Telstra Group Limited · ASX:TLS
Telstra — Investor Day (November 2007)
76 slides from Telstra's investor day presentation, Nov 1, 2007
Slide 1: Investor Day – Part 2 ASX cover letter
1 November 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 LO
Slide 2: Winning in the Market
For personal use only Winning in the Market Bill Stewart Winning in the market 1
Slide 3: Future of Marketing at Telstra
Driving significant results For personal use only Future of Marketing at Telstra 2
Slide 4: Business Unit Performance
Business Unit Performance For personal use only Thank You 3
Slide 5: Telstra Consumer FY07 performance
For personal use only Investor Day David Moffatt Telstra Consumer FY07 performance H107 H207 H107 H207 Revenue EBIT PSTN • Strong Sales Momentum- All products • Market Leader – All products Mobile Service • Market Leader – New Products Inte rnet • World Leading Performance - Mature Products Pay TV Q
Slide 6: Our sustainable value creation strategy
Our sustainable value creation strategy For personal use only Driven by customer needs 5 . Business ROI + Technical Feasibility Filter operating performance& 1 . T elstra cycle corp. s trategy 4. Shareholder Competitive Value advantages from scale Cycle 2 . Business Unit Strategy 3 . Business enable
Slide 7: The big customer experience initiatives for '08
The big customer experience initiatives for ‘08 For personal use only Retail and Call centre Transformation… We will enhance the customer experience Market Based Management IT Transformation Cultural Transformation Channel Transformation = Marketing Transformation 6 6 ....Investing to Sustain our Co
Slide 8: How we acquire and retain more users
How we acquire and retain more users… For personal use only Increased Targeting - MBM 44% 26% Multi- Channel Distribution Strategy Jun-06 Jun-07 3G Market Share % - FY07 Training and Leadership Development 4x Outselling nearest BB competitor Detailed focus on Performance Metrics Best Customer Retent
Slide 9: How we increase usage and lower operating costs
How we increase usage…. For personal use only • Market Based Management 27% Sales per contact • Propensity Based Usage Modelling • Segmented, Usage Based Offers 3x Customer usage of non-SMS data • Unique, Integrated Products & Services Demonstrating the Value of Integration How we drive lower operat
Slide 10: More to come post transformation
More to come post transformation For personal use only • 7 to 37M targeted contacts Tar geted Customer Co ntacts • Reduced process times 5x Pre-Tra nsformation Post-Tra nsformatio n • Enhanced training cycles 17% Induction time Toward “world-class” in every aspect of Operations… Our consumer value c
Slide 11: Telstra Business: Open for Business
For personal use only Telstra Business Deena Shiff Group Managing Director “Open for Business”… Telstra Business Revenue Trend 200 YOY Revenue Net Growth 850 05/06 A ctual 06/07 A ctual $3164m $3247m 150 Internet/ Declining 2.7% YoY Data Trend Growth +13.1% $M Revenue 100 825 +~4.5% Mobile 50 +11.6%
Slide 12: Strategic Focus
Strategic Focus… For personal use only 1. Offering communications solutions over Next G and Next IP that are business relevant 2. Enabling channels to capture business opportunities 3. Offering a service experience matched to segment preferences The Customer Story 2
Slide 13: Relevant Business Communications Solutions
1. Relevant Business Communications Solutions For personal use only • We are at the early stages of Quarterly Mobile Data APRU a wireless data adoption curve $12.00 • Customers appetite for data and $9.00 IP relative to PSTN values varies significantly by segment $6.00 • Modular solutions have been
Slide 14: Relevant solutions and enabling channels
1. Relevant Business Communications Solutions For personal use only • We are at the early stages of Customer ARPU a wireless data adoption curve • Customers appetite for data and IP relative to PSTN values varies significantly by segment • Modular solutions have been created to serve individual 7.4%
Slide 15: Enabling Channels to Capture Business Opportunities
