Good morning. Welcome, and thank you for joining our call on today's ASX announcement. I'm joining today from the lands of the Gadigal people. On behalf of Telstra, I acknowledge and pay my respects to the traditional custodians of Country throughout Australia and recognize the continued connection Australia's First Nation people have to land, waters, and culture. We pay our respects to elders, past and present. This morning, I will make some brief comments on today's announcement and then open to questions from analysts and investors. Michael Ackland, our CFO, and Nathan Burley, Head of Investor Relations, are also on the call. Turning to today's announcement. Today, we announced measures to begin the reset of our enterprise business, simplify our operations, and improve productivity.
As part of today's announcement, we reaffirmed FY2024 guidance, provided early FY2025 underlying EBITDA guidance, and said that we would be updating customer terms for our postpaid mobile plans to remove the CPI-linked annual price review. The measures announced today are difficult, but they are necessary. We need to be a more efficient and sustainable business to ensure we can continue to make the investments needed to support the ever-increasing growth in data volumes on our networks and deliver improved connectivity for customers across the country. Ongoing investment in infrastructure, technology, innovation, and service for our customers drives growth and underpins Australia's digital economy, contributing to the prosperity of the nation. This is occurring within a dynamic environment, with an evolving competitive landscape, rapid advances in technology, changing customer needs, and the ongoing inflationary pressures all businesses are facing.
Let me now step through the four components of today's announcement. Starting with our reset of Telstra Enterprise and the product simplification. At our half-year results in February, we announced a detailed review of Telstra Enterprise, covering all elements of its domestic business. A number of actions have been identified to begin the reset of Telstra Enterprise. These will sharpen its focus on areas where it has the strongest differentiation, further improve delivery for customers, and improve the cost base of the business. These include a streamlined product portfolio, reducing the number of NAS products in market by close to two-thirds, a simplified customer sales and service model to better support customers, and a reduction in the cost base of the Telstra Purple Tech Services business, particularly NAS products, aligned with revenue and changing market dynamics.
Our review of Telstra Enterprise is ongoing, and the challenging market conditions we are facing remain the same. A further update on next steps, including progress on the actions above, will be provided at our full-year results in August. Let me now turn to how we are simplifying operations and action on cost. At our half-year results in February, we noted that more significant action was required on cost. Today's proposed measures, which require consultation with employees and unions, would result in up to 2,800 job reductions from Telstra's direct workforce, with the majority of this to occur by the end of this calendar year. I appreciate the uncertainty proposed changes like this can create for our people, and we will support them through this change with care and transparency.
Consultation on 377 roles will begin immediately, mainly from areas supporting the products and services to be exited in Telstra Enterprise. In addition to starting the reset of Telstra Enterprise, we will reshape some of our internal operations by moving our Global Business Services function into other parts of the business. This will help simplify processes and empower leaders closest to customers to make more decisions. We will also continue to focus on a range of actions to reduce non-labor and indirect labor costs. With these actions, we expect to achieve AUD 350 million of our cost reduction ambition by the end of FY2025. We expect one-off restructuring costs of AUD 200 - 250 million across FY2024 and FY 2025. These costs will be excluded from guidance and are in addition to BAU annual restructuring costs.
Let me now turn to our update to customer terms for our postpaid mobile plans. Today, we announced that we will be updating the customer terms for our postpaid mobile plans to remove the CPI-linked annual price review. This change simplifies our pricing strategy by bringing the approach to postpaid mobile plans into line with other products. This approach reflects there are a range of factors that go into any pricing decision, and we will provide greater flexibility to adjust prices at different times and across different plans based on their value, proposition, and customer needs. As a result of this change, we will not be making a CPI-based annual price change to our postpaid mobile prices in July 2024. We will continue to review our pricing, and any changes will be communicated to customers in a timely and transparent way.
Our mobile business continues to perform strongly, with growth in subscriber numbers for the first four months of this half, consistent with the first half of FY 2024. This success has underpinned our EBITDA growth in FY 2024 to date, and reflects the high demand for our products and the value customers place on our differentiated network, its reliability, and our flexible plans. Finally, turning to guidance. Today, we reiterated FY 2024 guidance and provided FY 2025 underlying EBITDA guidance of AUD 8.4 - 8.7 billion. We are committed to delivering our T25 CAGR ambitions for underlying EBITDA, EPS, and ROIC growth. Our continued confidence in our capacity to grow mobile's revenue and EBITDA, Belong with clear actions on cost and to reset our enterprise business, has allowed us to bring forward our underlying EBITDA guidance for FY 2025.
