Good morning, and welcome to Telstra's Full Year 2021 Results presentation. My name is Nathan Burley, Head of Investor Relations. I respectfully acknowledge that I am joining today from the lands of the Kulin nation. And on behalf of Telstra, I would like to acknowledge and pay my respects to the traditional custodians of country throughout Australia and recognize their continued connection to land, waters and culture. We pay our respects to their elders past, present and emerging.
This morning, after presentations from our CEO, Andy Penn and CFO, Vicki Brady, we'll be taking questions from analysts and investors and NIM Media. I will now hand over to Andy Penn.
Thanks very much, Nathan, and good morning, and welcome to Telstra's results announcement for the full year ended 30th June 2021, a year in which we saw our underlying business return to growth, a year in which we continue to make strong progress against our T22 strategy. This morning, I will make some introductory remarks and take you through an overview of our results. Vicki will then take you through the numbers in more detail before we move to Q and A. Before I start, I wanted to thank you for attending virtually. It's been a trying 18 months for all of us, and my thoughts go out to those of you that are in lockdown and those families that are in businesses that are doing it tough.
I sincerely hope your families and yourself are staying safe. Let me turn then to 2021 because 2021 was a significant year for Telstra. It was a crucial milestone in our T22 journey. It represents a turning point in our financial trajectory with second half underlying EBITDA up on the first half, guidance for FY 'twenty two underlying EBITDA in the range of $7,000,000,000 to $7,300,000,000 representing mid- to high single digit growth and FY 'twenty one net profit after tax and earnings per share, up 3.4% and 2%, respectively. We have achieved this because we have stayed disciplined, and we have stayed focused on delivering what we said we would deliver.
3 years into what has been one of the largest and most ambitious transformations for Telco globally, we are a vastly different company. Since announcing T22, we have radically simplified our business, reducing the number of plans for our consumer small businesses from 1800 to 20. We've removed blocking contracts. We've removed excess data. We've removed many other fleets.
The number of calls coming into our contact centers has fallen by more than 2 thirds and by the end of this financial year, we expect to answer all calls from these customers in Australia. We're also well progressed on the arrangements to bring our licensee stores back in house. We've cut our workforce by 1 third reducing our direct and indirect headcount by more than 25,000 in response to the transfer of a material part of our business to the NBN and from our digitization and efficiency initiatives. We've also exceeded our target to recruit new capabilities in new areas, exciting areas such as software engineering, data analytics, Cybersecurity, artificial intelligence with more than 1500 new hires. We have removed on average with more than 4 layers of management.
We've delivered cost reductions of $2,300,000,000 and we are on track to deliver our 2022 productivity target by the end of this financial year of Q2 of the $2,700,000,000 That's more than a third of our starting cost base. We've repositioned our investment in Foxtrot, retaining access to key content for our customers and supporting its turnaround. We have similarly repositioned our investments in Telstra Ventures, which delivered a mark to market gain for us this year of $300,000,000 We've improved the performance of our health business and with Monday's announcement regarding Medical Director, it is now very well strategically positioned for the future. We have also successfully established InfraCo and we are progressing with our corporate restructure. We will continue to focus on opportunities to realize Additional value for shareholders on top of the $2,800,000,000 deal on towers that we announced recently.
We have monetized over $2,000,000,000 of assets, further strengthening our balance sheet. And in addition to our ordinary dividends, We have returned approximately 75% of the net one off payments from the NBN to shareholders And today, we have announced an on market share buyback, returning up to a further $1,350,000,000 from the towers deal that we announced earlier and we have taken a leadership position on climate change and the environment and we have been certified carbon neutral since this time last year. We also continue to make progress on our other two climate targets to reduce our absolute emissions by at least 50% by 2,030 and to enable renewable energy equivalent to 100% of our consumption by 2025. Importantly, through all of this change, We've seen positive movements in the way our customers and the way our employees view us, with strategic NPS increasing 15 points and employee engagement increasing 4 points. Now it is clear in my mind that initially we did not respond quickly or significantly enough to the reality of the impact of the NBN on Telstra, which as you know, has a cumulative negative impact on EBITDA ultimately by the end of the program of at least $3,500,000,000 per annum.
Before 2022, we were not focused enough on transforming and improving the core business to mitigate this. We were 2 business sorry, we were 2 dependent on investments outside of the core, but we have addressed this. We have addressed it very clearly with T22 and the T22 program has been a clear success. While we have more to do and we are determined to finish the job. We will therefore be announcing what comes after T22 and our strategy for the future and in an investor briefing, which we're going to hold on the 16th September.
This will be firmly focused on continuing to improve customer experience, driving growth and how we will leverage the foundation and the capabilities that we have built. So with that, now let me turn to the financial results for FY 'twenty one. Total income for the year decreased 11.6% to $23,100,000,000 on a reported basis. Underlying EBITDA on a guidance basis, which excludes 1 off NBN income and guidance adjustments decreased 9.7 percent to 6,700,000,000. Underlying EBITDA increased from of $3,300,000,000 in the first half of the year to $3,400,000,000 in the second half of the year.
Underlying EBITDA included an in year NBN headwind of $650,000,000 and an estimated $380,000,000 financial impact from COVID. Encouragingly, net profit after tax increased 3.4 percent to $1,900,000,000 on a reported basis and earnings per share was up 2% to $0.156 per share. Free cash flow was up 11.6% to a strong $3,800,000,000 The Board has resolved to pay a fully franked final dividend of $0.08 per share, bringing the total dividend for the year to $0.16 per share. And we have also announced today that we will be returning $1,350,000,000 to shareholders over the coming period through an on market buyback from the proceeds of the towers deal when it completes. This will bring the total returns to shareholders from activities in FY 2021 to $3,250,000,000 In terms of the operating highlights for the year, we continue to see strong customer growth in mobiles, albeit there's no doubt that the market is slow considerably due to COVID.
This has included The sharp reversal of net immigration and population growth in Australia as well as hardware supply shortages for their suppliers of fixed fittings. But notwithstanding that, we have added 101,000 net retail postpaid mobile services, including 67,000 branded at 34,000 from Belong. Our branded performance clearly reinforces the benefit of our leadership in 5 gs. In wholesale, we added 240,000 services and we also added 892,000 IoT services. Importantly in mobiles, we saw our leading indicator transacting minimum monthly commitment or TNMC increased by more than $3 Our continued focus on building value in bundles, in fact, resulted in EBITDA growth of $170,000,000 in the year.
In fixed, we lost 69,000 net new retail bundles, including 10,000 ads from Belong. While we did have negative ad scope, bundled and standalone data ARPU excluding one offs in consumer and small business did stabilize. We continue to focus on building value in FiX through our focus on price, higher speed tiers, add ons, improvements to WiFi and our smart modem. In fact, the smart modem is now in over 2,300,000 homes and it has been key to keeping customers connected when working and studying from home. Telstra TV at the same time is keeping them entertained And through it, more customers are watching Foxtel's KAO and binge streaming products.
Last week, Foxtel reported paid streaming subscribers were up 155 percent to over 2,000,000. That exceptional subscriber growth has Foxtel and our investment in Foxta incredibly well positioned for the future and it validates our strategy to restructure and retain our investment giving us continued access to great content for our customers. Telstra Health has had a strong year operationally and strategically. Revenue was up 6% in FY 'twenty one and we're confident Health will see high teens organic growth in FY 'twenty two. COVID is no doubt highlighting the importance of digital health and it's driven growth to key platforms such as virtual healthcare, electronic and real time prescribing.
Notwithstanding the strong demand though, key healthcare organizations themselves Have, as you could imagine, understandably, been focused on their own COVID responses. This has disrupted a number of contracts in our pipeline. This is included in electronic medical records and integration opportunities, albeit I'm confident these are just really delays in the process. Also, as you saw earlier this week, we have entered into binding agreements to acquire Medical Director, a key provider of practice management software to GPs in Australia. Now, as you would appreciate, GPs obviously play in a very central and a very key role in the healthcare system.
In fact, a number of our digital services within Telstra Health already integrate into their practice management systems. This acquisition will enable us to supercharge the digitization of this critical part of the healthcare system and it comes on the back of our announced acquisition of Specialist Billing and Clinical Coding Software Company, Power Health in June. It was also a very strong year for Telstra Ventures where on a mark to market basis, as I mentioned before, the value of our investment increased almost $300,000,000 Telstra Ventures is one of the most successful corporate backed venture firms globally. Not only have our investments given us access to key insights, key technologies and innovation. Of the 74 startups that Telstra Ventures has invested in, 12 have achieved unicorn status with a value of more than $1,000,000,000 and of those 4 have achieved a value of more than $10,000,000,000 That's incredible success for a venture company.
In customer experience, episode NPS improved 9 points in the year and 6 points in the last 6 months. Similarly, strategic AMPS improved 7 points in the year and 2 points in the last 6 months. These improvements to customer experience are evidence that the many initiatives under our T22 program in simplifying our business, in digitizing our business are having a very positive impact on customer experience. In fact, Customer complaint levels are now at their lowest level since the migration to the NBN began. Now, I know that not all aspects of customer experience are yet where we need them to be And we have more work to do, but I am confident that the initiatives that we've implemented through T22 combined with our decision to have all Calls inbound, calls back, contributors for business customers answered in Australia and in their decision to bring back in house our branded retail stores, These will all deliver further improvements.
Finally on our operating highlights, we've also made very strong progress in our productivity program. For the year. Total operating expenses were down $1,800,000,000 more than 10% and underlying fixed costs were down $490,000,000 So it's absolutely clear that we are building financial momentum. If you look at this slide, on the left hand side, You can see the growth that we have achieved in underlying EBITDA from the first half of the year to the second half of the year, Whilst the chart on the right hand side of the slide shows the evolution of our full year underlying EBITDA, including guidance for FY 'twenty two of $7,000,000,000 to $7,300,000,000 and the aspiration to be in the range of $7,500,000,000 to $8,500,000,000 in FY 'twenty three. As you know, we communicated the $7,500,000,000 $8,500,000,000 range as that required to support a $0.16 dividend under our dividend policy because we know how important the dividend is to shareholders.
Now, we plan to update the market with how we articulate our financial aspirations in conjunction with our strategy briefing in a few weeks. However, to be clear, we are not changing our outlook. We continue to aspire to be in this range. I just want to note that our 8% rate target is in the bottom half. I'm also required to point out that these statements for FY 'twenty three are not guidance, they're aspirations or ambitions, which means there are greater risks and uncertainties associated with them compared to our normal guidance guidance.
Nonetheless, the point is the charts clearly demonstrate why I say we're at a turning point. Now, while there are many things to support that trajectory, support that turning point and support underlying EBITDA, there are 3 in particular that I want to pull out as important. Firstly, mobile services revenue. Through our continued focus on building value, we achieved mobile services revenue growth of 3.7% in the second half of the year or 5.2% when you exclude international roaming. This is the 1st period of growth of services revenue in 4 years and we expect further growth in the current financial year FY 'twenty 2.