2. Enabling Channels to Capture Business Opportunities For personal use only • Direct Marketing • Contact Centres • Direct Sales • Industry Channels 2. Enabling Channels to Capture Business Opportunities • Direct Marketing • Contact Centres • Direct Sales • Industry Channels 5
Slide 16: Channels and service experience
2. Enabling Channels to Capture Business Opportunities For personal use only • Direct Marketing • Contact Centres • Direct Sales • Industry Channels 3. Offering a Service Experience Matched to Segment Preferences • Start / move / expand my business • Learn about business services • Order and provisi
Slide 17: Offering a Service Experience Matched to Segment Preferences
3. Offering a Service Experience Matched to Segment Preferences For personal use only • Start / move / expand my business • Learn about business services • Order and provision a new service • Use new services and applications • Resolve problems 3. Offering a Service Experience Matched to Segment Pre
Slide 18: Offering a Service Experience Matched to Segment Preferences
3. Offering a Service Experience Matched to Segment Preferences For personal use only • Start / move / expand my business • Learn about business services • Order and provision a new service • Use new services and applications • Resolve problems 3. Offering a Service Experience Matched to Segment Pre
Slide 19: Tracking Our Progress
Tracking Our Progress… For personal use only • Slow PSTN rate of decline by 40% compared to 05/06 Exceeded Reverse Revenue • Grow Mobile and Broadband above SME market rate Exceeded Decline • Grow Multi-Product customers from 40%-70% by June 2009 ~8pp Jun-06 Jun-07 32% Build • Grow 3G proportion of
Slide 20: Enterprise & Government market segmentation
For personal use only Enterprise & Government David Thodey E&G Market Segmentation: Deep customer understanding 1,500 Enterprise & Government Customers Key Customer ‘Reliable’ ‘Fast’ ‘Simple’ ‘Secure’ ‘Scaleable’ ‘Control’ Needs Government Industry MNCs Integrated Segments Specific • Effective polic
Slide 21: On track to meeting our nine commitments
We are on track to meeting our nine commitments For personal use only Milestones to meet by 2010 Progress made in FY’07 Grow revenue faster than addressable • Normalised revenue growth of 2% market of >1% New wave revenue mix >45% • New wave revenue now accounts for 41% of the total revenue base New
Slide 22: Next Dimension Working – differentiated product portfolio
Next Dimension Working – a unique & differentiated product portfolio For personal use only Next Dimension WorkingTM offers our enterprise & government customers new ways to generate revenues, productivity improvements and efficiencies through changing the way they do business Telstra Next GTM Networ
Slide 23: Next IP Network is the fastest network in Australia
Telstra Next IPTM Network is the fastest network in Australia scaleable up to 92 terabytes and 600% more coverage than our nearest competitor For personal use only Nearest Competitor Telstra +600% Our nearest competitor has The Telstra Next IPTM Network has 2,221 locations nationally 15,804 location
Slide 24: Next Dimension Working: Old Solution, Challenge, New Solution
Next Dimension Working: For personal use only Old Solution The Challenge New Solution • Satellite content transmission “…getting content to • Speed and coverage, from a stationary truck everywhere they need it the newsroom… fast • Labour and time intensive and cost effective…” • Flexible, able to us
Slide 25: Sustainable profitable growth and strong cash flows
We will deliver sustainable profitable growth and strong cash flows by focusing on.... For personal use only Customer Value Based Services & Transformation Value Management Solutions • Creating & • Understanding & • Telstra Next GTM & • Continuous Service delivering value meeting customer Next IPTM
Slide 26: CDMA Migration: Journey so far
For personal use only Geoff Booth CDMA Migration Investor Community Update CDMA migration : Journey so far Next G™ network Next G™ Marketing Blitz Launch of announcement Network commences Country Phone Planned CDMA Launch Next G™ Increased Network CDMA Customers Prepaid Handset equivalence Network a