We are just over 12 months from completing our T25 strategy, and good progress has been made in a range of areas, including improving customer experience. Our strategy beyond T25 will build on the momentum created over recent years and help set the organization up for success through to 2030. Let me close my comments there, and we will now open to questions. A reminder that Michael Ackland, our CFO, and Nathan Burley, Head of Investor Relations, are also on the call. Can I ask Rachel, our call moderator, to please introduce the first question? Thank you.
Thank you. Should you wish to ask a question, please register by pressing star, then one on your telephone keypad. If you need to cancel your request, please press star two. If you could please limit your question to one, and then rejoin the queue if you have any further questions. Your first question comes from Eric Choi with Barrenjoey. Please go ahead.
Morning, team. One question. Got it. So, thanks for the question. Just on mobile, I guess, mobile and group EBITDA guidance. Just thinking about those two things together, you're guiding for FY2025 EBITDA to grow AUD 150 - 450 million year-on-year. And it just seems to me, to hit the top end of that guidance, Telstra would need to see a lift in postpaid ARPUs. And furthermore, given your postpaid price increases are delayed this year, though any price increases would also need to be higher than what you previously thought to achieve a similar outcome, i.e., possibly higher than CPI. So can you just confirm I'm kinda logically thinking about mobile and EBITDA guidance the right way?
Thanks, Eric, for the question, and I'll make a couple of comments, and then I'm sure Michael will probably wanna jump in as well. So first thing I would say is we've obviously issued our FY2025 underlying EBITDA guidance a little earlier than we ordinarily would, and that really comes from, as I mentioned, the confidence in the growth we're seeing in the mobile business. I would just reinforce that mobile business strength is across really multiple areas. It is the postpaid business performing well. It is our prepaid business performing well. It is along Boost and also our wholesale business performing well. So, and as we mentioned in the ASX release, we've continued to see mobile subscriber growth in the four months of this half, running at a similar level to the first half of FY 2025.
So absolutely, we've got real confidence in our mobile business. In terms of the change we announced today to our customer terms, it removes the CPI-linked annual price review. It does provide us further flexibility. As we've said, we will not be increasing postpaid prices in July 2024. And obviously, it's not appropriate to comment on any future price increases. We've said pricing remains under review, and if and when we make those decisions, we'll obviously communicate those transparently to customers. But I just wanna reinforce, we are very confident in the performance of the mobile business. We're confident in the actions we've announced on cost today, and we are beginning the reset of Telstra Enterprise.
I do wanna be clear, on enterprise, we're at the start of that detailed review, that is still ongoing, and it will take some time to progress all of those actions to set it up for success. So all of those factors have come into play as we've thought about the underlying EBITDA guidance range for FY 2025. But Michael, are there any areas you'd call out?
No, I think you've covered them, Vicki. And just in terms of Eric, as you do that walk from on the EBITDA growth, obviously, as Vicki mentioned, there's cost. At the half year, we talked about being about AUD 105 million through our large majority of AUD 500 million. And so, as we committed today to the AUD 350 million, that, that provides part of that walk from 2024 to 2025. And then, we also, at the half, we had, mobile, customer growth of around 4%, and we've seen that consistent growth continue into the second half, which means that we start 2025 with a, a larger subscriber base than we started 2024, which underpins, that mobile, that mobile growth as well.
Now, obviously, when you look at EBITDA, when you look at the range, you know, we're a business, there's a lot of different businesses that will perform differently and, you know, depending on where they land as we go through the year, that will depend on the range. And obviously, one of the areas, you know, of risk and concern is our fixed enterprise business and particularly NAS, as we've talked about. So, we are at the start of that reset, and in the EBITDA guidance we've given today, we've accounted for, we think the range of sensitivities there.
But on mobile, when we look at that, that customer growth that we've seen through 2024, the range of products that we have, from postpaid to prepaid, the range of brands, in wholesale, in Boost, in Belong, you know, we remain confident that we have a fantastic value proposition that customers continue to value and continue to value more.
