Good morning, welcome to Telstra's full year 2021 results presentation. My name's 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 then media. I will now hand over to Andy Penn.
Thanks very much, Nathan. Good morning and welcome to Telstra's results announcement for the full year ended June 30th 2021. A year in which we saw our underlying business return to growth. A year in which we continued 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 take you through the numbers in more detail before we move to Q&A. Before I start, I wanted to thank you for attending virtually. It's been a trying 18 months for all of us. My thoughts go out to those of you that are in lockdown and those families and businesses that are doing it tough. I sincerely hope your families and yourself are staying safe. Let me turn then to 2021. 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 2022 underlying EBITDA in the range of AUD 7 billion-AUD 7.3 billion, representing mid to high single digit growth. FY 2021 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. Three years into what has been one of the largest and most ambitious transformations of a telco globally, we are a vastly different company. Since announcing T22, we've radically simplified our business, reducing the number of plans for our consumer small businesses from 1,800 to 20. We've removed lock-in contracts. We've removed excess data. We've removed many other fees.
The number of calls coming into our contact centers has fallen by more than two-thirds. 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 one-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 1,500 new hires. We have removed, on average, more than four layers of management.
We have delivered cost reductions of AUD 2.3 billion. We are on track to deliver our T22 productivity target by the end of this financial year of cumulative AUD 2.7 billion. That is more than a third of our starting cost base. We have repositioned our investment in Foxtel, 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 AUD 300 million. We have improved the performance of our health business, and with Monday's announcement regarding MedicalDirector, it is now very well strategically positioned for the future. We have also successfully established InfraCo. We are progressing with our corporate restructure. We will continue to focus on opportunities to realize additional value for shareholders on top of the AUD 2.8 billion deal on towers that we announced recently.
We have monetized over AUD 2 billion of assets, further strengthening our balance sheet. In addition to our ordinary dividends, we have returned approximately 75% of the net one-off payments from the NBN to shareholders. Today, we have announced an on-market share buyback returning up to a further AUD 1.35 billion from the towers deal that we announced earlier. 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 2030 and to enable renewable energy equivalent to 100% of our consumption by 2025. Importantly, through all of this change, we have 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 our EBITDA ultimately by the end of the program of at least AUD 3.5 billion per annum. Before T22, we were not focused enough on transforming and improving the core business to mitigate this. We were too dependent on investments outside of the core. We have addressed this, and 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 at an investor briefing, which we're going to hold on the September 16th. 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. With that, now let me turn to the financial results for FY 2021. Total income for the year decreased 11.6% to AUD 23.1 billion on a reported basis. Underlying EBITDA on a guidance basis, which excludes one-off NBN income and guidance adjustments, decreased 9.7% to AUD 6.7 billion. Underlying EBITDA increased from AUD 3.3 billion in the first half of the year to AUD 3.4 billion in the second half of the year.
Underlying EBITDA included an NBN headwind of AUD 650 million and an estimated AUD 380 million financial impact from COVID. Encouragingly, net profit after tax increased 3.4% to AUD 1.9 billion on a reported basis, and earnings per share was up 2% to AUD 0.156 per share. Free cash flow was up 11.6% to a strong AUD 3.8 billion. The board has resolved to pay a fully franked final dividend of AUD 0.08 per share, bringing the total dividend for the year to AUD 0.16 per share. We have also announced today that we will be returning AUD 1.35 billion 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 AUD 3.25 billion.
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 has slowed considerably due to COVID. This has included the sharp reversal of net immigration and population growth in Australia, as well as hardware supply shortages that our suppliers have experienced. Notwithstanding that, we have added 101,000 net retail post-paid mobile services, including 67,000 branded and 34,000 from Belong. Our Branded performance clearly reinforces the benefit of our leadership in 5G. 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 TMMC increase by more than AUD 3. Our continued focus on building value in mobiles, in fact, resulted in EBITDA growth of AUD 170 million in the year.
In fixed, we lost 69,000 net new retail bundles, including 10,000 adds from Belong. While we did have negative adds, though, bundle and standalone data ARPU, excluding one-offs in consumer and small business, did stabilize. We continue to focus on building value in fixed through our focus on price, higher speed tiers, add-ons, improvements to Wi-Fi, and our Smart Modem. In fact, the Smart Modem is now in over 2.3 million homes. It has been key to keeping customers connected when working and studying from home. Telstra TV at the same time is keeping them entertained. Through it, more customers are watching Foxtel's Kayo and BINGE streaming products. Last week, Foxtel reported paid streaming subscribers were up 155% to over 2 million.
That exceptional subscriber growth has Foxtel and our investment in Foxtel incredibly well-positioned for the future. 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 2021, and we're confident health will see high teens organic growth in FY 2022. COVID has no doubt highlighted the importance of digital health. 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 can imagine, understandably, been focused on their own COVID responses. This has disrupted a number of contracts in our pipeline. This has included electronic medical records and integration opportunities. I'm confident these are just really delays in the process.
As you saw earlier this week, we have entered into binding agreements to acquire MedicalDirector, a key provider of practice management software to GPs in Australia. As you would appreciate, GPs obviously play a very central and a very key role in the healthcare system. A number of our own 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, PowerHealth, in June. It was 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 AUD 300 million. 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 AUD 1 billion. Of those, four have achieved a value of more than AUD 10 billion. 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 six months. Similarly, strategic NPS improved 7 points in a year, and 2 points in the last six 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.
I know that not all aspects of customer experience are yet where we need them to be, and we have more work to do. I am confident that the initiatives that we've implemented through T22, combined with our decision to have all calls inbound contact centres for business customers answered in Australia, and our decision to bring back in-house our branded retail stores, these will all deliver further improvements. On our operating highlights, we have also made very strong progress in our productivity program. For the year, total operating expenses were down AUD 1.8 billion, more than 10%, and underlying fixed costs were down AUD 490 million. 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 2022 of AUD 7 billion-AUD 7.3 billion, and the aspiration to be in the range of AUD 7.5 billion-AUD 8.5 billion in FY 2023. As you know, we communicated the AUD 7.5 billion and AUD 8.5 billion range as that required to support a AUD 0.16 dividend under our dividend policy, because we know how important the dividend is to shareholders. 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% ROIC target is in the bottom half. I'm also required to point out that these statements for FY 2023 are not guidance. They're aspirations or ambitions, which means there are greater risks and uncertainties associated with them compared to our normal guidance statements. 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 three in particular that I want to call 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 was the first period of growth of services revenue in four years. We expect further growth in the current financial year, FY 2022. Secondly, as I've already mentioned, we continue to make strong progress on our productivity program, reducing underlying fixed costs by AUD 490 million in FY 2021, with another approximately AUD 430 million expected in FY 2022. Thirdly, the major headwinds that we have been facing from the NBN migration are coming to an end. In-year NBN headwinds peaked in the second half of FY 2020. They reduced in FY 2021. They will be substantially less again in FY 2022, 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 8.8 million services on our 20 new simplified consumer and small business plans. We have 3.5 million 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 the number of enterprise active products by more than a half, and we have launched new adaptive networks and adaptive mobility products for our enterprise customers to provide more flexibility and support and a return to growth. For consumer and small business customers, digital sales interactions are up 9 percentage points to 39%, and almost three-quarters of all service interactions that our customers have with us are now done digitally.
