The dividend reinvestment plan (DRP) will be available from the full-year final dividend that will be paid in September. Shares will be source on market, no discount will apply and no new share capital will be issued. However, there will be no costs for shareholders associated with the transaction. While some had been advocating for a higher dividend, given Telstra's strong growth and the signing of a new NBN deal, chief executive David Thodey stressed that that company had not yet begun to reap many of the cash benefits of the renegotiated contract – that is still to come. "We're just at the early stages and we've had a slower beginning on NBN than what had been forecast by the government," Mr Thodey said. "When you come back and look at that, we're obviously prudent in terms of setting any precedence going forward. We've made the decision, I'm sure the cash will flow, but the timing is still to be determined."

Mr Thodey said he expects the return of the DRP will be welcome by many shareholders as a way to increase their holding in a cost effective way. During the half, Telstra undertook a $1 billion share buyback, which at the time, represented around 1.5 per cent of the telco's market capitalisation. Chief financial officer Andy Penn said the decision to not raise the dividend for the third-straight half was about balancing shareholder returns with financial flexibility for things like acquisitions. "I think it's about pitching the dividend at right levels so it gives shareholders confidence that we will be able to sustain that dividend and grow that dividend over time," Mr Penn said. The $2.1 billion net profit compared with $1.7 billion in the prior corresponding period. Net profit from continuing operations rose 7 per cent from $2 billion to $2.1 billion.

Telstra said it expected full-year earnings to be in line with last year's, excluding a $561 million gain it made from the sale of Hong Kong mobile provider CSL. Growth across the company would offset the loss of CSL's operating revenue, the telco said. Total revenue from continuing operations edged up 0.7 per cent to $12.7 billion. Total income from continuing and discountinued operations fell 1.1 per cent to $13 billion. Mobile revenue increased 9.6 per cent to $5.3 billion, the strongest growth rate in three years. The number of mobile subscribers jumped 366,000 in the six months to December, taking Telstra's mobile customer base to 16.4 million. Margins in the mobile division held at 40 per cent. Revenue growth in mobile was driven by customers increasing their mobile spend. Average revenue per user for postpaid mobile increased 4.4 per cent to $69.71, excluding MRO (mobile repayment option). Telstra chief executive David Thodey said that customers in mobile and fixed-line were increasing their data plans.

"Customers are using these services more and they are willing to pay more for it," Mr Thodey said. Fixed-line revenue continued its steady decline, falling 1.7 per cent to $3.5 billion. The network applications services portfolio, which includes cloud storage and IT services, increased revenue by 18.1 per cent to $1 billion. Mr Thodey said Telstra continued its push to boost productivity, seeking to deliver improved revenues and use its cash more effectively to drive returns. "We have an extensive cost control program in place. While profitability has continued to improve we are still in the early stages of building out our new growth businesses and there is more work to do to achieve our long-term target margins. It is pleasing to see margins remain at a steady level across our core products," Mr Thodey said. Telstra in December negotiated an $11 billon deal with NBN Co to progressively sell its copper and hybrid fibre-coxial (HFC) networks and signed a four-year deal, worth up to $390 million, to assist NBN Co with the design and planning of the national broadband network.

The company remains in discussions with NBN Co, with both having expressed a desire to have Telstra play a larger role in the construction of the NBN. Analysts are divided on the prospects for Telstra's share price, with ratings ranging from 'buy' to 'sell'. Telstra is currently trading on a forward price-to-earnings ratio of 19.3 times. Credit Suisse analyst Fraser McLeish, who has an 'underperform' rating and a target price of $5.55 for Telstra shares, said before Thursday's result the price multiple was hard to justify, given the lack of earnings growth outside of NBN payments. "Telstra is currently in favour as a defensive stock with a reasonable yield," Mr McLeish said.

Citi analyst Justin Diddams said Telstra's shares were trading at a significant premium compared with other telcos around the world, however domestic market factors should support earnings, investor returns and the share price. "The near-term operational outlook looks encouraging for Telstra, with continued market share gains, cost levers and acquisitions driving earnings growth," Mr Diddams said. "At the same time, the NBN deal starts to provide incremental cash for re-investment and/or increase shareholder returns."