Can I ask you a super quick follow-up, just housekeeping, Michael? Just on those restructuring charges, can we just confirm they will reduce tax paid and therefore franking? And then the rough math on that is maybe those restructuring charges could be an additional 0.5% negative impact on franked EPS and DPS.
Yeah. So what we've said is that our, the restructuring charge, we expect to be AUD 200 - 250 million, over and above the BAU restructuring that we've had, annually. And so that in our, in our underlying guidance for next year, and what it was in FY 2022, was around that AUD 70 - 75 million mark. So on top of that, the 200-250 would absolutely be tax deductible. It would reduce tax paid. And, you know, you can calculate through what that leaves. Our franking balance has been tight, but we believe it is sustainable. And, we've factored that in as we've thought about these restructuring charges.
Thanks, Eric.
Thanks.
That's good. Question.
Your next question comes from Tom Beadle with Jarden. Please go ahead.
Oh, hi, guys. Thanks for the opportunity. I just wanted to run some logic on cost savings and T25. So just with that 2,800 redundancies, I've calculated that probably drives about AUD 360 million in annualized savings, assuming your average salary. So if we're to assume you received 75% of the benefits of that in FY 2025, and then were to exclude that from the AUD 350 of T25 cost savings, that probably infers that you might have only achieved AUD 50- 100 million of the cost savings under T25. So I just want to check if that math is correct, and just if there's anything that might have changed in the past few months that's driven that outcome? Thanks.
Yeah. Why don't I jump on that one, Tom? So I think there's a couple of other factors that are worth taking into account. Obviously, there's costs that go up and down within our business. Particularly in that math, we need to account for the fact that we will have, as always, annual salary rises across the entire base. This, the 2,800 represents a bit under 10% of our employee base. So the other 90%, their costs increase as we go into the year. So when you look at it on a net basis, it's a smaller number. Your calculations on a growth basis, you know, I think are probably pretty reasonable.
But yeah, you need to account for the fact that there's other costs that will be going up. And the big one is, the rest of that 90% of the, the employee base, their salaries will increase and increase through 2024, and they'll increase in 2025. So... And just to repeat, at the half, we said out of the AUD 350 million, we'd achieved about 100, a bit over AUD 100 million of that in the first half. We expected on a PCP basis, the second half, we wouldn't see a whole lot more. So, that's what we're expecting in 2025, is the remainder. On a net basis, a net nominal basis, net of all of those inflationary costs and salary rises.
Okay, great.
Thanks, Tom.
The next question comes from Lucy Huang with UBS. Please go ahead.
Thanks, Vicki and Michael. In relation to your comments around mobile subscriber growth currently tracking in line with the first half, sounds like momentum is still pretty strong there. Just wondering if you've seen any noticeable shift in the mix between post-paid, prepaid and wholesale? Like, anything to point out there for the last four months. Thanks.
Yeah. Thanks, Lucy, for your question, and, you know, broadly, we've seen the overall mix continue to trend pretty consistently with what we saw in the first half.
Great. Thank you. So no kind of trading down, in this kind of environment with still, I guess, macro uncertainties?
No, I mean, as we talked about in February, at you know, first half results, we continue to see absolutely that connectivity services, whether it's mobile, broadband, I think for a lot of consumers, even those that are doing it tough, it remains pretty high in their priority set of services that they want to maintain. Obviously, being connected is important to access a range of services, particularly if, you know, you're someone experiencing, you know, financial challenges. So we continue to see consumers wanting to remain connected and keeping their services with us. Obviously, we don't have locking contracts. We have a range of brands that people can access different propositions, and we do support customers who do find themselves in financial hardship.
At this stage, all of the trends and mix that we're seeing continue pretty consistent with what we saw in the first half.
Great. Thank you.
Your next question comes from Darren Leung with Macquarie. Please go ahead.
Good morning, guys. Thanks for the question. I just wanted to ask about postpaid churn, please. And I'm just looking at the first half number at 11.4%. Can you give us a feel as to what it's done in the first four months of this calendar year, please? And I guess I'm asking in the context of, you know, trying to unpin what's, what's driven the decision to defer the postpaid price increases.
Michael, do you want to comment?
Yeah. Darren, we haven't seen... I think it goes a little bit back to Lucy's question around downshifting and mix. We haven't seen any significant shift in that. We tend to get a little bit different first half, second half, churn, and it was 11.4 in the first half, as you rightly point out. We're expecting a pretty similar number for the second half. I haven't seen any trends that would suggest that's significantly different, Darren.
