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Telstra Group (TLGPY)
OTHER OTC:TLGPY
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Telstra Group
(OTC:TLGPY)
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Rating:68Neutral
Price Target:
$20.00
▲(24.84% Upside)
Action:ReiteratedDate:02/20/26
The score is driven primarily by solid profitability/ROE but offset by weak revenue and free-cash-flow growth. The earnings call was supportive due to strong cash performance and shareholder returns, though notable H2 headwinds and regulatory/spectrum uncertainty remain. Technically, the trend is positive but extremely overbought signals raise near-term pullback risk, and valuation looks high versus the growth profile.
Positive Factors
Strong profitability and ROE
Sustained high gross and operating margins alongside a 15.6% ROE indicate structural cost advantage and efficient capital use. These fundamentals support durable cash generation, dividend capacity and reinvestment into networks, underpinning long‑term shareholder returns and strategic flexibility.
Recurring mobile revenue momentum
Solid mobile service growth, ARPU gains and meaningful handset additions reflect durable subscription economics and scale in the core consumer franchise. Mobile's steady EBITDA contribution bolsters recurring cash flow, offsets fixed volatility, and provides a reliable platform for cross‑sell and margin expansion.
Infrastructure progress and digitalisation
Advancing Aura fibre and InfraCo growth create a structural revenue runway with attractive IRR potential, while digital consolidation (fewer vendors, >99.9% consumer migration) cuts operating costs. Together these investments enhance long‑term scalability and network differentiation.
Negative Factors
Declining revenue and free cash flow conversion
Negative top‑line growth and a sharp decline in free cash flow undermine the firm's ability to self‑fund large infrastructure projects and maintain cushion for buybacks/dividends. Persistent weak FCF conversion increases reliance on debt or tighter capital allocation over time.
Fixed enterprise (DAC) revenue and profitability decline
A material decline in Data & Connectivity revenue and near‑breakeven DAC EBITDA signals structural pressure in enterprise connectivity. Prolonged weakness here can reduce contract duration, lower cross‑sell opportunities and weaken overall margin profile in higher‑value B2B segments.
Spectrum renewal cost uncertainty
Regulatory uncertainty and a potential A$1.3bn spectrum cost gap pose a large strategic and capital allocation risk. Elevated renewal pricing could compress returns on network investment, force trade‑offs between capex and dividends, and materially change long‑term investment economics.
Telstra Group (TLGPY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$41.35B
Dividend Yield3.51%
Average Volume (3M)6.43K
Price to Earnings (P/E)28.8
Beta (1Y)0.30
Revenue Growth-0.31%
EPS Growth32.62%
CountryUS
Employees31,876
SectorCommunication Services
Sector Strength97
IndustryTelecommunications Services
Share Statistics
EPS (TTM)0.35
Shares Outstanding2,250,987,500
10 Day Avg. Volume0
30 Day Avg. Volume6,427
Financial Highlights & Ratios
PEG Ratio0.72
Price to Book (P/B)4.04
Price to Sales (P/S)2.47
P/FCF Ratio16.29
Enterprise Value/Market Cap1.89
Enterprise Value/Revenue3.40
Enterprise Value/Gross Profit12.15
Enterprise Value/Ebitda9.11
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.73
Revenue Forecast (FY)$16.75B
Telstra Group Business Overview & Revenue Model
Company DescriptionTelstra Group Limited provides telecommunications and information services to businesses, governments, and individuals in Australia and internationally. It operates in four segments: Telstra Consumer and Small Business, Telstra Enterprise, Networks and IT, and Telstra InfraCo. The company offers telecommunication, media and technology products and services in Australia using mobile and fixed network technologies, as well as operates call centers, retail stores, a dealership network, digital channels, distribution systems and Telstra Plus customer loyalty program. It also provides network capacity and management, unified communications, cloud, security, industry solutions, integrated and monitoring services to government and large enterprise and business customers; wholesale services, including voice and data; and telecommunication products and services to other carriers, carriage service providers, and internet service providers, as well as builds and manages digital platforms. In addition, the company operates the fixed passive network infrastructure, including data centers, exchanges, poles, ducts, pits and pipes, and fiber network; provides wholesale customers with access to network infrastructure; provides long-term access to components of infrastructure under the infrastructure services agreement; designs and constructs fiber, exchanges, and other infrastructure; and operates the passive and physical mobile tower assets owned or operated by the Amplitel Pty Ltd. The company was formerly known as Telstra Corporation Limited and changed its name to Telstra Group Limited in November 2022. Telstra Group Limited was founded in 1901 and is based in Melbourne, Australia.
