The Telstra Group Ltd (ASX: TLS) share price delivered a delightful return in 2025, significantly outperforming the ASX 200 (ASX: XJO).
Impressively, Telstra shares rose by around 21% in 2025, while the ASX 200 only increased by 6.25%.
There were two helpful factors that helped the telecommunications giant last year.
Solid financial performance
The most important thing to drive the Telstra share price higher is good financial performance and the FY25 result included a number of positives that has helped reset market expectations about how much profit that business can make going forwards.
In the FY25 result, Telstra reported ongoing progress for its key mobile division, with 3% income growth to $11 billion and 5% growth of EBITDA (EBITDA explained) to $5.3 billion. It said that mobile service revenue increased by 3.5% thanks to handheld price changes and wholesale. The company saw a 2.1% increase in average revenue per user (ARPU), with 2.5% postpaid handheld growth, 8.4% prepaid handheld growth and 5% wholesale growth. Total mobile handheld users increased by 0.6%.
Telstra boasted that it has Australia’s largest 5G network with 95% population coverage. It’s going to make an additional $800 million mobile investment over four years to extend its network leadership and deliver “5G advanced performance that is faster, more reliable and more efficient than 5G today”.
The mobile performance helped the company report 0.7% underlying income growth to $23.6 billion, net profit after tax (NPAT) growth of 2.6% to $2.2 billion and 3.2% earnings per share (EPS) growth to $0.191. Cash EPS grew by 12% to $0.224.
This improvement in the company’s financial picture enabled the business to pay an annual dividend per share of $0.19.
RBA rate cuts
Another factor that could have boosted the Telstra share price last year was that the Reserve Bank of Australia (RBA) decided to cut the cash (interest) rate three times last year.
When the central bank reduces the interest rate, it makes holding cash less appealing and makes assets like shares and property more appealing. It makes sense that investors looking for defensive investments would be happy to pay more for Telstra shares after three rate cuts.
Is the Telstra share price a buy?
I’m not expecting Telstra to rise another 20% this year.
However, its mobile earnings could rise again in FY26, which I believe is the most important driver of the company. I believe Telstra’s earnings can improve substantially over the next five years as more devices connect to its network and the ARPU could rise too, which helps its appeal as a long-term investment.
With a growing dividend and the tailwind of increasing connectivity, I think Telstra’s outlook is positive and I’d be happy to have it in my portfolio as a defensive pick.
