Telstra boss David Thodey had an enviable problem heading into the release of the company's full year results: what do you do with a $4.7 billion pile of cash?
The telco's 1.4 million shareholders have been eagerly eyeing off the cash pile, which built up in recent years thanks in part to the sale of its Sensis directories business and its stake in a Hong Kong mobile firm.
But Mr Thodey has big ambitions for Telstra and needs money to make them happen.
On Thursday he threw investors a bone, announcing a $1 billion share buyback and lifting the company's final dividend one cent to 15 cents.
While rewarding shareholders, he has still left himself plenty of cash to pursue his aim of turning Telstra into a global technology company with a big presence in Asia.
"It's a balance, we've got to hold money for future investments, we want to return dividends to our shareholders today as well as looking at good capital management in terms of buybacks," he said.
"I'm sure I haven't pleased everybody but I think it's a well-balanced and appropriate return for now."
And shareholders seemed happy with the result, with Telstra shares climbing 12 cents, or 2.2 per cent, to a 13-year high of $5.56.
Morningstar analyst Scott Carroll said the buyback was bigger than expected and would benefit shareholders over the longer term by reducing the number of shares on issue.
"Certainly for a buyback that was probably more than we expected so that's why you've seen the shares rally today," he said.
Telstra lifted its full year profit 14 per cent to $4.27 billion in 2013/14, helped along by a $561 million gain from the sale of its stake in Hong Kong mobile business CSL.
Excluding the impact of that sale, the telco lifted its earnings 4.7 per cent, while income rose 3.5 per cent.
It expects a similar underlying result next year, though headline earnings are likely to be flat because of the one-off boost to the 2013/14 results.
Mobile revenue rose 5.1 per cent to $9.7 billion, with 937,000 new customers added during the year.
But Telstra's dominance in the mobile and broadband markets mean it has limited room left to grow in Australia, which is motivating the push into Asia and into other technological areas.
"We have a strong aspiration to grow in Asia...that is because we've got to grow," Mr Thodey said.
Telstra spent around $500 million on acquisitions in 2013/14 and is looking for further opportunities.
Asia currently accounts for around four or five per cent of Telstra's revenue, excluding CSL, but Mr Thodey would like to see that rise to about 30 per cent.
But the expansion strategy is not without risks, including the huge amount of diversity in Asia, which is why analysts say Telstra is likely enter joint ventures with local partners.
TELSTRA LIFTS PROFIT, DIVIDEND
* Total income of $26.8b, up 3.5 pct from $25.98b in 2012/13
* Net profit of $4.27b, up 14.3 pct from $3.74b
* Fully franked final dividend of 15 cents, up from 14 cents
* The author owns Telstra shares
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