Slide 1: ASX cover letter: Analyst Briefing – Half year results presentation pack
10 February 2011 Office of the Company Secretary For personal use only Level 41 242 Exhibition Street MELBOURNE VIC 3000 The Manager AUSTRALIA Company Announcements Office General Enquiries 08 8308 1721 Australian Securities Exchange Facsimile 03 9632 3215 4th Floor, 20 Bridge Street SYDNEY NSW 2000
Slide 2: 2011 Half Year Financial Results
For personal use only 2011 HALF YEAR FINANCIAL RESULTS David Thodey, CEO John Stanhope, CFO 10 February 2011 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. Act
Slide 3: Natural Disasters
For personal use only 2011 HALF YEAR FINANCIAL RESULTS David Thodey, CEO 10 February 2011 NATURAL DISASTERS Telstra Corpora,on: investor.rela,ons@team.telstra.com 2
Slide 4: NBN Negotiation Update
NBN NEGOTIATION UPDATE For personal use only COMMERCIAL TERMS AGREED APPROXIMATELY $11 BILLION POST-TAX NPV TARGETING 1 JULY SHAREHOLDER VOTE 2011 HALF YEAR FINANCIAL RESULTS John Stanhope, CFO 10 February 2011 Telstra Corpora,on: investor.rela,ons@team.telstra.com 3
Slide 5: Financial Results - Reported
FINANCIAL RESULTS - REPORTED For personal use only On track Guidance $ Billions 1H10 1H11 % Growth versus basis* guidance Sales Revenue 12.32 12.26 -0.5% -0.5% EBITDA 5.32 4.58 -13.9% -12.5% EBIT 3.13 2.38 -24.1% -21.8% n/a Attributable NPAT 1.85 1.19 -35.6% -30.5% n/a Accrued Capex 1.60 1.45 -9
Slide 6: ARPU Trends and Sales Revenue by Product
ARPU TRENDS For personal use only MOBILE: Handheld postpaid: FLATTISH ! Smartphones & roaming offset more capped plans Handheld prepaid: INCREASED ! Increase in prepaid caps Broadband: DECLINED ! Growth in prepaid penetration & decline in pricing Blended handheld: INCREASED $50 FIXED: Retail Broadba
Slide 7: Retail Segments
RETAIL SEGMENTS For personal use only CONSUMER AND COUNTRYWIDE BUSINESS ENTERPRISE & GOVERNMENT Sales Revenue Sales Revenue Sales Revenue +1.9% +2.2% +1.3% Focused on growing customer Revenue growth across all Mobile services revenue +11% base from strategic investments product portfolios, except PS
Slide 8: Update on Strategic Opex Investments
UPDATE ON STRATEGIC OPEX INVESTMENTS For personal use only Investor Day We will continue to invest in the 2010 1H11 customer base DVC / COGS: maintain share, grow share ~$450m ~$500m $153m increase in mobile hardware - Mobiles (including subsidies & revenue partially offsets DVC spend other COGS), N
Slide 9: Product Profitability, Cashflow and Capex
PRODUCT PROFITABILITY* For personal use only EBITDA MARGIN FY08 FY09 FY10 1H10 2H10 1H11 Mobiles 30% 34% 35% 34% 35% 29% Fixed Internet 27% 35% 40% 40% 39% 33% PSTN 61% 59% 60% 59% 60% 59% IP & Data 55% 57% 62% 61% 64% 61% Sensis** 51% 53% 57% 50% 63% 41% Total Telstra Group 42.2% 43.2% 43.7% 43.1%
Slide 10: FY11 Guidance
FY11 GUIDANCE* For personal use only Measure Target Factors impacting 2H11 Sales Revenue Flattish Growth in customer base to flow into financials High single digit EBITDA Benefits from simplifying the business percentage decline Capex 14% of sales Recognition of Sydney Yellow Pages book Free cashflo
Slide 11: Strategy - Four Major Initiatives
For personal use only 2011 HALF YEAR FINANCIAL RESULTS David Thodey, CEO 10 February 2011 STRATEGY - FOUR MAJOR INITIATIVES 1. IMPROVING CUSTOMER SERVICE 2. RETAIN AND GROW CUSTOMERS 3. SIMPLIFYING THE BUSINESS 4. NEW GROWTH BUSINESSES Telstra Corpora,on: investor.rela,ons@team.telstra.com 10
