Telstra Group Limited · ASX:TLS
Telstra — Investor Day (September 2010)
41 slides from Telstra's investor day presentation, Sep 29, 2010
Slide 1: Investor Day – slide presentations (ASX cover letter)
29 September 2010 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 321
Slide 2: 2010 Investor Day – Disclaimer
For personal use only 2010 INVESTOR DAY David Thodey, CEO 29 September 2010 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 achieve
Slide 3: Agenda; Our industry is in transition
AGENDA For personal use only Strategy D Thodey Financial J Stanhope NBN D Thodey Q&A D Thodey / J Stanhope Project New R Nason Product and Marketing K McKenzie Consumer G Ballantyne Growth D Thodey Q&A All 3 OUR INDUSTRY IS IN TRANSITION Fixed to mobile migration for both voice and data Higher expec
Slide 4: We must become a strong sales and marketing-led company
WE MUST BECOME A STRONG SALES AND MARKETING-LED COMPANY For personal use only LEADING COMMUNICATIONS AND MEDIA COMPANY Current Extraordinary Unmatched Deep Core Sales and Advantages customer portfolio of Clear scale engineering marketing access and products and advantage and design capability intera
Slide 5: Improving customer satisfaction; retaining and growing customers
1. IMPROVING CUSTOMER SATISFACTION Reinforcing our Brand Essence For personal use only Brand Positive Positioning Managing Regulatory Reviews 25% Continued reduction of TIO Complaints Product New Offerings Product enhancements 25% Digital Business Customer Satisfaction Service Initiatives and traini
Slide 6: Simplify and restructure the business – Project New
3. Project SIMPLIFYNEW AND RESTRUCTURE THE BUSINESS – PROJECT NEW End-to-End Customer For personal use only Process Improvement A New New Lean Sales & Service Customer Operating Channel Enhancements Focused Model Culture Pricing Simplification Third Party Spend & Productivity Improvement Program ...
Slide 7: Key lead indicators for our strategy
KEY LEAD INDICATORS FOR OUR STRATEGY A. Customer satisfaction Measure Target For personal use only 1) Improve customer satisfaction 6% improvement year-on-year 2) Reduce TIO complaints 30% reduction year-on-year 3) First contact resolution 75% by 2013 B. Simplification Measure Target 4) Improving pr
Slide 8: Financial update: transformation was about infrastructure renewal
For personal use only FINANCIAL UPDATE John Stanhope, CFO TRANSFORMATION WAS ABOUT INFRASTRUCTURE RENEWAL TO DRIVE DIFFERENTIATION… Return On Investment (ROI) 30% Business Case ROI X Transformation Successes 25% Wireless broadband 3 yr CAGR +109% 20% Transformation Benefit 3G penetration 77% IP Acce
Slide 9: 2011 transition investment is not optional
2011 TRANSITION INVESTMENT IS NOT OPTIONAL … Revenue Trajectory EBITDA Trajectory For personal use only $25B $10B FY10 FY11 FY12 FY13 FY10 FY11 FY12 FY13 BAU IMPROVEMENT BAU IMPROVEMENT FCF Trajectory Competing aggressively to meet industry conditions We will simplify, serve and save to $5B help off
Slide 10: Update – first two months have seen good sales volumes
UPDATE – FIRST TWO MONTHS HAVE SEEN GOOD SALES VOLUMES For personal use only Sales of T-Hub and T-Box Sales of Bundles 600,000 60,000 T-Hub sales T-Box sales 300,000 30,000 0 Apr May Jun Jul Aug Nov Dec Jan Feb Mar Apr May Jun Jul …product differentiation and innovation is critical to our success 5
Slide 11: Dividend and free cash flow sustainability
DIVIDEND AND FREE CASH FLOW SUSTAINABILITY For personal use only 7 GUIDANCE, H1 PROFILE AND IMPACT OF SOUFUN Full Year Guidance* Measure FY11 Guidance Sales Revenue Flattish Impact of SouFun sale High single digit Measure A$ impact EBITDA percentage decline Accounting gain on sale pre-tax ~$75m Cape
Slide 12: NBN update: structure of the deal
For personal use only NBN UPDATE David Thodey, CEO STRUCTURE OF THE DEAL Passage of legislation with necessary amendments to implement the agreement CONDITIONS PRECEDENT Tax considerations Regulatory stability Decommissioning of copper and cable broadband FAIR CONSIDERATION Cooperation with NBN Co F
Slide 13: Conditions precedent/subsequent; non-binding financial heads of agreement
CONDITIONS PRECEDENT/SUBSEQUENT For personal use only Legislation passed - CCS Bill/NBN Co Bills Regulatory stability Ministerial waivers, exemptions & determinations ATO tax rulings USO Co agreement Retraining Agreement ACCC accepts SSU and migration plan Shareholder approval 3 NON-BINDING FINANCIA
Slide 14: NBN work streams; potential NBN timelines
NBN WORK STREAMS For personal use only 1. Operational, technical, 2. Due diligence 3. Tax commercial components Provide due diligence to Confirm tax treatment for Finalise the Definitive test and validate the both parties aligns with Agreements, including assumptions, calculations and expected outco