Secondly, and as I've already mentioned, we continue to make strong progress on our productivity program, reducing underlying fixed costs by of $490,000,000 in FY 'twenty one with another approximately $430,000,000 expected in FY 'twenty two. And thirdly, the major headwinds that we have been facing from the NBN migration are coming to an end. In year NBM headwinds peaked in the second half of FY 'twenty, they've reduced in FY 'twenty one and they will be substantially less again in FY 'twenty two with the majority occurring between now and the end of the calendar year. With that, let me turn back to this year and comment on our progress with T22. We have now completed or are on track to complete around 80% of our T22 scorecard metrics.
We now have 8,800,000 services on our 20 new simplified consumer and small business plans. We have 3,500,000 customers signed up to our rewards program, Telstra Plus, and we're seeing very strong engagement from these customers. In fact, The NPS for customers who are also members of Telstra Plus is 20 points higher than customers that are not. We've rationalized a number of enterprise active products by more than a half and we have launched new adaptive networks and adaptive mobility products for enterprise customers to provide more flexibility and support and a return to growth. For consumers, small business customers, digital sales interactions are up 9 percentage points to 39% and almost 3 quarters of all service interactions that our customers have with us and now done Dishla.
Under our T22 strategy, our aspiration had been to reduce the number of calls to our contact centers by at least 2 thirds by the end of the current financial year FY 'twenty two. With the acceleration to digital, we have achieved this aspiration 1 year early. And we're also on track with the transition to full ownership of Telstra branded licensee stores and we have reached agreement with most of the licensees. We have also met our T22 target to reduce our direct workforce by 8,000, excluding hires due to the COVID workforce restrictions. And whilst we have completed our 2022 reductions, I should say we remain a large organization that operates in a very dynamic environment.
And of course, there will always be workforce changes at Telstra as we work to improve customer experience, the NBN transition to its finalized, Technology continues to automate and digital is part of our business. We've further progressed our journey to introduce agile ways of working and today We had around 17,000 people across the business working in Agile. We have a proud history of building Australia and even the world's leading mobile networks And we're continuing that with 5 gs. Now our competitors like to talk up their 5 gs networks, but let me tell you, they are just not in the same league. Our 5 gs network is now more than twice the size of our next nearest competitor.
Let me say that again. Our 5 gs network is now more than twice the size of our next nearest competitor. We cover more than 75% of the population and our customers know this coverage matters because we have more than 1,600,000 5 gs devices already connected to it. And importantly, whilst we continue to roll out 5 gs, Customers will of course use both 4 gs and 5 gs as they travel around, which is why the combined average speeds is the most important metric. And on this measure, Telstra's network performs all of its competitors' supply of download and upload.
The 1,000 megahertz to 26 gigahertz spectrum that we acquired at Uchturn earlier this year gives us a 10 fold increase in capacity in hotspots. This is significant as we ramp up the rollout of millimeter wave beyond the 5 major capital cities and more compatible devices I released. In regional Australia, we've announced almost $500,000,000 of additional investment in our networks to ensure we maintain our competitive advantage And more importantly, we continue to maintain and improve connectivity for breachable customers. I'm pleased therefore with the Minister's decision to not follow the ACCC's advice in relation to the low band spectrum auction that is later this year. This was an incredibly important decision for our customers in regional Australia, particularly as we move to close 3 gs and to focus on 4 gs and 5 gs.
Not surprisingly, therefore, We continue to lead the market in the major mobile industry network performance benchmarks in the year, including Unlap, where we ranked number 1 for best in test and best in data. Turning to infrastructure, Telstra InfraCo has now completed its 1st full year as a fully operational business function. InfraCo fixed passive income increased 0.9 percent to around $2,200,000,000 and InfraCo towers income increased 4.3 percent to $340,000,000 The part sale of our towers business announced in June and which we expect to complete in this quarter reinforces the value of our infrastructure assets and our strategy. The final outcome of the transaction, a valuation of Telstra InfraCo Towers at $5,900,000,000 representing an FY 'twenty one pro form a EV to EBITDA after leasing multiple of 28 times clearly demonstrates this. We've also continued to make progress to implement the proposed legal restructure that we announced in November of last year.
This includes working closely with our partners, our people and stakeholders to navigate the range of commercial, regulatory and operational requirements and approvals. Now as you would appreciate, the proposed restructure is very complex. It involves the creation of separate subsidiaries, including InfraCo VIX, InfraCo Towers, Servco and Telstra International under a holding company. And we expect the restructure to be undertaken by way of a standard arrangement as we have previously advised. Now It was our intention to seek shareholder approval for the scheme at this year's AGM.
However, we now aim to do so at a separate meeting, in a separate general meeting before the end of the year. Let me also comment on the recent announcement confirming we are in discussions regarding Digisto. As we said in our ASF study, the discussions are incomplete and it's not certain that the transaction will proceed. Given the nature of these transactions, I'm not able to say more at this stage other than to confirm that any transaction will have to meet certain financial parameters and those financial parameters include Telstra's financial investment being the minor economic proportion of the overall transaction with all other capital being sourced on a non recourse basis. Telstra would own Digicel with appropriate risk protections and consolidate it in our financial results.
Digital Pacific is a commercially attractive asset. It enjoys a strong market position in South Pacific region. It generated EBITDA of 235,000,000 in calendar 2020 with a strong margin and it has an extensive telecommunications network. But also let me strongly reiterate the comments that you've heard from the Chairman, which is that we will only proceed with the transaction if it is in the interest of our shareholders. Turning then to our T22 scorecard.
There are 2 things that you will notice on the scorecard. Firstly, With a year to go on T22, there are more ticks than dots. And secondly, there are 3 times as many greens than Amherst and Ritz. In the period, we completed 6 measures to bring the total completed to date to more than half. There are some measures rated Android Red and I want to take a moment to explain why.
First, the underlying growth. Our target is to achieve around 8% and with the financial ambitions I spoke to earlier, we can see our path to doing so in FY 'twenty three. The building of our new technology stacks is very well progressing and is delivering great benefits. As you can imagine with any IT projects of this year, there are of course a few times that have shifted. Active My Telstra app users have grown by more than 500,000 in the last 2 years to 4,500,000.
This is below where we have planned it to be, but it reflects the good progress and active users across consumer and small business Digital platforms have in fact grown to 6,500,000. We need to build more momentum into average services per customer and we're continuing to target increased multi product holdings through entertainment, leveraging the benefits from Foxtel, mobile assurance and the gaming add ups. With the high way we wanted to be on achieving top quartile cost metrics for a full service telco, despite the fact that we've made incredible progress on productivity. On this measure, we set ourselves a very ambitious target 3 years ago. We have since achieved $2,300,000,000 of underlying cost out.
We've increased our overall cost out ambitions to $2,700,000,000 and we have delivered on our commitment to reduce total costs in every year since 2019. This incredibly strong progress on costs has improved our benchmarking position substantial and we expect to further improve it in FY 'twenty two. However, we do expect to finish FY 'twenty two just outside The top quartile given that our global peers are also improving more than we had originally planned. Similarly, on labor for sales. Although again, we have achieved our T22 cost reductions and the great improvements that I've mentioned, this metric has been impacted by the lower hardware revenue, which I mentioned earlier as a consequence of the slower hardware sales and slower supply chains from telecommunications hardware.
Our employee engagement did fall a few points this year. However, we were incredibly pleased to remain with a very high score of 78, consistent with other high performing companies through a period of great uncertainty and challenge, a relentless change for our people. Now, if I was to summarize FY 'twenty one into a single sentence, it would be, we say, disciplined on the execution of our T20 through strategy through very uncertain times. Our hard work is paying off and the turnaround is here. We are earning the trust of our customers, including by removing and embracing the bar on doing business responsibly.
Our networks remain Australia's biggest and Australia's best. Agile is transforming how we work and combined with our hybrid working model, it's helping our people to feel supported and perform at their best notwithstanding COVID related restrictions. I said in my opening that 2021 was a significant year for Telstra. We have reached an important turning point financially and we look forward to 2022 with great confidence in our ability to deliver by our strategic ambitions. In this final year of T22, we will be continuing to improve our customer experience, including for regional customers, Completing our digitization program, including remaining focused on simplification and migration of our customers to the new technology stack and the benefits it delivers, Completing our group restructure, further operationalizing Choshpor InfraCo and driving value from our passive assets, further extending our leadership in 5 gs, including the 5 gs standalone and core, continuing to grow core connectivity and services and accelerating growth of our exciting new businesses and finally and importantly, delivering on our financial commitments to our shareholders.
Delivering these priorities is key to us finishing the T22 job and setting up for what comes next. We have done the hard transformational work. We have built the capabilities to take advantage of the opportunities ahead. And as I said in my introduction, I'm excited to announce that we will be communicating what comes after T22 and our strategy for the future at an Investor Day scheduled for the 16th September. Can I close by acknowledging that the progress that we have made is only due to the combined efforts of our many dedicated employees?
Telstra is an amazing organization with amazing people. Despite the disruptions, the impact of COVID on them personally, Every day, our people are focused on working for our customers, keeping Australians connected and for that, I want to sincerely thank you. Thank you. And with that, I will hand over to Vicki before we open to Q and A.
Thanks, Andy. Good morning, and thank you for joining us. I'd like to begin by recognizing that I'm joining you from the land of the Darumurrigal people. I acknowledge their ancient and ongoing connection to this land and their culture, and I welcome any Aboriginal and Torres Strait Islanders joining us today. This morning, I'll go through our full year results and highlight some important trends in the second half, which illustrate the momentum we've built towards underlying growth.
I will also discuss expenses, free cash flow, dividends, capital and FY 'twenty two guidance. Turning to our FY 'twenty one performance on Slide 11. The numbers on the left are our statutory results. The numbers on the right are reported lease adjusted, which include depreciation of mobile handset lease expense as OpEx. This provides a like for like year on year view given our exit of mobile lease plans.
This is the view we use when managing the business and which today's presentation will focus on. Pleasingly, FY 2021 is the last year. This adjustment will be required. For FY 'twenty one, income was CAD23.1 billion, down 11.6%. Total operating expenses declined 10.2%, including a CNY 490,000,000 or 8.1% decline in underlying fixed costs.
On a reported lease adjusted basis, EBITDA declined 11.5 percent to $7,400,000,000 This included A AUD 734,000,000 reduction in net one off NBN receipts and a AUD 487,000,000 positive movement in guidance adjustments due to an impairment in FY 2020 and gains on sale in FY 2021. Underlying EBITDA for the year was in line with our FY 'twenty one guidance, declining 9.7% of $720,000,000 This included an estimated $650,000,000 of in year NBN headwind and approximately $180,000,000 of negative year on year impacts related to COVID-nineteen. At our half year results in February, we committed to growing underlying EBITDA half on half, and I am pleased to say we've achieved this. Depreciation and amortization declined 8.1 percent or C397,000,000 on a reported lease adjusted basis due to assets associated with NBN completion and legacy IT assets fully depreciation. We would expect around $100,000,000 of further decline in FY 'twenty two in the ordinary course.
However, Given our shift to hybrid working, we will continue to assess our property requirements and may exit some leases early. This may have a short term negative impact on D and A, but should result in financial benefits over time. Net finance costs declined due to both our reduction of net debt and lower average borrowing costs. We expect this trend to continue in FY 2022. Income tax expense declined 44% as we have used some capital losses to offset material profit on asset sales during FY 2021.
