review your memberships and note when a misalignment exists, but it's not possible to note a misalignment one way or the other if you won't take a position. So that seems to us that it's dodging the responsibilities of your own policy. So we're looking for a really clear answer as to what your position is.

As I said, we're very committed to the environment. We believe the best approach we can act or take is by deeds and actions, and that's what we're doing. I don't think I can add to the question. I suspect you and I are not going to disagree. As I said, I think shareholders in the room and watching online have every reason to be proud in our environmental record.

We'll take our next question online, and this question is from Graham Hunter. Are you aware that your customer service team are suggesting to customers who have an issue with losing discounts following the introduction of your new billing system that instead of Telstra solving the problem, they should go to another provider or the ombudsman.

So why don't talk about the goal of what we're seeking to achieve with that change because I think it's an important question. So for some years now, we have been shifting to a new technology system that underpins our plans. And that's a very important change for a whole series of reasons. It improves the experience for customers measurably. In fact, I think the Net Promoter Score, which is again a technical term for the way we measure our customer experience, they're at least 50% higher under that new technology stack. That new technology stack to operate effectively means we've had to move some of our old plans onto our new plans. We understand that for some customers, that's not a change that they would prefer to make. Some of these plans are more than 20 years old. And again, to move to the new stack, we need to make those changes. We've worked as carefully and cooperatively as we can with customers to make that change. If you've got any particular concerns about your personal circumstances, sir, we will be very keen to chase that up with you.

I'd also just make the point that we are also very committed to cybersecurity. And it is difficult to deliver the level of protection we would like around cybersecurity if we maintain legacy systems. They're just harder to protect. So part of the reason for the change to new systems is it also improves our cybersecurity protection for all of our customers.

We'll take another question from microphone #1.

Chair, I would like to introduce Mr. James Alexander, who has a question.

Thank you. Good morning, everybody, and thank you for your patience so far. My name is James, and I'm from Sustainable Investment Exchange. So we work with institutional investors to engage Australian companies about ESG issues. And my question is for the Chair of the Risk and Sustainability Committee, Maxine Brenner.

So there's a growing expectation from institutional investors for greater transparency in corporate lobbying and promoting lobbying aligned with the goals of the Paris Agreement. And that includes acting when a trade association is misaligned with that because the impacts on climate change are increasingly a risk to their investment portfolios because they're so diversified across their investments. So a recent legal opinion by the Environmental Defenders Office found that companies face increasing risks from making net zero commitments and then lobbying directly or indirectly through industry associations for policies that are inconsistent with those commitments, including for misleading and deceptive conduct under the Corporations Act.

So my question is, has the company considered the legal and reputational risks of being associated with industry association positions on climate change policy that are different to Telstra's own ones? And if so, do you consider them financially material?

Thank you, sir. I'd ask that you direct questions through the Chair of the meeting. I deeply respect your point of view, and I understand the comment you're making. But in my view, you're just making the same comment as important as it is to you, to the other two people that have asked the same question. I'm not going to repeat our answer. We're very committed to the environment. We've demonstrated that with actions. We have a great record on the environment. As I said, I think our shareholders can be proud of that. And I don't intend to take any more questions on this topic. They now addressed 3x essentially the same question. I think everyone else needs an opportunity to use the meeting for their turn as well. So thank you, sir.

We've got a microphone three on the side of the room.

Chair, I would like to introduce Mr. [ Peter Jures ], who has a question.

First of all, thank you to Vicki, the Board and staff for the great work you've done in the last 12 months. Mine is a really mundane question. I live on the 28th floor of a high-rise building surrounded by an increasing number of even taller buildings. The reception on my cheap and nasty phone is now nonexistent. So it's not functional. My question is, is this an increasingly reported problem in hugely built-up areas? Or I've had a lot of help and cooperation from the local Telstra shop. Thank you very much. But is this more widely reported problem? And is there a solution?

Thank you, sir, for your question. I mean one solution indoor, of course, is to use WiFi on your phone. If you do have an nbn connection. Okay, I understand that.

So, Vicki, do you want to comment on that? It's an important issue. And obviously, we want you to have the best possible service that you can, sir. So, Vicki, do you want to just touch on that point?

