By Shivangi Lahiri

(Reuters) -Australia's Telstra forecast a rise in annual operating earnings that fell short of market view, sending its shares more than 2% lower on Thursday, even as the telecom firm announced a A$1 billion ($656.10 million) share buyback plan.

The company expects between A$8.15 billion and A$8.45 billion in underlying operating earnings adjusted for lease amortisation in fiscal 2026, compared with A$8.02 billion reported for 2025.

The mid-point of the forecast range was lower than street consensus of A$8.44 billion, according to Jefferies.

Telstra shares fell more than 2% to A$4.88, their lowest in a month, and were among the biggest losers in the ASX 200 benchmark index, which was trading 0.7% higher, as of 0109 GMT.

Analysts at Jefferies said the earnings composition was "a bit disappointing", pointing to softer-than-expected earnings from Telstra's mobile division and a slowdown in customer growth in the second half of the year.

"The FY26 guidance consensus forecast is already at the top end, so there is a risk that consensus forecast may need to be reduced just to bring that into the middle of the range," said Roger Samuel, a TMT equity analyst at Jefferies.

Samuel said the higher-than-expected share buyback looked to have capped the losses in shares.

Telstra's A$1 billion share repurchase plan follows the A$750 million buyback announced in February, and underscores the firm's earnings growth and strong balance sheet.

The buyback is enabled by Telstra's earnings growth and strong balance sheet, and demonstrates the management's confidence in its financial strength and outlook, CEO Vicki Brady said.

Telstra reported 2025 underlying operating earnings of A$8.61 billion, 14% higher than last year and in line with a Visible Alpha consensus. Its statutory profit jumped 31% to A$2.34 billion, in line with street view.

Strong contribution from the mobile, fixed consumer, small business, and enterprise divisions helped Telstra's 2025 profit, further propped up by its cost management initiatives.

Telstra declared a final dividend of 9.5 Australian cents per share, slightly higher than the 9 Australian cents declared for the previous year.

($1 = 1.5242 Australian dollars)

(Reporting by Shivangi Lahiri and Kumar Tanishk in Bengaluru; Editing by Mohammed Safi Shamsi and Subhranshu Sahu)

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