Telstra Group Limited · ASX:TLS
Telstra — Merrill Lynch Conference, New York 2007
16 slides from Telstra's conference presentation, Sep 10, 2007
Slide 1: Telstra presentation to the Merrill Lynch Conference, New York
10 September 2007 Office of the Company Secretary For personal use only The Manager Level 41 242 Exhibition Street Company Announcements Office MELBOURNE VIC 3000 Australian Stock Exchange AUSTRALIA 4th Floor, 20 Bridge Street Telephone 03 9634 6400 SYDNEY NSW 2000 Facsimile 03 9632 3215 ELECTRONIC
Slide 2: FY 2007 Results
For personal use only FY 2007 Results
Slide 3: Disclaimer
Disclaimer For personal use only • These presentations include certain forward-looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties. Actual results, performance or achievements could be significantly different from those ex
Slide 4: World Class Performance
World Class Performance For personal use only PSTN retail line loss Broadband KPIs Mobile Service revenue growth of $60 50% national incumbent 0% 15% 45% 10% -4% $50 40% 5% 35% -8% 0% 2H05 1H06 2H06 1H07 2H07 2H07 $40 30% 1H06 2H06 1H07 2H05 1H06 2H06 1H07 2H07 Telstra US Avg Europe Avg Retail Marke
Slide 5: Delivering on the promise…
Delivering on the promise… For personal use only PSTN Revenue • Mobile service revenue growth at 9.8% YoY Mobiles • 2 million 3GSM customer milestone passed (1m Next G™) • Next G™ speed and coverage setting global benchmarks 2H04 2H05 2H06 2H07 • Broadband momentum continues – revenue growth -2.5% B
Slide 6: FY2007 Financial Results (Reported)
FY2007 Financial Results (Reported) For personal use only $ billions (except margins & DPS) FY06 FY07 % Guidance Sales Revenue 22.7 23.7 4.2 +2.5 to +3.0% Operating Expenses 13.5 14.1 4.4 EBITDA 9.6 9.9 3.0 On or ahead of guidance EBITDA Margin (%) 42.2 41.7 0.5pp EBIT 5.5 5.8 5.1 +3.0% to 5.0% PAT
Slide 7: Maintaining competitive advantage
Maintaining competitive advantage For personal use only Competitors Wireless 3 • 14.4Mbps network speed to 98.8% of population – world class • Superior depth at 850MHz 2 • 3.6Mbps to only 55% of population • Inferior depth at 2100MHz HFC 3 • 30Mbps to 1.7m homes in CY07 • 17Mbps to a further 1m home
Slide 8: Transformation progress – MBM & Productivity
Transformation progress – MBM & Productivity For personal use only Outbound sales Contact Volumes: 6m • Segmented lists • Needs-based product set Strike rates: doubled to 16% • Words that work • Time for day New services: 400k • Preferred medium • Test & learn Incremental revenue: $200m Fieldforce C
Slide 9: Transformation progress – IT
Transformation progress – IT For personal use only Targets & Timing Achievements Decommissioning: Target: Reduce and simplify systems 9 Exited 213 systems since Nov 2005 - 132 in FY07 9 80% ‘out of box’ requirements 9 On track to achieve 80% reduction by FY10 9 Aiming to deliver significantly improv
Slide 10: Sales Revenue Drivers: $23.7b
Sales Revenue Drivers: $23.7b +$961m 4.2% For personal use only Drivers of FY07 FY07 FY07 Revenue Growth 1H07 / 2H07 Movement (%) Growth Movement Actual % ($m) ($m) Total Mobiles 12% 16% 13.9 695 5,701 • Mobiles Services 7% 13% 9.8 444 4,983 • Mobiles Handsets 70% 41% 53.7 251 718 Retail broadband 5
Slide 11: Operating Expenses: $14.1b
4.4% Operating Expenses: $14.1b +$600m For personal use only FY07 Change +4.4% Labour $4.0bn -8.0% 0.8% 1.1% $14,092m 4.7% Salary $3.42 +0.3% -2.1% Redundancy $0.15 -72% $13,492m Goods and Services $5.2bn +9.6% Network payments $1.80bn -10% COGS $1.23bn +35% FY06 Mobiles Aqn / Div Transf. BAU FY07 H
Slide 12: Cash Capital Expenditure: $5.7b
32.8% Cash Capital Expenditure: $5.7b +$1.4b For personal use only • IT infrastructure • IP enablement of • Move from leases to Other (YoY +$464m) network Switching (+$504m) purchase of hardware • Next G™ & Next IP™ launch • Network infrastructure Specialised $867m $956m • Increased broadband to sup
Slide 13: Cash Flow and Financial Parameters
Cash Flow and Financial Parameters For personal use only Free Cash Flow -36.7% • FY07 peak spend year -$33m -$33m -$1,397m -$1,397m • FCF down $1.7 billion driven $4,579m $4,579m -$250m -$250m by launch of Next G™ and Next IP™ networks $2,899m $2,899m Total Operating Investing Net Total Reported Acq
Slide 14: FY08 Guidance
FY08 Guidance For personal use only Guidance on Reported Numbers* Revenue In the range of 2.0% to 3.0% First half EBITDA EBITDA In the range of 2.0% to 3.0% to decline slightly due to: 1. Transformation spend EBIT In the range of 3.0% to 5.0% profile 2. FY07 MTA adjustment 3. FY07 AAS sale Depreciat
Slide 15: Long Term Management Objectives
Long Term Management Objectives* For personal use only Revenue Growth 2.0% to 2.5% pa to FY10 New product revenue In excess of 30% sales revenue FY10 Cost growth 2.0% to 3.0%pa to FY10 EBITDA ($) 2.0% to 2.5%pa growth to FY10 EBITDA margin 46% to 48%pa by FY10 Workforce Down 12,000 by FY10 Capex 10%
Slide 16: Summary
Summary For personal use only Transformation World-class performance Media-comms/integration • Mobile growth • BigPond • Broadband ARPU • Foxtel • PSTN lines • Sensis • NextG™/NextIP™ integration TODAY TOMORROW Shareholder value 15