I understand. Thank you.
Your next question comes from Kane Hannan with Goldman Sachs. Please go ahead.
Thanks, guys. Maybe just looking retrospectively, I mean, if you didn't have the CPI linkage structure in your plans last year, how would you have changed postpaid pricing? So I'm just trying to understand, you know, you've spent all the time and effort conditioning the base to expect an annual price rise and giving the market and customers visibility about what it should be. I mean, why would you walk away from that, is the question?
So, Kane, why don't I jump in? And I can understand why there are a lot of questions about the change today. Just, just to reinforce, so firstly, it brings postpaid mobile plans back in line with the rest of our product portfolio. So that does help simplify a little bit in terms of our approach to pricing, and making those choices and decisions. The second thing I'd say is it does give us flexibility. Gives us flexibility, obviously, over the longer run as well, because we know there are many factors that need to be taken into account when we make pricing decisions. We also know we have very different customer needs and value propositions in the market. Even when I look at the Telstra-branded postpaid offering, obviously the customers that choose the various plans have quite different needs and demands.
The change we've announced today does provide us that additional flexibility over the long run.
And maybe just, sorry, quickly follow on. If I think about your, your 2030 outlook then, I mean, you've taken it out of the contract, but do you think CPI-esque mobile ARPU accretion is still something that, that's possible, or we start to tap out in terms of ARPU growth going forward?
The thing we're focused on is we obviously invest at a different level in our network, in our services, in the technology and experience we provide. We continue to see customers value that. We're seeing that through these 4 months again in terms of that subscriber growth in the business. That's what we're focused on. We've got to make the choices and decisions overall for our business. We know there's this ever-increasing demand for data, for ever-increasing better connectivity across the country. As we invest and as we deliver a differentiated experience, we'll make choices and decisions around that in all aspects of our business. Our focus is really on making sure what we're investing in, what we're delivering, delivers that differentiated experience for our customers.
Ultimately, customers will be the judge of that, and as I said, through the four months to date, at this house, we continue to see customers make that choice.
Perfect. Thanks very much.
The next question comes from Entcho Raykovski with E&P. Please go ahead.
Morning, Vicki, Michael, Nathan. Yeah, my question is also on the change in approach to postpaid pricing. I know there's been clearly a lot of focus on this, but, did anything change in the market, in the mobile market over the past few months, which has driven this change in approach to postpaid pricing? And then, you know, looking forward, you've obviously said you're not putting through the July increase. What are the key factors going forward which will drive your decision whether to increase prices in the future?
Thanks, Entcho, for that and for the question. First thing I'd say is, obviously it's a competitive market. You know, and it continues to be a competitive market. But our focus is always on... As I said, it's about how do we differentiate, where we invest, how what we deliver meets the needs of customers and does provide, frankly, a better experience. And we know our mobile network, its coverage, its performance, its reliability, the security that we provide through lots of technology and services over our network, you know, it is a differentiated proposition. And so, yes, it's a competitive environment, but we remain, you know, confident in our ability to invest and differentiate. As you point out, today, we've announced we won't make price changes in July for our postpaid mobile customers.
Part of, you know, the change for the customer terms does give us more flexibility because there are obviously a range of factors that need to be taken into account, not just CPI, when we're making pricing decisions. And you know, we continue to review pricing. As I said, if and when we make those decisions, we will obviously communicate that very transparently with our customers first.
The next question comes from Roger Samuel with Jefferies. Please go ahead.
Well, hi, morning, all. So with the 2,800 job reductions, you're required to consult with employees and unions. So how should we think about the enterprise agreement that is going to expire in September this year? Do you think you need to make some compromise to get through this job reduction program? Or, perhaps given the fact that you removed the annual CPI increases for mobile, that may imply that you're more confident with the outcome of the enterprise agreement?
Yeah. No, thanks, Roger, for that, and look, as you point out, you're spot on. Our current enterprise agreements expire end of September this year. We commenced bargaining with our employee representatives and with the union a little while ago. We were keen to enter those good faith negotiations because we know for our teams, having some certainty in getting new enterprise agreements voted on will be important. So those negotiations are underway and ongoing, as you would expect. This morning, as we made these announcements, we've also spoken with the unions. As part of those negotiations, look, we have very constructive relationships with our unions. We also, you know, have our employees engaged and part of those discussions. So they are ongoing.