How the Company Makes MoneyTelstra generates revenue through multiple streams, primarily from its telecommunications services, which include mobile services (postpaid and prepaid), fixed-line services (broadband and telephony), and wholesale services to other carriers. The company's mobile segment is a significant contributor, driven by its extensive customer base and the rollout of 5G technology. Telstra also earns revenue from its media and entertainment offerings, including subscription services and advertising. Additionally, the company has formed strategic partnerships with various technology and content providers, enhancing its service portfolio and creating new revenue opportunities. Factors such as the increasing demand for data and connectivity, as well as ongoing investment in infrastructure, play a crucial role in driving its earnings.
Telstra Group Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 13, 2026
Earnings Call Sentiment Positive
The call communicated a generally constructive operational and financial performance: solid headline growth in earnings, strong cash metrics (cash EPS +20%), disciplined capital management (higher dividend and an increased buyback), clear progress on major infrastructure (Aura halfway) and measurable gains from digitisation and AI. That said, several material challenges were highlighted — Fixed Enterprise revenue pressure, ongoing SIO losses in consumer fixed, international one‑offs creating H2 volatility, higher mobile operating costs (remediation and satellite), LEOsat reliability issues for some remote deployments, and regulatory uncertainty around spectrum renewal. Management positioned these as manageable trade‑offs while emphasising cost discipline, balance sheet strength and strategic investment to drive medium‑term growth.Q2-2026 Updates
Positive Updates
Strong headline earnings and cash growth
Reported EBITDAaL up 4.9% to $4.2bn; underlying EBITDAaL up 5.5% to $4.2bn. EBIT up 9.2% to ~$2.0bn. Profit for the period (NPAT / profit to shareholders) up ~8–9% (~$1.1–1.2bn). Underlying/cash metrics: cash EBIT up 14% to $2.5bn and cash EPS up 20% to $0.14. Underlying ROIC improved +0.9pp to 8.9%.
Strong capital return to shareholders
Interim dividend increased to $0.105 per share (up ~10.5% on a cash basis) with 90.5% franking (A$0.095 franked + A$0.01 unfranked). On‑market buyback increased from up to $1.0bn to up to $1.25bn; $637m completed in H1 at an average price of $4.90 and ~2.6% of shares retired in calendar 2025. Net debt stable at ~1.9x and average cost of debt reduced to 4.8%.
Mobile business momentum
Mobile service revenue growth +5.6%. Mobile EBITDA rose by ~$93m (≈4%) to $2.7bn. Handheld mobile base increased by ~135,000 in the half. ARPU gains across segments: postpaid handheld +4.8%, prepaid handheld +14.7% (noting caveats on per‑user basis), wholesale ARPU +7%.
Progress in infrastructure and Aura (Intercity Fibre)
Aura build halfway: ~7,000km of fiber laid (of ~14,000km). InfraCo fixed EBITDAaL +3.4% to $905m; Amplitel EBITDAaL +6.6% to $162m. Aura expected mid‑teens IRR and strong revenue growth from FY'28 as routes come online; project spend estimated ~$1.6bn above BAU CapEx (majority by end FY'27). Targeted +1 point uplift in network experience index.
Digitalisation and AI driving efficiency and customer outcomes
Software partners consolidated from ~400 to 2; software development efficiency improved >20% and release cycles sped 15–20%. >99.9% of 7.7m consumer customers migrated to new digital stack (~4,000 complex customers remain). 86% of consumer service interactions now digital self‑service. First customer‑facing generative AI assistant launched (almost 3× increase in AI self‑resolution). Internal adoption: ~75% of staff with access use AI weekly; ~9,000 employees completed Data & AI Academy courses in H1.
