Slide 1: Disclaimer
Disclaimer These presentations include certain forward-looking statements that are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward- looking statements. Such forward-looking
Slide 2: Disclaimer (forward-looking statements)
‘These presentations include certain forward-looking statements that are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward- looking statements. Such forward-looking statements
Slide 3: Telstra – the leading player with scale
Telstra – the leading player with scale Telstra is well positioned to take advantage of truly converged communications... I Telstra offers a full suite of communications services · Wireline – Unparalleled reach to customers across Australia · Wireless — already rolling out one of the world’s most ad
Slide 4: We are on the move
We are on the move To know our customers and meet their needs better than anyone else · We are on the move: · Driving a new customer experience · Driving new revenue sources · Driving reduced complexity in the business · Driving costs down · Driving a new competitive culture · Driving a new regulato
Slide 5: Telstra's transformation will deliver...
Telstra’s transformation will deliver... ?? Customer ?? Needs based solutions ?? 1 click, 1 touch, 1 screen, 1 button, 1 step ?? Simplified and integrated customer experience ?? Network ?? Leading wireless network • Biggest network in Aust • Fastest speeds • Best in-building coverage ?? Australia’s
Slide 6: What is market based management?
What is market based management? Set of business principles with strategic concentration on the most important asset of the company: the customer Focus on competitive differentiation in attracting, retaining, and up/cross selling customers: developing vs. “selling to” a customer · Requires deep unde
Slide 7: Seven segments defined with very different needs
Seven segments defined with very different needs I’m ready to buy
Slide 8: Telstra's competitive advantage delivering value
Telstra’s competitive advantage delivering value Customer knowledge greater understanding of customer needs Differentiation leverage exclusive BigPond and Sensis content to deliver a richer customer experience Value customers are willing to pay for Integration ability to access content, services and
Slide 9: BigPond integrated content
BigPond integrated content Telstra M2006 Mobile service • Exclusive LIVE video streams – 8 streams including Channel 9 and direct feeds from athletics, swimming etc • Video Archives, highlights • News and medal alerts • Sensis driven info services Differentiated content across multiple devices Telst
Slide 10: Sensis integrated content
Sensis integrated content Print Online Sensis Mobile Trading Post
Slide 11: Goldman Sachs Private Client Forum, Sydney – April 2006
Telstra Corporation Limited Goldman Sachs Private Client Forum Sydney – April 2006 Sol Trujillo Chief Executive Officer
Slide 12: Disclaimer
Disclaimer These presentations include certain forward-looking statements that are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward- looking statements. Such forward-looking
Slide 13: Telstra – the leading player with scale
Telstra – the leading player with scale Telstra is well positioned to take advantage of truly converged communications... ?? Telstra offers a full suite of communications services ?? Wireline – Unparalleled reach to customers across Australia ?? Wireless — already rolling out one of the world’s most
Slide 14: ...But we need to transform to improve operational trends
...But we need to transform to improve operational trends ?? Revenue mix shifting to currently lower margin products ?? Intense pricing pressure in a competitive market ?? We have too many of everything ?? Regulation is increasing costs and hampering growth Page 4
Slide 15: We are on the move
We are on the move To know our customers and meet their needs better than anyone else ?? We are on the move: ?? Driving a new customer experience ?? Driving new revenue sources ?? Driving reduced complexity in the business ?? Driving costs down ?? Driving a new competitive culture ?? Driving a new r
Slide 16: What is market based management?
