Telstra says AI cost-benefits need close examination

Telstra is monitoring its AI investments closely to ensure that the costs don’t start to outweigh the benefits, as it reported a solid result for the first half of the 2026 financial year.

The carrier has consistently positioned AI as a core part of its strategy to achieve cost and productivity benefits, and today told investors the technology was deployed across the business at scale having identified 380 use cases for the technology.

However, Telstra’s chief financial officer Michael Ackland also told investors at the carrier’s half-year results presentation that it was carefully scrutinising its AI deployments for signs that operating costs might start to erode expected returns on investment.

“The one point I would make, and I think it's really core to our technology strategy and how we're going about it … is there is a risk here that you end up in software licencing, cloud cost and in paying the AI providers so that you offset your benefits. That is very much our focus,” Ackland said.

Ackland said that the carrier had made “tremendous progress” in streamlining its cloud costs and that it was ensuring it replicated the achievement with AI.

“We're getting significant efficiencies around the way that we're focused on how we buy software and that is embedded in our in our strategy to ensure that we're using an open architecture, modern software approach," he said.

"We're setting up the way that we're executing AI right now so that we can swap out vendors so that we can move between LLMs [Large Language Models] and that we are really focused on the cost of both cloud and AI."

Telstra product and technology group executive Kim Krogh Andersen revealed some of the estimated 380 use cases that it has for AI to investors, including for testing, for quality assurance, architecture assurance, change management and for customer migrations.

It has also been using the technology to consolidate its applications and technology partners, and reported a 20 percent bump in software development productivity by using GitHub Copilot.

That’s allowed it to reduce code maintenance costs while accelerating its speed to market with new products, such as its self-service, virtual support agents, which are taking out additional operating expense.

Andersen said that while the carrier’s work on AI was not complete, it had reached a stage where the benefits of the technology would start to flow through to customers and create a “good chance” they will have a better experience.

However, reinforcing Ackland’s point, Andersen said that the carrier needed to get the foundation of its AI strategy right or risk losing the cost and efficiency gains its chasing.

“This has been very critical for software but it's [now] even more critical for AI. We believe that, if we don't get that foundation right, we will actually see the run cost of AI outperform the benefits of AI. We are very focused on that foundation, to get that in place,” Andersen said.

AI has become critical to Telstra’s as it seeks to extract higher margins across its business while reducing costs and embarks on its Connected Future 30 strategy.

The carrier today revealed that, as part of Connected Future 30 strategy it provided 75 percent of staff with AI tools and that nearly 9000 of its staff had completed AI training programs.

Another pillar of its strategy is its joint venture with Accenture which will see AI deployed as a means to reduce system complexity across the company and retire legacy platforms.

However, in a possible portent of what’s to come with AI, Telstra recently confirmed that it planned to outsource 209 roles in the year-old joint venture to India.

At the investor presentation, Telstra chief executive Vicki Brady began the delicate task of addressing the decision to move the roles out of the country.

“We recently proposed changes that would see the joint venture tap into Accenture’s existing resources and expertise to deliver on our data and AI roadmap more quickly. That means some roles would not be required. While decisions like this are never easy over time, we expect it will deliver benefits to our customers and our business faster,” Brady said.

Running the numbers

Telstra is chasing cost reduction to offset lower levels of income growth across its business.

However, it today reported a higher-than-expected 14 percent cash EBIT growth for the half and underlying EBITDA after leases of $4.2 billion, which was a five-and-a-half percent increase over the previous corresponding half for FY2024.

Its underlying net profit after tax for the period was $1.2 billion, a 10 percent improvement over the previous corresponding half.

Its mobile business was the outstanding performer returning $93 million in EBITDA growth compared to the previous corresponding half on the back of stronger average user revenue.

Its fixed consumer and small business division also showed healthy growth, with underlying EBITDA growth of $37 million, while its fixed enterprise and international businesses reported declines $9 million and $2 million respectively.

Infrastructure business InfraCo reported underlying EBITDA growth of $27 million over the previous corresponding half.

Meanwhile, Telstra's mobile tower infrastructure division, Amplitel, grew more modestly with underlying EBITDA at $10 million year-on-year.

Brady said that the carrier hoped to address some of the declines in the enterprise business through its partnership with Infosys and Accenture.

“In terms of our enterprise business, we've still got a load of complexity we need to get through in that business. So, we did announce and propose some changes where we are partnering with emphasis to really be able to access their capability to help us simplify the complexity in that business in the way that we serve our enterprise customers.

“We also proposed changes in the Telstra-Accenture data and AI joint venture. Again, that is about accessing Accenture’s global capabilities to help us really accelerate our roadmap on data and AI to be able to deliver benefits to our customers and into our business more quickly,” Brady said referring to its recent decision to cut back on headcount.

Brady added, however, that the carrier would continue to invest in its internal capacity and staff.

“It will be a combination – our internal teams are critical and we keep investing in them. But we also need to remain competitive and at the forefront. We've also got to leverage partnerships.

"I can assure you any decision that impacts a role inside Telstra, they are never taken lightly.”