Yes. No, thank you. It is an issue we see across particularly CBDs. If I look at Melbourne and Sydney, in particular, wherever there's big construction going on, the landscape can change pretty fast. And as you'd appreciate with mobile signals, once you have structures in between, it can interfere with the signal quality that you receive in your specific location. So I'm very pleased to hear the feedback on our store teams. Very happy for our team that's in the room today to also connect with you and just see if there are any other options we can come up with.

Definitely, in-building coverage for us, it is a specific focus, and I'm looking at my Head of Networks in the front row, where we look at our outdoor coverage, but we always -- we also look at indoor coverage. And so constantly looking at innovations and systems we can deploy. The 28th floor can be tricky, to be honest, because, obviously, as you're propagating from towers down closer to the ground, getting that to work can be hard. But please, we would love to follow up and see if there's any other options we can find today. Thank you.

Thanks, Vicki.

Our next question from microphone one again.

Thank you. Chair, I would like to introduce [ Mr. Joe Rulewich ].

My question concerns Telstra's subsidiary, Digicel Pacific and your plans for the ongoing growth of that business. I think just as in Australia, operating in Pacific states requires a degree of social license. We've seen what's happened with some competitors of Telstra in Australia in relation to Triple Zero. Telecommunications providers hold a special place in terms of supporting emergency response. So I think that Digicel Pacific has done some fantastic work through the Digicel Foundation to support communities, including, I think it was in 2023 following the hurricanes in Vanuatu, supporting calls from climate activists for climate justice. Of course, you also require the kind of support of governments in the Pacific to operate, especially being a telecommunications provider and that link with the state.

Earlier this year, when Woodside's North West Shelf project was up for approval, the Climate Change Minister of Vanuatu said that to approve it would be an intentionally wrongful act. And as we've heard earlier today, Telstra's membership of the Business Council of Australia is problematic in the sense that the Business Council of Australia explicitly wrote an op-ed calling for the approval of the North West Shelf.

My question is not in relation to your industry policy or your environment policy. My question is, does this present a risk to the social license for the operation of Digicel Pacific for the company to be lobbying for the expansion of fossil fuels, which Vanuatu considers an intentionally wrongful act?

Thank you for your question, sir. I'll keep my answer brief. I know it's a real issue for Pacific Islands. And obviously, when we are in discussions with governments like that, we point to our very credible record in the environment.

Next question, please.

Questions on this item on the floor or online. So, Craig, that concludes the question-and-answer session for this item.

Great. Thank you, Nathan.

Just correction. I believe we have one more question on microphone #3.

Chair, I would like to introduce [ Mr. Howard Pascoe ].

God morning. Chair and the Board, congratulations on your annual report. On a [indiscernible] question. I was here about 10 years ago, and you made a comment that the 100,000 plus of the MCG after the grand final, if most people attend with their mobile phone, if they all ran straight after the MCG game is finished, it's impossible to provide the service. I've noticed at the moment that it's fantastic. If everyone uses their mobile phone, you can handle it. I've been to Optus Stadium in Perth, 60,000. How is the technology -- how have you advanced the technology where that happens? I'd love to know.

Yes. Thank you for your question, Mr. Pascoe. And as a big AFL fan, I'm also interested in that topic. And must admit to using my phone quite a bit after the 2023 Grand Final win by Collingwood. Sorry to admit I'm a Collingwood supporter. There has been further advances in technologies over the last 10 years in that space that is an important part of our value proposition to our customers.

Vicki, do you want to touch on that a bit?

No, thank you for the feedback. It's great to hear that. I also heard great feedback this year on performance inside the MCG as the Grand Final was underway. So look, we do, again, as a little bit like the earlier answer, we're constantly looking at how do we innovate, how do we deploy, particularly in a stadium environment, we go in and deploy special solutions in that environment that use absolutely maximize the spectrum that we've got access to. And in that enclosed environment, our teams have been incredibly innovative because customer demand was clear.

People nowadays don't just want to call or send text. They want to upload video. They want to download content. And so it is a real credit to our networks team, the level of innovation and frankly, how determined they have been to try and find solutions for big events at stadiums. And so it's that constant innovation, keeping right at the forefront of global changes, along with our innovation on the ground to figure out ways to deliver that. So thank you for your feedback.

Thanks, Vicki.

Our next question will be from microphone #1.

Thank you. Chair, I would like to introduce [ Mr. Bobby Savitt ] with a question.

Good morning, Chair.

Good morning, sir.

