Slide 1: ASX cover letter for Analyst Briefing
27/02/2003 The Manager Company Announcements Office Australian Stock Exchange 10th Floor, 20 Bond Street SYDNEY NSW 20006 ELECTRONIC LODGEMENT Dear Sir or Madam Re: Anatyst Briefing Office of the Company Secretary Level 44 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA Telephone 03 8634 6400 Fac
Slide 2: Strong Cash Flow and Dividend Growth
Dr Ziggy: Switkowski Chief Executive Officer Strong Cash Flow and Dividend Growth - Underlying Result ($ billions except EPS/DPS) 1HO02 1HO3 %A Sales Revenue 10.2 10.2 (0.1) Operating Expenses 5.2 5.5 (0.1) EBITDA 5.2 5.2 (0.9) EBIT 36 3.5 (3.3) NPAT & Mi 23 22 (4.1) EPS (cents)! 17.5 16.8 (4.1) DPS
Slide 3: Productive First Half
Productive First Half Full Service Integrated Highlights Telecommunications Company : . Organisation _ = Restructure © _Betens positive _ = [TelstraClear = Property sale + Broadband - 2200k customers | = Chief of BigPond 4+ Wireless -~ MMS = SkynetGlobal > Blackberry 1% launched | = SMS record + Cor
Slide 4: Status - Economy and Regulation
Status - Economy GDP & Communications Services 20% 18% Communication Services 10% | % Growth 5%, oF 5% Sep.i990 Sep.1993 Sep.1996 Sep.1999 Sep.2002 Sour: wp Ganon of Stabsics Economy * Continued GDP growth over next few years expected at around 3% * Telecommunication activity levels growing strongly
Slide 5: Status - Competition and Customers
Status - Competition Revenue per Access Line Increasing Customer Segments 0 “6 * Consumer ~ Robust ~ Package quality ~ Brand strength ~ Customer offers ~ Sub-segment marketing + SME ~ Improving me ue son mee ~ Packaging increasingly important Sea everaesasatsed ~ Channels - increase touch but reduce
Slide 6: Status - Organisation and Capital Management
Status - Organisation + Organisational structure aligned with customers + Efficiency a key focus Staff Numbers G00 Business & Government, | Consumer & Marketing 7 International CAPEX ‘Country Wide Customer Facing B/Units Z New Business ee ue Incubator ou Capital Management improving efficiency @ . 1
Slide 7: Outlook
Outlook Growth Flat for next half + Catalysts - Economic growth ~ CIO/IT&T spending Broadband / wireless data / Sensis PSTN / internet Improve asset utilization ~ Bundling with PAY TV - Margins + To be maintained . Efficiency - New CAPEX targets Further cost reductions $3.2 to 3.3bn 2003, $3bn - 200
Slide 8: Strong Cash Flow & CAPEX Management
Chief dindncial Officer ~ David Moffatt Strong Cash Flow & CAPEX Management Reported Results ($ billions except EPS & DPS) 1H02 1HO3 | % Ax Sales Revenue 10.3 10.5 2 EBIT 3.4 26 (26) NPAT & Ml 2.1 1.2 (44) EPS (cents) 16.3 9.2 (44) Free Cash flow 1.4 2.1 54 Operating CAPEX 1.7 1.6 (8) DPS (cents)* 1
Slide 9: Financial Highlights
Financial Highlights + Increased Dividends — prudent capital management + Strong growth in free cash flow +54% to $2.1bn + Rigorous CAPEX management — down 8% (15% of sales) + Continued focus on operating expenses* — down 0.2% + Success of the New Mobiles Model - cash contribution up 29% to $743m +
Slide 10: Financial Drivers
Financial Drivers Strong Free Cash Fi . Produced by: Permanent Change Improvement @— NGC ill -»¢— Six Signa ——®» 1999 2002 2005 Slide § ‘Strong Free Cash Flow Rigorous CAPEX Allocation Capital envelope segmented into “meeting current business demands” and “discretionary” (for productivity, defence a
Slide 11: Strong Free Cash Flow
