You could read the official Telstra announcements. A snippet...

You could read the official Telstra announcements.

A snippet below

Capital Management Framework

The objectives of the revised capital management framework remain the same as those communicated to the market in 2012, including maintaining Telstra’s tight fiscal discipline, maximising returns for shareholders, maintaining financial strength and retaining financial flexibility.

As a result of the capital allocation strategy review some of the principles supporting these objectives have changed. The new principles are to:

• Maintain balance sheet settings consistent with an A band credit rating;
• Pay a fully-franked ordinary dividend of 70-90 percent of underlying earnings;1
• Target capex/sales ratio of ~14 percent excluding spectrum from FY20; and,
• Maintain flexibility for portfolio management and to make strategic investments.

The revised Capital Management Framework is attached.
Dividend Policy

The new dividend policy supports the objectives of the capital management framework and is consistent with shareholder feedback to maintain a strong balance sheet and flexibility to manage the business and invest, especially during the nbn transition.

Mr Penn said the new dividend policy, which will commence after the payment of the final dividend for the 2017 financial year, would move Telstra away from a historical practice of paying out almost 100 percent of profits.

“From FY18 we will adopt an ordinary dividend payout ratio of 70-90 percent of underlying earnings, which is more in line with global peers and local large companies,” he said.
“In addition to the ordinary dividend, we intend to return in the order of 75 percent of net one-off nbn receipts to shareholders over time via fully-franked special dividends.

“We believe this is appropriate given one-off income is akin to compensation for an asset sale over a number of years and aligns with market feedback and expectations that these receipts are returned to shareholders.

“With the implementation of this new dividend policy, we expect total dividends in respect of FY18 to be 22 cents per share fully-franked, including both ordinary and special dividends.”
Mr Penn said in adjusting the capital management framework and resetting the dividend policy Telstra had balanced the importance of providing consistent returns to shareholders with the long term sustainability of returns and strategic direction of the company.

“We realise this is a material reduction from the historic level of our dividend and we do not underestimate the impact on our shareholders. It is for this reason we are providing advance notice of this change and why the Board has maintained a 31 cents dividend this year,” Mr Penn said.

“These are important changes to Telstra’s approach to capital management and appropriate in the context of our strategic transformation. This is about setting the business up for success in the future.”

Above subject to some of below

1 “underlying earnings” is defined as NPAT from continuing operations excluding net one-off nbn receipts (as defined in footnote 2 below).

2 “net one-off nbn receipts” is defined as net nbn one off Definitive Agreement receipts (consisting of PSAA, Infrastructure Ownership and Retraining) less nbn net cost to connect less tax.

3 Return subject to no unexpected material events, assumes the nbn™ rollout is broadly in accordance with the nbn Corporate Plan 2017 and receipt of associated one-offs, and is subject to Board discretion having regard to financial and market conditions, business needs and maintenance of financial strength and flexibility consistent with Telstra’s capital management framework.

4 It is anticipated Telstra would retain approximately 25% of the equity component of the transaction.