Under our T22 strategy, our aspiration had been to reduce the number of calls to our contact centers by at least two-thirds by the end of the current financial year, FY 2022. With the acceleration to digital, we have achieved this aspiration one year early. We're also on track with the transition to full ownership of Telstra-b randed licensee stores, and we have reached agreement with most of the licensees. We've also met our T22 target to reduce our direct workforce by 8,000, excluding hires due to the COVID workforce restrictions. Whilst we have completed our T22 reductions, I should say we remain a large organization that operates in a very dynamic environment. Of course, there will always be workforce changes at Telstra as we work to improve customer experience, the NBN transition is finalized, technology continues to automate and digitize part of our business.
We've further progressed our journey to introduce agile ways of working, and today we have 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 5G. Our competitors like to talk up their 5G networks, but let me tell you, they are just not in the same league. Our 5G network is now more than twice the size of our next nearest competitor. Let me say that again. Our 5G 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 1.6 million 5G devices already connected to it.
Importantly, whilst we continue to roll out 5G, customers will of course use both 4G and 5G as they travel around, which is why the combined average speeds is the most important metric. On this measure, Telstra's network performs all of its competitors for both download and upload. The 1,000 MHz to 26 GHz spectrum that we acquired at auction earlier this year gives us a 10-fold increase in capacity in hotspots. This is significant as we ramp up the rollout of mmWave beyond the five major capital cities and more compatible devices are released. In regional Australia, we've announced almost AUD 500 million of additional investment in our network to ensure we maintain our competitive advantage, and more importantly, we continue to maintain and improve connectivity for regional 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 3G and to focus on 4G and 5G. Not surprisingly, therefore, we continue to lead the market in the major mobile industry network performance benchmarks in the year, including umlaut, where we rank number one for best in test and best in data. Turning to infrastructure. Telstra InfraCo has now completed its first full year as a fully operational business function. InfraCo Fixed passive income increased 0.9% to around AUD 2.2 billion, and InfraCo Towers income increased 4.3% to AUD 340 million.
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 AUD 5.9 billion, representing an FY 2021 pro forma EV to EBITDA after leasing multiple of 28x, 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. As you would appreciate, the proposed restructure is very complex. It involves the creation of separate subsidiaries, including InfraCo Fixed, InfraCo Towers, ServCo, and Telstra International under a holding company.
We expect the restructure to be undertaken by way of a scheme of arrangement, as we have previously advised. 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, a separate general meeting, before the end of the year. Let me also comment on the recent announcement confirming we are in discussions regarding Digicel. As we said in our ASX statement, 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 consolidated in our financial results. Digicel Pacific is a commercially attractive asset. It enjoys a strong market position in South Pacific region. It generated EBITDA of $235 million in calendar 2020 with a strong margin. It has an extensive telecommunications network. Also let me strongly reiterate the comments that you heard from the chairman, which is that we will only proceed with a transaction if it is in the interest of our shareholders. Turning to our T22 scorecard. There are two things that you will notice on the scorecard. Firstly, with a year to go on T22, there are more ticks than dots. Secondly, there are 3 x as many greens than ambers and reds. In the period, we completed six measures to bring the total completed to date to more than half.
There are some measures rated amber and red, and I want to take a moment to explain why. Firstly, underlying ROIC. 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 2023. The building of our new technology stacks is very well progressed and is delivering great benefits. As you can imagine, with any IT project of this scale, there are of course a few timings that have shifted. Active My Telstra app users have grown by more than 0.5 million in the last two years to 4.5 million. This is below where we had planned it to be, but it reflects the good progress in active users across consumer and small business. Digital platforms have in fact grown to 6.5 million.
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-ons. We're behind where 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 three years ago. We have since achieved AUD 2.3 billion of underlying cost out. We have increased our overall cost out ambitions to AUD 2.7 billion, 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 substantially, and we expect to further improve it in FY 2022.
However, we do expect to finish FY 2022 just outside the top quartile, given that our global peers are also improving more than we had originally planned. Similarly, on labor cost per 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 and relentless change for our people. Now, if I was to summarize FY 2021 into a single sentence, it would be, we stayed disciplined on the execution of our T22 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 pain points and raising 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, we look forward to 2022 with great confidence in our ability to deliver on 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 Telstra InfraCo, and driving value from our passive assets. Further extending our leadership in 5G, including with 5G standalone and core. Continuing to grow core connectivity and services and accelerating growth of our exciting new businesses. 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. 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 September 16th.
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's 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. Thank you. With that, I will hand over to Vicki before we open for Q&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 Darramuragal 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 2022 guidance. Turning to our FY 2021 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 2021, income was AUD 23.1 billion, down 11.6%. Total operating expenses declined 10.2%, including an AUD 490 million or 8.1% decline in underlying fixed costs. On a reported lease adjusted basis, EBITDA declined 11.5% to AUD 7.4 billion. This included an AUD 734 million reduction in net one-off NBN receipts and an AUD 487 million 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 2021 guidance, declining 9.7% or AUD 720 million. This included an estimated AUD 650 million of in-year NBN headwind and approximately AUD 180 million of negative year-on-year impacts related to COVID-19.
At our half year results in February, we committed to growing underlying EBITDA half on half. I'm pleased to say we've achieved this. Depreciation and amortization declined 8.1% or AUD 397 million on a reported lease adjusted basis due to assets associated with NBN completion and legacy IT assets fully depreciated. We would expect around AUD 100 million of further decline in FY 2022 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&A, 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 NPAT grew 3.4% to AUD 1.9 billion. Looking now at income by product on slide 12. Underlying income declined AUD 2.25 billion 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 AUD 820 million, this was largely due to AUD 750 million 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, legacy voice decline, Foxtel from Telstra decline, and remediation credits.
Fixed 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 2021. We are confident health will see at least high teens organic revenue growth in FY 2022. Turning to EBITDA. Our full year underlying EBITDA declined AUD 720 million, reflecting ongoing NBN headwinds, legacy declines, and the financial impacts of COVID-19. In FY 2021, mobile EBITDA grew by AUD 170 million.
