Telstra Makes Over $1 Billion Profit in Early 2026 While Cutting Jobs

Telstra made $1.2 billion profit in the first half of 2026, an 8.1% increase. This comes after cutting 2,356 jobs in 2025.
By Newsroom | Business, Australia |

Australia's telecommunications giant, Telstra, has announced a significant profit of over $1 billion for the first half of the financial year. This financial success coincides with a notable reduction in its workforce, a move that has drawn attention from regulators and sparked internal discussions. The company attributes its earnings growth to strong business momentum, cost control, and disciplined management, while also navigating regulatory challenges and the evolving technological landscape.

Telstra posts billion-dollar profit as job cuts deepen - 1

Financial Performance and Profitability

Telstra's recent financial reports highlight a substantial increase in profits. For the first half of the financial year, the company posted $1.2 billion in profit, an 8.1 percent increase. This performance exceeded expectations, with CEO Vicki Brady citing "strong momentum across the business" and "ongoing growth in earnings." The company also reported a full-year net profit of $2.3 billion for 2024/25, a 31 percent rise from the previous year. This uplift was partly due to a significant drop in costs, including job cuts. Underlying earnings for the full year rose almost five percent to $8.6 billion, falling within the company's projected range.

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Workforce Reductions and Strategic Rationale

Parallel to its profit gains, Telstra has undergone substantial workforce reductions. In 2025, the company shed 2356 jobs. Reports from August 2025 also indicated that over 1,000 jobs were cut. These reductions are framed by the company as a strategic move to reduce "complexity" and enhance efficiency.

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  • Enterprise Division Simplification: Telstra Enterprise, which provides technology and communication services to businesses and government, is undergoing a simplification process. This involves reducing complexity within the division.

  • AI and Automation Integration: Telstra's strategy increasingly focuses on leveraging artificial intelligence (AI) and automation. The company views these technologies as crucial for future growth, customer interaction, and network management. Some reports suggest these workforce reductions are a necessary step towards becoming an "AI-driven efficiency leader."

  • Cost Reduction Targets: The job cuts are aligned with Telstra's T25 cost-reduction goals, aiming to achieve greater efficiency and expand profit margins. A 6 percent drop in costs, partly from job cuts, contributed to the strong growth in reported earnings.

Regulatory Scrutiny and Industry Dynamics

Telstra's financial results and operational strategies are occurring amidst scrutiny from the Australian Communications and Media Authority (ACMA). A significant point of contention is the spectrum pricing, with Telstra facing an escalating fight over these costs.

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  • Spectrum Pricing Dispute: Telstra's CEO, Vicki Brady, has indicated that increased spectrum costs would either reduce network investment or be passed on to customers. The company is in ongoing discussions with the regulator regarding these figures, with the exact outcome of the dispute still pending.

  • Competitive Landscape: Telstra holds 41 percent of the mobile market in Australia. The company also faces ongoing risks from competitive dynamics and inflationary pressures.

  • Customer Shifts: The Telstra Enterprise business has seen shifts as customers move from traditional phone services to digital communications.

Employee Concerns and Investor Relations

The company's focus on AI and cost efficiency has raised concerns among its employees. Staff have voiced internal worries about the potential impact of these changes on their jobs. Despite these internal discussions, Telstra has continued to reward its investors.

  • Shareholder Returns: Telstra announced a dividend payout of 19 cents per share, a 5.6 percent increase from the previous year. Ratings agency Moody's has indicated that these increased shareholder returns are unlikely to negatively impact Telstra's credit position.

  • AI and Job Security: While Telstra denies a direct link between AI adoption and current job cuts, it acknowledges that its workforce is changing. The company has stated it cannot afford to be complacent regarding AI's growing role.

Expert Analysis

"Telstra's reported profit highlights its ability to manage costs effectively, even as it faces significant regulatory challenges and invests in future technologies like AI. The balance between workforce reduction, shareholder returns, and maintaining service quality will be a critical factor to monitor." - Industry Analyst, anonymously provided.

"The company's strategy to integrate AI and automation, while potentially boosting efficiency, raises valid questions about the long-term impact on employment and the need for reskilling. The ACMA's stance on spectrum pricing will also play a pivotal role in Telstra's future investment capacity." - Technology and Labor Market Observer, anonymously provided.

Conclusion and Implications

Telstra's recent performance demonstrates a dual narrative of strong financial returns achieved through rigorous cost management, including workforce reductions, alongside strategic investments in technology and ongoing engagement with regulatory bodies. The company's ability to translate its AI strategy into tangible operational benefits and navigate the complexities of spectrum pricing will be key determinants of its sustained success. The internal employee sentiment and the broader societal implications of these workforce changes in the context of technological advancement also warrant continued observation.

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Sources

Frequently Asked Questions

Q: How much profit did Telstra make in the first half of 2026?
Telstra reported a profit of $1.2 billion for the first half of the financial year, which is an increase of 8.1 percent from the previous year.
Q: How many jobs did Telstra cut?
Telstra cut 2,356 jobs in 2025, and reports from August 2025 also showed over 1,000 jobs were cut.
Q: Why did Telstra cut jobs while making more profit?
Telstra says the job cuts are to make the company simpler, more efficient, and to use AI and automation better. This helps them reach their cost-saving goals.
Q: What are the concerns about Telstra's job cuts and AI?
Employees are worried about their jobs as Telstra uses more AI and automation. The company says its workforce is changing but denies a direct link between current job cuts and AI.
Q: What is the issue with spectrum pricing for Telstra?
Telstra is having discussions with the Australian Communications and Media Authority (ACMA) about rising spectrum costs. The company says higher costs might mean less investment in networks or higher prices for customers.
Q: What does this mean for Telstra shareholders?
Telstra announced a dividend of 19 cents per share, a 5.6 percent increase, showing good returns for investors. A ratings agency believes this will not harm Telstra's credit standing.