We do now need to consult, so we will begin consultation today on the 377 jobs proposed to be impacted. I would expect, as that consultation process happens, we are likely to be in a position where we would make changes on those proposed jobs by the end of July. I anticipate by mid-July, we will be in a position to then provide more detail to our teams internally on the further job reductions and impacts. And again, with those, we will enter consultation with our teams and with the union. So look, as I said, negotiations in our EA negotiations are underway. And, you know, I expect we'll have ongoing constructive conversations with our employees and with unions on the back of today's announcement.
Next question, Rachel.
Next question comes from Brian Han with Morningstar.
Good morning. On the restructure, does it, does it encompass the fixed wholesale business in any way? And if not, I guess why not?
I'm not sure, Mike-
The restructure, the cost out of fixed wholesale. It's cost out right across all parts of the business and, including, fixed wholesale and our InfraCo business, there would be, there is cost out as well.
Right. I only asked, I only asked, Mike, because when you guys termed the... coined the term reset, you specifically confined it to fixed enterprise. So just wondering whether that resetting process encompasses the wholesale business.
Of the specific actions around resetting our Telstra Enterprise business, are focused-
Yeah
... on what we would refer to as, or you'd think of as the retail enterprise business, the enterprise business, where we're selling active services, directly to, businesses and enterprises. It's not specifically with regard to the fixed wholesale business, although as part of our overall cost out program and restructuring charge, there will be, there will be actions in fixed wholesale, along with all parts of the business.
Got it. Thank you.
The next question comes from Scott Ryall with Rimor Equity Research. Please go ahead.
Oh, hi there. Thank you very much. I wanted to focus just on Telstra Enterprise, please. If I read through your press release and listen to your prepared comments, you talk about streamlined product portfolio, simplification of sales and service model, reduction in cost base. And I know you've got next steps, but I was hoping you can comment on, you know, over the last few months as you've been embarking down this review process, what are the thoughts on capability in the Telstra Enterprise division, please? And I guess where I'm coming from is obviously, service provision is getting more complex, but you've now got investors talking in the press about Goodman Group being a better leverage than Telstra for so the data, you know, artificial intelligence themes, for for investment exposure.
It really surprises me that Telstra's not there. I'm wondering if you can just comment on how you see the capability within that group, please.
Why don't I make a couple of comments first, Scott, and then Michael might want to jump in as well. Just to provide a little bit more color as we've been progressing that detailed review of the Telstra Enterprise business... The first thing I'd say is, at the core of it, there is a differentiated business there and proposition to our customers in that enterprise business. You know, our vast networks, they're fast, they're secure, reliable, and we do hold a very deeply trusted position with those organizations we support within enterprise.
What's become clear as we've dug in and we've got into that detail is really, particularly network applications and services, we've probably moved a little bit further out from that core, and we can see advantages now in really simplifying that product set. And as we talked about, we would expect to simplify that down by two-thirds of the products we have in market for Network Applications and Services. Some of the areas where we do think we've got differentiation and absolutely a strong right to compete and win in the future, is absolutely in areas like cloud. It is in areas like AI and cybersecurity. So we absolutely see as we look over the medium to long term of our enterprise business, there is real strength and opportunity there. Now, you mentioned Goodman, and obviously they're investing in data centers.
Our focus when we look at that investment going into data centers across the country, those data centers don't operate as islands on their own. They've got to be connected. And so you will know that we're investing in our InfraCo business, particularly one of the things I'd call out is our Intercity Fibre investments, where we are laying new fiber across the country, connecting our major capital cities and big population areas. And as part of that, you know, that's an important investment because we can see demand just continuing to grow. And AI is fueling this enormous need for processing capacity that needs to be connected, and it's got to be transmitted across networks, and so we absolutely see benefits in our enterprise business. We see benefits in our infrastructure business.
So yeah, over the medium to long run, we see those as important growth drivers for our business as well. Michael, was there anything you wanted to add?
Well, I think you've covered it. I do think that as we look at our exposure to the growth in AI, the growth in sort of the digital economy, in traffic, in processing requirements, that the data center providers are sort of investing in right now, Vicki's captured it. We then connect those, and that connectivity is laying fiber, but it's also the infrastructure of ducts. It's the fixed network sites and other infrastructure we have all over the country, and our ability to invest in that within Intercity Fibre, but also to increase the leverage and growth of our existing infrastructure, whether that's active or passive.