Slide 15: Project New
For personal use only PROJECT NEW Robert Nason GMD Corporate Strategy & Customer Experience Agenda Thinking behind Project New Project New – what is it and what will it achieve? What is different about this program? 2 Telstra Corporation: investor.relations@team.telstra.com 1
Slide 16: Our cost profile has changed; invested heavily in IT and networks
Cost Structure ... OUR COST PROFILE HAS CHANGED Change in Operating For personal use only Cost Categories 4 Year CAGR $13.5Bn $14.2Bn +1.3% • Total +1.3% versus inflation of +8% and 26% -4.0% labour +16% Labour 32% • Change in product +3.3% and customer mix Goods/Services Purchased • Higher levels o
Slide 17: Initiatives delivered productivity; focus on improving productivity
Cost Structure MANY INITIATIVE HAVE DELIVERED PRODUCTIVITY INCREASES IN SPECIFIC AREAS… For personal use only Examples Network Payments Review General Administration Overhead Cost Review Telstra Consumer Working Smarter Marketing Simplification Telstra Operations Workforce/Performance Excellence Acc
Slide 18: Significant opportunity if we reduce bad volume
Cost Structure SIGNIFICANT OPPORTUNITY IF WE REDUCE “BAD VOLUME” For personal use only Buy and Connect Pay Get Help Too many order require Many customer bills still A large number of fixed remediation require error resolution assurances requires more than one call Customer End-to-End Process Get Mov
Slide 19: Our online channel has significant upside; leverage suppliers
Cost Structure OUR ONLINE CHANNEL HAS SIGNIFICANT UPSIDE Active users of online For personal use only (% customer base) Opportunity • Convenience and choice for our customers • Cost differential in servicing routine transactions • Higher level of online sales Telstra Best-in- Aust. Aust. Online clas
Slide 20: Customer service performance has not matched network superiority
Service History OUR CUSTOMER SERVICE PERFORMANCE HAS NOT MATCHED OUR NETWORK SUPERIORITY For personal use only 1 IT Transformation •Inability to adjust prices while migrating customers •Level of complexity under estimated 2 Service offerings and bundles •Explosion in the number of service offerings
Slide 21: Recent announcements demonstrate the strategy; service drives productivity
Service History AND SOME RECENT ANNOUNCEMENTS DEMONSTRATE THE STRATEGY WE ARE DEPLOYING For personal use only More Improved Better value convenience quality Weekend New products and Dedicated team appointments pricing plans (e.g. when moving house T-box and T-hub) 24/7 sales and service Service & su
Slide 22: Project New: clear on what we need to do
Project NEW WE ARE CLEAR ON WHAT WE NEED TO DO For personal use only Theme Objectives • Fast, lean and competitive operating model and culture Simplify • Value propositions clear and simple to communicate • Processes streamlined to reduce time-to-market by 30% • Best customer satisfaction rating com
Slide 23: New lean operating model; end-to-end customer process improvement
Project NEW NEW LEAN OPERATING MODEL For personal use only Program of Work Early Actions Have commenced a program of work to: • Announced 345 management • Remove duplication in accountabilities positions are redundant and structure • Redesign key corporate processes • Integrated Telstra CountryWide
Slide 24: Sales and service channel enhancements; pricing simplification
Project NEW SALES AND SERVICE CHANNEL ENHANCEMENTS For personal use only Channel Mix of Estimates Customer Interactions 6 million unique visitors a week to the online 100% portals Telstra.com and BigPond.com Online/ Online/ Self Serve Significant growth opportunity for us; customers Self Serve want
Slide 25: Third party spend and productivity improvement program
Project NEW THIRD PARTY SPEND & PRODUCTIVITY IMPROVEMENT PROGRAM (1) For personal use only Procurement Bad Debts 100 $M % External Spend • +$13 billion in • Increase in bad external spend debts from • Seeking more changes in value, with economic differentiated conditions and capability product/ cust
Slide 26: A customer focused culture
Project NEW A CUSTOMER FOCUSED CULTURE For personal use only We‟ve recognised a Early Actions need to move to a collaborative customer centric Telstra • Holistic culture change plan developed Top heavy Technical superiority Command & control • Developed shared goals linked to customer satisfaction,
Slide 27: Marketing and products
For personal use only MARKETING AND PRODUCTS Kate McKenzie, Chief Marketing Officer New Sales and Marketing focus • Collaborative market engagement • Customer Experience Panel Position Telstra as • Targeted customer communications the brand that • Customer discovery based innovation connects more •