‘Strong Free : Cash Flow CAPEX Framework Delivers <P CAPEX* continues to fall Free Cash Flow climbs $2,146m soe $1,716 cay $1,373 4H 2004 1H 2002 41H 2003 4H 2004 4H 2002 1H 2003, New Services within CSG Guidelines Customer Care ~ Satisfaction with Bill {%) om %Metcss — 1H oa SOOO oe om ws Consumy y
Slide 12: Settings for a Low Growth Environment
Seltings for a Low ‘Growth rowin . Environment Underlying EBIT Results $3,645 36m $43m Sales Revenue Si2m Som $76m Other revenue Expenses gare of net equity L $azam accounted losses * Depreciation & po Amortisation Expenses Focus: + Efficiency prog: ammes . + Commercial initiatives Co *SkSigna CAPEX
Slide 13: Settings for Low Growth: Cost Management
Settings tor 6 Low 2) Growth: “ ; ‘ " Environmoant Strategic Cost Management - Issues is Management Activity + Service, contracts & agreements 17% or $125 + Rationalisation and renegotiation - largely completed + Depreciation & amortisation 5% of $76m » Growth rate slowing as CAPEX and D&A "equalise
Slide 14: Settings for the Future
Settings for the Future Settings for the Future . Various Intercarrier Solutions Controlled Services Management “Entities Data & internet 6% 2% Growth: + Intemet & iP Solutions 7% Other Sates & . Service’ 5% 4% Inbound Calling y Products ™ + Mobiles wireless data + Directories (Sensis) Mobil ws . ‘e
Slide 15: PSTN rebalanced products grow +2%
0, PSTN rebalanced products grow +2% Basic access revenues to grow ... access lines stable Local call revenues volumes down 40.40m Access Lines a 6.2m Calls 7 & & = = = = 2 $m 3 sm 4 we = g 8 4H 2002 4H 2003 3H 2002 4H 2003 STD volumes stimulated... yield reduced F2i4 minutes and revenues up Calt 6m
Slide 16: Data, VAS and Handsets Drive Revenue Growth
Data, VAS and Handsets Drive Revenue Growth Revenue movement by category SMS growth trend continues 35% J 342m $52m $1,802m $49m Handsets $26 yy Data $74m YAS Access fees & call a, charges Total mobile Total mobile 2Q2002 «= 3Q2002 402002 = 12003 = 2.2003 revenue 1H revenue 1H 2002 2003 former behav
Slide 17: Internet & IP Solutions +42%
internet & IP Solutions +42% (40%) IP Souutions | 1 Internet Direct 1H 2002 1H 2003 Narrowband ARPU Online Narrowband es. Onkne Be : y Broadband St6m 4H 2002 TH 2003 +H 2002 1H 2003 Revenues Broadband Subscribers (000s) Drive SIO growth Technology . > Investment Decision ADSL > Applications > Profit
Slide 18: ISDN — The Changing Market Mix
ISDN — The Changing Market Mix ISDN Revenues $m ISDN Access Line Equiv (000's} 1,245 4,268 4.490 ISN Calls 2% ISDN Access 15% 4H 2002 2h 2002 4H 2003 4H 2002 2H 2002 4H 2003 ISDN: « A proven premium product — stabilised on 2H02 « Strategy to: * grow share of voice in Key/Corporate market * pursue gr
Slide 19: International Connectivity - Reach
International Connectivity - Reach Asia's Largest international Carrier of Combined Voice and Data Key Financials {A$m; in AGAAP) Wholesale Voice traffic is stable but price reduced... Smaths 6 mths “27% DecO1 Dec 02 ee ae ~~. a Revenue 1,287 1,423 +£4% ena EBITDA A43 6 Total Voice EBIT 248 798 roin
Slide 20: Financial Overview - International
Financial Overview - international Contribution to Telstra Group results 6 months to 31 December 2002 Ee Carrying Total Revenue EBITDA {post G’will} Value @ {$ millions) 1H03 0 1H. 02 1HO3 1H 02 1H03 1H. 02 + CSL 507 577 153 172 28 30 2,805 + Reach - - 19 20 19 20 + TelstraClear (from 1/12/04} 273 3