Excluding one offs, our effective tax rate was close to 30%. Reported end cap grew 3.4 percent to 1,900,000,000. Looking now at income by product on Slide 12. Underlying income declined $2,250,000,000 or 9.3%. This decline was around 3%, excluding in year NBN headwinds, lower international roaming due to travel restrictions and a reduction in low margin revenue.
For example, although mobile income declined CAD820,000,000 this was largely due to CAD750,000,000 decline in hardware revenue as handset and tablet volumes fell due to lower foot traffic in our stores, customers holding handsets for longer and higher outright purchases through independent retailers. Fixed consumer and small business income remained impacted by NBN migration, Enterprise declined due to competition and technology disruption in data and connectivity as well as a legacy calling and equipment decline not being offset by cloud and next gen services growth in NAS. The decline in fixed wholesale is attributable to legacy products, NBN Headwinds and Commercial Works. We saw growth in recurring NBN DA, which represents government backed contracts indexed to inflation with an average of 26 years remaining for use of our InfraCo fixed assets. Other revenue grew.
This includes health revenue growing 6% in FY 'twenty one. We are confident health will see at least high teens organic revenue growth in FY 'twenty two. Turning to EBITDA. Our full year underlying EBITDA declined of $720,000,000 reflecting ongoing NBN headwinds, legacy declines and the financial impacts of COVID-nineteen. In FY 2021, mobile EBITDA grew by $170,000,000 This was driven by benefits from transitioning our customers of subsidy and lease plans and ongoing productivity despite around $200,000,000 of decline in international roaming revenue.
As expected and in line with migration to NBN and legacy decline, all fixed products decreased. I will address mobile and fixed products shortly in more detail. Global EBITDA was largely flat in constant currency and excluding one offs in the prior period, as initiatives to reduce costs were offset by revenue declines. NBN recurring grew, other declined largely due to non operating accounting adjustments. Despite declines, there has been a significant improvement in the trajectory of the business during the year.
The second half has clear indicators of momentum, especially in our mobile business. This is further illustrated on Slide 14. Here you can see the trend in our underlying EBITDA by half. As you can see in the dark blue boxes at the top of the graph, Between first half FY 'twenty and first half FY 'twenty one, underlying EBITDA climbed $551,000,000 However, between second half FY 'twenty and second half FY 'twenty one, This moderated to $169,000,000 decline. Looking sequentially, the light blue arrows show that we have gone from a CHF 210,000,000 decline between second half FY twenty twenty and first half FY twenty twenty one to achieving growth of $41,000,000 in the second half.
This momentum is a result of improved product trajectory that includes mobile growth and fixed consumer and small business stabilizing as well as ongoing productivity and reducing MDN headwinds. I'll now take you through the key product trends. Firstly, looking at mobile. We've delivered on all our FY '21 mobile market commitments and now have clear momentum, which is flowing through to the financials. Let me take you through 4 important aspects of this.
Firstly, top left, you can see mobile service revenue, a key driver of mobile profitability, which has returned to growth. In the second half of the year, service revenue, excluding international roaming, grew 5.2%, up from 0.7% in the first half. We have added 101,000 postpaid handheld customers, including 34,000 Belong Sios and a strong contribution from Enterprise. This increase is despite a decline in Australia's population, a trend which is expected to continue to impact industry growth. In addition, 75% of mass market postpaid customers are on new simplified plans, providing pricing flexibility.
Secondly, top right, you can see mobile EBITDA, which grew an impressive CAD297 1,000,000 in the and half versus TCP as service revenue growth flows through to earnings. Thirdly, bottom left, You can see postpaid handheld ARPU, which grew 1.3% in the second half compared to the same period last year. Our lead indicator of postpaid handheld ARPU, Transacting Minimum Monthly Commitment, or TMMC, has now grown by more than $5 since FY 'nineteen. We can see this increase and pricing changes are flowing through to ARPU. However, the growth in reported postpaid handheld ARPU was somewhat offset by 4 negative impacts: Firstly, international roaming decline secondly, accounting changes, including new plans which allocate more revenue to hardware and a shift from full revenue recognition for some add ons to commission thirdly, lower out of bundle excess voice and data fees and finally, dilution from a higher mix of belong customers.
If these negative impacts are excluded, Postpaid handheld ARPU would have been in the high single digits. By segment, we achieved strong consumer postpaid ARPU growth in the second half of 7.5% on PCP. This was offset by small business and enterprise declines. Encouragingly, on a sequential basis, small business ARPU grew and enterprise ARPU flattened, giving us confidence that both segments will follow consumer to growth in FY 2022. With TMMC being accretive to ARPU and pricing changes continuing to flow through, we expect to report a postpaid handheld ARPU growth in FY 'twenty two.
This is despite the identified negative impacts I just mentioned, except for roaming continuing to drag. 4th, on the bottom right, you can see that prepaid handheld performance was strong, with FY 'twenty one revenue growing 4.7%. This was due to a 95,000 increase in unique users and higher ARPU. Finally, in other mobile categories, Mobile broadband declined 4.4 percent, mainly due to higher out of bundle enterprise revenue in the PCP and a reduction in prepaid. And wholesale grew revenue 21 percent with net adds of 240,000 and largely flat ARPU.
These factors give us confidence that mobile EBITDA growth will continue, thanks to a combination of service revenue, the final benefits of migrating customers of subsidy and lease plans and ongoing productivity. Turning now to our fixed portfolio. We've not achieved the same momentum in fixed as we have in mobile. Products within the fixed portfolio are at different stages. However, In all fixed products, we can see an inflection point as we address challenges head on.
We have now absorbed around 90% or around $3,200,000,000 of net negative recurring headwind from the MDM migration. We are further through this headwind in consumer and small business than enterprise. This means that in fixed consumer and small business, We have reached an inflection point with the NBN driven decline now substantially complete. The rate of decline has reduced in the second half of FY 'twenty one and is stabilizing sequentially. We expect this to continue in FY 'twenty two before EBITDA begins to grow in FY2023.
In FY2021, bundle and data connections declined 69,000, and we saw higher churn as customers continued to migrate to the NBN. We now have less than 150,000 services to migrate to the NBN in FY 'twenty two, less than half the volume of FY 'twenty one. Our churn on NBN is lower than legacy, giving us confidence of trends improving in FY 'twenty two. ARPU has bottomed and is now expected to grow. The decline in this period was due to remediation credits and other one offs.
TMMC was accretive to ARPU and 85% of mass market customers are now on simplified plans. We remain focused on increasing ARPU through plan mix and add ons, while maintaining our premium through differentiation. We have increased the percentage of customers on more profitable, highest feed plans, with 6% of customers now on plans of 100 megabits for 2nd or greater. And we have well over 1,000,000 carrier build streaming and Foxtel from Telstra Services. Digitization represents an opportunity to deliver a step change in both customer experience and productivity.
We are seeing these benefits in mobile and expect similar benefits to follow in mass market fixed as further digitization capabilities are enabled. In FY 2021, we also launched 5 gs home Internet, and we remain excited by the opportunities to drive on net growth. Our NBN reseller EBITDA margin in FY 2021 was around 5%. Despite challenges, we maintain our ambition to reach midteens NBN resale margin in FY2023. Turning to fixed enterprise.
In data and connectivity, we are seeking to stabilize the portfolio and position it for growth by FY 'twenty four as we transition from virtual private networks to integrating over the Internet technologies such as SD WAN with Telstra Fibre OMBN access. During the year, we successfully re signed key customers, which helped maintain our T fiber silos and increased network capacity for future services growth. Total silos declined as lower value copper connections were impacted by consolidation and NBN migration. While ARPU compression continued to occur, We made material progress in modernizing the product portfolio with adaptive networks, which has been well received by customers. In FY 'twenty two, we will have an increased focus on leveraging our extensive fiber footprint, complemented by reselling NBN and continued investment in capabilities.
This is expected to deliver a lower rate of decline in FY 'twenty two. Disappointingly, NAS income and EBITDA did not grow at the rate we expected in FY 'twenty one, given the larger than anticipated decline in high margin legacy calling apps and underperformance in professional services. We're confident that the workforce changes we put in place, which temporarily disrupted our execution, that set us up for future benefit. We remain focused on executing our NAS next gen strategy, targeting growth in strategic areas, including cloud, IoT, security, managed and professional services. We expect to achieve mid teens NAS EBITDA margins in FY 2022.
The significant restructuring initiatives we undertaken late FY 2021 will support our commitment to deliver overall enterprise revenue and EBITDA growth in FY22 across mobile, fixed and international. Turning to fixed wholesale, where you can see that 55% of the portfolio is now ongoing revenue. Our outlook for this product has not changed. We are targeting to maintain around GBP 350,000,000 EBITDA per annum from FY2023 once the portfolio stabilizes and returns to growth. Turning to our operating expenses, which you can see on Slide 17.
We are pleased to have achieved a significant reduction in costs during FY 2021. Total costs declined 10.2% and underlying costs declined 9.3%. An increase in NBN payments of $244,000,000 was more than offset by the productivity gains we achieved. Other sales costs declined $862,000,000 due to lower hardware costs. Underlying fixed Costs reduced by $490,000,000 as our T22 strategy continued to deliver productivity and simpler, better outcomes for our customers.
This means since FY 2016, we have delivered $2,300,000,000 of cumulative cost reductions, and we are confident we can deliver our $2,700,000,000 target by the end of FY 'twenty two. We continue to target top quartile cost metrics for our full service telco. We expect to finish FY 2022 just outside the top quartile, given our peers are improving more than we had originally anticipated. Cost reductions in FY 2022 are expected to be delivered from digitization benefits, including product simplification and customer self-service tools, reductions in IT and network costs as well as ongoing vendor optimization and labor efficiencies. Turning to free cash flow, which you can see on Slide 18.
We are very pleased with the improvement we have delivered in free cash flow. Free cash flow after operating lease payments increased 11.6 percent to $3,800,000,000 slightly above the top end of guidance. This was due to working capital improvements more than offsetting lower EBITDA. Working capital improvement reflects Reduced receivables from lower sales, including lower handset and roaming revenue. In addition, focused initiatives were delivered, resulting in improved collections performance in both enterprise and consumer and small business.
In In FY 2021, we also purchased 1 gigahertz of millimeter wave spectrum for 277,000,000 with payment terms spread over 5 annual installments. We expect to receive $2,800,000,000 of net proceeds from the sale of 49 percent of InfraCo Towers in Q1 of FY 'twenty two. We are very pleased with the transaction announced in June, which valued the business at $5,900,000,000 or 28 times EBITDA after leases. We will return up to $1,350,000,000 of these net proceeds to an on market buyback expected to commence in mid September. Moving to dividends.
The Board has resolved to pay a final dividend for FY 2021 of $0.08 per share fully franked, including an ordinary dividend of CAD0.05 and a special dividend of CAD0.03 This brings the total FY 'twenty one dividend to of $0.16 per share. The total FY 2021 ordinary dividend represents 103% payout ratio of underlying earnings and is well supported by cash flow. The FY 'twenty one dividend represents a 59% payout of free cash flow after operating lease payments, less net finance costs paid. Consistent with our commitment to returning the order of 75% of net one off NBN receipts, We have returned 74% of receipts received, life to date since FY 2018. Turning to our capital position, which you can to see on Slide 20.
