Telstra Group Limited (ASX: TLS) shares fell 3.2% to A$4.84 on Thursday after the telco released its FY26 results. The drop came even though Telstra reported higher profit, raised its dividend and announced another A$1 billion share buyback.
That contrast is the key story for investors. Telstra’s FY26 result was solid, but the market was already looking ahead to FY27 and asking how quickly earnings can keep growing.
Why Did Telstra Shares Fall After FY26 Results?
Telstra reported net profit after tax of A$2.4 billion, up 2.7% from a year earlier. Underlying EBITDA after leases rose 4% to A$8.3 billion, while Cash EBIT increased 8% to A$4.66 billion.
Those numbers show the business is still growing. However, total income slipped 0.9% to A$23.4 billion. That meant much of the earnings improvement came from stronger margins, pricing and lower costs rather than rapid top-line growth.
The market also had to weigh Telstra’s FY27 outlook. The company expects Cash EBIT of A$4.75 billion to A$4.95 billion and underlying EBITDA after leases of A$8.5 billion to A$8.8 billion.
Both ranges point to further growth, but the lower end of the Cash EBIT range is only modestly above FY26. The share price reaction suggests investors wanted a stronger growth signal.
Telstra Raises Dividend and Launches Another A$1 Billion Buyback
For income investors, there was still plenty to like.
Telstra declared a final dividend of 10.5 cents per share, taking its total FY26 dividend to 21 cents per share. That was up 10.5% on a cash basis from FY25.
The company also announced a new on-market share buyback of up to A$1 billion. This follows the A$1.25 billion buyback TLS completed in June.
A buyback reduces the number of shares on issue, which can support earnings per share over time. Combined with the higher dividend, it shows TLS is returning significant capital to shareholders.
What Does the FY27 Outlook Mean for Telstra Investors?
The next question is whether TLS can keep lifting earnings while spending more on its network.
FY27 business-as-usual capital expenditure is expected to be A$3.35 billion to A$3.65 billion, with TLS planning increased network investment.
That spending matters after the company’s significant mobile network outage in July. TLS has said it is taking lessons from the outage and increasing its focus on network resilience.
For investors, this creates a balancing act. More network spending could strengthen Telstra’s long-term position, but it also means the company needs continued earnings growth to justify the investment.
What Should Telstra Investors Watch Next?
Telstra’s FY26 result was not a bad result. Profit rose, cash earnings improved, the dividend increased, and another major buyback was announced.
But share prices move on expectations as much as current results. Investors now want to see TLS turn its FY27 guidance into stronger cash earnings while maintaining customer trust and network reliability.
For TLS shares, FY27 Cash EBIT growth, network performance and mobile momentum are likely to be the key factors to watch next.