Slide 27: Journey so far and the road ahead
Journey so far For personal use only • Network equivalence/Superiority 9 • Increased handset range 9 • Handsets specifically designed for Regional coverage 9 • Business, Enterprise & Government customers’ plans in place 9 The road ahead • Marketing in full swing − SMS, direct mail and outbound telem
Slide 28: Countdown to closure
Countdown to closure For personal use only • Systems and processes in place 9 • Our stores are ready 9 • We have the stock 9 • Our Next G™ network and services meet 9 the Carrier Licence Conditions* The time is right for customers to make the move to * Gov ernment rev iew is underw ay 3
Slide 29: Sustainable Growth through Product Differentiation and Innovation
For personal use only Sustainable Growth through Product Differentiation and Innovation Holly Kramer Only with Telstra Customer 1 click, 1 touch, 1 screen customer experience experience Integrated Integrated across access types services Unique brand assets World class Wireless Wireline OSS/BSS netwo
Slide 30: Differentiation delivering ARPU growth
Differentiation delivering ARPU growth For personal use only Customer experience Business ARPU Integrated services Broadband Unique Home Home ARPU brand assets World class network assets Wireless ARPU & capabilities A reality today. Sustainable tomorrow Next IPTM today Telstra IP Networks & Traditio
Slide 31: Next IP today
Next IPTM today For personal use only Medium enterprise Large enterprise customer customer Before • Basic carriage • Basic carriage IP (Frame, ISDN) (Frame, ISDN) Customers using more • IP access • IP MAN & IP WAN services, driving ARPU migration • IP MAN • Multiple business units After • Managed ne
Slide 32: Sustaining growth tomorrow; Broadband Home today
Sustaining growth tomorrow For personal use only IP Video Collaboration Education Solutions New wave IP services continue to drive growth Software as a Service IP Contact Centres Customer Integrated Unique brand World class experience services assets network Broadband Home today ARPU & Market Share
Slide 33: Broadband Home today
Broadband Home today For personal use only BigPond access plan mix (%) Customers demanding +83% Plans 1.5 Mbps more speed or more Plans less than 1.5 Mbps Sep 06/07 Sep 07/08 Customer Integrated Unique brand World class experience services assets network Broadband Home today From PC access To home n
Slide 34: Broadband Home today: premium support
Broadband Home today For personal use only Premium support Transforming customer 9Phone support and reducing 9 In-home costs Trouble 9 shooting 9 Diagnostics Remote management Customer Integrated Unique brand World class experience services assets network Sustaining growth tomorrow Video telephony V
Slide 35: Next G today: 3G SIOs and data ARPU
Next GTM today For personal use only 3G SIOs as % of base: Leading global peers Company reports 50-70% in 2010 30% Next GTM leading 25% Australia up the charts! 20% - 3G SIOs 15% 10% 5% 1H06 2H06 1H07 2H07 1Q08 Telstra VOD EU Average TIM Telefonica AT&T Customer Integrated Unique brand World class e
Slide 36: Next G today: retail mobile revenue
Next GTM today For personal use only Telstra retail mobile revenue: Sep qtr 07/08 vs pcp Interactive data We are growing across Wireless broadband all categories Messaging Core voice Sep qtr 06/07 Sep qtr 07/08 Customer Integrated Unique brand World class experience services assets network Next GTM
Slide 37: Next G today: ARPU uplift of business customers
Next GTM today For personal use only ARPU uplift of Email and Apps business customers: Sep qtr 07/08 Applications stimulating +117% +105% business ARPU Average voice ARPU uplift of ARPU uplift of ARPU Email customer Apps customer Customer Integrated Unique brand World class experience services asset
Slide 38: Next G today: 100% Next G devices
