| TLS |
| 01/11/2007 |
| GENERAL |
| |
| REL: 1106 HRS Telstra Corporation Limited |
| |
| GENERAL: TLS: Earnings guidance and Investor Day Presentation |
| |
| Transformation drives upgraded earnings guidance, |
| IT system upgraded ahead of schedule, icon store unveiled |
| |
| Telstra has upgraded its EBIT guidance for 2007/08 and its long-term |
| objectives for both revenue and EBITDA growth as the company's transformation |
| strategy delivers sustained strong results. |
| |
| Speaking at Telstra's annual investor briefing in Sydney today, Chief |
| Executive Officer, Mr Sol Trujillo, announced that - |
| |
| - EBIT guidance for 2007/08 would increase by two percentage points from 3-5% |
| to 5-7% which includes a |
| $100 million distribution from FOXTEL; and |
| - the long-term objectives for both revenue and EBITDA growth to 2010 would |
| increase by 0.5 percentage |
| points from the range 2-2.5% per annum to the new range 2.5-3% per annum. |
| |
| Mr Trujillo also announced that Telstra had beaten by two months its schedule |
| to switch-on a transformed new IT system that will make it easier for |
| customers to do business with the company. The company also last night |
| launched an icon store that will revolutionize the way customers interact |
| with the company. |
| |
| "Telstra is winning on the front line. We are earning new revenues as NextG |
| TM mobile broadband changes the way customers use their mobiles; we are |
| winning market share and revenue-per-user in broadband; and we are bucking |
| the worldwide decline in traditional products," Mr Trujillo, said today. |
| |
| "We have again beaten our own transformation timetable, switching on an |
| improved IT system that makes life better for customers and launching a new |
| icon store that changes the way customers experience Telstra. |
| |
| "Two years into our transformation, consumers have restored Telstra's |
| position as market leader. Consumers are recognising we offer better |
| products, innovation, service and value. Because of that complete experience, |
| consumers are choosing Telstra over the competition, and they are doing it in |
| growing numbers. |
| |
| "Telstra is also achieving world-class marketing excellence, operational |
| excellence and accelerating profitable |
| growth. The best news is we are achieving these results by staying on course |
| and executing the same integrated, |
| forward-looking strategy we announced two years ago," Mr Trujillo said. |
| |
| Mr Trujillo updated some results, expanded on the day's announcements and |
| updated the market on the main |
| elements of the company's transformation strategy - |
| |
| - The improved IT system was switched on last weekend. Called 'IT release |
| one', the new system will eventually serve 5.3 million consumer and small |
| business customers by giving call centre staff a single view of the customer, |
| reducing repeat activities, increasing automation and enabling a single bill |
| for most products. The second wave of IT improvement is on track for release |
| at the end of 2008. |
| - The new Telstra icon store was launched last night at 400 George Street. |
| Spread over two levels in Sydney's shopping district, the T[life]TM store |
| will revolutionise the way customers interact with Telstra. |
| |
| Customers will test-drive live products, learn from interactive, hands-on |
| technology demonstrations and |
| receive expert advice from specially trained staff. It will be matched by an |
| icon store in Melbourne. |
| |
| - An advanced new Telstra Experience Centre will open tonight at 400 George |
| Street. Visitors will interact |
| with live products like Telstra's NextIP TM Virtual Private Network and NextG |
| TM network to appreciate how |
| integrated solutions can improve their business productivity. Industry |
| partners will also use the Centre to |
| setup, test and present technology innovations to Telstra customers. |
| |
| - Major network investments have provided faster broadband to more people. |
| The company has built more than 6,000 NextG TM base stations (nearly twice |
| the number of CDMA) providing a cell range as far as 200 kilometres and peak |
| network speeds of 14.4 Mbps, sold nearly 400,000 mobile data cards that |
| turbo-charge |
| laptops, installed 2.2 million ADSL1 and 2.7 million ADSL2+ ports, upgraded |
| to 30 Mbps the HFC network passing 940,000 homes in Melbourne and 925,000 |
| homes in Sydney, and achieved 99.999% reliability on the NextIP TM network |
| for business. |
| |
| - Market-based management has given Telstra unprecedented and unmatched |
| customer knowledge of customer preferences and needs, resulting in improved |
| customer value and satisfaction scores across all businesses units, segments |
| and products. Strike rates on customer contacts doubled from 8% in April-June |
| 2006 to 16% one year later. Telstra has achieved measurable improvements in |
| brand qualities including innovation, ease of use and trustworthiness. This |
| has assisted Telstra to simultaneously command a price premium and increase |
| market share. |
| |
| - Telstra has bucked the worldwide trend of PSTN market share decline by |
| adding 33,000 retail customers to the traditional copper telephone service in |
| July-September 2007. This was assisted by the twelfth consecutive month of |
| positive retail |
| churn, leading to world-class trends in retail PSTN revenues. |
| |
