Telstra Network Paradox: Growth Trap: More network → More customers → More usage → More capex. Returns Impact: Historically subpar ROC (5-6%) due to continuous investment needs. Future: 10% ROIC by 2030 is highly ambitious 5G Network Evolution Higher frequency bands require denser base station networks. Fixed mobile internet growth (NBN competitor) increases infrastructure demand. Hypothesis: Telstra’s competitive advantage in network quality requires sustained high capex, limiting FCF and shareholder returns. Capex: 16.5% × $23Bn revenue = $3.8Bn annually. FCF Under The Hood Current EBIT: $3.8Bn Capex Intensity: 16-17% of revenues ~$23Bn revenue, so capex ≈ $3.7-3.9Bn. Depreciation & Amortisation: ~$2.5Bn (typical for telcos). Taxes: $3.8Bn × 30% = $1.14Bn. FCF = EBIT + Depreciation - Taxes - Capex – WC FCF = $3.8Bn + $2.5Bn - $1.14Bn - $3.8Bn - $0 (stable) ≈ $1.36Bn. FCF Yield = $1.36Bn / $75Bn ≈ 1.8% (low, r...