What is market based management? ??Set of business principles with strategic concentration on the most important asset of the company: the customer ??Focus on competitive differentiation in attracting, retaining, and up/cross selling customers: developing vs. “selling to” a customer ??Requires deep
Slide 17: Telstra's competitive advantage will deliver value
Telstra’s competitive advantage will deliver value Customer knowledge greater understanding of customer needs Integration ability to access content, services and applications across multiple devices, eg mobile, laptop, PC, home phone Value customers are willing to pay for Differentiation leverage ex
Slide 18: Regulation: ULL, Safeguard, Operational Separation
I’m ready to buy Page 9 Regulation ULL ?? Issue – structure and level of pricing ?? Our position — $30 averaged undertaking lodged ?? Next steps – Government decision expected early April. ACCC assessment of price level undertaking expected shortly after Safe guard ?? Issue – lack of regulatory cert
Slide 19: After transformation...the new Telstra
After transformation...the new Telstra ?? New Hi Speed national wireless network ?? New integrated products/services ?? New customer experience – “power of one” ?? Biggest networks in broadband, mobiles & IP ?? Simple pricing – easy to use ?? Scale position ?? New economic model ?? Attractive Asia p
Slide 20: Stakes in the Ground
Stakes in the Ground* Revenue growth ?? New product revenue ?? Workforce ?? CAPEX ?? Cost ?? EBITDA ($) ?? EBITDA margin ?? Free cash flow ?? Dividend *Subject to a reasonable regulatory outcome **Annualised ***Subject to normal Board considerations ?? 2.0% to 2.5% p.a. (FY10 vs. FY05) ?? 20-30% of
Slide 21: Macquarie Investor Conference, Sydney – May 2006
Telstra Corporation Limited Macquarie Investor Conference Sydney — May 2006 John Stanhope Chief Financial Officer
Slide 22: Disclaimer
Disclaimer These presentations include certain forward-looking statements that are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward- looking statements. Such forward-looking
Slide 23: Key themes
Key themes National 850 3G network IT transformation and cost take out How are we going to change the economics of the business? Culture at Telstra Regulatory environment
Slide 24: Transformation update — 3G network
Transformation update — 3G 850 network Telstra and Cingular first to roll out 850 Other carriers considering 850 networks, some of these involve migrating from CDMA to 3GSM Why the 850 network? Greater breadth of coverage · Necessary for Australia’s landscape · Less base stations required, less cost
Slide 25: Transformation update — 3G network handsets and devices
Transformation update — 3G 850 network 3GSM850 Handsets & PDAs will be a mixture of : triple or quad band 2G (900,1800,1900 2G or 850,900,1800,1900 2G) single and dual band 3G (850 3G or 850,1900 3G or 850,2100 3G) 3GSM850 PC Cards & modems will be : triple and quad band 2G (900,1800,1900 2G or 850,
Slide 26: Transformation update — IT rationalisation
Transformation update — IT rationalisation New BSS and OSS systems will deliver dramatic simplification and new capabilities cost effectively Business Support Systems Operational Support Systems (CRM, Billing & Care) Transformation timeline over 3-5 years (but with delivery of tangible benefits thro
Slide 27: We will dramatically simplify our IT systems environment
We will Dramatically Simplify our IT Systems Environment IT system simplification (number of BSS and OSS systems remaining) 1,252 100% 80% 60% Reduce Reduce 40% by ~75% by ~80% 20% 0% FY 05 FY08 FY10 Page 7
Slide 28: Telstra's competitive advantage will deliver value
Telstra’s competitive advantage will deliver value Differentiation Customer knowledge leverage exclusive BigPond and greater understanding of customer Sensis content to deliver a richer needs through MBM customer experience Value SIMPLICITY customers are willing to pay for Integration Coverage abili
Slide 29: Evolution of products, networks and systems
Evolution of products, networks and systems necessitates a new analytical framework Product extensions (Traditional and New onto NGN networks) • ADSL Internet <1.5 Mbps • IPTV / HDTV (mobile or fixed)* • Foxtel Reinventing • Video calling (GSM 2100 ?3GSM 850) (Broadband • Mobile Data (1xRTT) • Mobil
Slide 30: Driver analysis of the cost of product delivery
Detailed driver analysis will enable understanding of the cost of product delivery Mobile Cost of sales transformation Simplify supply chain NGN Implement single core network Network Maintenance Mobile transformation Eliminate duplicated OPEX NGN Pre-provisioning Activation BSS Customer Self Service
Slide 31: OFCF increases via product/network reinvention and re-engineering
OFCF increases via product / network reinvention & re-engineering ILLUSTRATIVE Operating Free Cash Flow New products over next generation networks Reinvention Traditional products over NGN Reengineering Traditional products over traditional networks (products over narrowband) 2005 — 2010 Page 11
Slide 32: Culture
CULTURE Our people are critical to success. We are developing a new, winning culture. Identified a need to change the organisational culture to align all staff to the new strategic direction and deliver on the vision. Top 300 managers forum CEO and Senior Management team roadshows to staff 6 new cul
Slide 33: Our principles for regulation
Our principles for regulation Legacy networks/services Regulate under existing rules Next generation networks — new rules required which: Compensate an investor for the risks and investment required and allow an appropriate return on capital Regulated access given to competitors only on strictly com
Slide 34: Stakes in the Ground
Stakes in the Ground* Revenue growth 2.0% to 2.5% p.a. (FY10 vs. FY05) New product revenue 20-30% of new revenue growth by FY08 Cost FY10 will be the same level as of Jan 1 st 2006** EBITDA ($) 3-5% p.a. growth through FY10 EBITDA margin 50% — 52% by FY10 Workforce Down 6,000 — 8,000 over 3 years Do
Slide 35: Next Generation Wireless Communications in Australia
Next Generation Wireless Communications in Australia Holly Kramer Group Managing Director Telstra Product Management ATUG Regional Conference, May 2006 Page 1 Version 1
Slide 36: Where are we today?
