Owners of Telstra Group Ltd (ASX: TLS) shares have seen a pleasing turnaround of the direction of the dividend and earnings in the last few years.
Of course, past performance by the business is not a guarantee of future profit generation. But, the signs are promising, with the company seeing increasing subscriber numbers and a growing average revenue per user (ARPU). The company is benefiting from its mobile network leadership.
The FY25 result saw an increase of earnings per share (EPS) and the dividend. Let's take a look at where the company could go from here, based on estimates from the broker UBS.
FY26
UBS said the 2025 financial year was in line with expectations, noting that mobile postpaid subscribers were impacted by one-off events including the exit of 3G, the reclassification of subscribers into internet of things (IoT) and the removal of idle sims. Price increases may also be somewhat slowing growth.
The broker also said that mobile growth is likely to be subdued going into the first half of FY26 and could lead to some analysts slightly reducing projections for FY26. After analysing the numbers and trends, UBS reduced its previous net profit after tax (NPAT) and EPS projections by an average of 2% over FY26 and FY27.
Even so, UBS is projecting that Telstra's net profit and EPS could increase in FY26 to $2.47 billion and 22 cents, respectively.
UBS highlighted a few key points from a recent conference call from Telstra, including:
(i) more rational mobile market but slower growth over next six months given maturing pay monthly market and higher licensing costs from Starlink direct to cell; (ii) buy back of up to $1bn; and (iii) confidence in FY26 cash EBIT forecasts of 5%-10%.
FY27
A solid FY26 is expected to be followed up by more growth in the 2027 financial year.
UBS is predicting that in FY27, Telstra's net profit could rise to $2.6 billion and the EPS could increase to 23 cents, helped by the $1 billion share buyback in FY26.
The broker noted some of the reasons why profit growth projections were reduced in the 2027 financial year, along with higher depreciation and amortisation charges. It said:
We have lowered our FY26/FY27 EBITDAaL forecasts by -1%, reflecting slower mobile revenue growth of 3% (cf 4% prev) to reflect lower subs growth and some margin pressure from Starlink D2C licensing deal, partially offset by +2-3ppts increase in Fixed Enterprise EBITDA margins reflecting ongoing restructuring (and sale of 75% of Versent in March 2026).
FY28
While earnings are not expected to rocket higher in the 2028 financial year, it could show yet another year of steady gains.
The 2028 financial year is forecast to see net profit rise to $2.8 billion and EPS could increase to 25 cents per share.
FY29
The 2029 financial year could be yet another period of pleasing growth for investors.
This financial year could see the business achieve $3.1 billion of net profit of 28 cents per share of EPS, according to UBS.
FY30
The final year of this series of projections could see the business deliver solid growth.
In this year alone, net profit could jump by 11% to $3.47 billion, with the telco also delivering 31 cents of EPS.
If these projections become reality, it would mean that net profit grows by an excellent 40% to $3.45 billion between FY26 and FY30. There are few ASX blue-chip shares that could expect to grow their net profit as much as that in percentage terms to the end of the decade.
I think it's this potential net profit growth that makes Telstra an appealing business to buy for the long-term.
