Telstra Group Ltd (ASX: TLS) shares were in the spotlight this week when the telco giant released its full year results for FY 2025.

The reaction was rather subdued, with investors selling down its shares.

But what do analysts think of its performance? Let's see what the team at Macquarie Group Ltd (ASX: MQG) is saying after running the rule over it.

What is Macquarie saying?

Macquarie appears to believe that it was a bit of a mixed year for Telstra and particularly its key mobile business. It said:

Noisy year for mobile. In FY25, Telstra's (TLS) mobile result was soft in softer market, with Postpaid in particular affected by several one-off drivers. On an underlying basis, Postpaid net adds were 106k underlying churn of 11.8%.

With an additional 2 months of price rises in FY26, mobile services revenue has tailwinds in FY26. Prepaid net adds were inarguably softer at -223k on an underlying basis, driven by the significant TLS Prepaid price rises in FY25. We are mindful of the broader marketwide mix-shift to Prepaid & MVNO post-Covid, but rational MNO pricing is a positive and MVNO price rises are starting to come through, with ALDI a key example. Our EPS downgrades in this report are largely driven by the associated mobile service revenue downgrades.

One positive is that Telstra has been cutting costs and will continue doing so in the future, which it expects to support its growth. Macquarie explains:

Cost-out drives thesis. Despite mobile weakness relative to expectations, cost-out progress continues. We estimate the 550 FTEs reduced in May will provide >A$70m of opex tailwinds in FY26, with an additional A$380m of cost-out from the Versent sale to Infosys in 2H26.

Should you buy Telstra shares?

In response to the results, Macquarie has held firm with its outperform rating but has trimmed its price target to $5.04 (from $5.19).

This implies potential upside of 3.2% based on its current share price of $4.88. The broker also expects dividend yields of 4.1%, 4.3%, and 4.5%, respectively, over the next three years.

Commenting on its recommendation, the broker said:

Wary of a subdued mobile market (and mix shift to MVNO & Prepaid), but looking through the one-off impacts in FY25. Rational MNO pricing and strong cost-out tailwinds, plus ICF earnings, we give TLS credit for a midsingle-digit cash EPS CAGR. Maintain Outperform.