On the 22nd of August this year, Telstra's Group Company Secretary confirmed in writing that undeclared high-value corporate hospitality was provided to senior public sector executives during a live government tender, a contract that Telstra subsequently won. That confirmation relates to only two high-value corporate events. However, information before the Board indicates that further high-valued hospitality was extended to decision-makers over several years involving multiple senior Telstra executives during live procurement periods and that many of those benefits do not appear to have been properly declared.

My question is straightforward. Will the Board now confirm whether this conduct extended beyond the two events already confirmed and commit to commissioning an independent external review of all corporate hospitality extended to public sector decision-makers during active tender periods to ensure full accountability to shareholders to provide public visibility to the findings and to review or if appropriate, repay any commercial benefits that may have arisen because without that assurance, shareholders are left uncertain whether Telstra's disclosures remain complete, accurate and consistent with directors' duties under the Corporations Act.

Thank you for your question, sir, and thank you for writing to the Board separately raising your concerns on this matter. We take governance very seriously at Telstra. And I just want to share with the shareholders in the room and online how we address the matter that you raised with us and how consistent that is with concerns regarding the way we approach business.

So on receiving your letter, that matter was immediately referred to a whistleblower committee that we have in Telstra. That's separate to line management. It's chaired by our Company Secretary, Craig Emery. That committee asked our investigations team, which is also separate to line management and reports directly to our Chief Risk Officer to take -- undertake an investigation of the incident that you referred to. My understanding is the matter you referred to occurred in 2018. It related to the purchase of two tickets to the court of final at the Australian Open. Our review by the investigations team found that those tickets were procured through the normal process. but the hospitality was not declared in the right register as it should have been, and that's a failing on our part. We disclosed that fact to the client concerned. We have further improved and strengthened our internal controls in this area since 2018. And as we've demonstrated by the review that we've undertaken, we remain committed to good corporate governance.

Go to microphone #2 for our next question.

Chair, I'd like to introduce [ Ms. Annabelle Alba ].

Good morning, everyone, all members of the Board present. And I would just like to extend my thanks to all of you for the work that you've done.

And my question, it really is not a question. It's more of a feedback in relation to our system. It's just that when Telstra change to the new system, right? I had a problem with the customer service in there because I had a credit in the old system, and it wasn't taken into account when it shifted to the new system. And my view was that how come Telstra didn't consider that in the first instance when transitioning to a new system to take into account those payments that were made in the old system to be transported to the new system. It took four months for that money to be transferred to my account. And in the meantime, Telstra was still direct debiting my account for all my bills that's coming in, right? That's the first experience I've had.

The second experience I've had, I had transferred from the FTTP to the 5G network, which is a high, what you call this upload and...

Yes, greater speed.

Yes, speed. So, thank you.

No, not at all.

Run it. And what happened was my printer and my telephone connection in my bedroom did not -- what you call this, did not -- it's not talking to the modem that was given, the new one that was given to me. And three hours, I was in the customer service chatting because there is no telephone connection that I could get to, three hours on the phone doing SMS chatting by MSS. And I can tell you, definitely, it's too hard to communicate by SMS if I've got an issue in my system, right?

So Anyway, let me just -- I'm just going to take a few minutes because I was so upset with that, right? My printer was disconnected. My phone in my bedroom was disconnected. And no one can give me any advice on what happened. And one person asked me to access the modem and change it to the 2G and make it a split to be a 2G and a 5G, right? And I don't understand all the ways, but I just did what she said, but it didn't work. So the next time, the next operator that did the shift, there was a change of operators, and it's the same question. It's the same thing that I put forward to them. And it's the same explanation that I was given.

My view is that with this type of issues wherein you need to talk to somebody face-to-face or by phone that it should be straight away assess the problem, straight away, refer it to the higher level that can put or fix my problem. But up to this point, I still haven't got any, any response as to what happened to my printer and my telephone. That's all. I thought I'm just going to give you some form of suggestion that anything, any issue with regards to the kind of issue should be referred to somebody higher up and not sit on that customer call center line.

Okay. Thank you, Madam. Thank you for your question. So just firstly, can I say sorry for the experience on the billing credit that shouldn't have happened. So I apologize for that.

Regarding your broader service, we do have experts in the room today who can sit down with you, and we'll be pleased to do so to see whether they can solve your problem. Under our call center arrangements, you can arrange for a call back, so someone can bring you back and take the time to work through your matter. I appreciate that hasn't worked for you. So why don't I suggest today we get someone to meet with you after the meeting and help you out as best we can. I understand it's frustrating.

