From CommsDay of 20April 2026
This week’s CommsDay Story of the Week is from an article in Monday’s issue. It is actually a comment piece by Grahame Lynch, rather than a news article, addressing the the notion that major service providers in the telecommunications sector are making super-normal profits (i.e. profiteering). Last year, TelSoc was honoured to have Professor William Webb (author of “The End of Telecoms History”) present at one of our lunchtime webinars, and he made a similar point as Grahame Lynch, in relation to MNOs in Europe as well as Australia. Mobile network operators had not recovered their very substantial investments in 5G and were heading toward the status of connectivity utilities, with commensurate low returns on capital. The reasons why MNOs are in this predicament are interesting matters for debate. 5G is possibly only one reason. Grahame Lynch’s article is interesting and informative.
Comment by Grahame Lynch: The big lie about telco profiteering
The claim that Australian telcos are making record profits has become a default call in some quarters. It is asserted with confidence, rarely tested, and almost always wrong.
The numbers do not support it. The structure of the market does not support it. The history of the sector does not support it.
Start with what was taken away.
Before the NBN, operators earned infrastructure-style returns on fixed networks. Telstra owned the copper access network. TPG Telecom, Vocus and their predecessor businesses built profitable on-net DSL footprints using regulated below-cost access to Telstra exchanges, even as Telstra maintained a high retail share. Those assets generated high-margin, capital-light returns once established. The copper network was sunk, DSLAMs paid for themselves after 18 months.
But that profit pool was dismantled.
The creation of NBN Co centralised those returns into a single wholesale provider. Retailers now buy access at a regulated price and compete over a commoditised product. Margins compressed. They have stayed compressed. If there were excess profits in fixed broadband, they would show up in sustained high returns. They do not. The market is crowded, pricing is tight, and differentiation is limited. The idea that there is a hidden pool of rent sitting in NBN-based retail has no basis in the data.
So the argument shifts to mobile. This is where operators still invest and still earn. It is also where the profiteering narrative falls apart.
Mobile in Australia is a rolling capital program. Networks are upgraded continuously, coverage expectations extend across a vast geography, and the business never settles. Then there is the cost most commentary ignores: spectrum.
Every mobile network depends on spectrum licences acquired from government. Over successive auctions, the industry has paid many billions of dollars for those rights. That money leaves the sector. It is not reinvested in networks. It is not returned to shareholders.
Call it what it is: an indirect tax on mobile users, dressed up as compensation to those users in their guise as taxpayers for use of a ‘community resource.’
Yet it has to be recovered from the same revenue that pays for everything else. It increases the capital base and drags down returns. It is almost entirely absent from the public discussion about pricing and profits.
Put the pieces together and the numbers are not those of a sector extracting rents. Telstra has been generating returns on invested capital of around 9%. TPG Telecom sits closer to 6%. Optus is lower again. These are not monopoly returns. According to Venture Insights, industry weighted cost of capital is 8.3%.
Upstream, the picture is worse. NBN Co itself appears to be earning around 0% on its capital (technically, -0.282% according to its reporting), evidently below its cost of capital. If the sector were awash with excess profit, it would show up somewhere in that chain. It does not.
What exists instead is a redistribution that is rarely described honestly. Consumers get relatively uniform national pricing on fixed broadband, enabled by various historical cross-subsidies. Government extracts billions through spectrum allocations tied to mobile services. The taxpayer-subsidised national network under-earns against its capital base as it pursues social and political objectives, even as 30% of premises don’t use it. Retail operators compete what margin is left away.
That is the system. It is not one where telcos are quietly extracting windfall gains. It is one where a significant share of every dollar paid by consumers is stripped out before profit is even calculated — to wholesale access, to spectrum licences, to so-called equity transfers, to the ongoing cost of keeping networks standing up.
The persistence of the profiteering narrative reflects a simple problem: the bill is visible, the cost stack is not. It is easier to assume rapacity than to follow the money.
But the arithmetic is not ambiguous. The investors making the best money out of Aussie telcos are the mostly foreign lenders to NBN with their de facto government guarantee on 6% annual returns. Dividend yields from Telstra and TPG are more in the order of 4%, while few Aussie telco stocks are at or near historical highs. By comparison, the Future Fund—ironically enough, mainly established from the proceeds of the Telstra privatisation—yields over 8% a year on average.
What you cannot seriously argue, on the numbers, is that Australian telcos are excessively profiteering. They are not.
Grahame Lynch
IN TODAY’S COMMSDAY (Friday 24 April 2026)
Microsoft CEO Satya Nadella outlined the firm’s largest-ever investment in Australia, committing $25 billion by 2029 to expand digital infrastructure, as the company also formalised closer ties with the federal government on AI, cybersecurity and data centre policy.
Telstra chief executive Vicki Brady said the operator’s ability to embed and apply artificial intelligence across its operations would be central to maintaining its position as a connectivity leader, as it pursues a transformation spanning customer engagement, workforce capability and network operations.
Telstra has begun deploying agentic artificial intelligence capabilities to support system modernisation, with early use focused on improving customer migrations between CRM platforms.
Deloitte has warned that surging demand for artificial intelligence infrastructure is set to tighten semiconductor supply chains, with downstream impacts across smartphones, fixed wireless access CPE and network equipment.
Artificial intelligence is beginning to reshape software markets, customer acquisition models and infrastructure strategies, according to Deloitte research director TMT Duncan Stewart and Deloitte Australia national TMT lead Peter Corbett.
The Australian Competition and Consumer Commission has extended the timeframe for its final decision on NBN Co’s replacement module determination, pushing the longstop date out by three months to 2 September 2026.
Major retail service providers have broadly endorsed NBN Co’s targeted fibre upgrade program, while cautioning that execution risks particularly around customer communication and migration support will be critical to its success.
Subcontractors working on the NBN downed tools in NSW yesterday in a 24-hour stoppage, with the Communication Workers Union citing reduced pay rates, rising fuel costs and changes to installation practices.
Telstra has collaborated with Voyages Tourism Australia to augment fibre and mobile connectivity at Yulara, home to Ayers Rock Resort.
The Department of Home Affairs is proposing to reform the Hosting Certification Framework to require cloud and data hosting platforms used by government agencies to meet stronger security standards.
Cisco has produced a working prototype of what it is calling the Universal Quantum Switch that addresses a key barrier to building a quantum network.
A French company plans to build a network of 1,000 distributed micro data centres for artificial intelligence inferencing spanning the US, Europe and the region under the Gulf Cooperation Council.
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