Slide 1: ASX lodgement letter: Analyst Briefing - Half year results presentation pack
9 February 2006 Company Announcements Office Australian Stock Exchange 4" Floor, 20 Bridge Street SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir or Madam Analyst Briefing - Half year results presentation pack Office of the Company Secretary Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA
Slide 2: Telstra Corporation Limited 1H 2006 Results
Telstra Corporation Limited 1H 2006 Results saat Parrecdy todo Selstra These presentations inciude certain forward-tooking statements that are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or imptied
Slide 3: 1H 2006 Result is on Guidance
1H 2006 Result is on Guidance nelstra “} Revenue growth in line with a : guidance with PSTN a concern BO) &, : “ Revenue mix shifting to currently lower margin products “» Wholesale revenue growth is strong “> We will maximise our position in newer product sets |, “» We will re-invigorate revenue gr
Slide 4: While Costs are Growing
While Costs are Growing. f cost Growth Before Interest “ Cost growth in line with % : guidance 10.0 “} Network maintenance 8.0 “» Increasing redundancy &o expense and wage rises : 6.3% « IT architecture 4.0 simplification 20 “» We have too many of everything ce) fs 1HOS © 2HOS aHO6 Lyrready toby “w
Slide 5: Strategic Outcomes - Progress to date
Strategic Outcomes - Progress to date 1000 FTE reduction since June 30 (incl contractors) Cost reduction programs commenced sb 1HO06 Capex saving of $300m identified and redirected to transformational projects Over 400 low value projects stopped 15 office building leases exited Unsatisfied ADSL orde
Slide 6: OSS transformation
OSS transformation: -} Detailed scoping for ail 26 domains complete =“ Vendors engaged BSS transformation: -~} Siebel licensing agreement signed Complexity Reduction: > Almost 200 platform exits identified } IP product simplification underway =} Pricing simplification team established —} Planning fo
Slide 7: Revenue growth
Revenue growth ~} New product revenue “> Cost “> EBITDA ($) “> EBITDA margin “> Workforce “p CAPEX “} Pree cash flow “Annudlised = 2.0% to 2.5% p.a, (FY10 vs. F¥05) 20-30% of new revenue growth FY 10 wiil be the same level as of Jan 1* 2006* 3-5% p.a. growth through FY10 ni ted 50% - 52% by FY10 ite
Slide 8: Telstra Corporation Limited 1H 2006 Results - John Stanhope, CFO
Telstra Corporation Limited 1H 2006 Results John Stanhope Chief Financial Officer j Trrecdy: 4 buys “etstra Product revenue trends continuing 1H result inline with guidance ‘ Unireddy: e BRB | 05/06 guidance adjusted for FITN on hold Setting the foundations for successful execution of strategy
Slide 9: What are the underlying trends
What are the underlying trends: ~) In our business? In the industry? Page 3 “etstra Australian housetiold Penetration wa Retail Broadborid S10 growth* 400% 0g ie = 50% 75% 06 = Ss Ss oe & is iS st ee on fniteenek sem Byedabod: ff * Growth based on net adds Junes-Sepos: “) Broadband penetration in Au
Slide 10: SIO: Market share estimate
SiO: Market share estimate Grange ie Vodafone’ Grek: Resellers) LER: Optus finch. Resatlersy $294 “Market share based on Telsera ectheates “ We have a lower prepaid base than competitors ~} Revenues have been impacted by competitive pricing “} Revenue market share estimated at 45%, down approximatel
