Telstra has vowed to protect its stronghold over the Australian mobile market, amid increasing competition from Optus and Vodafone as management seek new growth areas.
Telstra spent $667 million on its mobile network, the jewel in the group's extensive business portfolio, in the six months to December 31 to ensure a world-class service for data-hungry customers.
It added 235,000 domestic retail mobile customers in the period, taking its total mobile subscriber base to 16.9 million.
Optus, which is owned by Singapore Telecommunications, has around 9.4 million mobile customers while Vodafone Hutchison has around 5.3 million mobile customers.
But while Telstra lifted mobile customer numbers, the division delivered mixed financial results which fed into the telco giant's flat overall net profit of $2.09 billion.
Telstra is extending its 4G network coverage, improving its voice and data offering and increasing download speeds.
"We have a very clear purpose at Telstra to create a brilliantly connected future for everyone," chief executive Andrew Penn said at the mobile giant's interim results presentation on Thursday.
Demand for data continues to gain momentum, with the amount of data carried over Telstra's mobile network up 42 per cent in December from the same month a year ago.
Australians are increasingly using their mobiles and computer tablets to watch videos and movies while on the go.
Telstra has pledged to invest $5 billion on its mobile network over three years to June 2017.
The telco is looking at investing in the Philippines and other technology areas to ensure future earnings growth.
Mr Penn said talks with beer and food giant San Miguel about setting up a third mobile player in the Philippines, which has one of the lowest mobile network speeds in the world, are ongoing.
Telstra flat interim net profit came as a 7.6 per cent rise in revenue was offset by a 14 per jump in operating expenses.
The telco reiterated its annual guidance of mid-single digit growth in total income and low-single digit growth in earnings before interest, tax, depreciation and amortisation.
IG market strategist Evan Lucas said the results are "a little soft", noting the composition was a little bit weaker than expected.
Telstra's outlook guidance suggests the company is moving towards an expansion project idea, Mr Lucas said, noting the payout ratio fell to the lowest level in about five years.
Macquarie Securities analyst Andrew Levy said the operational challenges are becoming harder to offset.
The result is highlighted by the rapid turndown in mobile operating trends, with growth in service revenue - the money Telstra gets from customers' plans and traffic on its network - just 0.5 per cent.
That compares to service revenue growth of 7.2 per cent in the second half of fiscal 2015.
The slowdown was offset by a 19 per cent jump in mobile hardware revenue, with overall mobile revenue up 3.7 per cent to $5.5 billion.
Telstra shares gained three cents to $5.40.
TELSTRA'S NET PROFIT FLAT
*Net profit was flat at $2.09b vs $2.09b a year ago
*Revenue rose 7.6pct to $13.68b vs $12.72b a year ago.
*Interim dividend rose 3.3pct to 15.5 cents a share
