Telstra profit climbs as AI rollout deepens job cuts

Telstra reported an AUD $1.2 billion half-year profit after cutting more than 1,000 roles and expanding its use of artificial intelligence across engineering, customer service, and internal operations.

Profit for the half-year ended 31 December 2025 rose 8.1%. Underlying earnings increased 4.7% to AUD $4.45 billion. Telstra also lifted its interim dividend, citing higher cash earnings and tighter cost control.

The result reflected momentum in mobile services, lower operating costs, and the sale of assets it classed as non-core as part of a broader drive to simplify the business.

Cost base

Headcount fell more than 7% during calendar 2025 after Telstra cut 2,356 roles. It ended the period with just over 29,000 staff.

The reductions lowered underlying labour costs by 9%, a AUD $181 million saving. Underlying operating expenses fell by AUD $179 million, down 2.4%, helping offset inflation and other cost pressures.

Redundancy expenses moved in the other direction. Telstra reported a AUD $63 million increase in redundancy costs as restructuring progressed.

More cuts are planned. Telstra has flagged further redundancies as it continues to reshape the organisation and reduce complexity, focusing on its enterprise operations.

Enterprise reset

The largest structural changes are within Telstra Enterprise, where management has described a reset in response to weaker trading conditions and shifting demand. The Fixed-Enterprise unit has recorded income and earnings declines, particularly in Data and Connectivity and in Network Applications and Services.

In Data and Connectivity, upselling and product refresh activity did not fully offset the impact of service rationalisation and customer credits. Network Applications and Services has been affected by the market shift away from traditional voice calling products.

The reset includes exiting products that no longer fit its focus. Telstra has identified cloud applications, equipment sales, and International Network Applications and Services products among the areas it is leaving. It is also relying on partners in parts of the programme, including Infosys, as it reworks delivery and operating models.

Telstra also continued expanding its Aura fibre network as it invests in core connectivity infrastructure.

AI deployment

Artificial intelligence is now central to Telstra's productivity programme. Telstra disclosed 380 internal AI use cases and said it has begun deploying AI agents capable of handling multi-step tasks.

In technology and software teams, Telstra said AI has accelerated software production and release schedules by about 20% and reduced engineering defects. Most software engineers now use GitHub Copilot, with AI also used for testing, change management, and quality and architecture assurance.

AI has also moved into customer service and network operations. Telstra launched an AI Virtual Assistant in November 2025 and said it drove an almost threefold increase in customers resolving enquiries themselves. It reported that 86% of consumer service interactions are now complete through Digital Self Service channels.

Workforce impact

As Telstra reduces headcount, the expansion of AI has raised job-security concerns among staff. Telstra has also linked AI adoption to longer-term plans for a smaller workforce by 2030.

Under a data and AI joint venture with Accenture, about 200 roles are in scope for cuts, with some work moving offshore to India. Telstra has separately denied that AI drove a planned reduction of 550 roles announced in July 2025.

Alongside the reductions, Telstra has increased training for remaining employees. Almost 9,000 employees completed a Data & AI Academy course in the first half of 2026. More than 75% of staff with access to AI tools use them weekly or more often.

Chief Executive Vicki Brady linked the result to the rising mobile revenue, strong cost control, and disciplined capital management.

Brady also said she could not point to a specific role that AI has directly replaced so far, while noting the technology is making the business more efficient.