Telstra shares have been marked down despite the company growing profits and boosting mobile subscriber numbers.
Telstra reported net profit of $3.4 billion for 2011/12 on Thursday, an increase of 5.4 per cent on the previous year and its first profit growth in three years.
Revenue for the period grew 1.1 per cent to $25.4 billion.
However, Telstra shares closed nine cents down at $3.88 on the back of profit-taking and questions from analysts about future revenue growth drivers.
Mobile revenues were the big driver of the result, up 8.5 per cent to $8.7 billion as the telco signed up 1.6 million new customers to take its subscriber base to 13.8 million.
Telstra announced plans to invest an extra $500 million in its mobile and national broadband (NBN) transition networks over the next two years - taking its capital expenditure for 2013 to $1.2 billion.
Telstra chief executive David Thodey said the company had enjoyed "a strong year".
"We have delivered on our commitments," he said.
"We expect the business will continue to grow at the top and bottom line in fiscal year 2013."
Mr Thodey was awarded an 8.7 per cent increase in his base pay by the Telstra board, lifting his fixed remuneration component from $2.4 million to $2.65 million, to take it to the median for ASX20 CEOs.
Telstra reported Mr Thodey's total pay for 2011/12, including short-term incentives, was $4.8 million.
Across Telstra's businesses, the slide in landline telephone connections continued with a decline of 281,000 in Telstra fixed-line customers over the year to 6.9 million, and fixed-line revenue in the high-margin business falling 10 per cent to $4.8 billion.
Fixed-line broadband customers - a lower-margin business than voice - grew by 200,000 to 2.6 million.
The troubled Sensis media and marketing business suffered a 17 per cent decline in revenue as Telstra continues with a three-year turnaround plan to bring the once-great Yellow Pages publisher back to profitability.
Telstra also reported a $1.1 billion productivity gain for the year through business efficiency improvements.
Analysts' response were mixed.
Ovum research director David Kennedy said Telstra's mobile market lead and increased network spending would make it difficult for rivals to challenge its network superiority.
However, BBY analyst Mark McDonnell said he saw a series of risks around Telstra's revenue and was concerned that price increases for mobile services would eat into customer numbers.
"The results were lower than expected and that was about the slowdown in momentum," he said.
"The thing that concerns me about price growth is that it exacerbates churn, particularly in the fixed-line network, which has the highest margin."
Despite Mr Thodey saying the slower NBN rollout would have no material effect on revenues, Mr McDonnell said he remained concerned about a negative impact.
Mobiles accounted for a third of Telstra's revenue and Mr Thodey said while the growth plan for 2013 was strong, it would probably not match the customer growth of 2012.
Nomura analyst Daniel Blair said in a note to clients that, while 2013 earnings guidance was broadly in line with expectations, he highlighted the lower rate of sales growth for attention.