Slide 1: ASX cover letter: Full Year 2011 Financial Results presentation
11 August 2011 Office of the Company Secretary For personal use only The Manager Level 41 242 Exhibition Street MELBOURNE VIC 3000 Company Announcements Office AUSTRALIA Australian Securities Exchange 4th Floor, 20 Bridge Street General Enquiries 08 8308 1721 SYDNEY NSW 2000 Facsimile 03 9632 3215 E
Slide 2: Telstra Full Year Results Announcement 2011 - Disclaimer
For personal use only TELSTRA FULL YEAR RESULTS ANNOUNCEMENT 2011 Chief Executive Officer, David Thodey DISCLAIMER • 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 r
Slide 3: Strong growth in second half – exceeded guidance
STRONG GROWTH IN SECOND HALF – EXCEEDED GUIDANCE For personal use only REPORTED RESULTS 1H11 2H11 FY11 RESULTS ON Guidance* Outcome GUIDANCE BASIS Sales Revenue growth -0.5% 1.8% 0.7% Sales Revenue Flattish 1.0% Total Revenue growth -0.5% 1.9% 0.7% EBITDA High single digit decline -6.0% EBITDA g
Slide 4: Our strategic priorities are working
OUR STRATEGIC PRIORITIES ARE WORKING For personal use only 1. IMPROVE CUSTOMER SATISFACTION 2. RETAIN AND GROW CUSTOMERS 3. SIMPLIFYING THE BUSINESS 4. NEW GROWTH BUSINESSES 5 CUSTOMER SATISFACTION IS IMPROVING – WE HAVE MORE TO DO SERVICE, PRICE, PRODUCT AND BRAND RESULTS ANNUALISED DEACTIVATION RA
Slide 5: Another strong half for customer growth
ANOTHER STRONG HALF FOR CUSTOMER GROWTH For personal use only Product FY10 1Q11 2Q11 3Q11 4Q11 FY11 TOTAL Net adds (‘000) CUSTOMERS Bundles 309 215 205 147 92 659 1,043 T-Box® and T-Hub® (sales) 21 94 119 65 86 365 385 Postpaid mobile handheld 83 116 181 197 151 645 6,455 Mobile broadband 616 251 25
Slide 6: Network applications and services growth of 10.7%
NETWORK APPLICATIONS AND SERVICES GROWTH OF 10.7% For personal use only OFFERINGS HIGHLIGHTS • Strong sales pipeline with record sales in Unified Comms & Conferencing • Investing more than $800 million in cloud computing over the next 5 years • Acquisition of iVision to enhance video conference capa
Slide 7: Media – IPTV, Foxtel and BigPond
MEDIA – IPTV, FOXTEL AND BIGPOND For personal use only IPTV FOXTEL BIGPOND • 190K T-Box sales • 6% revenue growth and • Growing audience: unique • 25% of new broadband 15% EBITDA growth as visitors to BigPond on-line bundle customers take customers reach over +13% & mobile sites T-Box 1.65 million.
Slide 8: Leading strategic priority scorecard
LEADING STRATEGIC PRIORITY SCORECARD For personal use only A. Customer satisfaction Target FY11 1) Improve customer satisfaction 6% improvement year-on-year +3% 2) Reduce TIO complaints 30% reduction year-on-year +6% 3) First contact resolution 75% by 2013 74% B. Customer growth 4) Fixed broadband s
Slide 9: Financial results - reported
For personal use only TELSTRA FULL YEAR RESULTS ANNOUNCEMENT 2011 CHIEF FINANCIAL OFFICER, JOHN STANHOPE FINANCIAL RESULTS - REPORTED % Growth % Growth $ Billions FY10 FY11 (Reported basis) (Guidance basis*) Sales Revenue 24.8 25.0 0.7% 1.0% Total Revenue 24.9 25.1 0.7% EBITDA 10.8 10.2 -6.4% -6.0
Slide 10: Sales revenue by product - mix change continues
SALES REVENUE BY PRODUCT - MIX CHANGE CONTINUES For personal use only +$783m -$6m +$111m -$122m +10.7% -6.4% -$156m -0.3% Hardware +35.5% $24,983m $24,813m -$462m Full Year Growth 0.7% Services +7.4% -7.9% +0.7% Second Half Growth 1.8% +$22m +1.4% Mobile Growth offset PSTN decline FY10 PSTN Fixed Mo
Slide 11: 2011 strategic investment has delivered within guidance
2011 STRATEGIC INVESTMENT HAS DELIVERED WITHIN GUIDANCE For personal use only FY11 direction FY11 outcome OPEX Labour ~ $250m $217m Goods & Services Purchased ~ $650m $823m Other Expenses ~ $200m -$70m OPEX increase ~$1bn $970m ARPU TRENDS BUNDLES: NET MIX REVENUE ACCRETIVE ! New customers $50 ! Exi
Slide 12: Product profitability and retail segments
PRODUCT PROFITABILITY* For personal use only EBITDA MARGIN FY08 FY09 FY10 1H11 2H11 FY11 Mobiles 30% 34% 35% 29% 35% 32% Fixed Internet 27% 35% 40% 34%*** 32% 33% PSTN 61% 59% 60% 59% 59% 59% IP & Data 55% 57% 62% 61% 61% 61% Sensis** 51% 53% 57% 41% 65% 56% Total Telstra Group 42.2% 43.2% 43.7% 37.