What's exciting is that, particularly in that fiber and duct space, there's been now an expansion of the customers who are looking for that capacity. So we're seeing huge demand from hyperscalers and not just reselling to other carriers. That is creating significant growth opportunities for us. So we do have a lot of exposure to that growth and to that opportunity, and we're incredibly well positioned to exploit that, and that's where we're investing our capital.
All right, great. Thank you.
The next question comes from Nick Basile with CLSA. Please go ahead.
Morning, team. Just a question on mobile. Just wanted to ask, should we be expecting a price increase at all in FY 2025? And if so, what is the best way to think about, I guess, the average increase over 25 or out of financial years? Is it less likely or more likely to be above CPI? I think the reason I'm asking is, as others have alluded to, you know, it is somewhat challenging, I guess, to reconcile the EBITDA guidance in FY 2025 and the step up, if hypothetically, you know, the mobile segment price increases are lower than what we were expecting previously, with them being linked to CPI, and then that therefore negating some of the cost savings you're able to deliver. Thanks.
Yeah. Thank you for the question, and I appreciate you're all trying to reconcile a lot of things today. The first thing, again, I can't comment on future pricing decisions. Obviously, that wouldn't be appropriate at the time. If and when we make those decisions, we would communicate those to customers. We've obviously provided an early underlying EBITDA guidance range for FY 2025, and so that would be what I would point to. Unfortunately, I can't talk about future pricing decisions.
The next question is a follow-up question from Eric Choi. Please go ahead.
Oh, thanks, guys. If on the last maybe can I fit in two quick follow-ups? Just the first one on enterprise and NAS. You're gonna exit certain products and reduce sales staff, so just thinking, would this accelerate the revenue declines in enterprise into FY 2025 versus what you saw in FY 2024? And if so, have you factored this risk and potentially even minimal or negative NAS EBITDA into FY 2025 guidance? And then just on mobile, know you can't comment on timing. I was just wondering the two specific considerations, whether they're factors or factors that you're thinking about, and those two are, obviously, your discount to Optus is probably higher than the traditional range, so does that factor into your thinking?
And then you've also said, your headcount reductions will run until the end of CY 2024, so does the timing of all of that activity come into your thinking? Thank you.
Okay, thanks, Eric, for that. Just in terms of as we think about enterprise and NAS, and yet as you point out, we do expect to really streamline our NAS portfolio of products, reducing it by two-thirds. And obviously, as we're doing that, there's top and bottom line to consider, and we wanna make sure, you know, we're really focused on profitable NAS products and business, and that comes down to where we can differentiate. That also means bringing our cost structure in line with the demand and revenue that we're earning. So that's all in our thinking. As we think about and as we put our FY 2025 guidance together for underlying EBITDA, we've obviously, in that, thought about what we anticipate out of the changes and action we need to take to reset the enterprise business.
Obviously, it will take us a little bit of time to work through the transition of customers onto more modernized products where we have go-to modern products for them to go to, or where we might partner with someone to provide those services ongoing, or it might be, somewhere where it's a straight-out exit. So that's work all ongoing, but broadly, we have factored in sorts of scenarios as we've thought about that guidance range. And when we get to August, to full year results, we'll be able to talk to a lot more detail about where we're at and exactly how we see those things playing out through the enterprise business.
Just in terms of the question related to mobile, as I spoke to earlier, I mean, the thing that's at the forefront of our mind as we consider pricing, we always look at where we're investing, the proposition we're delivering, and obviously the different needs of customers in the market. And so, you know, we have, as you know, a multi-brand approach, so we think about our Telstra brand as really providing the most premium value proposition to our customers, and then we think about our other brands then addressing other needs and delivering other propositions to market. So, they're all of the things that we will always think about as we're looking at the overall business and what it's delivering. But really at the forefront of our minds is continuing to deliver that differentiated and highly valued proposition to our customers.
And as we said in the four months of this half, we continue to see customers making that choice, and we've seen our subscriber numbers continue to grow. So we know, we know that where we're investing, what we're delivering, continues to resonate with customers, and, and that, that's gonna be, you know, a key part as we think about what the future of the business is, and that really drives our confidence in the mobile business overall. That continues to perform strongly in postpaid, in prepaid, in our wholesale business, and in our other brands like Boost and Belong.