Slide 12: Customer Service Results; Retain and Grow Customers
1. CUSTOMER SERVICE RESULTS For personal use only Annualised Deactivation Rates 1H10 1H11 NEW INITIATIVES Postpaid 15.8% 9.7% Handheld ! IVR improvements Retail Fixed 25.1% 16.4% ! 24/7 for sales and service Broadband EARLY RESULTS ! Weekend technician appointments PSTN 25.0% 22.0% ! Free calls to T
Slide 13: Winning Share in the Consumer Battleground
WINNING SHARE IN THE CONSUMER “BATTLEGROUND” For personal use only Prepaid Handheld Services Postpaid Handheld PSTN & Fixed BB Revenue Growth Net Customer Growth (‘000) Net Customer Growth (‘000) +9.0% +221 +54 +6.9% 1H10 2H10 1H11 -103 1H10 2H10 2H10 1H11 1H10 1H11 -23 -0.2% -204 -53 3. SIMPLIFYING
Slide 14: Progress on Key Lead Strategic Indicators
PROGRESS ON KEY LEAD STRATEGIC INDICATORS For personal use only A. Customer satisfaction Measure Target Progresss 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
Slide 15: Maximising the NAS Opportunity; Asian Assets
4. MAXIMISING THE NAS OPPORTUNITY For personal use only IP Access Revenue Growth Unified Comms Revenue Growth +20.1% +28.3% 1H10 1H11 1H10 1H11 4. DRIVING SHAREHOLDER VALUE FROM OUR ASIAN ASSETS 1. CSL MOMENTUM IMPROVING 2. REACH DEMERGER ANNOUNCED 3. CHINA ASSETS Telstra Corpora,on: investor.rela,o
Slide 16: Growing Our Media Business
4. GROWING OUR MEDIA BUSINESS For personal use only FOXTEL – Total Revenue SENSIS – Digital Growth $1,078m 15m +9% +31% Monthly visits $989m 10m 1H10 1H11 1H10 1H11 T-Box Customers Every second in Australia: 104k ! Yellow Pages print is used 20 times +4k per week ! Yellow Pages digital is used twice
Slide 17: Appendix
For personal use only 2011 HALF YEAR FINANCIAL RESULTS 10 February 2011 APPENDIX Telstra Corpora,on: investor.rela,ons@team.telstra.com 16
Slide 18: Financial Results - Adjusted to Show Underlying Performance
FINANCIAL RESULTS – ADJUSTED TO SHOW UNDERLYING PERFORMANCE For personal use only ADJUSTMENTS (1H11 impact compared to 1H10) Sydney Yellow Pages ! Revenue $83m 1H11 ! EBIT $71m change FX Changes Sales Revenue 0.7% ! Revenue $69m ! EBIT $3m Total Revenue 0.2% Octave Impairment Operating Expenses 9.8%
Slide 19: Telstra Consumer and Country Wide; Telstra Business
TELSTRA CONSUMER AND COUNTRY WIDE* For personal use only Revenue Growth (%) 1H10 2H10 1H11 Sales Revenue -0.7 -1.5 1.9 Mobile services 4.7 3.6 4.3 Fixed (ex Internet) -6.4 -10.4 -8.8 Fixed Internet 0.5 -2.9 -3.2 Operating Contribution Growth -2.5 -6.1 -14.3 Operating Contribution Margin (%) 58.7 56.
Slide 20: Telstra Enterprise & Government; Offshore Performance
TELSTRA ENTERPRISE & GOVERNMENT* For personal use only Revenue Growth (%) 1H10 2H10 1H11 Sales Revenue -5.8 -1.4 1.3 Mobile services 5.1 11.7 10.7 Fixed (ex Internet) -7.5 -6.7 -4.3 IP & Data 2.7 2.3 0.0 Operating Contribution Growth -1.6 3.6 1.7 Operating Contribution Margin (%) 77.3 78.6 77.5 Chan
Slide 21: Market Share; Interest & Financial Parameters
MARKET SHARE* For personal use only Retail SIOs 1H09 2H09 1H10 2H10 1H11 Total Mobile 41% 41% 41% 39% 41% Fixed (ex Internet) 75% 75% 75% 74% 74% Fixed Retail Broadband 47% 45% 44% 44% 45% Revenue 1H09 2H09 1H10 2H10 1H11 Mobile 43% 42% 42% 42% 42% Fixed (ex Internet)** 73% 73% 73% 72% 72% Fixed Ret