Thank you.

The next question will be from microphone #1.

Chair, I would like to introduce Mr. Simon Livson.

I just had a thumb through the annual report, and I can't find a 10-year summary of the finances of the company. Could you explain why not? And also a 10-year graph of the share price would be good, too. So we could see how far behind we are to what we paid for them 10 years ago.

And another thing I'd like to say is I just heard on the radio the other day that Stephen Mayne is not very well. And I don't know whether we'll see him in annual meetings in the future. Pity, it's a good blog.

Thank you, sir. I'm sorry to hear Mr. Mayne's ill, and obviously, we extend our best wishes to him. I wasn't aware that we no longer disclose that 10-year information. So I'm happy to commit to including that again in the annual report. Thank you, sir.

Well, the share price, I understand that for people that have been in the stock for a long, long time, we'll have some issues with that. We're very much focused as a Board and a senior management team in delivering value to shareholders. The share price is one example of how that value comes through. As I said earlier in my comments, it's at a near nine-year high currently, and there's been a 34% increase in the share price over the last 12 months. So I appreciate your frustration, but I think the management and the Board are making good progress on delivering value to shareholders. Thank you, sir.

I believe this time, we have no more further questions in the room. So, Craig, that concludes the question session for this item.

Okay. Thank you, Nathan, and thank you for the shareholders who've taken the time to ask their questions this morning. So that means we have finalized our discussion of Item 2.

And next up is Item 3, director election and reelection. And to assist with the efficient conduct of the meeting, firstly, I'll deal together with the reelection of Eelco and the election of David.

And then as mentioned in my opening comments, I'll hand over to the Chair of the meeting to Elana Rubin to deal with my reelection. Elana is, of course, Chair of the Board's People and Remuneration Committee.

I'd now like to invite Eelco and David to each address the meeting, starting with Eelco. Thanks, Eelco.

Thank you, Craig. Good morning, ladies and gentlemen, fellow shareholders. It's a privilege to stand here today and ask for your support for my reelection to the Telstra Board. Over the past six years, I've seen how much this company means not only to you as shareholders, but also to our customers who rely on us every day and to our employees whose dedication makes everything possible.

I joined Telstra with more than 30 years of telecom experience, but what keeps me motivated is not the past, it's the future. Telstra is transforming itself to remain a leader in a changing world, and I'm proud to contribute to this transformation. My role is to listen, to challenge and above all, to serve with the overall goal of building a company that customers trust, that employees are proud of and that creates sustainable value for you.

If reelected, I promise to continue to give my very best. Thank you for your trust so far. It will be an honor to keep contributing to Telstra's future success. Thank you.

Thanks, Eelco. David, welcome. Good morning.

My name is David Lamont. Today, I seek your support as I stand for election to serve as a member of the Telstra Board of Directors. My professional qualifications and work experience are detailed in the Notice of Meeting, and I'm grateful for the opportunity to address you briefly today.

Since joining the Board on the 3rd of December 2024, it has been a pleasure to work with Vicki, her management team and my fellow directors, especially in the formation of the Connected Future 30 strategy. This strategy highlights the importance the telecommunications sector is to the success of Australia and the role of Telstra within that. Connectivity is a critical part of life and business and is becoming even more so. In this environment, I am acutely aware of the important role directors play in the stewardship and governance of your company.

Over my working life, I have gained significant senior executive experience across a diverse range of geographies and sectors. This has enabled me to form a broad perspective on strategy, operations, financial and risk management and a deep understanding of what drives a successful business. I have extensive expertise in the allocation of capital, delivering major capital works whilst also ensuring strong financial discipline and reward to shareholders. I believe these skills are complementary to those of the current Board and executive team.

My commitment is that I will use my values, experience and capabilities to help Telstra both manage its current assets and deliver on its Connected Future 30 strategy. in the interest of all stakeholders. I thank you again for your consideration and look forward to your support.

Thank you, Eelco, and thank you, David, for your addresses to the meeting. If you have any questions on Eelco's reelection or David's election, please go to the nearest microphone or submit your question online. The Board, other than Eelco and David in respect of their own reelection and election, recommends the reelection of Eelco and the election of David. The proxy and direct voting position for items 3A and 3C are now being shown on the screen.