This was driven by benefits from transitioning our customers off subsidy and lease plans and ongoing productivity, despite around AUD 200 million 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 2020 and first half FY 2021, underlying EBITDA declined AUD 551 million. However, between second half FY 2020 and second half FY 2021, this moderated to AUD 169 million decline. Looking sequentially, the light blue arrows show that we have gone from a AUD 210 million decline between second half FY 2020 and first half FY 2021 to achieving growth of AUD 41 million 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 NBN headwinds. I'll now take you through the key product trends. Firstly, looking at mobile. We've delivered on all our FY 2021 mobile market commitments and now have clear momentum, which is flowing through to the financials. Let me take you through four important aspects of this.
Firstly, top left, you can see mobile service revenue, the 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 AUD 297 million in the second half versus PCP 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 AUD 5 since FY 2019. We can see this increase and pricing changes are flowing through to ARPU. The growth in reported postpaid handheld ARPU was somewhat offset by four 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 access voice and data fees. Finally, dilution from a higher mix of Belong customers. If these negative impacts are excluded, postpaid handheld ARPU would've 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 Telstra 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 2022. This is despite the identified negative impacts I just mentioned, except for roaming continuing to drag. Fourth, on the bottom right, you can see that prepaid handheld performance was strong with FY 2021 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%, mainly due to higher out-of-bundle enterprise revenue in the PCP and a reduction in prepaid. Wholesale grew revenue 21% 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 off subsidy and lease plans, and ongoing productivity. Turning now to our fixed portfolio. We have 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 AUD 3.2 billion of net negative recurring headwind from the NBN 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 2021 and is stabilizing sequentially.
We expect this to continue in FY 2022 before EBITDA begins to grow in FY 2023. In FY 2021, 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 2022, less than half the volume of FY 2021. Our churn on NBN is lower than legacy, giving us confidence of trends improving in FY 2022. 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 higher speed plans with 6% of customers now on plans of 100 Mb per second or greater. We have well over 1 million carrier-billed 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 5G 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 mid-teens NBN resale margin in FY 2023. Turning to fixed enterprise.
In data and connectivity, we are seeking to stabilize the portfolio and position it for growth by FY 2024 as we transition from virtual private networks to integrating over the internet technologies such as SD-WAN with Telstra Fibre or NBN access. During the year, we successfully resigned key customers, which helped maintain our Telstra Fibre SIOs and increase network capacity for future services growth. Total SIOs 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 2022, we will have an increased focus on leveraging our extensive Fibre footprint, complemented by reselling NBN and continued investment in capabilities. This is expected to deliver a lower rate of decline in FY 2022.
Disappointingly, NAS income and EBITDA did not grow at the rate we expected in FY 2021, 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, have set us up for future benefit. We remained focused on executing our NAS NextGen 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 undertook in late FY 2021 will support our commitment to deliver overall enterprise revenue and EBITDA growth in FY 2022 across mobile, fixed, and international. Turning to fixed wholesale. We 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 AUD 350 million of EBITDA per annum from FY 2023 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 AUD 244 million was more than offset by the productivity gains we achieved. Other sales costs declined AUD 862 million due to lower hardware costs. Underlying fixed costs reduced by AUD 490 million as our T22 strategy continued to deliver productivity and simpler, better outcomes for our customers. This means since FY 2016, we have delivered AUD 2.3 billion of cumulative cost reductions, and we are confident we can deliver our AUD 2.7 billion target by the end of FY 2022. We continue to target top quartile cost metrics for a 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% to AUD 3.8 billion, 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 hand set and roaming revenue. In addition, focused initiatives were delivered, resulting in improved collections performance in both Telstra Enterprise and Consumer & Small Business.
In FY 2021, we also purchased 1 GHz of millimeter wave spectrum for AUD 277 million, with payment terms spread over five annual installments. We expect to receive AUD 2.8 billion of net proceeds from the sale of 49% of InfraCo Towers in Q1 of FY 2022. We're very pleased with the transaction announced in June, which valued the business at AUD 5.9 billion or 28x EBITDA after leases. We will return up to AUD 1.35 billion 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 AUD 0.08 per share fully franked, including an ordinary dividend of AUD 0.05 and a special dividend of AUD 0.03. This brings the total FY 2021 dividend to AUD 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 2021 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 see on slide 20. We reduced net debt by AUD 1.5 billion in FY 2021, 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 AUD 2 billion asset sale program and announced an up to AUD 1.35 billion buyback from the tower sale proceeds, reinforcing this commitment. Our target for underlying ROIC is around 8% by FY 2023, with a long-term ambition to grow ROIC.
Turning now to FY 2022 guidance, which you can see, along with the assumptions and conditions upon which we have provided them, on slide 21. Our underlying EBITDA FY 2022 guidance implies mid-single digit growth or around AUD 450 million at the midpoint. This guidance is despite remaining in-year NBN headwinds of approximately AUD 350 million in FY 2022. It also includes around AUD 50 million of non-cash accounting headwind from insourcing our Telstra-b randed retail stores and no return of international mobile roaming. Pleasingly, in FY 2022, we maintain a strong outlook on free cash flow, supported by further improvement in working capital, despite our expectation that one-off NBN DA EBITDA will reduce by over AUD 550 million. Proceeds from the InfraCo Towers sale, M&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 2022, 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 MedicalDirector and PowerHealth.
By staying disciplined and focused on delivering our strategy, we've put the business on course for growth in FY 2022 and on track to meet our FY 2023 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&A.
Thanks, Vicki. We'll now start a Q&A, beginning with investors and analysts. In addition to Andy and Vicki, also on the call today are Michael Ackland, Group Executive, Consumer & Small Business, David Burns, Group Executive, Enterprise, and Brendon Riley, CEO, Telstra InfraCo. Our first question today is from Kane Hannan from Goldman Sachs. Go ahead, Kane.
Morning, guys. Thank you for the questions. Nathan, just three from me, please. Firstly, Andy, on those FY 2023 aspirations. I think back in February, you indicated that the top half of that range was probably a bit out of reach for Telstra. Just wondering, following this mobile result, some of the price changes from your competitors, whether that comment still stands. Secondly, just on the mobile margin in the second half, that 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 toward the mid-40s number? How do we think about what a sustainable or potential mobile margin is? Finally, just that free cash flow guidance into 2022.
Can you just give us a bit more color around what's obviously a very strong cash result next year? I suppose what the working capital benefits are. Cheers.
Hey, thanks very much, Kane. And thanks for hooking in. Let me just 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. On the outlook, you might recall that the 7.5-8.5 we communicated, I'm trying to remember where 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 AUD 0.16 over the longer term. 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 NPAT.
