Christmas came early for Telstra shareholders on Thursday with a $4.7 billion present in the form of a $1 billion share buy-back and an increased dividend. The trouble is many of the recipients were expecting more.
A $1 billion share buy-back sounds like a big number but Telstra is a massive company capitalised at $70 billion and with free cash flow this year of $7.5 billion. It has raised a lot of cash recently from asset sales and internal cash generation. Shareholder anticipation of getting a big slice of that cash had been growing.
Some shareholders were hoping that the company might have produced a special one-off dividend. They will be disappointed.
Indeed finance director, Andy Penn, said over a year ago, when investors were asking about share buy-backs, that it would not be meaningful for a company the size of Telstra to undertake a small buy-back - enough to distribute excess franking credits.
But in a sense this is what it has now done.
From these actions, one can only conclude that Telstra wants to keep its powder dry and retain plenty in the kitty for future capital investment and for acquisitions.
As with all acquisitions, particularly those made for less-established companies, there will be hits and misses. And Telstra has never ruled out making a very large acquisition.
Hedging its bets makes perfect sense. Telstra is a company in transition from a core telephony business to a global technology company.
We all know that its traditional fixed line telephone services are shrinking at a fair clip (although in 2014 Telstra managed to curtail this well).
Growing new businesses takes time and in some instances will require plenty of additional capital expenditure.
To hand away the proceeds from selling legacy businesses to existing shareholders rather than investing in transforming into new areas would be short-sighted. (But investment markets can be very short-sighted.)
The trick for Telstra over the next couple of years will be to fast-track its newer growth divisions, like Network Applications and Services (NAS) and media, and optimally manage its mature businesses that currently generate the cash flow.
This places plenty of attention on the mobiles business which has been experiencing softness - particularly over the past half as growth in subscribers slows and competition heats up and places pressure on pricing.
It's the reason Telstra has committed even more capital to its mobile networks - it needs to retain its edge in coverage and service because that has enabled it to achieve a pricing advantage and a large market share.
Having said that, Telstra chief executive David Thodey challenges the naysayers, whom he thinks prematurely predicted the end of the growth in mobiles.
He believes the addressable market for mobiles is "enormous" and that this will flow through to increased numbers of SIM cards in perhaps 12 to 18 months.
Gone are the days when mobiles can be measured by percentage penetration given many people now have multiple devices that carry mobile sims - including new cars and tablets. All of which are, or will be, connected to the network. However he does concede that not all of these devices will produce the revenue per user that as we currently see in mobile phones.
Meanwhile Telstra will need to bide its time as earnings for the 2015 year will be flat - thanks in large part to the loss of earnings from its Hong Kong-based phone company CSL which was sold earlier this year. While analysts were expecting this result, the outlook statement could worry some shareholders.
And this probably goes some way to explaining why the company opted for a share buy-back rather than a special dividend. Even if profit is flat, earnings per share can improve - given there will be fewer shares.
The good news is that the 2014 earnings result was better than expected with total income up 6.1 per cent and earnings before interest tax depreciation and amortisation up 9.5 per cent to $11.1 billion.