| - Superior NextG TM coverage, capabilities and content has continued to |
| attract record new customers. By 30 September Telstra had 2.514 million 3G |
| customers of whom 1.546 million are NextG TM customers. In another |
| world-class performance for a 3GSM operator, Telstra has generated more |
| mobile revenue from non-SMS |
| data content than from SMS, showing Telstra customers are using their |
| handsets differently to experience content and services unique to the NextG |
| TM network. |
| |
| - Customers can now choose from nearly 30 NextG TM handsets including six new |
| devices unveiled today. The new devices include two from Nokia and others |
| from ZTE, Samsung and Motorola, designed to appeal to specific customer |
| segments like rural and youth. A new super receptive ZTE Country Phone TM , |
| for instance, |
| will enable bush customers to take even more advantage of the expansive Next |
| G(TM) network coverage. |
| |
| o Telstra also announced unique new online content and services including 33 |
| channels of mobile FOXTEL and 33 shows on BigPond TV, a BigPond Office |
| application that makes it easy for small businesses and families to share |
| documents or budgets, a trial of exclusive discounts for NextG TM customers |
| who use their handset to scan barcodes at shops and restaurants, the creation |
| of a simulated city of Sydney on Second Life, and a new pocket-sized mobile |
| credit card terminal for business customers. |
| |
| - Productivity has increased dramatically. Since November 2005 unsatisfied |
| ADSL orders have fallen 90%, activation costs are down 22%, field workforce |
| productivity has improved 20% and reported problems per 100 services have |
| declined by 40%. Despite reducing staff numbers by 5,746 to June 2007 the |
| company has |
| delivered the best customer service levels ever recorded. |
| |
| - The company's procurement policies continue to save money. Telstra's |
| partnership with Brightstar for end-to- end handset procurement has delivered |
| savings of more than $300 million compared to old buying practices, including |
| $246 million in 2006/07 alone. Telstra will also enter phase two of a |
| contract with IBM to transform the supply-chain. The existing contract will |
| contribute to savings of $159 million by the end of 2007/08. The phase two |
| contract will produce savings beyond the $500 million already announced. |
| |
| - Telstra has saved office space, water, electricity and paper. Since |
| November 2005 the company has exited 66 property leases representing 107,020 |
| square metres of office space. The company will this year save enough |
| electricity to power some 2,225 suburban homes (17.9 million KWh) and enough |
| water to fill about |
| 2,000 backyard swimming pools (83 million litres). Consolidating multiple |
| customer services onto single bills has saved 240 million sheets of paper |
| annually. |
| |
| - Staff are enthusiastic about the company's future and proud of its new |
| culture, with staff surveys showing the highest support in more than a decade |
| for the company's management, strategy, business direction and job |
| satisfaction. |
| |
| - A leadership development program is producing a broad and deep talent pool. |
| Telstra has recruited international leaders from world-class companies in |
| Australia, Europe, Asia and North America. Telstra has new programs to groom |
| future leaders and boost staff diversity. The new Telstra Learning Academy |
| has also |
| transferred new skills to 16,000 field employees, with more to come. |
| |
| "Key to Telstra's future success will be wireless, where our NextG TM network |
| now offers content, coverage and speed that is revolutionizing the way |
| Australians use their handsets. At the same time we have a commanding |
| position in broadband, where we are growing market share and revenue thanks |
| to superior services and content from BigPond, Sensis and FOXTEL," Mr |
| Trujillo said. |
| |
| "Telstra now has a low-cost operating model based on intelligent new networks |
| that are accelerating revenue growth at lower unit cost, simplified |
| processes, and a software-defined environment that allows us to roll-out new |
| applications and services at low cost. It's a different kind of business. |
| |
| "We are also reducing the capital intensity of our business after |
| transformation spending peaked in 2006/07. The major expenses of the |
| transformation - including the NextG TM and Next IP TM networks - are largely |
| behind us, and our capex to sales ratio will decline to 10-12% by 2010. |
| |
| "We are winning on the front line despite the world's most punitive and |
| intrusive regulatory environment which has produced the developed world's |
| lowest wholesale prices, highest input costs and declining investment from |
| other companies. Despite the challenges we are winning because of operational |
| superiority, differentiation from the competition and value-based thinking. |
| |
| "I am proud of our results but recognize we still have plenty on our agenda. |
| Our journey has only just begun and our progress is measured by results and |
| the velocity of change. Customers are making choices for themselves, and by |
| their choices they have restored Telstra's position as the market leader," Mr |
| Trujillo said. |
| |
| A copy of the Telstra Investor Day Presentation can be obtained by e-mailing |
| lcr@nzx.com |
| End CA:00156056 For:TLS Type:GENERAL Time:2007-11-01:11:06:16 |