We reduced net debt by CAD1.5 billion in FY 'twenty one, and we remain within our comfort ranges for all our credit metrics. We remain committed to our capital management framework, including balance sheet efficiency and settings consistent with an A band credit rating. We successfully completed our T22 $2,000,000,000 asset sale program and announced an up to $1,350,000,000 buyback from the tower sale proceeds, reinforcing this commitment. Our target for underlying ROIC is around 8% by FY2023 with a long term ambition to grow ROIC. Turning now to FY 'twenty two guidance, which you can see along with the assumptions and conditions upon which we have provided them on Slide 21.
Our underlying EBITDA FY 'twenty two guidance implies mid single digit growth or around $450,000,000 at the midpoint. This guidance is despite remaining in year NBN headwinds of approximately $350,000,000 in FY 'twenty two. It also includes around $50,000,000 of non cash accounting headwind from insourcing our Telstra branded retail stores and no return of international mobile roaming. Pleasingly, in FY 'twenty two, we maintained a strong outlook on free cash flow, supported by further improvement in working capital despite our expectation that 1 off NBNDA EBITDA will reduce by over $550,000,000 Proceeds from the InfraCo tower sale, M and A and payments to acquire licensees under our strategy to transition to full ownership of our branded stores are excluded from guidance free cash flow. To conclude, FY 2021 was an inflection point for the financial performance of our business.
In the second half, You can clearly see strong momentum leading to sequential growth in underlying EBITDA. We have confidence this momentum will continue, Thanks to ongoing mobile growth, continued delivery of our productivity program, solid free cash flow, including sustained improvement in working capital and a strong balance sheet. We will continue driving the performance and recognition of our world class infrastructure assets as we illustrated through our agreement to sell 49% of our towers business. In FY 'twenty two, we Expect to revise our disclosures to further elevate InfraCo fixed and towers, giving more focus and clarity on their performance. We are also focused on diversifying our growth across other verticals, including in energy.
Telstra Health is well positioned, and we are excited by the inorganic growth, including from the recently announced acquisitions of Medical Director and Power Health. By staying disciplined and focused on delivering our strategy, we've put the business on course for growth in FY 'twenty two and on track to meet our FY 'twenty three ambitions. We look forward to talking more about our growth outlook at our September Investor Day. Finally, I would like to take this opportunity to add my thanks and recognize our dedicated teams right across Telstra. I'll now hand over to Nathan to take us through Q and A.
Thanks, Vicki. We'll now start a Q and A beginning with Investors and analysts. Now in addition to Andy and Vicki, also on the call today are Michael Ackland, Group Executive, Consumer and Small Business David Burns, Group Executive Enterprise and Brendan Reilly, CEO, Telstra InfraCo. Our first question today is from Kane Hannan from Goldman Sachs. Go ahead, Kane.
Good morning, guys. Thank you for the question, Nathan. Just 3 from me, please. Just firstly, Andy, on those FY 'twenty three aspirations, I think back in February, you indicated that the top half of that range is probably a bit out of reach for Telstra. So just wondering following this mobile results, some of the price changes from your competitors, whether that comment still stands?
Secondly, just on the mobile margin in the second half 41%. If we look out over the next few years as well, roaming recovering some of these pricing trends still going north. Do you see scope to expand that towards the mid-40s number? Or how do we think about what a sustainable or potential mobile margin is? And then finally just that free cash flow guidance into 'twenty two, can you just give us a bit more color around what's obviously a very strong cash result next year?
I suppose what the VoIP and capital benefits are?
Thanks very much, Caim and thanks for hooking in. Let me just sort of comment on the first one and then I'll hand over to Vicki Just to talk about mobiles and free cash flow and she may involve Michael Ackland in that as well. But On the outlook, you might recall that the 7.5, like a half we communicated, I'm trying to remember what it was now, I think it was at least a couple of years ago, as being the range that would be required effectively to support a dividend of $0.16 over the longer term. And the reason that range was quite a wide range is obviously not only is underlying EBITDA important, but there's a number of other factors below the EBITDA line that go to Net profit after tax. And so when we communicated that, it was, as I said, at least a couple of years ago, I think, and then It was also we're still looking at a couple of years as well, so it's a long time into the future.
And in my comments today, I made the point that Our ROIC target, which is 8% is in the bottom half of that range. So Mackenzie, that's where aspiration And ambition is and if we can do that, we will be able to deliver the performance we need for an underlying 16% But what I should say is nothing's changed. We haven't changed our outlook in any regard. We still have the same outlook. We're still committed to do that.
We're just Conscious that that's quite a wide range, which is why we also said that come September when we talk about the next phase of our strategy, we'll I'll articulate our financial ambitions in conjunction with that as well. So thanks, Klein. And I'll hand over to Vicki to talk on mobile margins and for Catharine.
Thanks, Andy, and thanks, Trane, for those questions. Just on mobile margin, well, firstly, Second half of twenty twenty one, we're certainly pleased to have mobile EBITDA margins back in the low 40s. So it's obviously a great place to be. As I talked about for FY 2022, we're expecting further service revenue growth and mobile EBITDA growth. And as you said, longer run, there's lots of factors to play out, but certainly pleased with where The EBITDA margin is in second half and we remain positive on mobile into FY 2022 And many things to play out beyond FY 2022, but obviously mobile, a critical part of underpinning the growth in 2022 and our longer run ambitions as well.
Just on free cash flow, yes, we're really pleased with our free cash flow result For FY 2021, we did have significant improvement in working capital. The major driver of that was in receivables where we saw both in terms of handset receivables improvement, but also Really targeted initiatives in collections in Enterprise and Consumer and Small Business, which helped really deliver that working capital benefit. As we look to FY 2022, we do expect sustained working capital benefits, so some further benefit. And again, It largely sits in the receivable space. There is a number of pieces that play a role.
We are very focused on ensuring We manage working capital with great discipline and so yes, our guidance includes that sustained improvement in working capital, largely coming from, as I said, the Largely coming from, as I said, the receivable side as well.
Great. Our next question is from Entcho Rakowski from Credit Suisse. Go ahead, Entcho.
Thanks, Nathan. Maybe if I can follow-up on those free cash flow comments. I'm interested in your perspective on whether the dividend policy is appropriate given free cash flow is tracking so far ahead of And Pat, I know that's a question you've been asked before, but it seems like it is well ahead. So would be interested in any updated thoughts you might have on that issue. Just secondly, around the postpaid net adds, they were up 21,000 for the half, which is obviously still growing, but a slowdown from the 80,000 in the first half.
So do you have any concern around this slowdown, Especially you may have seen Optus have just this morning reported that they've added 85,000 in the first half. So they're tracking a little bit better. So any concern around the slowdown and what are your expectations into FY 2022? And then finally, if I can throw the last one in there, Digicel, I appreciate there may be only so much you can say, but are there any return hurdles you can talk about That you need to meet in order for the transaction to work. And I mean, is there a concern about expansion into a region which Much has likely seen a pretty significant COVID impact.
Thanks very much, Look, on the dividend policy, our focus really has been to Ensure we're on the right trajectory to sustain that $0.16 dividend for shareholders out to FY 'twenty three and we talked a bit about that. In terms of payout ratios, we're outside of their current payout ratios And we've been pointing to free cash flow though as an underlying indicator of the strength of the balance sheet and our ability to do so. So our primary focus right now is to continue to focus on We'll continue the trajectory to the $0.16 dividend. The Board hasn't made any further decisions or Made any further sort of comments in relation to dividend policy. So that's really just a matter that we'll obviously continue to, I'm sure discuss and if If we have any updates, we'll provide them when we do.
On the postpaid trajectory, I'll get maybe Again, excuse me, Vicki and Michael Ackland to comment. I mean, the one thing I would say is, I don't think our postpaid handheld Numbers are exactly comparable with offices. I think they've got a few other things in there, which we report separately, but A bit more across that than I am, but I'll let them comment on it. But what I would say is that we have clearly been focused on driving value in our mobiles business, which as we said, we would. And as a consequence, As you heard from Vicki, there's a $290,000,000 improvement in underlying mobile EBITDA in the second half and Good growth in services revenue.
There's no doubt that the markets slowed down overall just in terms of level of Net activity that I pointed to population growth has gone negative first time in, I think, Nearly 100 years. That obviously has an impact on the margin. And we have seen some slowdown in hardware or some supply issues in hardware, but I'll let Vicky and Michael talk further about that. On Digicel, you're right. And so I can't say anything further other than Maybe make the comments that it is subject to meeting key financial metrics as well as downside risk protection.
And ultimately, as the Chairman said, we're only going to proceed with something if it's in the interest of for shareholders. And at this stage, those discussions are incomplete. So I can't really say anymore at the moment. But Vicki and Michael, I'm not sure, want to comment on for postpaid performance.
Yes. Thanks, Angie. Why don't I make a couple of comments and then I'll hand over to Michael about the market dynamics. So Incho, the thing I would say, so yes, absolutely, you can see postpaid net add second half lower than first half. As Andy said, we have been very focused at getting mobile back to growth in terms of service revenue and EBITDA and really pleased with that focus on generating value overall in the mobile business.
It is paying off and we've had a very consistent strategy on that over a number of years now. The thing I would point out in the second half in particular, And Michael might want to comment more. Some of the price increases that went into our existing customer bases at the lower end of our plans. We did anticipate some churn as you do those price increases and you can see that with a small lift in our churn in the second half in mobile postpaid. So that has certainly played out in the half, but as I said, really focused on generating value and growth in mobile in service revenue and EBITDA, which you can see strongly in the second half.
I'll hand over to Michael.
Thanks, Vicki. I think Esu and Handy covered everything pretty well there. I think that the combination of the rolling retail closures over the course of the year and also in the second half of the year has definitely had an impact. The price rises early in the second half, did lift our churn a bit as planned. We've seen that come back to normal levels now and We remain committed to delivering value, getting differentiated value in the market for 5 gs And it has been a subdued market.
But no, no, we're not concerned around that second half SAI growth and it's consistent with our strategy to drive for value and we'll continue to do so.
Great. Thank you. Our next question is from Eric Choi from Beren Go ahead, Eric.
Good morning, guys. Thanks very much for the questions. First one, just on the SMB and enterprise ARPUs, it feels like there might have been declining high single digit in the second half. So just interested in how much of that was sort of general price deflation versus, say, roaming or any significant recontracting events? And I guess given that latest momentum, are you still comfortable there's enough juice in mobile, I guess, for you to achieve your FY 'twenty two ambition for total enterprise to get back to growth.
Sorry, that's the first. And then just on the second, I guess, on the TMMCs, There's still 25% of your base to transfer onto the new plans. So I guess, can we safely assume first half 'twenty two TMMC growth is still positive, And maybe just at a nominally lower rate, given you're comping that 330 TMC growth in the PCP. And then just the last question. In the presentation, Vicki, you highlighted the pricing flexibility in the new mobile plans.
And if I think about the industry cost base Post your tower sales that they're becoming increasingly CPI linked with the site leases and then you've got underlying wage inflation as well. So just wondering how you think about The scope for retail pricing to sort of grow in line with CPI along with that cost base. Thanks.
Thanks, Eric, and thanks for looking in. It sounds like they're all for you, Vicki.
