Slide 1: ASX cover letter: Analyst Briefing half year results
26 February 2009 Office of the Company Secretary For personal use only Level 41 Company Announcements Office 242 Exhibition Street Australian Stock Exchange MELBOURNE VIC 3000 4th Floor, 20 Bridge Street AUSTRALIA SYDNEY NSW 2000 General Enquiries 08 8308 1721 Facsimile 03 9632 3215 ELECTRONIC LODGE
Slide 2: First Half 2009 Financial Results / Disclaimer
For personal use only First Half 2009 Financial Results Sol Trujillo, CEO 26 February 2009 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 results, perfo
Slide 3: Financial Results
Financial Results For personal use only $ billions (except margins & DPS) 1H08 1H09 % Sales Sales Revenue 12.3 12.6 +3.2 Revenue Total Revenue 12.4 12.7 +2.7 +3.2% Operating Expenses 7.3 7.4 +1.7 EBITDA - reported 5.2 5.3 +3.1 EBITDA Margin (%) 42.2 42.2 - EBIT - reported 3.1 3.1 -1.3 Unde
Slide 4: Continued Strength from Domestic Retail Business
Continued Strength from Domestic Retail Business For personal use only 1H09 Sales Revenue Growth 1H09 Domestic Revenue Growth Verizon 3.8% TC +3.0% AT&T 3.2% TB +7.2% Telstra 2.8% TE&G +3.9% Telecom NZ 1.4% Total Retail KPN 0.8% (excl Sensis) +4.1% -0.6% TeliaSonera Sensis +8.4% -1.3% Telenor Wholes
Slide 5: Next G Stimulating Mobile Growth
Next G Stimulating Mobile Growth For personal use only Mobile Services Revenue Mobile Data Revenue $979m +12.4% $3.1b +37% $2.7b $716m $2.4b $415m +37% $979m $716m $490m +21% $490m $343m $647m +6% $689m $589m $246m $286m +72% $143m $1,346m $1,364m +2.5% $1,398m $128m +38% $318m $230m $76m 1H07 1H08
Slide 6: Next IP Driving Best Ever IP & Data Growth
Next IP Driving Best Ever IP & Data Growth For personal use only IP Access - ARPU Escalator IP Access Revenue +28% se +48% rea Customer Value nc Ui A RP +20% erage Hosting Av +4% IP +10% Telephony 13% TE&G IP Access ARPU +40% since FY07 IP Security Managed 7% WAN 59% IP Network 58% Continued migrati
Slide 7: China: Emerging Growth Engine
China: Emerging Growth Engine For personal use only China Revenue & EBITDA – A$ $0.6b +30% Target of $1 billion Revenue & 30-40% CAGR EBITDA margins in 2013 +30% CAGR $0.3b $0.25b Strong SouFun & Sequel organic growth with Sequel integration on $0.1b track CY08* CY11F CY08* CY11F Revenue Revenue EBI
Slide 8: Managing Change
Managing Change For personal use only IT Transformation Achievements Environmental Social & Governance New system deployed to 1900 sites $34m Arnhem Land fibre Optic Cable Project Community Safety Messages during South Key customer service metrics improving Australian heat wave delivered via SMS Dec
Slide 9: Global mobile performance comparison
For personal use only Appendix Global mobile performance comparison 1H09 Mobile Services Revenue Growth 1H09 Mobile EBITDA Margin Movement (pp) AT&T 13.8% Telstra 12.4% 1.5 1.3 Verizon 12.1% 0.1 Optus 9.9% Vodafone -1.4 Australia 8.0% Telenor 4.2% -3.6 KPN 1.1% Vodafone -5.9 Europe* -1.4% Optus AT&T
Slide 10: First Half 2009 Financial Results (CFO)
For personal use only First Half 2009 Financial Results John Stanhope, CFO 26 February 2009 Financial Results $ billions (except margins & DPS) 1H08 1H09 % Sales Sales Revenue 12.3 12.6 +3.2 Revenue Total Revenue 12.4 12.7 +2.7 +3.2% Operating Expenses 7.3 7.4 +1.7 EBITDA - reported 5.2 5.3
Slide 11: EBIT Reconciliation and Guidance Updated
EBIT Reconciliation For personal use only -54 35 -54 -95 44 392 -106 -103 $3,120m -100 $3,079m -1.3% 1H08 Sales Other Other Redundancy Labour ex DVC Other Acc D&A Other 1H09 Revenue Revenue* Income* Redundancy Exp D&A Contribution to: Reported EBIT growth 12.7% -1.8% -1.7% 1.1% -3.1% 1.4% -3.4% -3.3