Where are we today ? Page 2 Version 1
Slide 37: Mobiles are now very much more than voice!
Mobiles are now very much more than voice! From FY 2003/04 to end-December 2005 a 34% increase in SMS messages a >300% increase in MMS messages a 264% increase in active Mobile Browsing users a 356% increase in Mobile Games downloads a Mobile data traffic more than doubled Our handsets are changing
Slide 38: Wireless Broadband
Wireless Broadband Strong growth during 2005 Acceptance by corporate and enterprise IT groups Productivity gains a Quick issue resolution a Easy collaboration with distributed work teams Page 4 Version 1
Slide 39: Why have we turned the corner?
Why have we turned the corner ? Inroads made into the key blockers – a Service and application performance a Service, application and device cost a Applications a More Content a Service and device complexity a Security of mobile devices Page 5 Version 1
Slide 40: Improving performance
Improving performance Customer’s perception of performance is a function of: a Network speed and quality a Device performance a Application design and quality Also requires close cooperation with all parties involved in service delivery Page 6 Version 1
Slide 41: Improving performance: 3G launches
Improving performance 3G launches By end of 2005, all major carriers had launched 3G services Support for a High speed data (> 200kbps) a Multimedia a Video calling and messaging a Voice a SMS Page 7 Version 1
Slide 42: Improved price/performance
Improved price/performance Significant improvement of price and performance of wireless data services Better understanding of value propositions Reducing risk in investments in wireless enterprise solutions Page 8 Version 1
Slide 43: Applications
Applications Applications community maturing a Transport Logistics a Mining a Healthcare Benefits a Better resource utilisation a Improved customer service Page 9 Version 1
Slide 44: More content! Commonwealth Games 2006
More content! Example : Commonwealth Games 2006 Broad range of Commonwealth Games content to our 2G and 3G customers Real time video feeds (8 real time channels) for our 3G customers Paid per event, no carriage fee News, medal tally, schedules & event Results Good example of “next generation” techni
Slide 45: Reducing complexity
Reducing complexity Device manufacturers improving in device usability “Walk Out Working” — Telstra initiative to enable all devices “out of the box” a Requires close cooperation across Telstra with key device, application and infrastructure partners One Click, One Touch, One Button, One Screen, One
Slide 46: Improving security of mobile devices
Improving security of mobile devices Significant increase in laptops & PDAs accessing corporate networks from outside the office a Device control a Usability a Multiple access options Telstra & iPass working together to deliver seamless & secure enterprise connectivity Page 12 Version 1
Slide 47: Telstra Technology Roadmap
Telstra Technology Roadmap Page 13 Version 1
Slide 48: Telstra has continued to invest in multiple platforms
Telstra has continued to invest in multiple platforms 2G 2.5G 3G Super 3G 4G Sharing 3GSM HSDPA1 3GSM 10 Mbps & 2 1 Gbp peak (WCDMA ) 100 Mbps peak 550-1100 Kbps(target goal) 220-320Kbps(target goal) GSM EDGE GSM GPRS 100-130 Kbps Telstra Today 9Kbps 30-40 Kbps Deployed Active rollout 1x EVDV Retain
Slide 49: 3G City To Country
3G City To Country A game changing move Most pervasive, homogeneous, high capacity wireless broadband network in Australia’s history Greater than 98% population coverage 1.6 million square kilometres of coverage Consistency of services in metropolitan and country areas Page 15 Version 1
Slide 50: City to Country coverage map
Orange areas combined represent City to Country coverage equal to CMDA coverage today Page 16 Version 1
Slide 51: 3G City To Country: 3GSM family of technologies
3G City To Country 3GSM family of technologies a 82% of the global digital mobile market a 1.8 billion mobile users globally Average data rates between 500kbps and 1Mbps at launch Simplified integration a Applications developed for one technology Page 17 Version 1
Slide 52: Significant platform simplification
Significant platform simplification 2G 2.5G 3G Super 3G 4G Sharing HSDPA1 3GSM 10 Mbps & 2 1 Gbp peak (WCDMA ) 100 Mbps peak 550-1100 Kbps(target goal) 220-320Kbps(target goal) GSM GPRSEDGE 9Kbps 30-40 Kbps 100-130 Kbps Telstra Today Deployed Active rollout Wide Area WirelessRetaining option Not cur
Slide 53: Customer benefits
Customer benefits For city-based customers: Significantly improved coverage compared to their GSM service today For country customers: Improved city coverage, wireless broadband and 3G services For all 3G850 customers: Better in-building coverage Much improved international roaming Available across
Slide 54: CDMA closure
CDMA closure Customers first a Both CDMA and the new network will work concurrently for some time to assist transition to the new service. Realistic timetable a CDMA will be available until 2008 when replacement services and coverage are the same or better. Analogue lessons learnt Page 20 Version 1
Slide 55: Progress to date
Progress to date Network deployment progressing Well down the handset & device procurement path for 3GSM850 Exciting service portfolio in development Communication with our CDMA customers well progressed Page 21 Version 1
Slide 56: Telstra committed to success
Telstra committed to success Pieces of the next generation wireless service puzzle now in place Significant business development ongoing Industry capabilities maturing Telstra is committed to next generation wireless success Page 22 Version 1
Slide 57: Thank you!