Thanks, Andy, and thanks, Eric. It might be a combination of myself and Michael, I suspect, on some of them. But just in terms of Yes, I did give a little bit of information just so you could understand what's going on in the segments in mobile postpaid. And so yes, as I said, we could We see small business ARPU sequentially growing and we saw enterprise stabilize. And so Again, just reinforcing, we expect in FY 2022 that those two segments in postpaid handheld ARPU will follow consumer to growth.
And so We're confident about that. In terms of enterprise overall returning to EBITDA growth, You can obviously see in our FY 2021 results, enterprise EBITDA declined around 360,000,000 In terms of getting it back to growth, yes, mobile plays a part. However, the decisions we've taken in the second half in enterprise that David has implemented on the cost and restructuring side, along with allocation of productivity benefits from across the group. They absolutely play a big part in the return to growth as does NAS. So that focus on our next gen strategy and those strategic areas play also an important role as we look to returning it to growth.
So We remain confident of the ability to return the enterprise business as a total portfolio across mobile, fixed and international to growth in FY 2022. Just on TMMC and the customers still to transition. I might get Michael to comment in a minute a bit more, but he can talk a little bit more about that in detail. But I would just say in terms of TMMC, It is accretive to ARPU and we do expect TMMC to grow again in FY 2022. And then around pricing flexibility, yes, as you know, it's a big change by moving our customers Onto our new simplified plans, we no longer have a back book, so any pricing changes we make flow through immediately.
In terms of the question about will we do price rises indexed to inflation, Certainly a question we've had before. We look at many other industries and approaches and it's something we will take into account as we think about and future pricing changes in our mobile portfolio. But I might jump across to Michael to talk a little bit about the 25% of the base that you were asking about. So Michael, over to you.
Thanks, Vicki. And I think once again the summary is pretty good. So we expect as we go through the rest of that base that we'll see a little bit further 10MC lift more in the first half, but as you said at a lower level, but still positive and still TMMC accretive to Underlying ARPU. I would agree. I think that having the no back book model that we've put in place and as that rolls through the rest of the base, we will get into a position where we can think about How we might index prices or do other things with prices.
But I think the really important thing is this no back book Does give us flexibility. It also means that our customers are always on the latest plans and no one gets No one gets left behind, which I think is also an incredibly important position to be in and has been a lot of hard work to get us to where we are. Thanks.
Thanks, Michael. Our next question is from Lucy Huang from Bank of America. Go ahead, Lucy.
Thanks, Nathan, and good morning, Andrew and Vicki. I just have three questions. So firstly, just in relation to your EBITDA guidance, have you affected any further COVID headwinds Moving into FY 'twenty two given borders are unlikely to open. And then just secondly, in relation to enterprise, I think you mentioned you're seeing Competition from competing technologies such as over the Internet with SD WAN. Just wondering if you anticipate that it To be a need and step up in CapEx just to stem off some of this disruptive technological competition moving forward.
And then just thirdly, if you can provide us some color around the revenue contribution from Medical Director and Power Health, that will be great. Thanks.
Sorry, Lucy, just before
I could, could you repeat that last one, the what contribution from Power Health and Medical Director?
Sorry, the revenue and EBITDA contribution. Yes.
Yes, correct. Thanks. Okay, cool. On the EBITDA headwinds, I'll get Vicki to comment. I think obviously, probably the most significant one is just continued Softness in, more than softness, but complete sort of reduction in international roaming.
On Medical Director and Power Health, I'll make a strategic comment and Vicky, I don't know how much we provided in terms of revenue and EBITDA contributions and what we can say. But look, I mean, from a strategic point of view, as I said in my address. Digital health has always been important, but just the last 12 to 18 months has obviously just reinforced How critically important it is. Telstra Health is actually now the largest electronic health company in the country. We employ More than 1200.
This is before these acquisitions. And it's growing strongly. As I said, the revenue was a bit softer than we wanted it to be this year, but That was because we had a whole bunch of things in pipeline, which is why and then of course all those health organizations for whom We were looking at those contracts, obviously got completely distracted on to COVID, but we're confident. Actually, what COVID has done is reinforce the importance of those contracts. So they haven't gone away, Which is why we're confident of that quite strong growth in FY 'twenty two and Medical Director is just such a crucial Preciously strategic asset.
It just sits at the apex of the whole healthcare system because it's your June period and that's where you go to get your pathology Referrals where you go to get your consultant referrals, where you go to get your prescriptions and they're all of the things that we're linking. So That's really important. But I don't know how much we're able to say on revenue and EBITDA both on that and on Power Health. But with that said, why don't I hand to Vicki to add any comments, more comments on EBITDA, your first question around EBITDA headwinds. We'll maybe get David to comment on your question around consequences of SD WAN and the acceleration towards that as a technology.
And then also, Thank you. If there is anything more color we've got on health, then I'll let you share that.
Okay. Thanks, Andy, and thanks, Lucy, for the questions. Just on Power Health and Medical Director, obviously Medical Director is still subject to completion. So I won't go into the detail of the financials for each at the moment. But broadly, both we're very positive about Both acquisitions, as Andy just spoke about, both generating EBITDA, generating cash, earnings accretive.
So Financially, we're pleased with those acquisitions as well as the strategic side. We are going to come back and talk more about health down the track. It is a question again we get quite a bit and so providing a bit more transparency around the health business and financial performance is something that we'll come back and do. Just in terms of COVID impacts, so if you think about FY 2021, we had overall $380,000,000 of in year impact from COVID. That was made up broadly $200,000,000 of roaming, About $100,000,000 of cost out that we were we made the decision to delay during the midst of COVID and then finally, customer related support.
So as we look at FY22, there's really no more roaming to lose, So there's no additional headwind on roaming. On cost, we've proceeded with the decisions we made and so those Delays on cost reductions are no longer there. We will see the benefits of decisions and restructuring and those cost benefits flow into FY 2022 and they support our net $430,000,000 of additional cost out And we have, we've not allowed additional amounts for customer support packages in FY22. So Overall, we're not predicting COVID-nineteen impacts in the same way as we've seen in 'twenty one and 'twenty. So Just to answer that question.
And then I will hand over to David on TEE, but just on the CapEx component of that, Obviously, our CapEx guidance is based on a plan that assumes support for all our key strategic initiatives, including in the enterprise space. So I'm comfortable we've got the CapEx in plan needed to support the enterprise business, but I'll hand over to David for some more comments on enterprise.
Thanks, Vicki. Just to add some color around the question of SD WAN. I think there's 2 or 3 things that are really important milestones that we've executed in 2021. 1 is the release of our adaptive network offerings. There were some mobility offerings as well, but an adaptive network around our fixed network offerings.
That to me strengthens firstly our to fiber options, our Telstra fiber options in the marketplace and our presence. It secondly includes Strong presence of NBN Enterprise Ethernet offerings in that environment. And so we're more strongly a multi network organization today than we were yesterday. And to enter into the SD WAN marketplace and be successful in that, quite frankly, you need to have a strong multi network managed services offering around that in our Telstra Purple or NAS environment. And we're continuing to invest and harden that environment.
That's not capital intensive. So again, all those pieces fitting together, I think we're responding well to that. There were a couple of instant customer events in the first half of twenty twenty one, which were highly competitive and not the outcomes we were looking for. I think since first half of twenty twenty one, We've actually competed really well in market with that. So I'm excited about what SD WAN offers and I'm excited about how we are ready to respond to that.
And as Vicki has just said, I think that's within the normal balance of our capital environment. So thank you.
Excellent. The next question is from Tom Beadle from UBS.
Hi, everyone. Thanks for the questions. I'll just ask 2. Just firstly on guidance, I'm trying to bridge that $450,000,000 gap from FY 2021 to FY 2022 EBITDA at the midpoint of your range obviously. But could you just give some more color into the underlying assumptions There's obviously that $350,000,000 NBN drag.
You've got the $430,000,000 of cost savings. So That leaves you with about sort of $200,000,000 to $500,000,000 of other growth in there. I realize there's a growth in mobile and I'd estimate about every dollar of Postpaid ARPU growth is worth roughly $100,000,000 So how much ARPU growth are you assuming in that? And also is there anything else worth highlighting? Second question is on M and A.
Telstra Health obviously made those acquisitions and there's a potential investment here in Digicel as well. Yes. Does this represent a changing attitude to M and A? And you're obviously most likely to generate higher cash flows and earnings for a number of years now. So Could we expect that you might use that excess cash flow to undertake M and A rather than pay down debt?
And also to what extent are you prepared to actually take on more debt if the right opportunity comes up. Thanks.
Thanks very much, Tom. I'll let Vicki comment on the guidance. And Kai, you've already sort of called out obviously the productivity, mobiles, the NBN headwinds sort of softening or reducing, which is obviously all part As well as Telstra's we were just talking about is improving as well. So there's a few things there, but I'll get Vicki to speak about On NNA, no, I wouldn't say there's been a change of strategy in any sense. We are obviously open to acquisition opportunities where they can add value, where they meet certain criteria, particularly where they're strategic as The Medical Director 1 is there's no doubt on health When I became the CEO, I felt that we needed to consolidate what we had acquired and really sort of focus the strategy on health and that absolutely led to a concentration in organic and doing it.
And the team has just done an amazingly outstanding job. And as a consequence, I think we're in a super, super position. And sometime probably over the next within this financial year, We'll do a bit more of a deep dive for the market on Telstra Health because I think it's a really exciting business in a great place. And this Medical Director acquisition is something that is very, very strategic. So that's sort of in a sense, it's A consequence of just when Medical Direct we couldn't determine when Medical Direct was going to come to market, but it happened to be now.
So there's no real change strategically, as I said, in relation to Digicel is that were that transaction To proceed, our investment would be the minor part of the overall financing of that and I mean, The real minor part of it, albeit we would own the asset and consolidate its financials if that's what occurs. And then with the rest of the financing being provided on a non recourse basis. So In terms of so you shouldn't take it as any sort of signal of a change of strategy on M and A, we'll continue to look at M and A Opportunities as and when they arise. I mean, obviously, doing anything in core telco is challenging because of our scale from a competition regulatory point of view. But we continue to look at opportunities in Topical Purple in services in another parts of our business as well.
And then, Becky, as I sort of pass over the guidance question to you as well, you might just want to comment on The balance sheet and the question around debt, etcetera.
Yes. Thanks, Andy, for that. And I think on
the balance sheet, we're incredibly pleased with where
we sit at the end of We're incredibly pleased with where we sit at the end of FY 2021. We obviously had a clear focus in T22 to retain that balance sheet strength and flexibility and obviously our free cash flow Being as strong as it is, has allowed us to pay down debt of $1,500,000,000 So, it's put us in a good position. But as Andy said, there's no change in stance there and we remain committed to our capital management framework around the A band settings. So I won't add any more to that. Just in terms of the $450,000,000 of underlying EBITDA Tom, I think you've hit on a number of the key things.
I would always start with mobile. Mobile is obviously critical and you can see the strong EBITDA growth in the second half of twenty twenty one. So we are expecting both Service revenue and EBITDA growth and that EBITDA growth will be supported by the service revenue and also the final benefits of customers transitioning of Subsidy and lease plans combined with some of those cost productivity benefits flowing in because you're right, cost out plays into The entire portfolio end is critical as well. A couple of things I would add. You think about that NBN headwind and I know you mentioned it, We're about 90% of the way through that and particularly for fixed consumer and small business, the stabilization That continuing to stabilize is important.
