Telstra Group Limited · ASX:TLS
Telstra — Investor Day (November 2008)
34 slides from Telstra's investor day presentation, Nov 6, 2008
Slide 1: Investor Day – slide presentation by Telstra Senior Executives
6 November 2008 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: Strategy Update - 3 Years On
For personal use only Strategy Update - 3 Years On Sol Trujillo - CEO 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, performance or achievements
Slide 3: Agenda
Agenda For personal use only John Stanhope The Pathway to the 2010 Objectives Greg Winn Operations Objectives and Transformation Milestones Tom Lamming, David Moffatt, IT Transformation Update John McInerney Deena Shiff, David Thodey, Retail Business Unit Update David Moffatt Holly Kramer New Produc
Slide 4: No change to Guidance
No change to Guidance* For personal use only 2009 FY10 Measure Measure guidance Long-term Management Objectives Total revenue growth 3-4% Revenue growth 3-4% CAGR from FY05 EBITDA growth 6-7% EBITDA margin 46-48% EBIT growth 6-8% Capex/sales Around 14% Accrued capex $4.3-$4.6b Free cash flow $6-$7b
Slide 5: Strong WBB growth; YTD Share Price Performance
Strong WBB growth For personal use only SIOs (k) 90k adds in Q1 700 600 500 400 300 200 100 0 2H07 1H08 2H08 1Q09 YTD Share Price Performance 130 120 110 100 TLS outperforming 24% vs ASX 200 90 80 70 60 50 31/12/07 29/02/08 30/04/08 30/06/08 31/08/08 31/10/08 Telstra ASX200 ASX 200 Financials BHP US
Slide 6: Towards the 2010 Objectives: Cost Reduction Program Update
Changing the Game For personal use only 1-click, 1-touch, 1-command... Email BigPond Music Mobile TV Downloads Photos Search Maps My Account Towards the 2010 Objectives An Update on the Cost Reduction Program John Stanhope - CFO & GMD Finance & Administration
Slide 7: No change to Guidance; Economic Outlook
No change to Guidance* For personal use only 2009 FY10 Measure Measure guidance Long-term Management Objectives Total revenue growth 3-4% Revenue growth 3-4% CAGR from FY05 EBITDA growth 6-7% EBITDA margin 46-48% EBIT growth 6-8% Capex/sales Around 14% Accrued capex $4.3-$4.6b Free cash flow $6-$7b
Slide 8: Balance sheet has become an asset
Balance sheet has become an asset For personal use only Long-term Debt Maturity Profile FY08 Debt Completed $bn LT debt average maturity: ~5 years 3.0 €500m Eurobond benchmark (March 08) 2.5 2.0 US$600m Asian Syndicated Loan Facility (May 08) 1.5 1.0 SFr250m Syndicated Loan Facility (Sept 08) 0.5 0.
Slide 9: Operating leverage emerging
Operating leverage emerging EBITDA For personal use only $b Margin 30 50.0% Revenue EBITDA Margin 20 OPEX 40.0% 10 0 30.0% FY05 FY06 FY07 FY08 FY09 FY10 The Path to FY10 - Sales Revenue 50-150m -100 - +100m $25.7 – 27.0b 200-400m 0 - 100m 700m – 1.0b 800m-1.2b $24.7b 600-900m $1b - $2.3b FY 08 Fixed
Slide 10: Absolute opex reduction from FY08 to FY10
For personal use only $500m-$800m Absolute opex reduction from FY 08 to FY 10* * based on current revenue expectations The Path to FY10 – Opex Drivers 300 – 600m 200 – 300m 400 – 500m $14.6b ~100m 150 – 200m $13.8 – 14.1b $500m - $800m FY 2008 Net DVC Growth Net Labour Service Impairment Other Opex
Slide 11: Opex Drivers - Labour
Opex Drivers - Labour For personal use only 1) On track for 10k – 12k FTE $4.2b 150 – 250m 100 – 200m reduction by FY10 200 – 300m 2) 800 FTE reduction to save $3.9 – 4.0b ~$100m in FY10 3) Transformation / IT productivity related headcount benefits Redundancy materialise before end of FY 08 Salary
Slide 12: Opex drivers – SC&As
Opex drivers – SC&As For personal use only IT Sourcing and Vendor reviews, workforce optimisation Bad and avoidable volumes, IT benefits $2.3b ~ 150m Lower programme spend, post Transformation 150 – 200m 150 – 200m $1.8 - 1.9b FY 2008 Contract Transformation Reduced FY 2010 Rationalisation Benefits
Slide 13: 2010 Capex: Demand-driven investment
2010 Capex: Demand-driven investment For personal use only • 2010 revenue guidance ~$1.5b more than in 2005 • Wireless ~$100m to support • Extra complexity exponential growth in data volumes • Systems not covered by original scope • Additional compliance required • Domestic and International, media-
Slide 14: Free Cash Flow Drivers
Free Cash Flow Drivers For personal use only $1.1 - 1.3b $0.5 - 0.6b $0 - 0.2b $6-7b $0.5 - 0.8b $1b - 2.3b $3.9b FY08 Revenue Opex Capex Tax & Super’n FY10 reduction reduction W/Cap $6b-$7b Free Cash Flow FY 10
Slide 15: Update on Operational Progress and Transformation Milestones
For personal use only Update on Operational Progress and Transformation Milestones Greg Winn - COO Transformation accomplishments Infrastructure Operation Organisation • IT that benefits customers • Network/IT management • World class partners • Reliable & Secure Networks • Supply chain / Property •
Slide 16: Riding the data growth wave
Riding the data growth wave For personal use only “Everything starts with our customers. … we will understand our customers better than anyone. … we need to reinvest in our network and IT infrastructure. ... Traffic volumes are growing like a tidal wave. ... Right across the business we're seeing th
Slide 17: Mobile network unit costs; Next G network excellence