Thanks, Vicki.
Your next question is from Fraser McLeish with MST Marquee. Please go ahead.
Yeah. Hi, thanks. Vicki, just on the CapEx, you've talked about cost savings on operating cost base. CapEx is obviously a very big number for you. Is there not some opportunities to do more on CapEx? And then also just with the fall in the share price, since you made the to walk away from InfraCo Fixed monetization, is that not something you should maybe be considering having another look at again now? Thanks.
Thanks for that. Why don't I get Michael to cover the CapEx one first?
Yeah. No, we are very focused on CapEx and many of the productivity initiatives that we're focused on, particularly in the non-labor or non-direct labor space, where we're working with all of our vendors to improve their the outcomes that they deliver for us. A great example is the two recent deals we've done with Infosys and Cognizant to consolidate our existing IT vendors into into those two in a longer-term partnership. That will give us both OpEx and CapEx efficiencies as we go into next year. So definitely a focus on CapEx efficiency. The demand for CapEx, however, you know, continues and particularly as we've talked about in terms of the Intercity Fibre investments that we're making, but also back into RAN and mobile investments to support the mobile business.
But yeah, absolutely focused on CapEx efficiencies as we go into 2025, and many of those same actions we're taking in OpEx will have benefits in CapEx as well.
Mm. No, thanks, Michael. And just to comment, just a question around InfraCo Fixed. Obviously, we made the decision that we think, you know, the value-maximizing choice is to hold InfraCo Fixed under its current ownership structure for the medium term. You know, as we talk to those trends and real tailwinds that we see behind that business, you know, the growth in AI, what that means for demand, and as we progress now, you know, the build is well underway on key Intercity Fiber routes. And frankly, as that progresses, we continue to see, real growth and, potential upside in our InfraCo business over the long run. And so, we continue to believe that holding InfraCo Fixed in its current ownership structure, for the medium term makes sense.
As we've spoken to previously, there may well be on certain projects, on certain investments, we may want to look at different structures or partnerships, to support those. But actually, you know, our confidence in the business and, you know, steady growth in that business over the long run, only continues to increase as, you know, technology changes is happening at the pace it is right now.
Thanks.
The next question is a follow-up question from Tom Beadle. Please go ahead.
Hi. I just wanted to ask about, just with the product simplification in NAS, just how long might this take? Is it fair to assume this might take something like three years, like, you know, like the simplification you saw in the Consumer and Small Business under T22? I guess I'm just trying to understand how you think about the trajectory of that business over the next few years. Like, you know, what type of margin could this streamlined business have? And also, like, could there be some revenue impacts with the product simplification that may not be realized, say, until FY 2026 or later? And also, could the simplification involve the sale of any businesses?
Yeah. Thanks, Tom. And the first thing I'd say is, I think that the way you're thinking about it, you're right. Under T22, we went through a massive simplification of our plans and products from a consumer and small business point of view. As we embark on the reset of enterprise, one piece of that is, you know, a big simplification of our Network Applications and Services products. And, you know, as part of our detailed review, we've been looking at what other peers around the world have been doing. And as I have those conversations with many other CEOs and leaders of those enterprise businesses, yes, I think it is fair to say it will take a period of time to transition and make that change. You don't just automatically make the decision today to simplify the portfolio, and it happens the next day.
It is gonna take real planning, work with our customers. And my expectation at this stage would be that is likely to be over a two to three-year period. As I said, we'll definitely, when we get to August, we're gonna be a lot further through, and we'll be able to talk in more detail about that. But I do think, you know, the way you're thinking about that, how it sits as a comparison to the simplification we needed to go through in consumer and small business, you know, we do need to really approach this as a very significant reset of our enterprise business to put it in the right position to be able to just deliver for customers and then grow over the long run. That's definitely our aim. We think, you know, we've got very deep trusted relationships there.
We've got very strong network and connectivity assets and business. And, you know, it is necessary to go through this reset of the business. I wanna do it properly. I don't wanna do it in a superficial way. This is a real chance to reset it. And obviously, as we plan through that, we will need to consider, as we transition, what are the revenue impacts? But equally, how do we keep, you know, making sure the cost structure matches where we're taking that business? And as I said earlier, we've in that FY 2025 underlying EBITDA guidance, we've obviously formed a view and got a range of perspectives that fit within that in terms of how the business could evolve next year.