Slide 11: Where are we now? Highlights of 1H 2006
_ Where are we now? _ Highlights of 1H 2006 Page 7 “elstra | Totalincome Operating | jin eecidy
Slide 12: Drivers of Growth
Movement. Drivers of Growth sim Revenue Growth Ser % Internet 8 IP solutions 88s 42 Mobiles 2,486: ‘4G. Sensis (Adv:-& Directories) 2i:2944 63 Pay TV 156 39 ISBN 421 (E4) Specialised Dota 453 (8:5) PSTN Voice 3,818 (28) drivers — broadband, S Page 9 i ‘y f Broadband Subscribers ie ADSL cycle times 1
Slide 13: Mobile Revenues and Value Added Services Revenue
em fa Mobile Revenues OM fo vale Added Services Revenue gears 6% $2,486in $8377n. [toe ee inteihational : oo Neeainatiog 319 Roaming Ete Mobile Data Mabile-Services:. B28 E. Hin ready tobD AHOS, “» Mobile SIO growth 7% tb Voice growth slowing, with yields affected by capped plans and discounting “p>
Slide 14: PSTN revenues
11-05. PSTN revenues ~~ Volume migration “> Yield pressures “> Focus on mitigating churn fi PSTN calling volumes and yields Ss 00%, ‘gan Sonipart: 26.00%. “30008, 15.00%. eal Volumes Yields “Non yy Page 13 1H 05 Labour >Redundancy > Salary increases > Controlled entities Baa “ Network payments “Y Pa
Slide 15: Domestic
Domestic “» 3G JV payment to Hutchison $312m ~# international transmission D&A: “> ADSL build & 3G JV/spectrum Depreciation & Amortisation’ Dividends per share IB Ordinary EB Speciat 2H ioe Has. deo! 2H ies! a ae! Intend to maintain ordinary | __ dividend at 28¢ to FYo8 “>interim ordinary dividend $
Slide 16: Free Cash Flow
fo Free Cash Flow » FCF decline: “as $2 038eN <p se $ES5ENT, > Lower earnings we Higher debtors & inventory wi Higher final tax payment for FY05 “> 3G payment | tin ready to Hutch oe whe Lower investment spending Page 17 Telstra nzsm Mee fgrkk HKSm i c J sat basis Standatone basis 1H 06 *A 1H 06 A 4
Slide 17: Guidance
_ Guidance jo uwereday ope Page 19 en Us Lo ( Celstra _FY06 Earnings Guidance _ { FY06 EBIT change vs. FY05 (percent) ‘ Q%' +20% 220% joc tin ready ote buy. PROD Fs ieiser te 2 Frc s8tE Nat Popo nddtionl Sem ies nial! aR ovina ‘quidanice. improvement, ape cost io net Coencbel ic actor vies peeaieg)
Slide 18: And here are the things we have in store...
And here are the things we have in store... Page 24 Sen teckel’ Milestones: Nears: EYa0: PYOG Yeo d hear “y Broadband Access IP-DSLAM & FTTAZMSAN) “Y IPIMPLS Core “) Next Gen Ethernet “} Multi Service Edge “y ATM-Core Exit “Y Soft Switches “e Class 5 & Class 4 CALs “Y 3G wireless. i +. Build Compiet
Slide 19: Major Milestones
Major Year a ao Nea2 | Years Milestones: he | fe a ‘a } Campaign Execution & Time 75% > Reduction ~Y Labour productivity : 1 di irnprovernent 20% % epi ad Cross seli/up sell 30% € immprovernent ~» Churn reduction 40% > Page 23 “etstra Years | ‘ear BOs PGS L Major Ve eal Milestones: Re hey > Migratio
Slide 20: Milestones
Milestones: are Pye “Y Grow revenue faster than tearket “y New wave revenue share ~) New wave revenue growth +} Slower decline in core carriage ~} Longer term contracts ~Y Strong EBITDA from applications ~} Lower cost support due to NGN “ Minimum 10% productivity imp. ~} Lower Capex intensity & stro
Slide 21: Product revenue trends continuing
Product revenue trends continuing 1H result in line with guidance 05/06 guidance adjusted for FITN on hold Setting the foundations for successful execution of strategy Page 27 Telstra Telstra Corporation Limited 1H 2006 Results Q&A j) Pin reciely A