Telstra (ASX:TLS) slashes costs in T25 growth plan

Telecom giant Telstra (ASX:TLS) is set to slash $500 million of costs in a bid to focus on growth after their unveiled their T25 strategy and their plan around future payouts to shareholders.

The new strategy is built on a blueprint of four pillars including customer experience, network and technology solutions, shareholder growth and value, along with employee engagement.

Telstra are eyeing a compound annual growth rate of mid-single digits for EBITDA and high-teens for underlying earnings per share from FY21 to FY25. Additionally, they plan to lift their underlying return on invested capital to 8 per cent by the 2023 financial year.

As part of their vision, they are looking to focus on their loyalty program Telstra Plus which has 3.5 million customers into a full sales and marketing channel under T25. Cybersecurity, cloud products and other telco products will also be in focus.

They also plan to have 80 per cent of all mobile traffic to be on their 5G network by 2025 and are already in early planning stages on what it will take to support 6G networks.

The telecom giant’s is looking to maximise fully-franked dividends and seek to grow them over time, to invest for growth and to return excess cash to shareholders through their capital management framework. Through delivery on its T25 commitments, they are confident in maintaining a minimum 16 cents per share fully franked dividend.

“We are poised for growth as our society and economy increasingly digitises and we all work, study, transact and get our entertainment online. These fundamental shifts, together with T25, will underpin our future growth and shareholder value,” said Mr Penn.

Shares in Telstra (ASX:TLS) are trading 0.8 per cent higher at $3.96.

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