This article first appeared on GuruFocus .
Telstra Group ( TLGPY ), Australia's largest telecommunications provider, slipped 0.5% in Thursday's early Australian trading. The market's message was pretty clear: another giant buyback was not enough. Telstra unveiled a fresh A$1 billion repurchase program, but annual attributable profit of A$2.24 billion came in below the A$2.30 billion Visible Alpha consensus cited by Reuters. And this is hardly Telstra's first swing at shrinking the share count. The company only finished a separate A$1.25 billion buyback in June.
The real money machine is mobile, and it is still humming. Mobile revenue rose 3.2% to A$11.37 billion as higher prices and better average revenue per user did the heavy lifting. That business generates roughly 44% of group income, so even small improvements matter. Telstra also bumped its final dividend to 10.5 Australian cents per share from 9.5 cents. Looking ahead, management expects fiscal 2027 EBITDA after leases of A$8.5 billion to A$8.8 billion and cash EBIT of A$4.75 billion to A$4.95 billion. In other words, Telstra is betting that mobile pricing power can keep feeding both earnings and shareholder returns.
But investors are not buying Telstra at bargain-bin prices. The shares stood at $17.0385 on Aug. 13 against a GF Value estimate of $15.94, putting the stock 6.89% above GF Value. That changes the equation. Telstra has now committed A$2.25 billion across its two latest buybacks, but it also needs to keep spending on the network after a nationwide software failure exposed just how expensive reliability problems can become. The bull case is simple: keep squeezing more dollars from mobile customers, keep generating cash and keep returning it. The risk is just as simple. If customers push back on higher prices or network costs bite harder, investors are already paying a premium for a story that suddenly looks a lot less comfortable.