Next GTM today For personal use only 100% Next G devices Realising the 1-click Customised principle keys Usability lab Customer Integrated Unique brand World class experience services assets network Next GTM today Information Communication Compelling services and brands for consumers… Entertainment
Slide 39: Next G today: leading suite of apps for business
Next GTM today For personal use only Business Workforce Communications Management …and the leading suite of apps for business Office Mobility Contact Solutions Remote & Mobile Asset Management Customer Integrated Unique brand World class experience services assets network Sustaining growth tomorrow
Slide 40: Sustaining growth tomorrow: Mobile FOXTEL
Sustaining growth tomorrow For personal use only EPG Introducing… Featured devices Mobile FOXTEL from Telstra! Foxtel iQ Rich media remote record client* * On featured de vice s Customer Integrated Unique brand World class experience services assets network •12
Slide 41: Telstra is increasing its broadband market leadership
For personal use only Investor Day Justin Milne, BigPond Telstra is increasing its market leadership position in broadband . . . Telstra Retail Broadband Market Share 47% 46% 45% 44% 43% 42% 42% 41% 41% 37% Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec 02 03 03 04 04 05 05 06 06 07 07 1
Slide 42: Continued innovation in access
. . .due to continued innovation in access For personal use only BigPond Access Awards • Best International Wireless, 2007 Broadband World Forum Europe Awards • Best Wireless Broadband, 2007 Australian Personal Computer Internet Technology Awards • Best Broadband Supplier, 2007 Australian Telecoms A
Slide 43: Home Networking initiative
Home Networking is an exciting new initiative which will continue to drive ARPU to the next level… For personal use only Launched in October with very promising results • Over 20% take up by customers since launch • 7% greater spend on access • 50% less churn Home Networking Campaign ….by stimulatin
Slide 44: Telstra's online network is 4th largest publisher
Telstra’s online network is the 4th largest publisher in Australia For personal use only Unique Audience1 – Sept 07 (000’s) Key media businesses 9,323 8,083 5,492 5,441 5,040 5,017 1) Nielsen//NetRatings NetView, September 2007 Content value includes direct acquisition, retention and cross product r
Slide 45: Next G stimulating take-up of mobile content
Next G™ is stimulating take-up of mobile content For personal use only 1 Proportion of BigPond Mobile handset users that use the mobile portal 49% 36% 5% 2G 3G 1 # visitors to BigPond portal / # SIOs (September 2007) Telstra’s mobile TV offering is the best in market Mobile FOXTEL BigPond TV 33 Mobi
Slide 46: Web 2.0 applications and BigPond Office
We are continuing to innovate with Web 2.0 applications: document editing and sharing with BigPond Office For personal use only ® ® ® 3D Sydney in Second Life Hype Ree l to follow 6
Slide 47: Integrated access, content and advertising proposition
Only Telstra can provide this integrated access, content, and cross platform advertising value proposition For personal use only Sensis AdServer Interactive banners Click to call features Thank you and good night In video streaming 7
Slide 48: Sensis update
For personal use only Sensis Bruce Akhurst, CEO Sensis update • Yellow™ print returns to positive growth • White Pages® delivering world class results • Trading Post® on track to deliver improved earnings • Systems & processes transformation on track & budget 1
Slide 49: Executing our strategy to drive profits from the core
We continue to execute our strategy to drive profits from the core For personal use only Global leader delivering world class growth in a highly attractive industry • 8% five year CAGR media market driven by high consumer spend1 Favourable industry and • Strong online market: 60% CY06 gro wth almost
Slide 50: Customer and capability investments driving sustainable growth
Customer and capability investments are driving sustainable growth For personal use only Shareholder Usage Advertiser ROI Value A business model for driving sustainable growth Our investments and customer focus are already paying off • Yellow™ is performing strongly • White Pages® continues world’s