We'll now move to any questions on this item. So over to you, Nathan.

We have no questions online.

Sorry, we have one question.

There is one question in the room from microphone #4.

Chair, I'd like to introduce Mr. Ian Hamilton.

Good morning again. What percentage of the votes have been cast and what percentage do you will be cast? So, in total, how many of the votes will be cast?

Yes. Thanks, Mr. Hamilton. My understanding is around 53% of the votes on the shareholder register have been cast.

[indiscernible] will be cast from the...

Well, the polls open for 10 minutes after the AGM, typically.

Rough estimate...

No, no, I don't think it will change much from 53%.

So that means half of all the people -- if it says 99%, that means half of it didn't vote for it.

Well, what it means is every shareholder has an opportunity to vote. Those that have chosen to vote, the outcomes are demonstrated on the screen. We can't force shareholders to vote.

But a non-vote is candidate is having passed.

We only record on the screen people that have actually voted. So there'll be four votes, there'll be no votes, and there'll be some shareholders who have allocated their voting rights, if you like, to the Chair. And in that instance, I've voted For. Thanks, Mr. Hamilton.

No further questions, Craig. So that concludes the question session for these items.

Okay. Thank you, Nathan. So we've now finalized our discussion on items 3A and 3C. As indicated in the Notice of Meeting, I intend to vote all available proxies in favor of Eelco's reelection and David's election. If you haven't already done so, please complete your voting card for items 3A and 3C now.

Before handing over to Elana for the item dealing with my reelection, I'd like to say a few words. Obviously, you know who I am, and I've already done a lot of talking, so I'll keep this short. However, it has been a great honor for me to be your Chair since 2023 and a director since 2016. It's a real privilege and responsibility to hold this role at a company that makes such an important contribution to Australia. And I feel very fortunate to have had the opportunity, particularly now as we embark on our Connected Future 30 strategy.

Over my time on the Board, I've seen this company change very significantly. and I'm proud of the progress we've made through the strong delivery of T22 and T25. As I mentioned earlier, we're now at another very significant moment in our company's history when technology and connectivity are transforming once again. Connected Future 30 is the right strategy to navigate this change. And given my history on the Board and more than 30 years of financial and corporate experience, I believe I can make a significant contribution to Telstra's future success. I remain committed to Telstra, and I'm excited about the role it will play in Australia's digital future. And with your support, it would be indeed a great honor for me to continue as to chair and continue to conserve you and our customers.

I'll now step away from the Chair and ask Elana to take over Chair of the meeting. Welcome, Elana.

Thank you, Craig, and good morning, ladies and gentlemen. Item 3b is to consider the reelection of Craig Dunn. Shareholders, if you have any questions on Craig's reelection, please come to your nearest microphone or submit your online question.

As Craig mentioned, he has been on the Board since 2016 and has been Chair since 2023. Craig is an outstanding Chair and the Board, other than Craig, fully supports and recommends his reelection. In recommending his reelection, the Board considered a number of factors, including Craig's strong performance, the skills, experience and leadership he provides to the Board and Telstra as we commenced execution of our Connected Future 30 strategy, the length of time he has served as Chair and as a Director and the importance of continuity on the Board. The Board believes that notwithstanding his period of service on the Board, Craig has retained his independence of character and judgment, and he continues to bring invaluable experience and expertise to the Board. Telstra and its shareholders are very well served by Craig as Chair. And once again, the Board fully supports and recommends his reelection.

I will now take any questions in relation to Craig's reelection. The proxy and direct voting position is being displayed on the screen. Nathan, do we have any questions?

There are no questions online, and we have no questions in the room.

Thank you.

That concludes the question-and-answer session for this item.

Thank you. Well, we have now finalized the discussion on this item. As indicated in Notice of Meeting and as Chair for this part of the meeting, I intend to vote all available proxies on this item in favor of Craig's reelection. Shareholders, please complete your voting card for item 3B now.

As we have now final this item, I will hand the Chair back to Craig and congratulate him.

Thank you, Elana, and thank you, shareholders. It's a great honor to continue as Chair. Items 4 and 5 on today's agenda are set out in the Notice of Meeting and are now being shown on the screen. They relate to the allocation of equity to our CEO, Vicki Brady, and the adoption of our 2025 remuneration report or rem report for short. These items are well covered in the Notice of Meeting and the rem report, and so I don't propose to go into detail here.