Next question?
Next question is another follow-up question from Kane Hannan. Please go ahead.
Sorry, guys. Two quick ones. Just Telstra Health. You've announced a few organizational changes today. Have you made any decisions around where Telstra Health sits in the portfolio? And then quickly, NAS used to talk about a mid-teens margin aspiration. Any sense of what that looks like under the new, new simplified product set? Cheers.
Thanks, Kane. Why don't, Michael, you take Telstra Health first?
Yeah, why don't... Yeah. So, look, we remain confident in Telstra Health. We think the set of assets that we have in Telstra Health fit together and represent a real value proposition to the healthcare sector. Clearly things are uncertain in the healthcare sector at the moment. I don't think that's any surprise to anyone as many of the different healthcare providers and government departments and government healthcare providers come out of COVID and go through that transition. But the need for digital health and connectivity across pharmaceutical scripts, GPs, hospitals, aged care, disease registries, all of those assets that we've got put together, that value proposition remains incredibly strong.
Yeah. No, thanks, Michael. And then, Kane, just to your second question on NAS, we're obviously in the midst of that detailed work and planning out that simplification of the product set. It's fair to say, as we're doing that, we're very much focused on those products where we can differentiate, where we can get the cost structure at the right level, to be able to deliver, you know, profitable NAS products to market. It's a bit too early, I think, for us to talk about what that looks like in terms of targeted EBITDA margins. It's something, you know, as we progress further and come back as part of full-year results, you know, we'll be able to expand a little bit further on where we're at in that work and certainly what the outlook is for 2025.
Yep... Perfect. Thanks, guys.
Next question, please.
Our next question is a follow-up question from Roger Samuel. Please go ahead.
Yeah, thanks. I just want to follow up on the previous question. So what exactly the products that you are removing in NAS? Is it mainly the legacy calling applications and not so much on cloud and cyber, and yeah, the value-adding stuff? Thanks.
Thanks, Roger, for that. Michael, why don't you jump in on that one?
Yeah, I think you're absolutely right. There's a focus on exiting and migrating out of those legacy products onto growth products. Calling is a great example where we're moving out. There's also, you know, a tail of small products that we would look to exit that just take noise and cost out of the system over time. And probably trying to get less a focus on pure technology reselling and into managed technology services that are sovereign, secure, and mission-critical and managed by Telstra. So really focusing on those areas where we're advantaged. So the legacy is obviously one, but and then that long tail.
I think we'll go to our last question.
Now for Entcho Raykovski. Please go ahead.
Thank you. Hopefully a quick one to wrap up. I'm just interested in how you think about the ability of the company to grow dividends in DPS in light of the FY 2025 guidance. I mean, I know you don't provide specific guidance, but the market is at AUD 0.19 per share in FY 2025 at the moment. Is there any reason why you shouldn't be able to deliver that number, particularly in light of the earnings guidance you've now provided? Thank you.
Thanks, Entcho. Michael, do you want to jump in?
Yeah, so, Entcho, I mean, we don't provide guidance for dividends. And, you know, as a management team, we're absolutely focused on growing earnings to support ongoing dividend growth, and we'll continue to maximize our payment of full franked dividends. So, we do see real growth opportunities in the company. Obviously, the guidance range we've provided at the moment is a little wider than we would normally range because it's quite a bit earlier. But we remain confident in our business. We remain confident in getting the cost out. We remain confident in the strength and growth in our mobile business.
We are leaning in heavily to the reset of enterprise, and we think there is a space for us to be advantaged and to get back to sustainable growth within enterprise. And then our InfraCo business is incredibly well positioned to benefit from the explosive growth that we're seeing being triggered by AI. And you're seeing that, and I know the reference to the Goodman Group came up before, but our exposure there, we think, gives us long-term sustainable growth as well. So, we're committed to our strategy of paying, maximizing the payment of fully franked dividends, and as a management team, we're absolutely focused on all levers to grow earnings and to support growth in that dividend.
Okay. Thank you.
Thanks, Entcho, for the last question. And again, thank you to everyone for joining the call today. We appreciate your time and interest in Telstra, and enjoy the rest of your day. Thank you.