So there's been a big drag on the business from the fixed consumer and small business portfolio. So that is a key piece. And then the final piece I would say is an area I commented on early, which is about Telstra Enterprise returned to growth in FY 2022 in terms of its total portfolio of mobile, fixed and international. So they would be the key pieces I would think about as you're thinking about that outlook for our underlying EBITDA growth in FY 'twenty two.
Great. Thanks, Vicki. Our next question is from Roger Samuel from Jefferies. Go ahead, Roger.
Good morning, all. I've got two questions. First one, just on the NBN reseller EBITDA margin. So Vicki mentioned that it was around 5 and in FY 2021. Can you share with us what the margin was for NBN in the second half 'twenty one and how would you be able to get to mid teens by FY 'twenty three?
Is it going to be driven by Cost out, whether it's fixed wireless rollout or price increases? And my second question is just regarding your FY 'twenty two guidance. Obviously, cost out takes But are you concerned at all with cost inflation, given How difficult it is to get good talent and also the cost Yes, Cosmo be going up as well.
Excuse me. Thanks very much Roger. Thanks for the questions. On I'll get Vicky to comment on the Fixed NBN reseller margins, but suffice to say we need to pull all of the leases that you referenced. It's obviously A big stretch for us to get to that mid teens and aspiration by 2023 from where we are today.
So we're going to have to pull All of the levers and some, but I'll get Vicki to talk through that. On the cost out, No, we're not concerned. I mean, I think you made some really relevant points around inflation and obviously, The war for talent. So they are pressures, but the way we look at our cost and productivity program and we're pretty I think we've got this down to a pretty good aft now is that going into the year, we're already carrying in quite a bit of momentum from That we've already made and implemented and we always go into the year with a pretty good eye on having how we solution Any of the additional productivity that we need to deliver our commitment, which is $430,000,000 for this year. And in fact, We obviously overachieved in FY 'twenty one and I think we pretty much have consistently through the program.
So I'm pretty confident we've got and our arms around that. But Vicki, over to you.
Yes. Thanks, Andy, for that. And Roger, yes, in terms of MVN resale margin, just looking at FY 2021, pretty consistent through the year around that 5% EBITDA margin on NBN resale. So no stark differences first half, second half. Just in terms of the mid teens, it is an ambitious target and we remain committed to it.
As Andy said, it is going to involve pulling all of the levers. So on the revenue side, We're pleased with the progress on customers adopting and taking up higher speed plans. Profitability is better on those higher speed plans and customers are looking to take advantage of those high speeds, so there's still opportunity there. We're also still focused on add ons that are valuable to customers. That's an important component as well on the revenue side.
On the cost side, there's still benefits to come as we keep digitizing our fixed customers across to the new digital stacks and moving them across to that more simplified environment. It's also helpful for us on the cost side, takes out some costs At the back office side of our business, obviously, productivity overall across the company, which Andy just referenced, is important To delivering that as well. And then as I flagged, we're a long way through the NBN migration now with about 150,000 services left to migrate less than half of what we've done in FY 'twenty one. And so obviously cost comes with that process of migrating customers as well. So there are a number of things.
We've got to be pulling all those levers and I can assure you inside the business there is a lot of focus and Many initiatives underway to support that ambition that we've got. So that would be my comments. Thanks, Roger.
Thanks, Vicki. Our next question is from Fraser Nagleish from MST. Go ahead, Fraser.
Hi, guys, and Well done on that mobile performance. Great to see it back to growth. And just I think I've got 3 as well. Just firstly on infra coal Fixed and further asset monetizations. Just what are some of the, I guess, possible barriers to do further monetizations there, maybe operational and I guess approvals I'm thinking of.
Second one, just on the spectrum auctions up later in the year, Andy. Should we think about that as like the likely cost being sort of similar to 700 or spectrum or to some of the higher bands. And I think you currently have that through the P and L, the cost of apparatus license. Can you Vicky, if you could give us an idea of what that cost is, that would be helpful. And then finally, just Vicky, on the D and A guidance you've given, You said minus €100,000,000 next year.
We're not previously talking about minus €200,000,000 to €300,000,000 and that It does leave D and A still miles above CapEx. Should we still be expecting that D and A to trend down to CapEx over time? Thanks.
Yes. Thanks very much, Fraser. Thanks for joining. I'll make a couple of comments and then on the InfraCo point, but then I'll also invite Brendan to talk about some of the operational steps that need to be put in place to Take advantage of any opportunities there. On the spectrum auctions, I can't comment on What you should expect for governance reasons in relation to that auction.
Sorry, I don't think I can add anything there. I'll ask Vicki to comment in terms of from an accounting point of view And then Vicki on the D and A guidance. But just firstly, on the monetization of Improcofix, I think the first point to make is that We're clearly very committed to our strategy to set up our infrastructure businesses as a standalone business unit for the reasons that we mentioned that there were three reasons that we gave When we launched T22, they hadn't changed and I think we've demonstrated we're delivering on each of them and particularly with the towers deal recently that obviously just validates That strategy is the right strategy. InfraCo fixed and setting that up is far more complicated and a much bigger exercise than on the towers side for a whole range of different reasons, not least of all because actually the Economics of our InfraCo fixed business are actually 6x the scale of our Cara's business. So it's obviously much bigger and then there's more complexities associated with because obviously the contracts and the relationships with NBN and other key customers and its regulatory considerations and such.
So we're working through all of those. And as I mentioned, We still anticipate that that will be given effect through a scheme of arrangement, but ultimately the final complexities of that will determine that and We'll talk further about it in the coming weeks or rather certainly no later than the strategy update on the 16th September. So I might that's but what I should say, sorry, in addition to that, I was going to comment is Obviously, we're doing that to create optionality to create more shareholder value. So that's absolutely the intention behind that. But I might hand over to Brendan just to talk about what's involved from an operational point of view having sort of gone through the towers exercise And we've done a lot of work on the fixed side, but it's a big project.
And then maybe Brendan can hand to Vicki to pick up those other points.
Yes, thanks very much, Andy. Yes, Fraser, thanks for the question. Yes, the TELUS process was, I think, a great learning experience. And I think there's a couple of things. 1, we did have a huge amount of the base work done.
So when that offer came in from the Future Fund and Morrison and Co, we were able to respond, I think, pretty quickly and definitively. And to Andy's point, the amount of work that is going to be required to put ourselves in a similar position with the fixed assets given it's multi asset, given It's a $1,500,000,000 EBITDA business versus a couple of $100,000,000 EBITDA business means It's a lot more complex. But I think in terms of building out all of the data side of it, property It's a really big one. All of the commercial contracts and arrangements that we have with 3rd parties, all of the commercial arrangements we put in place with Telstra itself, That's where we've got a huge amount of work to do ahead of us. But we're going to take the same approach that we did with TELUS.
We're going to Start that work and put ourselves in a position where we can be ready. Obviously, one of the differences with the portfolio is NBN is a major customer. The government has, obviously, a point of view on the assets. So we just need to make sure that we are doing all the right consultations and partnership work with NBN and the government. We probably prioritized some of the activities around towers ahead of the other assets, so we could be ready for monetization.
So I think we've made Good progress on fiber, good progress on DUCs. We've seen some new product releases in the data center space in the last week or so. On the fixed network sites, the old exchanges, that's probably where we've got more work to do in the year ahead. I'll pass back to you, Nathan.
I might just jump in Brendan and just answer the last couple of questions. No problems. So a little bit different in a virtual environment. So, Fraser, just your question, I think you were asking about the accounting treatment of the apparatus license. Can I just confirm, is that what you are after?
Is there any different treatment? Was that the question?
Just asking, I guess, That spectrum, you're now paying for it on an annual, I think, as an apparatus license, aren't you, and it's going to switch to you're going to pay for upfront at auction. So just how that's going to work. Thanks.
Yes. So the way we pay, so where we're doing the equal installments, accounting wise still treated the same way. So intangible which gets amortized through, so no change in treatment of that. And then just On your question in relation to D and A, so you're right, we had expected that D and A in FY 2021 End FY 2022, we expected about GBP 300,000,000 per annum reduction in each year, so GBP 600,000,000 across the couple of years. What you see in FY 2021 is we've actually achieved a D and A reduction of about $400,000,000 So we're A little bit ahead in year, so 400 delivered this year and that's really come because of the legacy IT Applications end of life being a bit ahead of where we anticipated.
So we've achieved 400 out of the 600 that we had previously spoken about. In FY 'twenty two, I mentioned that in the ordinary course, we would expect another €100,000,000 reduction. So it is It's a little bit short of the 600. We're about 100 short of the 600. And the reason for that is there are Some D and A associated with the in sourcing of the stores and then some of the M and A transactions.
So overall, we have spoken about CHF 600,000,000 across the 2 years. We expect about CHF 500,000,000 in the ordinary course and the reason for that CHF 100,000,000 difference, as I said is insourcing of stores and M and A impact on the D and A. Thanks, Nathan.
Thanks, Vicki. Our next question is from Ian Martin from New Street Research.
Just three quick questions. First, the 5 gs market is clearly getting more contested Optus Back in the game, it seems with the particularly metro markets on note your comment on coverage, but the focus of competition is metro markets, particularly going into the December quarter. TPG is going to be more have better coverage by then. They have lower price points. I just wonder, Are you prepared to let market share slip in that quarter or this half year?
Or are we likely to see some kind of price response? Secondly, EBITDA at $7,500,000,000 is your target you said could support a $0.16 dividend. With The buyback, I guess that number is going to be a bit lower. Are you in the ballpark to support that next year? How much net one off NBNs remaining, about $400,000,000 or so, I think?
And finally, you mentioned 150,000 fixed line services yet to migrate. What will that leave with Telstra In terms of you obviously got some fixed lines you've got to continue in And how material is that to particularly the cost framework?
Thanks very much, Ian. I might give Becky and Michael in particular to comment just on The competitive dynamics, but I think the reason, Optus are focusing on metro markets is that they're so far behind from an overall network perspective. And I think TPG are a long way back on 5 gs. So we're going to continue to press our advantage on 5 gs and our network and our rollout and we are very, I guess, confident about our ability to continue to complete. But I'll get the guys to sort of comment on that.
Vicki might comment on the EBITDA range. I think Your question really is that if we were at the top end of the range of guidance for The current financial year at 7.3 percent with the trajectory of D and A and with the implementation of a buyback, how close would that get us to Underlying earnings supporting a $0.16 dividend on standalone basis At a 90% payout ratio, roughly around that. My instinct is that, that would still be a bit short and I should Our aspiration is to get in the range of 7.5% to 8.5%. I did say 8% is in the bottom half of that. So My guess is it's it would be still short in 2022, but Vicki might want to confirm on that point.
And then As regards to your other question about what's left within the end of the 150,000 retail customers, I think the most significant thing and Michael can comment on this would Probably the SMB, which would be a bit further behind in the rollout. But Maybe I'll go to Michael first and then maybe Michael can hand to Vicki.
Yes. Thanks, Thanks, Andy, and thanks for the question. I mean, just on 5 gs competition, Yes, I think Andy made the point. I mean it's Optus are focusing on the metro markets. They're also focusing on getting value and price for their for 5 gs as well.