Thank you ! Page 23 Version 1
Slide 58: Next Generation Wireless Communications in Australia
Next Generation Wireless Communications in Australia Holly Kramer Group Managing Director Telstra Product Management ATUG Regional Conference, May 2006 Page 24 Version 1
Slide 59: ASX Investor Hour, Sydney – May 2006
Telstra Corporation Limited ASX Investor Hour Sydney – May 2006 Tarek Robbiati Deputy Chief Financial Officer
Slide 60: Disclaimer
Disclaimer These presentations include certain forward-looking statements that are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those expressed in, or implied by, these forward- looking statements. Such forward-looking
Slide 61: Telstra – the leading player with scale
Telstra – the leading player with scale Telstra is well positioned to take advantage of truly converged communications... Telstra offers a full suite of communications services Wireline – Unparalleled reach to customers across Australia Wireless — already rolling out one of the world’s most advanced
Slide 62: Revenue and cost trends are concerning...
Revenue and cost trends are concerning... Income Growth % 5.0 4.6% 4.0 3.0 2.6% 2.0 1.9% 1.0 0.0 1H05 2H05 1H06 % 10.0 8.0 6.0 6.3% 4.0 4.0% 3.1% 2.0 0 1H05 2H05 1H06 Revenue mix shifting to currently lower margin products We have too many of everything 2
Slide 63: Our Strategic Priorities
Our Strategic Priorities Our vision: a world of 1 click, 1 touch, 1 button, 1 screen, 1 step solutions that are simple and valued by customers Implement market based management to know the customer like never before Focus on integrated services Invest to take out complexity and cost Win in mobiles a
Slide 64: Telstra's competitive advantage will deliver value
Telstra’s competitive advantage will deliver value Customer knowledge greater understanding of customer needs through Market Based Management Value Differentiation leverage innovative Telstra applications, services, BigPond and Sensis content to deliver a richer customer experience SIMPLICITY custom
Slide 65: Transformation update – 3G network
Transformation update – 3G 850 network Telstra and Cingular first to roll out 850 Other carriers considering 850 networks, some of these involve migrating from CDMA to 3GSM Why the 850 network? Greater breadth of coverage • Necessary for Australia’s landscape · Less base stations required, less cost
Slide 66: Market based management
Market based management I Business principles concentrate on customer I Competitive differentiation — developing relationships v selling I Understanding of customer segment unique needs I Extensive research to determine segments – we’ve identified seven different customer segments I Deliver value by
Slide 67: Our principles for regulation
Our principles for regulation I Legacy networks/services I Regulate under existing rules I Next generation networks – new rules required which: I Incentivise investment and allow an appropriate return on capital to shareholders I Regulated access given to competitors on strictly commercial terms I M
Slide 68: FY06 Earnings Guidance
FY06 Earnings Guidance FY06 EBIT change vs. FY05 (percent) 0% -10% -7% to -10% -15% to -20% -20% -21% to -26% September 05 Program EBIT Net Program opex Additional D&A due to Total R&R provision Total Intention to pay 28 cps dividend, subject to board approval
Slide 69: Telstra's transformation will deliver...
Telstra’s transformation will deliver... Customer Needs based solutions 1 click, 1 touch, 1 screen, 1 button, 1 step Simplified and integrated customer experience BigPond Australia ’s leading ISP and services entity Sensis Australia’s leading information resource 50 years of experience managing Aust
Slide 70: Stakes in the Ground
Stakes in the Ground* Revenue growth New product revenue Cost EBITDA ($) EBITDA margin Workforce CAPEX Free cash flow Dividend 2.0% to 2.5% p.a. (FY10 vs. FY05) 20-30% of new revenue growth by FY08 FY10 will be the same level as of Jan 1 st 2006** 3-5% p.a. growth through FY10 50% — 52% by FY10 Down