Customer experience and network recognition
Strategic NPS up 5 points (12 months) and episode NPS up 2 points. Telstra won the 2025 umlaut Best in Test Mobile Network Award for the 8th consecutive year with its highest score ever. Satellite messaging proved resilience value (3× increase in connections during Victorian bushfires).
Cost discipline and operating leverage
Underlying operating expenses reduced by ~$179m (≈2.1–2.4%), delivering positive operating leverage of ~3.1 percentage points. BAU CapEx in H1 was $1.5bn, down ~5% (timing), supporting cash EBIT growth of 14% in H1.
Negative Updates
Fixed Enterprise (DAC) revenue and profitability decline
Data & Connectivity (DAC) income fell ~9% in the half; DAC EBITDA declined to $25m as revenue declines (service rationalisation, in‑period credits) outpaced cost reductions. Fixed Enterprise EBITDA declined by $9m as the reset continues.
Fixed consumer SIO losses and subscriber churn
nbn SIO losses remain a challenge (c.25,000 SIO decline in the half). Despite product moves (Internet‑only plans, Telstra Smart Modem 4) the business is still focused on stabilising customer numbers and addressing SIO attrition.
International volatility and one‑off impacts
Reported International EBITDA down ~0.5%; Wholesale & Enterprise H1 included ~$45m of one‑off benefits (deferred revenue recognition, balance sheet releases and an associate gain). Excluding one‑offs and FX, growth was modest; significant sequential H2 decline expected as one‑offs do not repeat and divestments complete.
Mobile cost pressures and remediation items
Mobile faced higher costs in H1 (customer remediation/compensation from historical sales practices, satellite‑related sales costs, redundancy, and higher shared cost allocations), which partially offset service revenue growth and may dampen sequential mobile revenue in H2.
Spectrum renewal uncertainty and potential material cost
ACMA’s interim renewal pricing materially exceeds Telstra’s view of fair market value (Telstra cited ~A$1.3bn difference on the spectrum up for renewal). This creates uncertainty that could affect pricing, investment choices or returns (and is factored as a potential headwind in planning).
LEO satellite/backhaul issues affecting remote voice
OneWeb LEO constellation rollout issues caused voice dropouts for some small‑cell/backhaul deployments; Telstra has paused further rollouts while working with customers/communities and OneWeb to resolve voice/backhaul reliability.
Workforce change and role reductions
Further organisational changes proposed (including changes in the Accenture JV and partnership moves such as with Infosys) and role reductions were discussed; management noted difficult decisions and support for affected employees. (Redundancy impact was flagged as a potential drag into H2 if consultations proceed.)
Guidance & second‑half headwinds
Underlying EBITDAaL guidance tightened to $8.2–$8.4bn (midpoint unchanged). Management flagged H2 headwinds from non‑repeat one‑offs, loss of earnings from divested businesses, and higher BAU CapEx; Wholesale & Enterprise and International expected to be weaker sequentially in H2.
Company Guidance
Telstra tightened FY26 underlying EBITDAaL guidance to $8.2–$8.4bn (mid‑point unchanged) and reconfirmed other guidance, while reiterating its Connected Future 30 targets of mid‑single‑digit cash‑earnings growth and a long‑term underlying ROIC goal of 10% (current underlying ROIC 8.9%). Management expects full‑year cash EBIT growth of roughly 5–10% (H1 cash EBIT was $2.5bn, up 14%), noted H1 BAU CapEx was $1.5bn (down 5%) but flagged higher BAU CapEx in H2, and confirmed ~$1.6bn of incremental Aura/Viasat spend above BAU (mostly by end FY27, some into FY28) with a targeted mid‑teens IRR. Capital management guidance included an interim dividend of $0.105/share (90.5% franked, ~75% of H1 cash EPS of $0.14), an increase in the on‑market buyback programme to up to $1.25bn (H1 buybacks $637m at $4.90 avg), net debt around 1.9x and an average cost of debt reduced to ~4.8%, all supporting the Board’s aim of a sustainable, growing dividend and an A‑band rating.Telstra Group Financial Statement Overview