Slide 51: Print: investing in usage growth
Print: We’re investing in usage growth For personal use only Promotion Circulation Increase consideration 250K increase Focus on life events Circulation managers Also impacts advertiser decisions “You can’t use the directory if you don’t have it” Circulation to high return locations: apartments, off
Slide 52: Online: improving the search experience
Online: Improving the search experience For personal use only 60% of people typing ‘Japanese’ are looking for a Japanese Restaurant Now straight through to ‘one-click’ results page with enhanced refinement tools One click results, enhanced search refinements New media: Powerful new services for Wher
Slide 53: Improving usage through integration
Improving usage through integration For personal use only We’re improving and demonstrating the value of print and our multi-channel offering • Info-rich ads • Metered ads • ROI monitoring • Sales training • Streamlined processes Several thousand metered ads to measure and report on ROI 6
Slide 54: Directories transformation and Trading Post
Directories: Transformation will deliver speed, efficiency and new integration opportunities For personal use only Phase 1 Phase 2 Phase 3 Phase 4 Sensis Q3 FY08 Telstra Complete Q4 FY08 Q2 FY09 (on track) Integrat ion Product Designer Online Ad Online Ad • Billing & Finance Production: Production:
Slide 55: Soufun growth business and Sensis summary
Soufun: An exciting growth business. On track for 100 cities plan. For personal use only UV (Monthly)* New Home Home Furnishing 50 • New property listing • Advertising by suppliers 45 • Advertising by developers and stores 40 • Promotional events • Promotional events 35 • Total web solution (TWS) 30
Slide 56: FOXTEL: significant service expansion
For personal use only TELSTRA INVESTOR DAY SUSTAINABLE GROWTH Kim Williams AM CEO FOXTEL SIGNIFICANT SERVICE EXPANSION Number Of Channels On The FOXTEL Platform (#) 160 140 • • 100% 100%Digital Digital • • 145+ 145+channels channels 120 • • EPG EPG • • FBO FBO • • FOXTEL FOXTELiQ iQ 100 • • Interact
Slide 57: FOXTEL strengthened financial position
STRENGTHENED FINANCIAL POSITION For personal use only $m 2001/02 2003/04 2005/06 2006/07 Total Subscribers(1) (k) 799 1,099 1,271 1,416 Total Revenue 632 938 1,268 1,421 EBITDA (47) (79) 169 237 EBIT (94) (149) 39 101 Operating Profit (93) (156) 4 76 (1) Includes Wholesale; excludes sales queue Sour
Slide 58: Increasing viewing share
INCREASING VIEWING SHARE For personal use only Share Of Viewing, Australian Households (%) 35 Share Of Total TV Viewing Across 5 City Metro (%) 30 25 STV 20 15 10 5 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: OzTAM. All Metro Homes Data. 5 City Metro. 0600-2400. Weeks
Slide 59: New and exclusive content; FOXTEL next generation
NEW AND EXCLUSIVE CONTENT For personal use only FOXTEL NEXT GENERATION ‘On Demand’: New iQ PVRs: For Simple Navigation Everyone! Optimisation: And Search With Better TV, Not More Recommendation TV iQ 2 Transferability: Content: Pay Once But Use Carefully Targeted, Many: Watch Me, Rent True High Defi
Slide 60: For personal use only
For personal use only 5
Slide 61: People & Culture: Our strategy
For personal use only People & Culture Andrea Grant Group Managing Director Human Resources Our strategy Two key areas of focus: Build a world class talent base with quality Talent leaders at all levels Culture & Create a high performing customer intense Capability culture and organisation 1
Slide 62: Talent: building a world class talent base
Talent Building a world class talent base For personal use only Talent Talent management Placing top talent in every position along the leadership pipeline Entry Mid-Management Senior-Management Level Level Level 2
Slide 63: Diversity
Diversity For personal use only Culture & Setting the foundations for Capability a high performance culture 3
Slide 64: Aligning our people with our strategy