Slide 28: Fixed voice and broadband momentum; T-Box and T-Hub sales
Fixed Voice & Broadband momentum For personal use only Fixed Broadband Growth PSTN SIO Losses Net Activations (p/m) slowing (p/m) 20,000 10,000 15,000 10,000 Triple play 10%pts - Triple Play Bundles 5,000 Bundles Increase -10,000 19%pts in activation Reduction New Bundles in churn - -20,000 -5,000 -
Slide 29: Regaining momentum in mobiles
Regaining momentum in Mobiles For personal use only Post Paid SIO growth Pre-paid SIO growth Wireless broadband Net adds (p/m) Net Adds (p/m) SIO growth (YoY) Pre-paid caps New Pricing 55% Growth Plans YOY SIO Prepaid 97% YoY Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-
Slide 30: Content strategy is making a difference
Content strategy is making a difference For personal use only Portal Audience growth: Video Streams: Online & Mobile 4.2m 15.5m 3.0m 40% 11.7m Online Portal 33% Unique Visits Aug 09 Aug 10 Aug 09 Aug 10 BigPond Movie Downloads 6 2.9m 5 2.5m 18% 4 Mobile Portal Unique Visits 3 T-Box launch 2 1 0 Aug
Slide 31: Growth in IP and data
Growth in IP & data For personal use only IP Networking Growth – YoY SIOs Drive IP VPN IPVPN Attached Rates Attach rates Managed WAN 80% ~12% growth in Managed Network IP Access - Attached Rate Escalator 70% 20% Service Penetration FY10 60% Enterprise Attach Rate 110%* 50% Business 40% Slight growth
Slide 32: Cloud comes to life; value based pricing
Cloud comes to life For personal use only Enterprise Customer Managed UC Drivers Unified 34% Comms YoY Hosted UC IP Video Collaboration Infrastructure as a Service Net Customer activations 28 new Telstra’s Differentiated activations Customer Satisfaction levels – Q1FY11 Cloud 59% YoY Computing Growt
Slide 33: Redefining our brand
Redefining our brand For personal use only 13 Telstra Corporation: investor.relations@team.telstra.com 7
Slide 34: Telstra Consumer and Countrywide: competing in a changing marketplace
For personal use only TELSTRA CONSUMER AND COUNTRYWIDE Gordon Ballantyne, GMD MARKET COMPETING IN A CHANGING MARKETPLACE PSTN in Decline Across Mobility has Reasonable FBB Penetration Low, Price All Key Metrics: SIOs, Growth, But Telstra Losing Competition & Wireless Substitution; Usage and Price Sh
Slide 35: Fixed fightback in PSTN and fixed broadband; postpaid share
FIXED FIGHTBACK IN PSTN & FIXED BROADBAND For personal use only PSTN & FBB Net Subscriber Growth (SIO) Leveraging our assets to drive Fixed Fixed Broadband plans (from Nov 2009) Value in bundle offers (from Dec 2009) T-Hub® (from April 2010) T-Box® (from June 2010) Q2 Q3 Q4 Q1 FY10 FY10 FY10 FY11(f)
Slide 36: The challenger in prepaid; service at the core
PREPAID THE CHALLENGER IN PREPAID Prepaid Mobiles Market Share For personal use only Low market share, especially in metro 40% New offers, competitive pricing 36% Prepaid cap offers New creative and overhaul of marketing 24% Exclusive devices Improved distribution Telstra VHA Optus SOURCE Internal M
Slide 37: Distribution giving customers choice; it's all about the customer
DISTRIBUTION GIVING CUSTOMERS CHOICE ONE TELSTRA Efficiently deliver a consistent experience across all channels For personal use only regardless of where our customers choose to interact with us Premium branded store experience VISIT RETAIL Strong partner network CALL CONTACT Primary focus on servi
Slide 38: Growth opportunities
For personal use only GROWTH OPPORTUNITIES David Thodey, CEO NEW GROWTH OPPORTUNITIES NAS Network based applications and services Media Digital media, content and advertising portfolio Growing shareholder value from our Asia assets Asia These opportunities create value for shareholders 2 Telstra Cor
Slide 39: NAS and cloud service opportunities; digital media opportunity
NAS AND CLOUD SERVICE OPPORTUNITIES For personal use only Network Integrated Business Managed Unified Comms Computing Service Applications Networks (Cloud) Management and SaaS Enterprise SMB Consumer Investing in capability that satisfies customer needs protects and creates
Slide 40: Grow shareholder value from our Asia assets
GROW SHAREHOLDER VALUE FROM OUR ASIA ASSETS 1. Managed Services & International Connectivity For personal use only 2. New Media in China 3. Wireless Opportunities to grow shareholder value in adjacent sectors and markets 5 NEW GROWTH OPPORTUNITIES NAS Network based applications and services Media Di
Slide 41: In summary
IN SUMMARY For personal use only LEADING COMMUNICATIONS AND MEDIA COMPANY Extraordinary Unmatched Deep Core Sales and Advantages customer portfolio of Clear scale engineering marketing access and products and advantage and design capability interaction brands capability Drive value from our core Bui