Slide 12: Growth drivers and product mix change
Growth drivers and product mix change For personal use only 25% Fixed Retail BB 1H09 Revenue Growth (pcp) 20% Mobile Services 15% IP & Data Access 10% Group Rev Growth 5% Sensis -2.5 -2.0 -1.5 -1.0 -0.5 0.5 1.0 1.5 2.0 2.5 -5% PSTN 1H09 Proportion of Sales Revenue (pp change) Telstra Enterprise and
Slide 13: Telstra Business and Telstra Consumer
Telstra Business For personal use only Sales Revenue +7.2% Mobiles momentum maintained $1.93b $1.80b $1.82b • 3G SIOs now 72% of base, up 8pp from June 08 $1.69b +44% +30% +45% $1.64b High growth from dedicated +15% +22% +18% business data access offerings • Business Broadband +44% • IP Access +54%
Slide 14: Operating Expenses
Operating Expenses For personal use only +$105m $7,428m +$60m -$44m $7,307m $2,152m $2,092m $2,632m $2,676m +1.7% $2,644m $2,539m 1H08 Labour Goods & Services Other 1H09 Opex Purchased Opex Labour $2,152m $62m $2,092m -$35m $67m -$50m $16m +2.9% 1H08 Volume Price LSL Redundancy Other 1H09 Bond rate
Slide 15: Directly Variable Costs
Directly Variable Costs For personal use only Goods and Services Purchased Improving Mobile Productivity Blended ARPU $56 $192 -1.6% $177 $2,676m $52 $160 $2,632m $156 $48 -161 78 $135 $44 39 $40 1H07 2H07 1H08 2H08 1H09 1H08 COGS Network Other 1H09 Payments Blended SARC Rate Blended ARPU Other Expe
Slide 16: Depreciation & Amortisation and Net Finance Costs
Depreciation & Amortisation For personal use only $2,255m $103m $2,052m $354m $418m +9.9% $1,734m $1,698m 1H08 1H09 Accelerated D&A Depreciation Amortisation Net Finance Costs $ % End Dec 07 End Dec 08 Change Change Net interest expense $577m $632m $55m 9.5% Other (incl IFRS adj)* -$77m -$229m -$152
Slide 17: Debt position and Financial Parameters
Debt position and Financial Parameters For personal use only Long-term Debt Maturity Profile LT debt average maturity: ~5 years Financial Parameters $bn 3.0 Target 1H09 2.5 2.0 Debt Servicing 1.7 – 2.1 1.5 1.5 1.0 0.5 Gearing – Net Debt 55%-75% 58.3% 0.0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17
Slide 18: Free Cash Flow
Free Cash Flow For personal use only $4,245m $1,911 Operating cash flow Investing cash flow -$2,334m Free cash flow Focused on shareholder returns Investing in growth & innovation $6bn-$7bn FCF in FY10 9
Slide 19: International Foreign Exchange Impact
For personal use only Appendix International Foreign Exchange Impact Net EBIT Revenue Expense Impact CSL New World $55m $58m -$3m TelstraClear $11m $11m - China $4m $2m +$2m Other International $1m $15m -$14m (inc Reach) 10
Slide 20: Retail performance and Telstra Enterprise & Government
Retail performance For personal use only 1H08 2H08 1H09 pcp pcp pcp Sales Revenue growth 7.6 4.3 4.1 - Mobile Services 13.0 10.0 11.3 - Fixed -0.6 -1.7 -1.5 - Internet 44.3 34.2 28.1 - Data & IP 7.6 7.9 10.9 Operating contribution growth 8.9 7.8 5.3 Operating contribution margin* 64.6% 65.2% 65.4% -
Slide 21: Telstra Business and Telstra Consumer
Telstra Business For personal use only 1H08 2H08 1H09 pcp pcp pcp Sales Revenue growth 9.5 8.1 7.2 - Mobile Services 21.9 17.5 14.5 - Fixed 0.9 0.9 0.7 - Internet 44.9 43.7 30.3 - Data & IP 18.6 23.9 27.1 Operating contribution growth 7.6 8.9 7.8 Operating contribution margin (%) 71.4 71.6 71.8 - ch
Slide 22: Market Share and ULL Trends
Market Share* For personal use only REVENUE 2H07 1H08 2H08 1H09 Mobile 43% 43% 43% 43% Fixed 72% 73% 74% 75% SIO 2H07 1H08 2H08 1H09 Mobile 43% 43% 41% 41% Retail Broadband - Total 47% 47% 48%** 47% Fixed 46% 46% 48% 47% Wireless 53% 53% 49% 47% Fixed 74% 74% 75% 75% * Telstra Management estimates *