And I think That's good overall for the market in terms of pushing the value of a 5 gs experience, which Our view would be coverage. Coverage really matters to any mobile experience. We're really committed to getting value and we think we can get value and share and but it's a competitive market and that just makes us do better. In terms of what's left on On NBM, obviously, there's the last 8%. We will be in terms of the migration activity for consumer, There is very little left to migrate beyond this financial year and probably The tail is a little bit longer for SMB as that moves through.
But I think This year, as Vicki said, we'll migrate half as many as we did the previous year and then into 'twenty three, Another dramatic reduction and the tail will really be in SMB. Vicki?
Thanks, Michael, and thanks, Ian, for those questions. Just on the first one around you, I think you were asking about the net one offs still to come from the NBN and we're expecting those to be around $250,000,000 in FY 2022. So that goes to your question that you were asking about around payout ratios, etcetera. So obviously, we've been clear we've got to get to that in that range of 7.5% to 8.5% under our dividend payout policy. However, John, our Chairman was very clear at last AGM, The Board considers a number of factors as they have done again this time in terms of likelihood of our ambition to We achieved that, so having that confidence of getting in that range, our free cash flow plays an important part and obviously we're very strongly supported with free cash flow.
So there is $250,000,000 of the net one offs we expect still to come in FY 2022. And then just on the final question around the services we're left post the full transition to NBN, so the last 8%, Yes, there are definitely costs associated with that, and we've actually got an ambition out there to say that we limit those Legacy losses to around $100,000,000 per annum. So, you're right, there are costs. Unfortunately, to service the last 8%, It's a lot more than 8% of the copper network, just given the geographic spread. So yes, we have got an ambition to limit those losses to £100,000,000 per annum.
I'll go back to you, Nathan.
Thanks, Vicki. Our final analyst and investor question comes from Brian Han from Morningstar. Go ahead, Brian.
Thanks, Nathan. Just some quick questions. For NAS, given the full results in F 2021, What specifically gives you the confidence that margins can rebound so quickly to mid teens issue? And just putting aside Medical Director and Power Health, is Telstra Health actually profitable now? And Vicki, finally, do you have any guidance on what restructuring expenses there may be in F'twenty 2?
Thanks.
Thanks very much, Brian. I'll comment on the Telstra Health question and then I'll ask David to talk about NAS margins and the confidence He has to turn that around and then also Vicki to talk about to comment on your last question as well. So look, on Health, I remember actually this time last year referencing the fact that Health has achieved a profitable It's 1st profitable month in May of last year. Overall, it was not it was negative EBITDA in FY 'twenty one. And as I mentioned before, that's because we've seen a we didn't achieve the revenue outlook that we were We continue to ramp up our investments and our OpEx to support the trajectory of the health business.
And that was a lot to do with the fact that whilst on the one hand, we saw a lot of demand for our virtual health platforms and other electronic services. On the flip side, we had a number of contracts in pipeline with healthcare organizations and those organizations were understandably As COVID had an impact, their understanding their focus was on actually responding to COVID according to how they needed to respond to COVID. So A lot of those sort of contract and pipeline projects got effectively delayed. Now the good news is that, is it notwithstanding that What COVID has actually done is it's made them, made those contracts more important for those customers rather than less important. And we do have a very strong pipeline, which is why we made some strong comments about our revenue growth in 2022.
So As I say, it was EBITDA negative this year, late last year. That's because we've continued to focus on the growth of the business, But we are confident of Health achieving profitability in the near term, but more importantly, candidly, growing because it's an incredibly positive business and both of the acquisitions that we've made are EBITDA positive as well. David?
Thanks, Andy. Thanks, Brian. And it's a question that I'm sure is on everyone's mind about returning NAS to mid teens profitability. It's a combination of 3 things, as you would probably anticipate, I would say. In 2021, we had a couple of one offs, which I don't expect to see again.
But most importantly, we made some Reasonably significant decisions on cost and structure and that gives us an enormous backlog or momentum in cost management as we enter into 2022. We have more decisions to make in the year. But given, I will be quite honest and say the lack of decisions made in 2020 that flowed into 2021, We're in an enormously different position as we start the year from a cost structure and the costs that flow into that NAS business. And then most importantly is our trading actions for our offerings and products and services in that NAS business, and I'll Comment on 2 or 3 areas. Our PS business, professional services business, did have a poor year in 'twenty one.
The decisions we made I needed to make on restructuring had an impact to that PS business through the second half, in particular the Q3 of the year and flowed on into impacting our revenue and return of the second half of the year. But what I can say is that the sales performance that picked up in the Q4 was extremely strong. Our PS business is reasonably a 90 to 180 day book to bill business and the backlog that we enter into this year for the first half of this year is extremely strong and extremely encouraging and positive. The second area I would talk about is what we call our next generation growth, in particular, our cloud and digital based services. We signed very significant partnerships with, In particular, AWS and Azure.
We also work with all the other hyperscalers, but in particular, those 2 through the second half of twenty twenty one. And again, we can see the momentum in the performance in that business, Strong performance also from our managed network services business and we'll need to continue to watch the impact of the Calling apps business on our performance, but collectively between those three areas, one off Extremely strong cost management and flow into the 2022 year from decisions in 2021 and the start of the performance of our PS, our next generation cloud managed network services business as we start the 2022 Fiscal year is what gives me that confidence of returning that business to those healthy margins that we would expect. Thanks, Andy.
Thanks, David. And Brian, just to come back to your last question, which was around restructuring costs, As Andy mentioned earlier today, we're obviously through the significant reduction in headcount completed that under T22. So That was a driver of restructuring costs. Looking backwards, as we look at FY22, I do expect Some restructuring costs associated with the legal restructure of the group. However, they'll be significantly less in FY 'twenty one.
So Nathan, back to you.
Thanks, Vicki. So after a short break, which we will now take. My colleague, Mukul McKechnie will chair our media Q and A.
Good morning, everyone, and welcome to the media part of today's annual results. Thank you very much for coming along. I've got Andy with me who's very happy to answer your questions, and we do have a few questions in the queue. So let's to get into things. And the first question, Andy, is from Zoe Samios from Fairfax.
Good morning. Hi, Andy. Congratulations on the results today. Just two things from me. Just regarding the most recent lockdowns across Australia, has there been any impact on earnings or distribution of services that you've seen?
And secondly, there's been a lot of speculation in market about the potential for a Foxtel IPO. I know that's been floated before, but I just wondered if you had Any comments on that and whether it's the right time to list on the ASX?
Hi, thanks very much, Sari. Good morning and thanks for joining us. Just on the first part of your questions, I mean, in terms of obviously impact on services, I mean, absolutely, there's been a sharp increase in Demand for connectivity and data volumes obviously across the fixed network as people have Necessarily had to move to work and study from home. That's put pressure on CVC charges for sure. I think We've incurred about $15,000,000 worth of extra CVC charges just in this last since the beginning of the lockdown.
So that's Certainly had an impact. That's we factored that in I should say, we factored that in so far at least in relation to our guidance. But there's There's not a comment on the guidance or an outlook, but just a direct response to your question. But we've absolutely been able to meet those requirements and keep customers connected and all of those things, which is great. Look, on Foxtel, what I would say is that my strategy on Foxtel has never changed.
I've had lots of helpful pieces of advice about what our position will launch for Telstra. But I've always been a very passionate and strong believer in the value of really high quality content and our customers love it. And therefore, our partnership with Foxtel has always been crucially Important because we've been able to give our customers access to that content. It was clear to me that Foxtel was going to undoubtedly go through a period of very significant disruption just because of obviously what's happened in the whole streaming market and anybody could see that. And so therefore, It was important for us to restructure our investment, which we did at our lead several years ago, where we consolidated FOX And we took a 35% investment in the combined entity in exchange for a 50% investment in just purely Foxtel and that strengthened the business, it strengthened our position, kept us as a great cornerstone investor.
Formally enabled us to continue to have Thanks for that great content which we're doing. And of course, that strategy absolutely validated as Foxtel and Patrick as a team have done a fantastic Job turning the business around and as you saw last week, subscribers and streaming is going back gangbusters. I'm delighted. I'm delighted that. Telstra's doing a lot behind the scenes obviously in supporting that distribution as well, which is super exciting.
Whether Foxtel IPO is or not, obviously, it's a matter for Foxtel, but if that's a decision that also helps Further support the further growth of what's the best media company in the country, then we would certainly be supportive of facilitating that. But to be clear, We continue to be a keen and happy and supportive investor in Topsella, and that's where we'd like to continue.
Okay. Thanks, Zoe. Our next question is from Jenny Hewett from the AFR. Hi, Joe.
Just a couple of questions. One is, Andy, you obviously had a couple of Sharp responses in your post yesterday to the ACCC suing you. Just wondering if you think And you said it was the beginning, the process from the beginning that was the problem. Do you see that changing at all? And how do you kind of How would you rate your current negotiations with NBN about pricing?
And secondly, with Digicel, would you ever have considered such an opportunity without the government Strongly encouraging you and becoming part of the process.
Thanks so much. Jen, look, on NBN, I think the fundamental point I was really getting at yesterday is that There's obviously a problem in the process because the whole of the industry has struggled with this issue about the Convoluted process of needing to sell customers' plans and go back and check speeds and then go back and backwards and forwards. And so And I know because I've spoken to Stephen, Stephen is very supportive of trying to find a better solution for everybody and I appreciate our stated support in that regard. And so, that's what we've got to do. I think as an industry, we've all got to come together to try and Quite a better way to do this so that we don't actually divide more complexity and more tuning and running into the whole process.
And so I think that really sort of tackles the first one. On the pricing aspects of your comment, which you referenced as well, I think people I'm very aware of what my views have been on the pricing structure and the level of pricing for a good number of years that I've been Talking about that and I think all I really say is I'm pleased with the ACCC is now conducting a review of both those things, both the structure And the overall pricing as well and we'll obviously support that in any way that's helpful for us. But I think it's the right time to do it because Obviously, we're now at the end of the rollout of the NBN and I think what the last 18 months has shown is just how important connectivity in the home internet is for everybody, not just to Live there private. Obviously, it's actually to work and study and do really essential things. So now is the right time to make sure we've got the right framework set up for the future.
On digital and I think as the Chairman indicated, this isn't something that was ordinarily on Our strategic agenda and the government asked us to assist in relation to the consideration of it and we were happy to do that. Ultimately, we won't go forward with any particular involvement in it Unless it's in the interest of shareholders and that therefore means there needs to be certain sort of protection and financial support that put in place, but ultimately We're Team Australia and if we can find a way to support and help the government and that for that also to be In the interest of shareholders, we have a very strong relationship and obviously many points of engagement and interdependency with the government, Then we would do so. But ordinarily, we wouldn't it wouldn't have been on our strategic agenda. You're right.
Thanks, Jenn. Thanks, Andy. Okay, next question is from Evita Rotala from Bloomberg, rather. Good morning, Evita. Are you with us, Sabeta?
Just checking. Okay. We might move on to I think I've got Rowan Pierce from Comms Day, hopefully.
You do. Excellent. Good morning. Just two quick ones, Andy. 1, Looks like very strong mobile wholesale service adds.