When we communicated that, it was, as I say, at least a couple of years ago, I think, and then we're still looking at a couple of years as well, so it's a long time into the future. In my comments today, I made the point that our ROIC target, which is 8%, is in the bottom half of that range. Candidly, that's where our aspiration and ambition is, and if we can do that, we will be able to deliver that performance we need for an underlying AUD 0.16 dividend. 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'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 articulate our financial ambitions in conjunction with that as well. Thanks, Kane, and I'll hand over to Vicki to talk on mobile margins and free cash flow.
Thanks, Andy, and thanks, Kane, for those questions. Just on mobile margin, well, firstly, second half of 2021, we're certainly pleased to have mobile EBITDA margins back in the low 40s. 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. As you said, longer run, there's lots of factors to play out, but I'm certainly pleased with where the EBITDA margin is in the second half and we remain positive on mobile into FY 2022. 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. 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 benefit, so some further benefit, and again, it largely sits in the receivables space. There is a number of pieces that play a role. We are very focused on ensuring we manage working capital with great discipline. Yeah, our guidance includes that sustained improvement in working capital, largely coming from, as I said, the receivables side as well.
Great. Our next question is from Entcho Raykovski from Credit Suisse. Go ahead, Entcho.
Thanks, Nathan. Maybe if I can follow up on those free cash flow comments. Interested in your perspective on whether the dividend policy is appropriate given free cash flow is tracking so far ahead of NPAT. I know that's a question you've been asked before, but it seems like it is well ahead. 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. 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. They're tracking a little bit better. Any concern around the slowdown and what are your expectations into FY 2022?
Finally, if I can throw a 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? Is there a concern about expansion into a region which has likely seen a pretty significant COVID impact?
Thanks very much, Entcho. Look on the dividend policy, excuse me. Our focus really has been to ensure we're on the right trajectory to sustain that AUD 0.16 dividend for shareholders out to FY 2023. We talked a bit about that. In terms of payout ratios, we're outside of our current payout ratios. 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. Our primary focus right now is to continue the trajectory to the AUD 0.16 dividend. The board hasn't made any further decisions or made any further comments in relation to dividend policy. That's really just a matter that we'll obviously continue to, I'm sure, discuss. If we have any updates, we'll provide them when we do.
On the postpaid trajectory, I'll get, excuse me, Vicki and Michael Ackland to comment. The one thing I would say is I don't think our post-paid handheld numbers are exactly comparable with Optus. I think they've got a few other things in theirs, which we report separately. They're more across that than I am, but I'll let them comment on it. What I would say is that we have clearly been focused on driving value in our mobiles business, which as we said we would. As a consequence, as you heard from Vicki, there's an AUD 290 million improvement in underlying mobile EBITDA in the second half and good growth in services revenue. There's no doubt that the market's slowed down overall, just in terms of level of net activity. I pointed to population growth has gone negative, first time in, I think, nearly 100 years.
That obviously has an impact on the margin. We have seen some slowdown in hardware or some supply issues in hardware. I'll let Vicki and Michael talk further about that. On Digicel, you're right, I can't really say anything further other than maybe make the comments that it is subject to meeting key financial metrics as well as downside risk protection. Ultimately, as the chairman said, we're only going to proceed with something if it's in the interest of shareholders. At this stage, those discussions are incomplete, so I can't really say any more at the moment. Vicki and Michael, I'm not sure, want to comment on the post-paid performance.
Thanks, Andy. Why don't I make a couple of comments, and then I'll hand over to Michael about the market dynamics. Entcho, the thing I would say, yes, absolutely, you can see post-paid 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.
You can see that with a small lift in our churn in the second half in mobile post-paid. That has certainly played out in the half. 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 you and Andy 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 5G. It has been a subdued market. No, we're not concerned around that second half SIO 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 Barrenjoey. Go ahead, Eric.
Morning, guys. Thanks very much for the questions. First one, just on the SMB and Enterprise ARPUs. It feels like they might've been declining high single-digit in the second half. Just interested in how much of that was sort of general price deflation versus, say, roaming or any significant recontracting events. I guess, given that latest momentum, are you still comfortable there's enough juice in mobile, I guess, for you to achieve your FY 2022 ambition for total Enterprise to get back to growth? Sorry, that's the first. Then just on the second, I guess on the TMMCs, there's still 25% of your base to transfer onto the new plans. I guess, can we safely assume first half 2022 TMMC growth is still positive, but maybe just at a nominally lower rate, given you're comping that 330 TMMC growth in the PCP?
Just the last question. In the presentation, Vicki, you highlighted the pricing flexibility in the new mobile plans. If I think about the industry cost base post your tower sales, they're becoming increasingly CPI-linked with the site leases, you've got underlying wage inflation as well. 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 hooking in. Sounds like they're all for you, Vicki.
Thanks, Andy. Thanks, Eric. It might be a combination of myself and Michael, I suspect, on some of them. Just in terms of, I did give a little bit of information just so you could understand what's going on in the segments in mobile post-paid. Yes, as I said, we could see Small Business ARPU sequentially growing, and we saw Enterprise stabilize. Again, just reinforcing, we expect in FY 2022 that those two segments in post-paid handheld ARPU will follow Consumer to growth. 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 AUD 360 million. 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. That focus on our next gen strategy and those strategic areas play also an important role as we look to returning it to growth. 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.
I would just say in terms of TMMC, it is accretive to ARPU, and we do expect TMMC to grow again in FY 2022. Around pricing flexibility. Yep, 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. It's something we'll take into account as we think about future pricing changes in our mobile portfolio. I might jump across to Michael to talk a little bit about the 25% of the base you were asking about. Michael, over to you.
Thanks, Vicki. I think once again, the summary is pretty good. We expect, as we go through the rest of that base, that we'll see a little bit further TMMC lift more in the first half. 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, 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. 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 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, Andy and Vicki. I just have three questions. Firstly, just in relation to your EBITDA guidance, have you factored any further COVID headwinds moving into FY 2022, given borders are unlikely to open? Secondly, in relation to Enterprise, I think you mentioned you're seeing some competition from competing technologies such as over the internet with SD-WAN. Just wondering if you anticipate there to be a need and step up in CapEx just to stem off some of this disruptive technological competition moving forward. Thirdly, if you can provide us some color around the revenue contribution from MedicalDirector and PowerHealth, that'd be great. Thanks.
Sorry, Lucy, just before I do, could you repeat that last one? The what contribution from PowerHealth and MedicalDirector?
Oh, sorry.
Oh, revenue.
EBITDA contribution. Yep.