Summary
Profitability and efficiency are solid (gross margin 63.85%, EBIT margin 17.12%, EBITDA margin 37.77%, ROE 15.63%), but growth and cash conversion are weaker (revenue growth -1.68%, free cash flow growth -28.84%). Leverage is moderate (debt-to-equity 1.29) with rising debt noted as a risk.Income Statement
Telstra Group's income statement shows a stable gross profit margin of 63.85% in 2025, indicating strong cost management. However, the revenue growth rate has declined by 1.68%, reflecting challenges in expanding sales. The net profit margin improved to 9.56%, suggesting enhanced profitability. EBIT and EBITDA margins are healthy at 17.12% and 37.77%, respectively, highlighting operational efficiency.75
Positive
Balance Sheet
The balance sheet reveals a debt-to-equity ratio of 1.29, indicating moderate leverage. Return on equity is strong at 15.63%, reflecting effective use of shareholder funds. The equity ratio stands at 30.91%, suggesting a balanced capital structure. However, the increase in debt levels over the years could pose a risk if not managed carefully.70
Positive
Cash Flow
Cash flow analysis shows a decline in free cash flow growth by 28.84%, which could impact future investments. The operating cash flow to net income ratio is 0.64, indicating sufficient cash generation relative to profits. The free cash flow to net income ratio of 0.47 suggests a reasonable conversion of profits into cash.65
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 22.95B | 22.72B | 22.93B | 22.70B | 20.92B | 21.00B |
| Gross Profit | 6.43B | 14.51B | 10.53B | 5.75B | 12.69B | 12.68B |
| EBITDA | 8.57B | 8.58B | 7.53B | 7.86B | 7.29B | 8.86B |
| Net Income | 2.25B | 2.17B | 1.62B | 1.93B | 1.69B | 1.86B |
Balance Sheet | ||||||
| Total Assets | 44.59B | 44.97B | 45.55B | 45.03B | 41.63B | 42.52B |
| Cash, Cash Equivalents and Short-Term Investments | 1.43B | 1.01B | 1.05B | 932.00M | 1.04B | 1.13B |
| Total Debt | 21.23B | 18.00B | 16.97B | 15.87B | 14.27B | 17.44B |
| Total Liabilities | 28.87B | 28.65B | 28.20B | 27.21B | 24.79B | 27.25B |
| Stockholders Equity | 13.32B | 13.90B | 14.92B | 15.41B | 15.35B | 14.59B |
Cash Flow | ||||||
| Free Cash Flow | 4.56B | 3.45B | 1.99B | 2.37B | 3.73B | 3.52B |
| Operating Cash Flow | 6.95B | 7.32B | 7.05B | 6.24B | 6.82B | 6.66B |
| Investing Cash Flow | -3.23B | -3.37B | -4.99B | -6.03B | -3.40B | -2.34B |
| Financing Cash Flow | -3.27B | -4.00B | -1.94B | -333.00M | -3.97B | -4.24B |
Telstra Group Technical Analysis
Positive
16.02
Price Trends
16.77
Positive
16.40
Positive
16.03
Positive
Market Momentum
0.47
Negative
74.51
Negative
77.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TLGPY, the sentiment is Positive. The current price of 16.02 is below the 20-day moving average (MA) of 17.61, below the 50-day MA of 16.77, and below the 200-day MA of 16.03, indicating a bullish trend. The MACD of 0.47 indicates Negative momentum. The RSI at 74.51 is Negative, neither overbought nor oversold. The STOCH value of 77.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TLGPY.
Telstra Group Peers Comparison
UnderperformOutperform
Sector (60)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $33.10B | 27.00 | 10.10% | 3.15% | 5.74% | 7.12% | |
75 Outperform | $20.83B | 15.76 | 15.54% | 6.14% | -5.21% | -7.45% | |
68 Neutral | $41.35B | 28.82 | 14.73% | 3.51% | -0.31% | 32.62% | |
60 Neutral | $48.67B | 4.58 | -11.27% | 4.14% | 2.83% | -41.78% | |
60 Neutral | $35.64B | -8.39 | -7.08% | 3.77% | 19.67% | -278.51% | |
57 Neutral | $33.35B | 6.47 | 31.52% | ― | 0.42% | 13.46% |
* Communication Services Sector Average
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.