Telstra flags $750m share buy back as profit nudges higher thanks to cost-cutting, strong cash flow

Telecommunications giant Telstra has unveiled a $750 million share buyback on the back of a stronger half-year profit and healthy cash flow.

The on-market buyback is expected to start on March 12, 13 days after the shareholder recording date for a 9.5¢ interim dividend.

Telstra chief financial officer Michael Ackland said the group was enjoying the financial benefits of a cost-cutting program and price rises across its businesses in the December half.

Mr Ackland said the finances had also benefited from the $128m sale of its 35 per cent financial stake in Foxtel to DAZN in December and the $137m exit from its majority stake venture capital group Titanium.

“Our balance sheet is strong and we remain committed to an A-band credit rating,” Mr Ackland told an investor briefing on Thursday morning. “We have made a decision on the buyback because it is consistent with our capital management.”

Telstra posted a 54 per cent rise in free cash flow to $1.29 billion in the December half as net profit nudged 6.5 per cent higher to $1.03b. Revenue was 1.5 per cent up at $11.6b and operating expenses were down 1.8 per cent $7.56b.

Chief executive Vicki Brady said the biggest driver of the stronger financial performance was the slashing of up to 2800 jobs as part of a cost-cutting program unveiled in May last year.

“The cash generation of the business is good,” Ms Brady said.

The share buyback was consistent with Telstra’s capital management framework and demonstrated the board’s confidence in the group’s financial strength, she said.

She said there was a big shift in the need for worker skills and capability with the increased importance of digital infrastructure to support artificial intelligence.