Yeah. Right. Yeah, great. Thanks. Okay, cool. On the EBITDA headwinds, I will get Vicki to comment. I think, obviously, probably the most significant one is just continued softness in Well, more than softness, but complete sort of reduction in international roaming. On MedicalDirector and PowerHealth, I will make a strategic comment. Vicki, I do not know how much we have provided in terms of revenue and EBITDA contributions and what we can say. 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 1,200. This is before these acquisitions. It is 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. Of course, all those health organizations for whom we were looking at those contracts obviously got completely distracted onto COVID. We're confident. Actually, what COVID has done is it's reinforced the importance of those contracts, so they haven't gone away, which is why we're confident of that quite strong growth in FY 2022. MedicalDirector is just such a crucially strategic asset. It just sits at the apex of the whole healthcare system because it's your GP, 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.
They're all of the things that we're linking, so that's really important. I don't know how much we're able to say on revenue and EBITDA, both on that and on PowerHealth. 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. Then also, Vicki, 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 PowerHealth and MedicalDirector, obviously, MedicalDirector is still subject to completion. I won't go into the detail of the financials for each at the moment. Broadly, we're very positive about both acquisitions, as Andy just spoke about. Both generating EBITDA, generating cash earnings accretive. 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. 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. If you think about FY 2021, we had overall AUD 380 million of in-year impact from COVID.
That was made up broadly AUD 200 million of roaming, about AUD 100 million of cost out that we made the decision to delay during the midst of COVID. Finally, customer-related support. As we look at FY 2022, there's really no more roaming to lose. There's no additional headwind on roaming. On cost, we've proceeded with the decisions we made, 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 AUD 430 million of additional cost out. We've not allowed additional amounts for customer support packages in FY 2022. Overall, we're not predicting COVID-19 impacts in the same way as we've seen in 2021 and 2020. Just to answer that question. I will hand over to David on TE.
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. I'm comfortable we've got the CapEx in plan needed to support the enterprise business. 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 two or three things that are really important milestones that we've executed in 2021. One is the release of our adaptive network offerings. There is mobility offerings as well, but adaptive network around our fixed network offerings. That, to me, strengthens firstly our Telstra Fibre options, our Telstra Fibre options in the marketplace and our presence. It secondly includes strong presence of NBN, Enterprise Ethernet offerings in that environment. We're more strongly a multi-network organization today than we were yesterday. 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. We're continuing to invest and harden that environment. That's not capital intensive.
All those pieces fitting together, I think we're responding well to that. There are a couple of instant customer events in the first half of 2021, which were highly competitive and not the outcomes we were looking for. Since first half of 2021, we've actually competed really well in market with that. I'm excited about what SD-WAN offers, and I'm excited about how we are ready to respond to that. I think that's within the normal bounds of our capital environment. Thank you.
Excellent. The next question is from Tom Beadle from UBS.
Hi, everyone. Thanks for the questions. I'll just ask two. Just firstly on guidance. I'm trying to bridge that AUD 450 million gap from FY 2021 to FY 2022 EBITDA at the midpoint of your range, obviously. Could you just give some more color into the underlying assumptions in that? There's obviously that AUD 350 million NBN drag. You've got the 430 of cost savings. That leaves you with about sort of AUD 200 million-AUD 500 million of other growth in there. I realize there's a growth in mobile. I'd estimate about every dollar of your postpaid ARPU growth is worth roughly AUD 100 million. How much ARPU growth are you assuming in that? Also, is there anything else worth highlighting? Second question is on M&A. Telstra Health obviously made those acquisitions. There's the potential investment here in Digicel as well. Does this represent a changing attitude to M&A?
You're obviously most likely to generate higher cash flow than earnings for a number of years now. Could we expect that you might use that excess cash flow to undertake M&A rather than pay down debt? 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. Comment you've already sort of called out obviously the productivity mobiles, the NBN headwind sort of softening or reducing, which is obviously all part of it, as well as health, which we were just talking about is improving as well.
There's a few things there, but I'll get Vicki just to speak about that. On M&A, 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 and where they meet certain criteria, and particularly where they're as strategic as the MedicalDirector one is. There's no doubt on health that 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 on organic and doing it.
The team have just done an amazingly outstanding job. As a consequence, I think we're in a super position. Sometime probably 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. This MedicalDirector acquisition is something that is very strategic. In a sense, it's been a consequence of just We couldn't determine when MedicalDirector was going to come to market, but it happened to be now.
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, I mean the real minor part of it, albeit we would own the asset and consolidate its financials if that's what occurs. With the rest of the financing being provided on a non-recourse basis. You shouldn't take it as any sort of signal of a change of strategy on M&A. We'll continue to look at M&A opportunities as and when they arise. Obviously, doing anything in core telco is challenging because of our scale from a competition regulatory point of view. We continue to look at opportunities in Telstra Purple, in services, and in other parts of our business as well.
Vicki, 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, et cetera.
Yeah. Thanks, Andy, for that. I think on the balance sheet, 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 AUD 1.5 billion. It's put us in a good position. As Andy said, there's no change in stance there. We remain committed to our capital management framework around the A band settings. I won't add any more to that. Just in terms of the AUD 450 million of underlying EBITDA growth at the midpoint of guidance, 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 2021. 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 off subsidy and lease plans, combined with some of those cost productivity benefits flowing in. You're right, cost out plays into the entire portfolio. NBN's critical as well. The 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. There's been a big drag on the business from the fixed consumer and small business portfolio. That is a key piece.
The final piece I would say is an area I commented on early, which is about Telstra Enterprise return to growth in FY 2022 in terms of its total portfolio of mobile, fixed, and international. They would be the key pieces I would think about as you're thinking about that outlook for our underlying EBITDA growth in FY 2022.
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 retailer EBITDA margin. Vicki mentioned that it was around 5% in FY 2021. Can you share with us what the margin was for NBN in the second half 2021, and how would you be able to get to mid-teens by FY 2023? Is it going to be driven by cost out, whether it's Fixed Wireless rollout or price increases? My second question is just regarding your FY 2022 guidance. Obviously, cost out plays a part there, but are you concerned at all with cost inflation, given how difficult it is to get good talent and also the cost may be going up as well?
Excuse me. Thanks very much, Roger. Thanks for the questions. I'll get Vicki to comment on the fixed NBN reseller margins, but suffice to say, we need to pull all of the levers that you referenced. It's obviously a big stretch for us to get to that mid-teens aspiration by 2023 from where we are today. We're going to have to pull all of the levers and some. I'll get Vicki to talk through that. On the cost out. No, we're not concerned. I think you make some really relevant points around inflation and obviously, the war for talent. They are pressures.
The way we look at our cost and productivity program, I think we've got this down to a pretty good art now, is that going into the year, we're already carrying in quite a bit of momentum from decisions that we've already made and implemented. We always go into the year with a pretty good eye on how we solution any of the additional productivity that we need to deliver our commitment, which is AUD 430 million for this year. In fact, we obviously overachieved in FY 2021, I think we pretty much have consistently through the program. I'm pretty confident we've got our arms around that. Vicki, over to you.
