Telstra Group Limited · ASX:TLS
Telstra — Non-Deal Roadshow (October 2004)
22 slides from Telstra's roadshow presentation, Oct 1, 2004
Slide 1: 2004 International Roadshow presentation - Merrill Lynch conference New York
01 October 2004 The Manager Company Announcements Office Australian Stock Exchange 4" Floor, 20 Bridge Street SYDNEY NSW 2000 ELECTRONIC LODGEMENT Dear Sir or Madam Office of the Company Secretary Level 44 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA Telephone 03 8634 6400 Facsimile 03 9632 32
Slide 2: Highlights of 2003/04
Highlights of 2003/04 Telstra’s fundamentals are strong : i
Slide 3: Telecommunications is a Growth Industry
Telecommunications is gd Growth Industr TT 29%, tad # }fthe consumer market (approx $14b) grav aint Se next year ($76drn), Telco share of Miu Onlg grow 0.1% y © Equivalent to edch household ty DVD par morth Offering customers value will grow our share of wallet Our Strategy Tae FeV: Customier servic
Slide 4: A Progressive Incumbent Telco
A Progressive Incumbent Telco So far in 2004: Telstra is pro-active, not reactive Broadband Taking Off 1 Beret Marox: lun-ay) On target to reach 1 million $10’s ahead of plan 7
Slide 5: A paradigm shift is underway
A paradigm shift is underway Fixed network and services: Mobile network ahd sence __\PNETWORK Internet network: Gnd senices The shift to IP is being managed effectively j Telstra’s Broadband Access Networks — Fixed and Wireless
Slide 6: Integrated Consumer Communications Vision
Integrated Consumer Communications Visio My Identity Consistent and easy ac to-allray: ser My Pauments Control, view. and pay ray Ser My Info & Entertainment [J Communications jij) ource, store, fe Manage and | || 1 control how My Calendar & Address Book Building stronger Customer relationships Busi
Slide 7: Improving Customer Satisfaction
Improving Customer Satisfaction Activation _ 7 Psaurarice HTN Dropout Rate LTT improved customer service is our top commercial priority Full Service Model } is a competitive advantage
Slide 8: Regulatory Issues
Regulatory Issues Federal Election October 9th Bragdband Competition Notice Regulatory issues being proactively managed g Underlying Results | Soles Revenue Domestic ales Revenue | | | Operel ag omenses Steady irnprovement across key financial metrics
Slide 9: Margin Performance Over Time
Margin Performance Over [ime ing EBITDA taurgin % Ce Our underlying margins have improved” Incumbent Telco comparison Twain: Fuvmimens ote Relea)
Slide 10: Effective Capital Management
Effective Capital Management * EPS improvement to 32,4cps (42.2%) # ROE improvement to 27% (+3%) « Net Gearing 42% “LT Outlook As = Stable Moody's Ai — Stabie Fitch At Stable Significant cash returns for shareholders 4 Outlook Company financial focus: profitable revenue, margin & cash flow
Slide 11: Financial Highlights
n fo i m at 6) Anh Financial Highlights Business Growth Cost Management Management Capital fee 2 : i coe: D Fo We GY Strong free cash flows supporting capital management program
Slide 12: Underpinned by Strong Free Cash Flows
Underpinned by Strong Free Cash Flows Free Cash Flow funding operations with modest movement | Free cash flow generation . provides flexibility 4a Repotted Results profits and dividends 4 11
Slide 13: Underlying Sales
Underlying Sales Growth in key products PSTN Rebalanced Products Rebalancing Bundling ' Feature penetration Call completion 53,08am oN eT HHT Optimising returns from fixed network 12
Slide 14: Mobile Revenues (includes termination)
Mobile Revenues (includes termination) $4,705 $322 700. $3455 Solid performance in increasingly competitive market Mobiles Subscriber Base Changing = Increasing portion of prepaid base " Lower blended ARPUs Alignment of deactivation criteria, additional 202,000 SIOs included in Prepaid Mobile Data A
Slide 15: 3G Infrastructure Sharing with Hutchison
3G Infrastructure Sharing with Hutchison * Signed Heads of Agreement 4 August # Cost A$450m over 3 years for 50% share of " Additional approx A$200m for Core ney » Access to Hutchison Whampoa’s globa » Separate consumer branded 36 off ™ Deal Subject to: a ACCC informal clearance a Signing of long fo
Slide 16: Mobile Data
Mobile Data Date asa proportion of revenue Low Data Desk Opportunity to grow ; education is critical ff Strong Growth in Broadband = H2 Stats: 1 46% Net adds Retail » ARPU.- Retail $71 c ARPU - Wholesale $46 BigPond retail market share 42% Minimal impact on Dial-up base Competitive plans stimulating
Slide 17: Broadband Drives Online Commercial Activity
Broadband Drives Online Commercial Activit Seerds Online Onine banking shopping " Full/Half/Qtr page ads " New local directories " Regional colour Oaline * Increasing paid & i customer base Innovation driving growth ut A 16
Slide 18: Sensis business structure and strategy
ensis business structure and stratequ os Hi mid PM) i) agua Fistiore: charinet: (| Gsipgcuders Sensis — Trading Post Acquisition OAR in Australian = Print and online general, automotive and collectibles IA ant Guinea OWL Op Growth synergies expected to deliver continued double digit performance
Slide 19: Service Solutions — KAZ Acquisition
Service Solutions — KAZ Acquisition Mili : GEES uy i Combined capabilities provide a | strong platform for growth ; Underlying Operating Expenses sintsam Oe coum Continued cost focus allowing OD investment in service and growth 18
Slide 20: Cost Drivers
Cost Drivers $10,753 Non tecunirig/Non controllable 2g: Pilot Year Cable recovery REACH pricing LEK $16,3501 Targeted cost reductions on track investing in service and growth Capital Expenditure Eiticiency Retention Ne : 3 Revenue Growth fea Capital allocation process driving targeted capex spend eT
Slide 21: Key International Operations
Key International Operations 4022 | ee 1203 EBITDA aut EBIT * Increasingly competitive market = One-offs impacting FY 03 EBITDA HKS234m Hong Kong’s most profitable EBIT positive mobile business : on standalone basis react" Formot of © diibetton PN OS Sustainable medium term program in place 4 20
Slide 22: Target Financial Parameters
get Financial Parameters Talget Zone 45-558 Tavoet Zone a0 % Target parameters provide flexibility for the future Telstra — A Strong Performer Telstra has an impressive dividend yield, ROIC, EBITDA 14th largest telco globally by market capitalisation * Strong Free Cash Flows Fully integrated model d