Culture & Aligning our people with Capability our strategy For personal use only Culture & Capability 2007 Engagement Highlights • Average 4% point improvement across all categories • More employees understand future business direction − 77% have clear understanding, highest score in a decade and a
Slide 65: Raising the Performance Bar
Culture & Capability Raising the Performance Bar For personal use only Year 1 Year 2 Performance expectations High performance is what world class companies do • Telstra is changing • We are evolving into a media-comms company • Our customers are expecting more • We are building a world class workfo
Slide 66: The Pathway to the FY10 Long Term Management Objectives
For personal use only The Pathway to the FY10 Long Term Management Objectives John Stanhope CFO $6b-$7b Free Cash Flow FY10 1
Slide 67: Free Cash Flow Drivers
Free Cash Flow Drivers For personal use only $2.3-2.5b $0.5-0.6b $6-7b $0.5-0.7b $1.2-1.8b $2.9b FY07 Revenue Opex Capex Tax & FY10 reduction reduction W/Cap A disciplined use of FCF with clear priorities • Half yearly board decision First Priority Shareholder Returns • Committed to fully franked di
Slide 68: Sales Revenue Movements
Sales Revenue Movements For personal use only 400-600m 0-300m $25.1-25.7b 1.0-1.3b $23.7b 1.0-1.4b 1.1-1.5b FY07 Fixed Mobiles Internet Sensis Other FY10 (incl SouFun) Revenue Mix – Traditional versus New FY07 FY10 2006/07 2009/10 New ProductsNew over Products over next 3% Traditional 5% next gener
Slide 69: Opex reduction by FY10
For personal use only $500m-$700m Opex reduction by FY10 Opex Drivers 200-400m 100-200m 300-400m $14.1b 150-200m 100-250m $500-700m $13.4-13.6b FY07 Net DVC Net Labour Service Impairment Other Opex FY10 Growth Reduction Contracts Expense & Other Agreements 4
Slide 70: Opex Profile
Opex Profile For personal use only Opex Trend ($b) • Drive top line growth • Cease transformation spend $b • Transformation spend • Removal of platforms/systems • Duplicate networks/systems • Productivity gains 14 12 10 FY05 FY06 FY07 FY08 FY09 FY10 Absolute Opex declines FY09 & FY10 Opex Drivers -
Slide 71: Opex Drivers – Directly Variable Costs
Opex Drivers – Directly Variable Costs For personal use only Pre MBM/IT Post MBM/IT 1.7X 1 1 <1X Sales Rev CAGR Directly Variable Cost Sales Rev CAGR Directly Variable Cost FY02-FY07 CAGR FY02-FY07 FY07-FY10 CAGR FY07-FY10 Opex Drivers – Network Payments Offshore payments expected to grow from 56% t
Slide 72: Opex Drivers – Service Contracts & Other
Opex Drivers – Service Contracts & Other Agreements For personal use only 150-200m $2.2b 100-150m 150-200m 200-250m $1.8 – 1.9b FY07 Growth Contract Productivity Reduced FY10 Rationa lisation Benefits from Transformation Transformation Spend Opex Drivers – Other Opex 50m $2.8b 50m-100m 150-200m 100-
Slide 73: Capex / Sales trend
Capex / Sales trend For personal use only Structural shift in Capex mix: • Complete transformation build • Fewer physical platforms/systems Peak spend driven by: • More software defined applications • Next GTM and services • Next IPTM • Flexibility/Scalability 25% • IT • Clear Evolution path Assumes
Slide 74: Capex Drivers – IT and Wireless
Capex Driver - IT For personal use only TR1/2 build Transformation spend in excess TR1 in production of $2.5b over 3yrs Peak $1.1b TR2 in production FY06 FY07 FY08 FY09 FY10 Note: future data points a re indic ative Capex Driver - Wireless Next GTM build Next GTM complete Peak $1b • Technology Evolu
Slide 75: Capex Driver – Transmission; Global Capex Benchmarks
Capex Driver - Transmission For personal use only Metro NGN Ethernet Peak $0.5b Domestic Build Sydney-Hawaii Move traffic on-net International FY06 FY07 FY08 FY09 FY10 Global Capex Benchmarks CY09E capex/sales for domestic business 18% 16% TLS FY10 long term 14% management objectives 12% 10% 8% 6% 4
Slide 76: Long Term Management Objectives
Long Term Management Objectives For personal use only Previous Long Term Updated Long Term Management Objectives* Management Objectives* FY05 Revenue 2.0% to 2.5% pa to FY10 2.5% to 3.0% pa to FY10 $22.2b Growth Cost 2.0% to 3.0% pa to FY10 No change $12.0b growth EBITDA 2.0% to 2.5% pa to FY10 2.5%