Thanks, Andy, for that. Roger, yes, in terms of NBN resale margin, just looking at FY 2021, pretty consistent through the year around that 5% EBITDA margin on NBN resale. 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. 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 higher speeds. 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 stack. 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. 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 2021. Obviously cost comes with that process of migrating customers as well. 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. They would be my comments. Thanks, Roger.
Thanks, Vicki. Our next question is from Fraser McLeish from MST. Go ahead, Fraser.
Hi, guys. Well done on that mobile performance. Great to see it back to growth. I think I've got three as well. Just firstly on InfraCo 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 the likely cost being sort of similar to 700 or spectrum or to some of the higher bands? I think you currently have that through the P&L, the cost as a apparatus license. Vicki, if you could give us an idea of what that cost is, that would be helpful. Finally, just Vicki, on the D&A guidance you've given, I think you said -AUD 100 million next year.
Were we not previously talking about -AUD 200 to -AUD 300? That does leave D&A still miles above CapEx. Should we still be expecting that D&A to trend down to CapEx over time? Thanks.
Look, 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 Brendon 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. 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&A guidance. Just firstly, on the monetization of InfraCo Fixed. 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.
There were three reasons that we gave when we launched T22. They haven'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 Towers business. It's obviously much bigger, and then there's more complexities associated with it because obviously the contracts and the relationships with NBN and other key customers, and there's regulatory considerations and such. We're working through all of those. As I mentioned, we still anticipate that will be given effect through a scheme of arrangement.
Ultimately, the final complexities of that will determine that, and we'll talk further about it in the coming weeks. Rather, certainly, no later than the strategy update on the September 16th. 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. That's absolutely the intention behind that. I might hand over to Brendon just to talk about what's involved from an operational point of view, having gone through the towers exercise. We've done a lot of work on the fixed side, but as I say, it's a big project. Then maybe Brendon can hand to Vicki to pick up those other points.
Thanks very much, Andy. Fraser, thanks for the question. The Towers process was, I think, a great learning experience, and I think there's a couple of things. One, we did have a huge amount of the base work done. When that offer came in from the Future Fund of Morrison & Co, we were able to respond, I think, pretty quickly and definitively. 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 AUD 1.5 billion EBITDA business versus a couple hundred million dollar EBITDA business means it's a lot more complex. I think in terms of building out all of the data side of it, property is a really big one.
All of the commercial contracts and arrangements that we have with third 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. We're going to take the same approach that we did with Towers. 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. We just need to make sure that we are doing all the right consultations and partnership work with NBN and the government. We probably prioritize some of the activities around Towers ahead of the other assets, so we could be ready for monetization.
I think we've made good progress on fiber, good progress on ducts. We've seen some new product releases in the data center space in the last week or so. On the fixed network sites, the older 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, Brendon.
Sorry
the last couple of questions. No, no problems. It is a little bit different in a virtual environment. 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 were 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? It's going to switch to. You're going to pay for it upfront at auction. Just how that's going to work? Thanks.
The way we pay, where we're doing the equal installments, accounting-wise, still treated the same way. Intangible, which gets amortized through. No change in treatment of that. Then, just on your question in relation to D&A. You're right. We had expected that D&A in FY 2021 and FY 2022, we expected about AUD 300 million per annum reduction in each year. AUD 600 million across the couple of years. What you see in FY 2021 is we've actually achieved a D&A reduction of about AUD 400 million. We're a little bit ahead in year. AUD 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. We've achieved AUD 400 out of the AUD 600 that we had previously spoken about.
In FY 2022, I mentioned that in the ordinary course, we would expect another AUD 100 million reduction. It's a little bit short of the AUD 600. We're about AUD 100 short of the AUD 600, and the reason for that is there are some D&A associated with the in-sourcing of the stores and then some of the M&A transactions. Overall, we had spoken about AUD 600 across the two years. We expect about AUD 500 in the ordinary course, and the reason for that AUD 100 million difference, as I said, is in-sourcing of stores and M&A impact on the D&A. Thanks, Nathan.
Thanks, Vicki. The next question is from Ian Martin from New Street Research.
Just three quick questions. First, the 5G market's clearly getting more contested. Optus back in the game it seems with, particularly metro markets. I know you commented on coverage, the focus of competition is metro markets, particularly going into the December quarter. TPG is going to 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 AUD 7.5 billion was your target, you said could support an AUD 0.16 dividend. With the buyback, I guess that number's gonna be a bit lower. Are you in the ballpark to support that next year? How much net one-off NBN's remaining? About AUD 400 million or so, I think.
Finally, you mentioned 150,000 fixed line services yet to migrate. What will that leave with Telstra with, in terms of You obviously got some fixed lines you've got to continue in areas NBN doesn't cover? How material is that to, particularly the cost framework?
Thanks very much, Ian. I might get Vicki and Michael in particular to comment just on the sort of 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. I think TPG are a long way back on 5G. We're gonna continue to press our advantage on 5G and our network and our rollout. We're very, I guess, confident about our ability to continue to compete. I'll get the guys to sort of comment on that. Vicki might comment on the EBIT 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 AUD 7.3, with the trajectory of D&A and with the implementation of a buyback, how close would that get us to underlying earnings supporting a AUD 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. I should say our aspiration is to get in the range of AUD 7.5 to AUD 8.5. I did say 8% is in the bottom half of that. My guess is it would be still short in 2022. Vicki might want to confirm on that point.
As regards your other question about what's left with NBN after the 150,000 retail customers, I think the most significant thing, and Michael can comment on this, would probably be SMB, which would be a bit further behind, in the rollout. Maybe I'll go to Michael first and then maybe Michael can hand to Vicki.
Yeah. Thanks. Thanks, Andy, and thanks for the question. Just on 5G competition, yeah, I think Andy made the point. Optus are focusing on the metro markets. They're also focusing on getting value and price for their 5G as well, and I think that's good overall for the market in terms of pushing the value of a 5G experience, which our view would be coverage really matters for any mobile experience. We're really committed to getting value, and we think we can get value and share, but it's a competitive market, and that just makes us do it better. In terms of what's left on NBN, obviously, there's the last 8%. In terms of the migration activity for consumer, there's very little left to migrate beyond this financial year. Probably the tail is a little bit longer for SMB as that moves through.
I think this year, as Vicki said, we'll migrate half as many as we did the previous year, then, into 2023, another dramatic reduction and the tail will really be in SMB. Vicki?
Thanks, Michael, thanks, Ian, for those questions. Just on the first one around, I think you were asking about the net one-offs still to come from the NBN, we're expecting those to be around AUD 250 million in FY 2022. That goes to your question that you were asking about around payout ratios, et cetera. 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 achieve that. Having that confidence of getting in that range.
