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Highlights

  • Macquarie raises Telstra rating to ‘outperform’ and lifts target price 34% to $5.28.

  • Telstra unveils $4.5 billion in operating and capital cost reductions.

  • New five-year strategy includes shift to Network as a Product (NaaP) model.

Macquarie has upgraded its investment rating on Telstra Group Limited from 'neutral' to 'outperform' following the telecommunications company's announcement of a new five-year strategy featuring $4.5 billion in cost reductions.

The brokerage also raised its target price for Telstra shares by 34%, from $3.93 to $5.28, citing improved earnings outlook and strategic clarity. Telstra’s shares closed at $4.75 on Tuesday, marking a 0.4% gain for the day.

The upgrade follows Telstra’s investor briefing in Sydney, where the company outlined its cost-cutting initiatives and long-term operational roadmap under its new ‘Connected Future 30’ strategy. The plan includes a combination of operating and capital expenditure savings to be achieved through workforce reductions, process optimisation, and the application of artificial intelligence technologies.

Macquarie analysts highlighted Telstra’s move toward a more defined product-centric approach, particularly through its Network as a Product (NaaP) offering. 

According to Macquarie, the NaaP model is expected to support average revenue per user (ARPU) growth by enabling differentiated pricing strategies, new product introductions, and a broader mix of services. The brokerage noted that Telstra is targeting more than 50% of its connectivity revenue to come from the NaaP framework in the future.

The $4.5 billion in planned savings form a key component of Telstra’s bid to streamline operations and improve margin performance over the next five years. While specific figures on workforce impact were not disclosed, the company has stated that cost rationalisation will be achieved through structural and technological efficiencies.