Slide 1: Full Year 2008 Financial Results ASX cover letter
13 August 2008 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 Telephone 03 9634 6400 Facsimile 03 9632 3215 ELECTRONIC LODGEMENT Dear
Slide 2: FY 2008 Financial Results - Sol Trujillo, CEO
For personal use only FY 2008 Financial Results Sol Trujillo, CEO 13 August 2008 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
Slide 3: Financial Results – strong retail performance
For personal use only PAT +13.5% EBIT growth 9.1%* Retail growth +5.9% FCF +33% to $3.9bn * On guidance basis, adjusted for CSLNW accelerated depreciation of $77 million 3 Financial Results – strong retail performance Segments - FY08 Absolute Sales Revenue Growth $ billions (reported) FY08 Growth %
Slide 4: Outperforming our global peer group; Guidance summary
Outperforming our global peer group For personal use only World Class Domestic Revenue Growth FY08 Mobile Services Revenue Growth 12.3% Telstra 4.8% 7.2% Telefonica 2.7% 3.0% France Telecom 2.4% 2.9% 2.1% BT 1.2% -0.2% -1.7% Telecom New Zealand -1.1% -3.3% -2.7% Telenor -4.5% -5.8% Deutsche Telekom
Slide 5: IT Transformation: going well
IT Transformation: going well For personal use only Migration Update 11 August Customers migrated 3.3 million Services migrated 4.3 million • Reduced 74 billing, product and ordering systems to three • More than 15 million lines of code Including 5 million in mediation software • To date: 1016 OSS a
Slide 6: Transformation: end-to-end strategy
Transformation: 5 year end-to-end strategy For personal use only Transformation decisions… …delivering results • Australia 1st, 2nd and 3rd priority • Next G™ network: 99% population coverage and > 2m sq km • Market-based management • Next IP™ network: 600% bigger than nearest competitor • New custo
Slide 7: Redefining the business…mobile; IP and fixed
Redefining the business…mobile For personal use only Browsing Usage per UU Mobile Data Revenue (Mb/mth) $830m 2.0 $716m $582m $367m 0.8 $343m $490m $311m 2007 2008 $142m $179m $286m MMS Volumes (m) $112m 64 $128m $230m $284m $158m $76m 37 1H07 2H07 1H08 2H08 SMS Handset WBB2 data1 1. Includes MMS, b
Slide 8: Redefining the business…broadband and media-comms
Redefining the business…broadband For personal use only and media-comms Broadband Revenue growth offsetting PSTN decline Domestic content $500m business in five years growth +$285m +$159m +$64m -$159m -$221m FOXTEL revenue • EBITDA +48% to $351m +17% to $1.7b • ARPU up to $85 / month -$318m FY05 FY0
Slide 9: Sensis: sales revenue +8.1%; China
Sensis: sales revenue +8.1% For personal use only Sensis Revenue Revenue World class Digital Media as a % of Total Sensis Revenue $2.5b 25% • Total directories +7.2% $2.13b directories • Print directories +5.4% growth • Online directories +20% $1.97b 20% $2.0b $1.83b $1.71b $1.5b 15% Digital media •
Slide 10: Shareholder value creation: final dividend and FCF
For personal use only Redefining business 14 cps final dividend FCF $6 - $7bn in FY10 Shareholder value creation 17 Appendix
Slide 11: Redefining the business…mobiles; PSTN
Redefining the business…mobiles For personal use only 3G as % of subs base Mobile EBITDA Margin Movement (pp)* 60-70% by 2010 2.3 50% 45% 40% 0.7 35% 30% 25% -1.1 -1.2 20% -2.1 -2.0 15% 10% -3.4 5% -3.8 0% UK Vodafone Vodafone Vodafone Orange France Germany Italy Germany T-Mobile Spain Telefonica Te
Slide 12: FY 2008 Financial Results - John Stanhope, CFO
For personal use only FY 2008 Financial Results John Stanhope, CFO 13 August 2008 Disclaimer • These presentations include certain forward-looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties. Actual results, performance or
Slide 13: Financial Results; Guidance
Financial Results For personal use only Reported 1H08 2H08 FY08 FY08 pcp pcp ($’b) pcp +13.5% Sales Revenue 5.3% 3.0% 24.7 4.2% Total Revenue 6.2% 3.2% 24.8 4.7% EBITDA 5.2% 6.0% 10.4 5.6% Profit after Tax EBITDA Margin (%) -0.1pp +1.2pp 42.2% +0.5pp EBIT 6.2% 9.3% 6.2 7.7% PAT (post minorities) 13.
