Slide 1: Telstra Investor Day 2 May 2016
TELSTRA INVESTOR DAY 2 MAY 2016 ANDREW PENN, 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 could be significan
Slide 2: Agenda; Our Purpose, Vision and Strategy
AGENDA 1 Becoming a world class technology company Andrew Penn 2 Capital Management Warwick Bray 3 Q&A Andrew Penn, Warwick Bray 4 Network Resilience Kate McKenzie 5 Q&A Andrew Penn, Kate McKenzie, David Williams Page 3 OUR PURPOSE, VISION AND STRATEGY Purpose: To create a brilliant connected future
Slide 3: Strategic Pillars: Improve Customer Advocacy; Drive Value and Growth from the Core
STRATEGIC PILLAR: IMPROVE CUSTOMER ADVOCACY Strategy: Improve customer Drive value & growth Build new growth advocacy from the core businesses Personalised and easy to Simplifying and digitalising the Helping our customers access forms of customer connection experience connect their technology servi
Slide 4: Strategic Pillar: Build New Growth Businesses
STRATEGIC PILLAR: BUILD NEW GROWTH BUSINESSES Strategy: Improve customer Drive value & growth Build new growth advocacy from the core businesses Building the Telstra brand in Asia Connecting the • Strengthened capabilities through Pacnet healthcare system acquisition through Telstra Health • Combine
Slide 5: Technology Creates an Opportunity for Growth by Leveraging Our Network
TECHNOLOGY CREATES AN OPPORTUNITY FOR GROWTH BY LEVERAGING OUR NETWORK World class customer experiences Unified Applications and services Digital Media Communications Cloud Connected home Managed network services Software and technology solutions World class networks Page 9 OUR INVESTMENTS AND PARTN
Slide 6: Summary
SUMMARY Our strategy Our customers remain at the heart of remains the same everything we do We are lifting our aspirations to be a world class technology company Technology creates an Our investments and partnerships opportunity for growth by develop and expand our leveraging our network technologic
Slide 7: Capital Management Framework
CAPITAL MANAGEMENT FRAMEWORK FISCAL DISCIPLINE 1 2 3 OBJECTIVES MAXIMISING MAINTAINING RETAIN RETURNS FOR FINANCIAL FINANCIAL SHAREHOLDERS STRENGTH FLEXIBILITY 1. Maintain balance sheet settings consistent with a single-A credit rating PRINCIPLES 2. Ensure dividend remains fully franked and seek to
Slide 8: Ordinary Dividends Based on Long Term Sustainable Earnings
ORDINARY DIVIDENDS ARE BASED ON THE BOARD’S PRINCIPLE 2 ASSESSMENT OF LONG TERM SUSTAINABLE EARNINGS We are focused on the long-term “exit run rate” of earnings post NBN rollout In a particular year, ordinary dividends Sustainable earnings are not the same as may be >100% of earnings less: earnings
Slide 9: Economics Influenced by Mix Change in Major Products and the NBN
OUR ECONOMICS ARE INFLUENCED BY THE MIX CHANGE IN OUR MAJOR PRODUCTS PRINCIPLE 2 Revenue CAGR FY13 – FY15 +25.3% +23.6% +7.6% +6.7% -2.6% -7.3% Global NAS3 Mobile Fixed Data Data & IP1 Fixed Voice Connectivity3 FY15 revenue $2.4b $0.8b $10.7b $2.4b $2.9b $3.7b EBITDA margin Single digits Not disclos
Slide 10: Raising the Bar on Customer Advocacy and Productivity
WE ARE RAISING THE BAR ON CUSTOMER ADVOCACY AND PRODUCTIVITY PRINCIPLE 2 Last 5 years Now Over the last 5 years we Continue with 1. Customer advocacy led productivity including: have achieved annual gross previous • Digitalisation productivity of $1 billion, progress including more than $500 and...
Slide 11: Summary of Sustainable Earnings Drivers; Capex/Sales Ratio
SUMMARY OF SUSTAINABLE EARNINGS DRIVERS PRINCIPLE 2 Change in mix of existing products Total impact of shift in product mix Long-term net The impact of NBN recurring EBITDA impact of negative Sustainable $2-3 billion Earnings Decline in underlying Productivity fixed costs Long-term value creation bu
Slide 12: Cumulative Excess Free Cash Provides Flexibility
CUMULATIVE EXCESS FREE CASH PROVIDES FLEXIBILTY PRINCIPLE 4 Cumulative 4.7 excess free 1.0 1.7 2.8 2.2 Cumulative excess free cash cash $b FY12 FY13 FY14 FY15 1H16 incl. sale of Sensis and CSL incl. sale of TelstraClear Included cash Net operating cash flow inflows $b 8.7 9.3 8.4 Divestments 8.3 3.8
Slide 13: Majority of Investments Close to Core and Meet Criteria
MAJORITY OF INVESTMENTS BY VALUE HAVE BEEN CLOSE TO CORE AND ALL HAVE MET INVESTMENT PRINCIPLE 5 CRITERIA Further from core1 Telstra Health: $218m Telstra Software Group: $514m Dr Foster Videoplaza FRED IT iCare Nativ Health Connex Cloud 9 Ooyala Other4 Telstra has invested $1.8 billion GES: $1,020m
Slide 14: Balanced Approach Towards M&A; Telstra Ventures
WE WILL CONTINUE TO TAKE A BALANCED APPROACH TOWARDS M&A PRINCIPLE 5 We expect the most significant investments to be closely aligned to our core We will continue to pursue external opportunities where our existing investment guidelines are met, including M&A that is better than a share buyback of a
Slide 15: Ventures Providing Value to the Core Business
VENTURES PROVIDING VALUE TO THE CORE BUSINESS PRINCIPLE 5 Examples of our Ventures investments and how they have contributed to our core business: Investment What do they do? Value added to core business Whispir is a cloud based software provider that helps Telstra and Whispir have successfully part
Slide 16: Q&A; Kate McKenzie, COO
Q&A NOW ON iPHONE, iPAD AND ANDROID TELSTRA INVESTOR DAY 2 MAY 2016 KATE MCKENZIE, COO 16
Slide 17: Our Mobile Network Is Australia's Best
OUR MOBILE NETWORK IS AUSTRALIA’S BEST Australia’s largest Australia’s fastest Making it better • Our 4G network will reach • Based on a national • Over the three years to 98% of the population by average of 3G and 4G June 2017 we will have June 2016 and 99% by speeds invested more than $5 June 2017
Slide 18: Network Review: Actions; Leading in Mobile Innovation
NETWORK REVIEW: ACTIONS 01 Identified and addressed the root causes of the disruptions 02 Increase investment in world leading network monitoring and tools - $25 million 03 Improve network recovery time for customers to be world class - $25 million Page 35 LEADING THE MARKET IN MOBILE INNOVATION TWO
Slide 19: Q&A
Q&A NOW ON iPHONE, iPAD AND ANDROID 19