Telstra has posted a 5.4 per cent gain in full-year profit to $3.42 billion.
The company says the rise in net earnings comes off the back of a 1.1 per cent increase in revenue to $25.37 billion, which was due to adding 1.6 million mobile services.
Telstra says it has also increased revenue by retaining more customers with improved customer service.
Its chief executive David Thodey says the company is on track to continue growing revenues and profits next year.
"We have seen two years of significant customer growth as our strategy continues to bear fruit," he noted in the report.
"This has translated into strong financial results despite tough domestic and international economic conditions." Mr Thodey told analysts that rising mobile revenues were offsetting the loss of fixed-line customers.
"As you know we had the declines in Sensis and in Telstra business, and the rest of the domestic telco business has been able to pick up those declines and offset them in the year," he said.
"Also our balance sheet remains very strong, and we really do have now have a very clear capital management strategy." Australia's largest telco says it invested nearly $3.6 billion into its network over the past year, including the expansion of its 4G network.
The company says it had excess cash of $1 billion at the end of the financial year, half of which it plans to invest back into its mobile network over the next two years.
Telstra says its relationship with the NBN, finalised in March this year, was progressing well with the company handing over stage one of the transit network to the Government-owned broadband provider.
"With the NBN agreements now in place, we really are committed to delivering on those agreements, and that's our focus, and we are NBN ready because we've got to leverage the opportunities that does create for us," Mr Thodey said.
"We are going to continue to seek opportunities to collaborate with NBN as they work through their roll out schedule." Telstra has met its commitment to 28 cents in fully franked annual dividends, with a 14 cent final distribution announced for payment on September 21.
However, investors were hoping for a better result, pushing Telstra shares down 2 per cent to $3.89 by 12:37pm (AEST).