Despite its many flaws - a reputation for poor customer service chief among them - the one thing Telstra always had going for it was engineering prowess. That's why the company has dominated Australia's mobile market in the era of the iPhone. Its network has, for most of that period, simply been better equipped to handle data-hungry devices, and demands for constant connectivity, than those of its rivals. But times change. Telstra's claim to network superiority was seriously called into question last year after a series of embarrassing outages. And this week, we were given the clearest sign yet that top management is focused less on actual engineering than it is on financial engineering. For the 1 million or so Australians who own Telstra shares, as well as its many customers, this should be a wake-up call. The goliath telecoms operator released its annual results on Thursday and they weren't entirely terrible. Yet, as is often the case with Telstra, the numbers were overshadowed by the board's decision on returns to shareholders. The telco said it would next year cut its dividend to 22?? a share from 31?? currently. It also said it was considering a plan to package up payments it will receive from the national broadband network for access to its infrastructure, and sell them on to investors. The proceeds from doing that, which could be as much as $5.5 billion, would then be used to reduce debt and fund share buybacks. Telstra's stated aim is to be a world-class technology company. It's a reasonable and worthy goal. But one of the defining characteristics of world-class technology companies is rapid growth. Telstra doesn't have that. And it's hard to see how it ever will, especially when its focus is financial wizardry, rather than selling more products to people and businesses. If the financial chicanery Telstra attempted this week was designed to mask the reality that its core business isn't growing, it didn't work. The stock crashed 10 per cent on Thursday, and with that, much of the gains of the David Thodey era have been wiped out. Some form of dividend cut was widely telegraphed - chairman John Mullen signalled it was on the cards last month, and some analysts were expecting it. Yet the degree to which Telstra decided to swing the axe took the market by surprise. It formed part of a new policy under which Telstra will return between 75 and 90 per cent of its profits to shareholders, down from 100 per cent currently. This brings it closer to the kinds of payouts its oligopoly peers in Australia, such as the major banks, adhere to, but for Telstra it represents a huge change. In any case, it was the kind of decision chief executive Andy Penn eventually needed to make if Telstra is ever going to escape from its dividend straitjacket. At the moment, its shareholders own the stock for its yield. They expect the company to return all excess funds to them. But that makes it harder for Telstra to invest in its core business of selling mobile phone connections and internet access - let alone the growth initiatives that will determine its long-term fortunes. Lowering the dividend will provide Penn with flexibility to ensure Telstra's network is up to scratch and that its prices remain competitive as pressure heats up in its key markets. With David Teoh-led TPG Telecom building its own wireless network, unprecedented competition in mobiles looms on the horizon. Meanwhile, as the NBN rolls out, millions of Australians households are getting a chance to think about who they want to get their internet from. With the most market share, Telstra has more to lose than anyone. Just last month, Mullen noted that Telstra's "potential competitors of the future" like Amazon don't pay dividends at all - instead they use the cash generated from their operations to invest for growth. If Telstra had not paid dividends for a decade, he said, it would have a $50 billion war chest to play with. We will never know what Telstra might have done with that money. It might have built a killer new business, or totally blown it. The reality is shareholders wanted this money in their pockets. Eventually, Telstra's dividend binge had to stop, and that day has finally arrived.