Mobile network unit costs For personal use only Busy hour rate [Mbps] Traffic cost Voice (c/min) HSPA Data (c/MB) Oct06 Sep08 FY07 FY08 FY09 FY10 FY11 FY12 FY13 Next G™ network excellence • ALWAYS 3G • BREADTH & DEPTH • SPEED • CAPACITY Published Next G™ network coverage *More than 8 times the size
Slide 18: Network integration
Network integration For personal use only Access Common Network Services & Applications Copper Consumer TM Business Fibre Ethernet IP/MPLS Aggregation Core Enterprise HFC Cable Service Edge Service Provider Edge Wholesale NextGTM Scalable Large Robust Secure Network capabilities, service differentia
Slide 19: Network platform reductions on track
Network platform reductions on track For personal use only 400 144 platform caps/exits 300 334 Platforms 49 platform caps/exits 200 100 141 Dec 10 Platforms 0 Nov 05 Achieved Achieved Nov 08 Scheduled Dec 2010 start Nov 05 to Nov 07 to Caps/Exits Target Nov 07 Nov 08 Operational improvement Field Wo
Slide 20: Delivering in The Factory
Delivering in The Factory For personal use only Procurement Brightstar Property transformation & supply chain agreement Space Sites Opex $226m*savings $246m savings reduced** exited out^ $65m in FY08 in FY08 172k 96 • From 10,000 to • More than 80% ~ 8000 suppliers forecasting accuracy • Purchasing
Slide 21: Delivering for customers
Delivering for customers For personal use only • 9,120 kms cable from Sydney • ADSL2+ upgrade to an to Hawaii additional 907 telephone exchanges • Delivering up to 1.28 Terabits per second of traffic • Serving 2.4 million homes and businesses • Australian Rail Track • Beijing Olympic Games 500% Corp
Slide 22: Bringing Enhanced HSPA to Australia
Bringing Enhanced HSPA to Australia For personal use only Indicative Next G™ network coverage 3G driving wireless data traffic Busy Hour Rate [Mbps] Oct06 Sep08
Slide 23: Telstra's world class Next G network
Telstra’s world class Next G™ network For personal use only Device evolution October 2006 November 2008 Peak rated 21Mbps downlink
Slide 24: Revenue uplift
Revenue uplift More speed = more data = more revenue For personal use only Wireless Broadband Mobile Services The path to 21Mbps
Slide 25: The path to 21Mbps
The path to 21Mbps For personal use only The path to 21Mbps
Slide 26: The path to 21Mbps
The path to 21Mbps For personal use only • Network ready end 2008 • Commercial launch with devices in early 2009 IT Transformation Update Tom Lamming, John McInerney and David Moffatt
Slide 27: Creating Momentum – Early Wins
Creating Momentum – Early Wins For personal use only 2006 2007 Telstra Retail Integrated Enterprise Program Mgmt Campaign System • Out-of-the-box integrated • Strike rates increased program management tool IP Activation Integrated Desktop OnePlan Access • Reduction in log-in times • Integrated plann
Slide 28: Integrated Delivery Model
Integrated Delivery Model For personal use only Business Solution IT IT Systems & Service Delivery Architecture Solutions Management End to End Business IT strategy System design, build, Manages and operates Deployment testing, deployment, IT infrastructure End to end solution support and New Proces
Slide 29: Migrated millions of customer records
Migrated millions of customer records Trained thousands of staff For personal use only Legacy Data Deployment 9 Identified 1200 source data items from 14 9 Deployed the solution to over 1900 plus legacy systems Internal and external sites and over 17,000 users trained Mapping Rules Process 9 Defined
Slide 30: And an enhanced IT Capability
And an enhanced IT Capability For personal use only Reducing Capital Profile Operations 9 Capex profile is reducing year on year 9 New operations model in place to 9 FY10 will see a 40% reduction in IT support the transition from legacy to capex on FY08 new systems. 9 Targeted cost take out program
Slide 31: Our Business transformation
For personal use only IT Transformation Update David Moffatt – GMD, Telstra Consumer Marketing and Channels Our Business transformation Customer experience improvement at the centre Single integrated view of Business realities the customer 5.3% Winback Research / •Total revenue Investigation •EBIT 7
Slide 32: Single integrated view of the customer
Single integrated view of the customer For personal use only 9 One view Cross Company 1 9 All products & services in one place: 2 1. Customer information, 2. Service history 3. Campaigns 3 9 improved customer experience across all touch points * Data in screen shots is for presentation purposes only
Slide 33: Simplified integrated billing
Simplified integrated billing For personal use only 9 Clearer customer bill 9 Marketing via bill messages 9 “Let’s cut down paperwork not trees” C • Contribute to saving over 30,000 trees per year • Equivalent to over 260 million A4 sheets of paper per year • …laid end to end would wrap around Earth
Slide 34: Our Business transformation
Our Business transformation For personal use only Customer experience improvement at the centre Single integrated view of Business realities the customer 5.3% Winback Research / •Total revenue Investigation •EBIT 7.6% Simplified bill Customer Business/IT Retention lifecycle Introduction partnership