Our free cash flow plays an important part. Obviously, we're very strongly supported with free cash flow. There is AUD 250 million of the net one-offs we expect still to come in FY 2022. Just on the final question around the services we're left post the full transition to NBN, so the last 8%. Yeah, 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 AUD 100 million per annum. 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. Yes, we have got an ambition to limit those losses to AUD 100 million 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.
Oh, thanks, Nathan. Just some quick questions. For NAS, given the poor result in FY 2021, what specifically gives you the confidence that margins can rebound so quickly to mid-teens this year? Just putting aside MedicalDirector and PowerHealth, is Telstra Health actually profitable now? Vicki, finally, do you have any guidance on what restructuring expenses there may be in FY 2022? Thanks.
Thanks very much, Brian. I'll comment on the Telstra Health question. Then I'll ask David to talk about NAS margins and the confidence he has to turn that around. Also Vicki to comment on your last question as well. On health, I remember actually this time last year referencing the fact that health had achieved its first profitable month in May of last year. Overall, it was negative EBITDA in FY 2021. As I mentioned before, that's because we didn't achieve the revenue outlook that we were anticipating. We continued to ramp up our investments and our OpEx to support the trajectory of the health business.
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. 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. A lot of those sort of contract and pipeline projects got effectively delayed. The good news is, though, is that notwithstanding that, what COVID has actually done is it's made those contracts more important for those customers rather than less important. We do have a very strong pipeline, which is why we made some strong comments about our revenue growth in 2022. As I say, it was EBITDA negative last year.
That's because we've continued to focus on the growth of the business. We are confident of Telstra Health achieving profitability in the near term, but more importantly, candidly, growing, because it's an incredibly positive business. Both of the acquisitions that we've made are EBITDA positive as well. David.
Thanks, Andy. Thanks, Brian. 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 three 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. Most importantly, we made some reasonably significant decisions on cost and structure, and that gives us an enormous backlog of momentum in cost management as we enter into 2022. We have more decisions to make in the year. 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.
Most importantly is our trading actions for our offerings and products and services in that NAS business. I'll comment on two or three areas. Our PS business, professional services business, did have a poor year in 2021. The decisions we made, I needed to make on restructuring had a impact to that PS business through the second half, in particular the third quarter of the year, and flowed on into impacting our revenue and return of the second half of the year. What I can say is that the sales performance that picked up in the fourth quarter 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 two through the second half of 2021. 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.
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. 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. That was the driver of restructuring costs. Looking backwards as we look at FY 2022, I do expect some restructuring costs associated with the legal restructure of the group. However, they'll be significantly less than FY 2021. Nathan, back to you.
Thanks, Vicki. After a short break, which we will now take, my colleague, Nicole McKechnie, will chair a media Q&A.
Good morning, everyone, 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. Let's get into things. The first question, Andy, is from Zoe Samios from Fairfax. Zoe, good morning.
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? 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, Zoe. Good morning. Thanks for joining us. Just on the first part of your questions. In terms of, obviously, impact on services, 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 AUD 15 million worth of extra CVC charges since the beginning of the lockdown. That's certainly had an impact. We factored that in, I should say, so far at least in relation to our guidance. That's not a comment on the guidance or an outlook, but just a direct response to your question.
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 our position in relation to Foxtel. I've always been a very passionate and strong believer in the value of really high-quality content, and our customers love it. 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.
Therefore, it was important for us to restructure our investment, which we did at our lead several years ago. Where we consolidated Foxtel and Fox Sports, and we took a 35% investment in the combined entity in exchange for our 50% investment in just purely Foxtel. That strengthened the business, it strengthened our position, it kept us as a great cornerstone investor. Importantly, it enabled us to continue to have access to that great content, which we're doing. Of course, that strategy absolutely validated as Foxtel and Patrick and the team have done a fantastic job turning the business around. As you saw last week, subscribers and streaming is going gangbusters. I'm delighted for that. Telstra's doing a lot behind the scenes, obviously, in supporting that distribution as well, which is super exciting. Whether Foxtel IPOs or not, obviously that's a matter for Foxtel.
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. To be clear, we continue to be a keen and happy and supportive investor in Foxtel, and that's where we'd like to continue.
Okay. Thanks, Zoe. Next question is from Jenny Hewett from the AFR. Hi, Jen.
Hi. 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. You said it was the process from the beginning that was the problem. Do you see that changing at all? How would you rate your current negotiations with NBN about pricing? Secondly, with Digicel, would you ever have considered such an opportunity without the government strongly encouraging you and becoming part of the process?
Thanks very much, Jen. 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, then go back and check speeds, and then go backwards and forwards. I know because I've spoken to Stephen. Stephen's very supportive of trying to find a better solution for everybody. I appreciate Stephen's support in that regard. That's what we've got to do. I think as an industry, we've all got to come together to try and find a better way to do this so that we don't actually invite more complexity and more to-ing and fro-ing into the whole process. 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 are 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. I think all I'll 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. We'll obviously support that in any way that's helpful for us. I think it's the right time to do it because obviously we're now at the end of the rollout of the NBN. I think what the last 18 months has shown is just how important connectivity and the home internet is for everybody, not just to live their private lives. It's actually to work and study and do really essential things.
Now is the right time to make sure we've got the right framework set up for the future. On Digicel, I think as the chairman indicated, this isn't something that was ordinarily on our strategic agenda. The government asked us to assist in relation to the consideration of it. We were happy to do that. Ultimately, we won't go forward with any particular involvement in it unless it's in the interests of shareholders. That therefore means there needs to be certain sort of protection and financial support put in place. Ultimately, we're Team Australia. If we can find a way to support and help the government and for that also to be in the interests of shareholders, we have a very strong relationship and obviously many points of engagement and interdependency with the government, then we would do so.
Ordinarily, it wouldn't have been on our strategic agenda. You're right.
Thanks, Jen. Thanks, Andy. Next question is from Avita Retala from Bloomberg. Good morning, Avita. Are you with us, Avita? Just checking. No? We might move on to, I think I've got Rohan Pearce from CommsDay, hopefully.
You do.
Excellent. Morning.
Just two quick ones, Andy. One, 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 5G home internet becoming available in FY 2021. I'm just wondering the status of availability and uptake. I guess, do you anticipate a full-scale launch of that service in FY 2022?
Thanks very much, Rohan. Firstly, yeah, I'm very pleased with our mobile postpaid handheld net subs growth. 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 Australia, net population growth, as well as some supply chain issues that the major handset manufacturers have experienced, 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. Certainly impacted our gross revenue, not that it has an impact from an EBITDA perspective. Notwithstanding that, we saw Belong had growth, Telstra branded had growth, and we also saw pretty good growth in our Enterprise part of our business as well. That's been pretty solid.