In summary, with the change in remuneration structure that I mentioned earlier in the meeting and which again is covered in significant detail in this year's rem report, for this year, on a onetime transitional basis only, we are seeking shareholder approval for three grants to Vicki. The first two grants being the FY '25 EVP restricted shares and EVP performance rights, which form part of the CEO's total remuneration package for FY '25. And the third being FY '26 LTI performance rights, which form part of the CEO's total remuneration package for FY '26. The performance rights under the FY '26 LTI plan will be granted at the start of the relevant performance year and not following the end of the relevant or previous performance year as has been the case under the EVP.

Items 4 and 5 will be voted on separately, but as they relate or both relate to remuneration, we'll deal with them together now. If you have any questions regarding items 4 or 5, please come to your nearest microphone or submit your questions online. The Board recommends that shareholders vote in favor of these items. The proxy and direct voting position for Items 4 and 5 are now being shown on the screen. As indicated in the Notice of Meeting, I intend to vote all available proxies in favor of the grants to Vicki and the adoption of the 2025 rem report.

Nathan, over to you for any questions.

We have no questions online, but I think we have a question at microphone #1.

Chair, I'd like to reintroduce Mr. Mike Robey from the Australian Shareholders' Association.

Thank you, Mr. Chair. Look, my sympathies to Elana for having to redraft the whole remuneration report. Our view is it's probably the least appreciated job done by the Board. And so we're very grateful that you've actually simplified what was quite a complex report. And in fact, most shareholders have no idea how remuneration works. And I think Telstra has gone to great lengths to try and a head down towards what most other companies do, slight differences; and b, make it intelligible.

My only question really more of a comment it concerns some of the nonfinancial measures used in the performance plans, and they include a customer service measure, which we've heard about today, which is called the eNPS or the Net Promoter Score, a company reputational measure, which is called RepTrak, which is how wider community views Telstra's reputation and a staff engagement measure. Now all of these are targeted in the middle of the bands in which they operate. So for example, other companies do way better than Telstra on each of these measures. And it looks like Telstra is targeting to be average on these scores rather than actually outstanding.

Is this the best that what's become a utility company can expect because, in fact, customers only really notice their companies like Telstra and the utility companies when things go wrong? Or should we up the game and try to target much higher numbers?

Thanks, Mr. Robey, for your question. And obviously, the scorecard, just to remind shareholders, is a combination of financial targets and nonfinancial targets. And as Mr. Robey noted, the nonfinancial targets for some time and continue going forward under the new strategy have clear targets for the customer experience, both episode and strategic.

And also, as Mr. Robey noted, have a score for our broader reputation. The broader reputation score is independently measured by RepTrak. So that's got -- that measurement and scorecards got is determined by an independent agency. We believe we've made good progress on that reputation score. We believe we've got more progress to make. We think that target is a good balance of being achievable, but also stretching for management. It's a very important target for us to continue to improve. We've spent a fair part of the meeting talking about the customer experience and how that's changed and improved very significantly over recent times. When we sit down with Vicki, we take some considerable time as Vicki before she puts the draft target to the rem committee and the Board to consider. Again, we think the targets for both those customer measures have got an appropriate balance of being achievable, but also stretching. And we think they're very important going forward. So as best we can do, Mr. Robey, we think they're sensible targets to set management going forward.

There are no further questions online or in the room or hang on. We have one further question on mic four.

Chair, I'd like to reintroduce Mr. Ian Hamilton.

I probably say it in the annual report, but I haven't been able to find it. Where do the shares come from? Are they purchased off the share market or they are new ones that are created?

We buy the shares on market if we need to satisfy share allocations to executives. Thank you, Mr. Hamilton.

That concludes the question session for these items.

Okay. Thank you again, Nathan, and thank you, shareholders, for your questions. If you haven't already done so, please complete your voting card for Items 4 and 5.

So shareholders, that concludes the formal business of today's Annual General Meeting. Please put your voting card in one of the ballot boxes located throughout the room and near the exits. The poll will remain open for a further 10 minutes. The results of the poll will be made available later today and can be obtained by visiting the ASX or Telstra website.

I now declare our 2025 Annual General Meeting closed, subject to the finalization of the poll on Items 3 to 5. And shareholders, on behalf of the Board, thank you very much for joining us today, whether in the room or online, and thank you for your continued investment in Telstra. Good morning.