Slide 14: Towards $6bn-$7bn of FCF; Changing product mix
Towards $6bn-$7bn of FCF For personal use only $1.0b -$0.5b +$0.2b +$0.3b $6-7b 6 m +$95 $3.9b $2.9b FY07 Revenue Opex Capex Other FY08 FY10 Objective 5 Changing product mix since Transformation $24.7b $22.2b +$1.5b -$1.1b +$0.4b -$0.2b +$0.2b +$1.7b Mobile Internet Fixed IP & data Advertising Other
Slide 15: FY08 Product Growth led by Mobiles & Broadband
FY08 Product Growth led by Mobiles & Broadband For personal use only Mobile Services +7% Mobile Services +12.3% (ex Wireless Broadband) Retail Broadband +30% Retail Broadband +49.2% (ex Wireless Broadband) $m ULL Shortfall – band 2 150 PSTN -3.2% Revenue Cost Cumulative Sensis +8.1% 0 -100 1H06 2H06
Slide 16: Retail Performance; Telstra Consumer and Channels
Retail Performance For personal use only 1H08 2H08 FY08 Sales Revenue growth 7.6% 4.3% 5.9% - Mobile Services 13.0% 10.0% 11.5% - Fixed -0.3% -1.5% -0.9% - Internet 47.2% 35.3% 40.7% - Data and IP 8.2% 8.8% 8.5% Operating contribution growth 8.5% 7.5% 8.0% Operating contribution margin 64.0% 65.2% 6
Slide 17: Telstra Business; Enterprise & Government
Telstra Business +8.6% For personal use only Sales Revenue $1.83b $1.81b Slowing PSTN Added 30k SIOs Revenue decline for the year +46% +41% $1.70b $1.65b +22% +17% Strong growth in 3G now 65% mobile voice and of mobile data revenues postpaid base +1% +1% Strong Broadband broadband 1H07 2H07 1H08 2H0
Slide 18: Total Expenses +3.3%; FTE reductions on track
Total Expenses +3.3% 3.3% For personal use only +$0.1b 3.5% $4.2b +$0.3b +$0.03b +$0.1b $4.2b $4.0b $18.8b $5.2b $5.2b $5.2b $4.9b FY07 Labour Goods & Services Other FY08 Depreciation & FY08 Purchased Amortisation Opex Opex Total Expenses 13 FTE reductions on track Target Headcount Reductions* Labou
Slide 19: Directly Variable Cost growth slowed… driven by SARCs
Directly Variable Cost growth slowed… For personal use only DVC Growth: +0.6% DVC growth < Sales growth $5,151m $5,181m 4.7x $1,799m -0.1% $1,797m 3.4x $2,036m $2,004m 2.3x -1.6% $1,316m $1,380m 0.1x 4.9% FY07 FY08 FY05 FY06 FY07 FY08 Network Payments COGS Other 15 … driven by SARCs Blended SARCs tr
Slide 20: Key drivers in Other Expenses; Capex passes peak
Key drivers in ‘Other Expenses’ increase For personal use only Other Expenses: +6.5% +$5,246m +$4,924m Key Drivers Change: $2,339m FY08 vs FY07 $2,177m 7% SC&A IT Prof services +$147m General Admin Debtor impairment +$58m Impairment Other ‘Other IT Costs +$38m expenses’ $1,028m P&A +$35m $949m 8% $3
Slide 21: Appendix: $6b-$7b Free Cash Flow FY10
For personal use only $6b-$7b Free Cash Flow FY10 19 Appendix 20
Slide 22: Consumer & Channels and Business - Performance
Telstra Consumer & Channels - Performance For personal use only 1H08 2H08 FY08 Sales Revenue growth 8.5% 3.8% 6.1% - Mobile Services 9.0% 5.1% 7.0% - Fixed 0.5% -1.8% -0.7% - Internet 45.6% 31.8% 38.0% - Data and IP 43.5% 22.3% 32.3% Operating contribution growth 8.9% 6.4% 7.6% Operating contributio
Slide 23: Enterprise & Government - Performance; Tax and Interest
Telstra Enterprise & Government - Performance For personal use only 1H08 2H08 FY08 Sales Revenue growth 4.5% 2.7% 3.6% - Mobile Services 19.3% 23.7% 21.6% - Fixed -4.3% -4.1% -4.2% - Internet 73.7% 68.2% 70.7% - Data and IP 6.3% 6.0% 6.2% Operating contribution growth 8.5% 8.3% 8.4% Operating contri
Slide 24: Debt markets remain open to Telstra
Debt markets remain open to Telstra For personal use only Long-term Debt Maturity Profile FY08 Debt Completed $bn LT debt average maturity: ~5 years 3.0 €500m Eurobond 2.5 benchmark 2.0 A$1bn Domestic 1.5 Syndicated Loan Facility 1.0 US$600m Asian 0.5 Syndicated Loan Facility 0.0 FY09 FY10 FY11 FY12