On 5G home internet, we have thousands of customers on 5G 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 proposition right, we understand the network dynamics. 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 in making sure that it really improves what they have at the moment. That is what that's all about. I've long said on this topic that 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 5G fixed wireless solution actually is a great alternative.
That's what we've been focused on understanding and targeting. You should expect us to go above the line on that in the coming period.
Thanks, Rohan. Thanks, Andy. We are going to try and see if 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. Let's see if we can bring Dave Swan up. Are you with us, Dave?
I am. Sorry, I think Rohan's had a quick follow-up. I think you missed his. He was trying to follow up, I think.
Couldn't quite hear him. I'm very happy to go back to Rohan then.
Clarify on the net wholesale mobile adds and where they were coming from particularly.
Yeah, no, thank you. That was very gentlemanly of you, Dave. Well done.
Thank you.
Thanks. No, the wholesale net adds have very much been our two biggest wholesale customers being ALDI and Woolworths, and they both performed strongly.
Cool. Thanks.
Thanks. I am sorry I couldn't hear you. I am not sure why that didn't come through. I am going to try Avita one more time. See how we go. If not, we'll have to come back to her at the end. If not, then Dave, you are up. Yes, thank you for being very gentlemanly. Can I just check and see if Avita is with us? No. I may have to give up for today. Dave, you are up.
No worries. We've got to look after each other during these times, so that's important. Couple 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 particular, vaccinated? 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? One more, I just wanted to ask about consumer phone plans. If prices will need to continue to rise at all with 5G investment ramping up? Any sort of update just in terms of consumer pricing when it comes to mobile?
Yeah, no, look, thanks so much, Dave. Look, on the vaccine point, I'll make a few comments maybe. Firstly, I am absolutely pro-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 and 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 fundamental part of the healthcare of the modern society. 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. 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're maybe people in stores, maybe people like our field techs who are out there in the field or going into homes. It's really important. We need to think very carefully about their safety and the safety of our customers. I can certainly see that certain roles should require a vaccine. I think, as you also know, there's quite a bit of complexity involved in that. You should assume that we're considering that very carefully. Any decisions that we do make in that regard, I'll certainly be sharing with our people first. 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. Even pre-COVID, on average, our people would work from home one and a half to two days a week, pre-COVID. That made us able to seamlessly move 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. 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. That is the business model that we're 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 are taking that clause out of our contract. Ultimately, the only real constraint for us is we need to have the administrative capability to employ and to pay somebody in the location in which they want to work. For example, there's certain countries around the world we don't actually have the administrative capability to do that. Essentially, we do have people who live overseas and full-time support our business in Australia. Not because they're working in an office there necessarily.
We obviously have resources on the ground. Because they choose to do so. We're very much an advocate for new ways of working, and that's been an important feature of our. We now have 17,000 people working in Agile, just as an example. Just finally, on consumer phone plans. I won't comment on pricing, I'm afraid, because governments wouldn't allow me to do that. Needless to say, it's a really competitive market. We continue to invest heavily in 5G. 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 x more spectrum capacity that we can target to hotspots. Millimeter-band wave spectrum handsets are starting to become more available. As that happens, we'll be able to really supplement our network there.
We still do think that there is an important leadership and differentiation across the different networks. Telstra's is clearly by far the best and the biggest, and that's how we intend to continue to compete. Thanks, Dave.
Thanks, Andy.
Thanks, David. Okay. Moving on to Lucas Baird at the AFR. Hi, Lucas.
Hey, guys. How you going?
Yes.
Just to follow up on David's question, I guess. The ACCC has been making some noise about not being very happy with the way mobile prices are trending post-TPG, Voda merger. Do you see any sort of adverse action from them, whatever form it may take? Could that impact your projections for mobile ARPU and stuff like that going forward? 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. There's also been a lot of talk today about these growth areas in energy, eHealth, 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 just too far a leap to make?
Thanks very much, Lucas. Look, on your 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 governance point of view. 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. At the same time, data allowances have been going up dramatically. To the point where most of our plans have plans where essentially there is no excess data charges.
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 5G. Ultimately, as a telco, all telcos have to achieve a return on invested capital. We've seen ARPU increase in the last six to nine months or so. That's off the back of a period of four or five years of ARPU declines, candidly. That's the comment I would make there. On the buyback, it is absolutely our intention to do the buyback once the transaction is complete 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's a bit more complex and there's a bit more involved. You need it to be of a significant scale to make that worthwhile. I think the advice to us was that, AUD 1.3 billion is a big buyback, but still nonetheless, maybe not worth doing a capital reduction on that basis. Off-markets and special dividends are probably slightly more attractive when you've got excess franking credits. We don't have excess franking credits because we pay out a high proportion of our earnings, our franking balance isn't really big enough to support being able to do that on a fully franked basis. That's hence why an off-market buyback is the preferred route. Finally, on your question, health and energy. I'd love to think that that could be the case. Last year, our revenue was AUD 23.1 billion.
Obviously, overwhelmingly that came from telecommunications. 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. I don't see them being the bigger part of our business for certainly at least for my foreseeable future.
Okay. Thanks very much for that, Lucas. Moving on to John Dagge from the Herald Sun. Hi, John.
Hi. Good morning. Hi, Andy, thanks for your time. I just had one on Telstra's approach to vaccines as well. I was wondering, A, has the company received sort of, or is it asking for some legal advice on this? B, would it like some more guidance from government here? They've obviously, I think, singled out aged care. 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 homes. Would you like 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?
Yeah. Look, thanks, John. 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. We're certainly looking at the legal aspects of all of this, as you can imagine we would. There's several of them. For example, there's privacy considerations, and your ability, can you ask an employee whether they have been vaccinated or not? Can you insist on knowing the answer to that question? There's a privacy element to it. There's a liability element to it. There are quite a lot of complexities. With the BCA, Business Council of Australia, we've been to very numerous briefings with government at both the state and the federal level, including with General Frewen, who's leading the Vaccination Task force for the Prime Minister.
We've had good access there. There's some good dialogue. I don't think it's as simple for anybody just to say, well, 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. As I say, I'd bring it back up and say, nonetheless, we are, I am absolutely pro-vaccine for the reasons I mentioned earlier. 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 I legitimately accept that's obviously an important consideration. There are people that are in roles that come into touch with lots of other people.
The crucial issue is in those circumstances, how do we make sure we protect both them and protect both our customers? That's what we're really very much looking through, and looking at the moment. That includes getting a legal understanding of that and engaging with government in consultation on that as well.
Okay. No worries. Thank you.
Thanks very much, John. Okay, I think that is our last question. I think we did lose Avita, 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. Cheers.
Everyone for coming in. Thank you.