Slide 13: Productivity benefits reinvested in strategic initiatives
PRODUCTIVITY BENEFITS REINVESTED IN STRATEGIC INITIATIVES For personal use only +$160m -$622m +$96m +$231m +$277m +$823m $15,154m +$93m +$53m -$141m $14,184m +6.8% New STI Natural Impairments DVCs Price Business Redundancy Programme costs Productivity FY10 disasters & Other Growth & other Benefits F
Slide 14: Expenses: DVCs and other expenses
EXPENSES: DVCs +15.4% For personal use only +2 million new mobile customers (Australia & Hong Kong) +$135m +$120m $6,183m +$568m +365 thousand T-Boxes® and T-Hubs® $5,360m +659 thousand Bundled customers $2,644m $2,076m $1,808m $1,943m Customer acquisition driving COGS and Network Payments exp
Slide 15: Cashflow and capex
CASHFLOW AND CAPEX For personal use only Free Cash Flow Accrued Capex $6.2b $5.5b $4.9b $4.4b $4.6b 2H10 $3.9b $3.6b 2H11 $3.5b $3.5b $3.4b 2H10 2H11 $1.9b 1H10 $1.9b 1H11 $2.6b $2.0b 1H10 1H11 $1.6b $1.5b FY08 FY09 FY10 FY11 FY08 FY09 FY10 FY11 P&L IMPACT OF NBN Physicals Revenues Expenses Telstra
Slide 16: Guidance
GUIDANCE* For personal use only Measure FY11 Reported FY12 Guidance Total Revenue $25.09bn Low single-digit growth EBITDA $10.15bn Low single-digit growth Capex 14% of sales Free cashflow $4.5 - $5.0 billion Dividend** 28 cps fully franked * Guidance assumes wholesale product price stability and exc
Slide 17: National Broadband Network agreements
For personal use only TELSTRA FULL YEAR RESULTS ANNOUNCEMENT 2011 CHIEF EXECUTIVE OFFICER, DAVID THODEY NATIONAL BROADBAND NETWORK AGREEMENTS KEY BENEFITS SUSTAINABLE FREE CASHFLOW IN MEDIUM TERM MORE STABLE REGULATORY ENVIRONMENT GREATER STRATEGIC FLEXIBILITY STRONG SHAREHOLDER PROTECTIONS Telstra
Slide 18: Strategic opportunities in an NBN world
STRATEGIC OPPORTUNITIES IN AN NBN WORLD For personal use only CONSUMER BUSINESS • High speed broadband into • NBN-ready Digital Business suite more channels of products • Customer-centric service • New products and capabilities in differentiation key verticals • Product innovation and bundling ENTER
Slide 19: Conclusion
CONCLUSION For personal use only EXCEEDED GUIDANCE RETURNED TO EBITDA GROWTH MOMENTUM TO CONTINUE IN FY 2012 Telstra Corpora,on: investor.rela,ons@team.telstra.com 3
Slide 20: Appendix: Domestic retail performance
For personal use only APPENDIX 1 DOMESTIC RETAIL PERFORMANCE* Revenue Growth (%) 1H10 2H10 1H11 2H11 FY11 Sales Revenue -1.5 -0.3 1.9 3.6 2.7 Mobile services 4.8 7.4 6.9 8.0 7.4 Fixed (ex Internet) -6.0 -8.4 -7.5 -5.6 -6.6 Fixed Internet 0.7 -1.4 -1.0 0.9 0.0 Operating Contribution Growth -1.8 -1.8
Slide 21: Telstra Consumer and Country Wide; Telstra Business
TELSTRA CONSUMER AND COUNTRY WIDE* For personal use only Revenue Growth (%) 1H10 2H10 1H11 2H11 FY11 Sales Revenue -0.5 -1.3 1.7 5.4 3.6 Mobile services 5.0 4.0 3.9 8.6 6.2 Fixed (ex Internet) -6.4 -10.4 -8.9 -5.2 -7.1 Fixed Internet 0.7 -2.7 -3.4 2.9 -0.3 Operating Contribution Growth -2.2 -5.8 -13
Slide 22: Telstra Enterprise & Government; Offshore performance
TELSTRA ENTERPRISE & GOVERNMENT* For personal use only Revenue Growth (%) 1H10 2H10 1H11 2H11 FY11 Sales Revenue -5.8 -1.4 1.3 2.2 1.8 Mobile services 5.1 11.7 10.8 12.8 11.8 Fixed (ex Internet) -7.5 -6.7 -4.3 -5.3 -4.8 IP & Data 2.7 2.3 0.1 0.6 0.3 Operating Contribution Growth -1.6 3.6 1.7 -0.7 0.
Slide 23: Market share; Interest and financial parameters
MARKET SHARE* For personal use only Retail SIOs 1H09 2H09 1H10 2H10 1H11 2H11 Total Mobile 41% 41% 41% 39% 41% 43% Fixed (ex Internet) 75% 75% 75% 74% 74% 73% Fixed Retail Broadband 47% 45% 44% 44% 45% 45% Revenue 1H09 2H09 1H10 2H10 1H11 2H11 Mobile 43% 42% 42% 42% 42% 43% Fixed (ex Internet) 73% 7