I'm just wondering if you can kind of elaborate on where they're coming from. The other one was you mentioned briefly 5 gs home internet becoming available in FY 'twenty one. I'm just wondering the kind of like the status of availability and uptake. And I guess, Do you kind of anticipate a full scale launch of that service in FY 2020?
Thanks very much, Ryan, so firstly, yes, I'm very pleased with our mobile postpaid handheld net subs growth. I mean, As I mentioned in my commentary, I certainly think the overall market has been slower and I think we have seen as a consequence of COVID just A reduction in, as I say, net migration into Australian net population growth, as well as some supply chain issues that the Make a handset manufacturers of experience, which has led to a lower number of devices available, which doesn't necessarily have to flow through into service plans, but can have an impact as well. It certainly impacted our gross revenue, not that it has an impact from an EBITDA perspective. But notwithstanding that, we saw Belong had growth, the Telstra branded had growth and we also saw pretty good growth in the enterprise part of our business as well. So that would be pretty solid.
On 5 gs home Internet, we have thousands of customers on 5 gs home internet at the moment. We've only been offering that on a very targeted below the line basis. As we make sure we get the product proposition right, we understand the network Because the last thing in the world we want to do is to offer a customer a service and then not deliver on a service that's in their best interest and making sure that It really improves what they have at the moment, which is what that's all about. And I've long said on this topic. The fixed wireless isn't for everybody because the NBN provides a great service in many respects.
Having said that, there are some Homes, particularly customers that might be on copper services and services that are not capable of better speeds where A 5 gs fixed wireless solution actually is a great alternative and so that's what we've been focused on understanding and targeting And you should expect us to go above the line on that in the coming period.
Thanks, Alan. Thanks, Andy. We are going to I think we can get Avita back now. Are you with us? No, maybe still on mute.
We'll try and get her off mute and go to Dave Swan. And let's see if we can bring Dave Swan up. Are you with us, Dave?
I am. So I think Rowan's had a quick follow-up. I think he missed his he was trying to follow-up, I think.
Couldn't quite hear him. I'm very happy to go back to Rowan then.
On the MB wholesale mobile ads and where they were coming from particularly?
Yes, I think that was very gentlemanly of you, Dave. Well done. Thank you. Thanks, Sal. No, the wholesale net adds have very much in our 2 biggest wholesale customers being Audi and Woolworths and they both performed strong.
Thanks.
Thanks, John. Sorry, I couldn't hear you. I'm not sure why that didn't come through. I'm going to try VITA one more time And see how we go. And if not, we'll have to come back to her at the end.
If not, then Dave, you are up in here. Thank you for being very gentlemanly. Any can I just check and see if Vivida is with us? I may have to give up for today. Dave, you're up.
No worries. And we've got to look after your pitch out during these times. So that's important. A couple of questions from me and thanks for the time. On the topic of vaccines, Andy, would there be any consideration to any sort of mandate for making your retail workers in You're also the first to or among the first to push some of your staff to work from home and work remotely.
Will there be any sort of Permanent shift there. And one more, I just wanted to ask you about consumer phone plans. If Prices will need to continue to rise at all with 5 gs investment ramping up. Any sort of update just in terms of consumer pricing when it comes to mobile?
Yes, Nava, thanks so much, David. Look, on the vaccine point, I'll make a few comments maybe. Firstly, I am absolutely proud of vaccine. Vaccines for all sorts of Conditions and illnesses and diseases have been a fundamental part of making our society that we live in today a healthier in safer society, whether it's typhoid, whether it's cholera, whether it's polio, Whether it's tetanus, whatever it may be, they've been a final part of the healthcare of the modern society. And so I am absolutely pro vaccine.
Ultimately, I don't think you can force people to have a vaccine because obviously everybody's got their own individual health circumstances and so that's important that People have the opportunity to get their own health advice and understand what it means in their particular situation. Having said that, There is no doubt that certain people fulfill certain roles where they come in contact with lots and lots of other people, whether they may be people in stores, Maybe people like our field techs who are out there in the field are going into homes. And it's really important we need to think very carefully about their safety and the safety of our customers. And I can certainly say that certain roles should require of vaccine. But I think as you also know, there's quite a bit of complexity involved in that and You should assume that we're considering that very carefully, but any decisions that we do make in that regard, I'll certainly be sharing with our people first.
So that's on vaccines. On working from home, my philosophy on this has been Very much, we came into this with a philosophical view about supporting flexibility to support diversity in our workforce. And even pre COVID on average, our people would work from home 1.5 to 2 days a week pre COVID. And so that made us able to be Seamlessly moved the restrictions we're seeing today relatively seamlessly. I do think that we will see flexibility being an increasingly important part of a successful company in the future.
And I think the companies that will be the most successful will be those that can enable their people to work from where they want, when they want, How they want and in fact indeed even their customers to engage with you where they want, how they want and when they want as well. And so that is the business model that we are building for the future. We are embracing working virtually, working in a hybrid way. Even to the point we announced actually, we're just now moving to location agnostic contracts. In other words, what that means in simple terms is that, you know that old letter of employment you used to get one of the clauses in the letter of employment said, Your normal place of work is XYZ.
We no longer we are taking that clause out of our contract. And ultimately, the only real constraint for us We need to have the administrative capability to employ and to pay somebody In the location in which they want to work. So for example, there's certain countries around the world, we don't actually have the We have industry capability to do that, but essentially we do have people who live overseas and full time support our Business in Australia, not because we've got office they're working in an office there necessarily. We obviously have resources on the ground, but because I choose to do so. So, we're very much an advocate for new ways of working and that's been an important feature of We now have 17,000 people working in Agile, just as an example.
Look, just finally, on consumer I won't comment on pricing, I'm afraid, because that would be governments wouldn't allow me to do that. But Needless to say, it's a really competitive market. We continue to invest heavily in 5 gs. We're already at 75% PoP coverage. We are now also really focusing on densification.
The millimeter band wave spectrum will help that. That gives us 10 times More spectrum capacity that we can target to hotspots and millimeter bandwave spectrum handsets are starting to become more available. And as that happens, we'll be able to really supplement our network there. So we still do think that there is an important leadership and differentiation across of different networks and Telstra's is clearly by far the best and the biggest and that's how we intend to continue to compete. Thanks, Doug.
Thanks, Scott.
Thanks, David. Okay, moving on to Lucas Baird at the AFR. Hi, Lucas.
Hi, guys. How are you going?
Yes. Just to sort of follow-up on David's question, I guess. I mean, the ACCC has been making Some noise about not being very happy with the way mobile prices are trending post TPG modem merger. I mean, do you see Any sort of adverse action from them, whatever form it might take, could that impact your projections for mobile ARPU and stuff like that going forward? And then just on the buyback, I think you said in your statement that you may investigate some other forms of returns if required.
I'm just wondering what would trigger such action like that and sort of what another form of return would look like. And then there's also been a lot of talk today about the growth areas in energy, EL, venture capital. Andy, can you see a future where Telstra is primarily one of them and just sort of a telco on the side or is that sort of just too far a leap to make?
Thank you very much, Lucas. Look, on the comment regarding the ACCC's comments on mobile pricing for the same reason I mentioned to Dave. I want to make sure that I'm not saying anything that I shouldn't from a government's point of view, so I won't comment on pricing per se. The only thing I would say though is if you look at Mobile ARPUs and mobile service revenues across the industry, ARPUs have basically been declining since about 2015, Pretty much 2015 2016, we've seen essentially the ARPU coming down and not just for Telstra, I mean at an industry level, mobile services revenue coming down at an industry level. And at the same time, data allowances have been going up dramatically, I mean, to the point where most of our plans have planned where essentially there is no excess data charges.
And so in terms of The value to the customer, the value to the customer has gone up dramatically over that period of time. We are in a period now where we're Investing heavily in 5 gs and ultimately as a telco, we and all telcos have to achieve a return on invested capital. And so we've seen ARPU increase in the last 6 to 9 months or so, but that's off the back of a period of 4 or 5 years of ARPU declines candidly. So that's the comment I would make there. On the buyback, it is it's absolutely our intention to Do the buyback once the transaction is completed and we've received the proceeds on the basis of an on market share buyback.
The other options that you do have available to you are an off market share buyback and or a Special dividend is another way. You can do a capital return. Capital return is a bit more complex and requires a bit more There's a bit more involved and so you need it to be of a significant scale to make that worthwhile. I think the advice to us was that 1,300,000,000 is a big buyback, but still nonetheless maybe not worth doing a capital reduction on that basis. And then off markets and special dividends are probably slightly more attractive when You've got excess franking credits and we don't have excess franking credits because we pay out a high proportion of our earnings and so therefore our franking balance Is it really big enough to support being able to do that on a fully franked basis, so that seems why an off market buyback is the preferred route.
And then finally on your question, health and energy, I mean, I'd love to think that that could be the case. Last year, our revenue was $23,100,000,000 Obviously, overwhelming that came from telecommunications. And so our Health and Energy Businesses and Telstra Ventures, they are really important and exciting Opportunities for growth and add extra value, growth and value as well to the company, but I don't see them being the bigger part of our business for the certainly for at least for my foreseeable future.
Okay. Thanks very much for that, Lucas. Moving on to John Dagg from the Herald Sun. Hi, John.
Good morning. Hi, Andy, and thanks for your time. I just had one on your Telstra's approach to vaccines as well. And I was wondering, A, has the company received sort of or is it asking for some legal advice on this? And then, B, would it like some more guidance from government here?
I mean, they've obviously sort of, I think, singled out aged care. But If you guys come to a conclusion that higher risk roles, say, as you've mentioned, a technician going into people's homes, potentially Visiting numerous times, would you like sort of government to perhaps make it more clearer that you'd be able to require a vaccine for that role, if indeed that's the decision Telstra came to.
Yes. Thanks, John, I mean, I think the first and the simple answer to your question is, are we getting legal advice? We obviously have quite a significant legal team ourselves. And we're certainly but we're certainly looking at the legal aspects of all of this as you can Imagine we would. And there are several of them.
For example, there's privacy considerations and your ability can you ask An employee whether they have been vaccinated or not and then can you insist on knowing the answer to that question? So There's a privacy element to it. There's a liability element to it. And so there are quite a lot of complexities. We are with the BCA, Business Council of Australia.
We've had we've been to very numerous briefings with Government at both the state and the federal level including with General Froehn, who's the leading the vaccination task force for the Prime Minister and so we've had good access there and so there's some good dialogue. I don't think it's as simple for anybody just to say what it's this or it's this. There's a very detailed legal framework out there and lots of different considerations and we're working through them right now. But as I say, I Bring it back up and say, nonetheless, we are I am absolutely pro vaccine for the reasons I mentioned Earlier, you can't ultimately, you can't force somebody to have the vaccine and you shouldn't be able to because they need to be the people that Can take into account their own health and medical situation and that and I'm legitimately and accept that that's obviously an important consideration. But there are people that are enrolled to come into touch with lots of other people.
And so the crucial issue is in those circumstances, How do we make sure we protect both them and protect both our customers? And that's what we're really very much looking through I'm looking at at the moment and that includes getting legal understanding of that and engaging with government in consultation on that as well.
Okay. No worries. Thank you.
Thanks very much, John. I think that is our last question. I think we did Lou, Zavitra, and that was the problem earlier. It looks like there are no further questions, so we might leave it there. Thanks, everyone, for coming along today, and have a great day.