TELSTRA GROUP LIMITED — AGM Information 2008

Oct 6, 2008

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7 October 2008

Office of the Company Secretary

The Manager

Company Announcements Office Australian Stock Exchange 4[th] Floor, 20 Bridge Street SYDNEY NSW 2000

Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA

Telephone 03 9634 6400 Facsimile 03 9632 3215

ELECTRONIC LODGEMENT

Dear Sir or Madam

Telstra Corporation Limited – 2008 Notice of Annual General Meeting

In accordance with the listing rules I attach for release to the market:

• the Notice of Meeting for Telstra’s Annual General Meeting to be held in Melbourne on 21 November 2008;

• a shareholder statement pursuant to section 249P of the Corporations Act; and

• the Shareholder Update.

Yours sincerely

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Carmel Mulhern Company Secretary

Telstra Corporation Limited ACN 051 775 556 ABN 33 051 775 556

Telstra Corporation Limited 2008 Annual General Meeting

7 October 2008

Dear Shareholder

It is my pleasure to invite you to the 2008 Annual General Meeting of Telstra Corporation Limited on Friday,21 November 2008.

The AGM will be held at the John Batman Theatre,Melbourne Convention Centre,Cnr Spencer and Flinders Streets,Melbourne commencing at 10.00am (local time).Shareholder registration will commence at 9.00am and shareholders are invited to join with the Telstra Board and senior executives for refreshments prior to the meeting.A light lunch will be served during the course of the meeting.

The AGM will also be webcast.Shareholders should log on to www.telstra.com/agm before the meeting to download any software needed to view the event.

Shareholders can submit questions that they would like raised at the AGM using the form at the back of this notice of meeting or via the internet www.linkmarketservices.com.au/telstra/agm .As in past years,we will respond to the more frequently asked questions at the AGM but as you would appreciate,with Australia’s largest shareholder base of over 1.4 million,we will not be able to respond individually to all questions.

I enclose your notice of meeting together with a personalised voting form for shareholders.This year,for the first time,Telstra is implementing the provision in its constitution to allow shareholders to exercise their voting rights directly.The attached personalised voting form allows shareholders who are not attending the meeting to either lodge their vote directly,or as in past years,appoint a proxy to vote on their behalf. Please refer to the back of your voting form for more information on direct voting.

You can lodge your vote on-line at the Telstra Share Registry website www.linkmarketservices.com.au/telstra . Alternatively,you can complete and return the hard copy form in the envelope provided,or fax it to the fax number on the form.

This year two of your serving directors,Catherine Livingstone and I,are retiring by rotation and standing for re-election.A further two standing directors,John Mullen and John Stewart,who were appointed to the Board since the last AGM,are standing for election.The Telstra Board recommends the election and reelection of your four standing directors.

If you are unable to attend the meeting,please remember to lodge your vote either on-line at www.linkmarketservices.com.au/telstra or complete and then return the form enclosed with this notice.

I look forward to welcoming you to the meeting.

Yours sincerely

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Donald G McGauchie AO Chairman

Telstra Corporation Limited ABN 33 051 775 556

Notice of Annual General Meeting 2008

ITEMS OF BUSINESS

1. CHAIRMAN AND CEO PRESENTATIONS

2. REMUNERATION REPORT

To adopt the remuneration report for the financial year ended 30 June 2008.

3. DISCUSSION OF FINANCIAL STATEMENTS AND REPORTS

To discuss the Company’s financial statements and reports for the year ended 30 June 2008.

4: NEW CONSTITUTION

To consider,and if thought fit,pass the following resolution as a special resolution:

‘THAT the constitution tabled at the meeting and signed by the Chairman of the Meeting for the purposes of identification,be adopted as the constitution of the Company in place of the present constitution,with effect from the close of the meeting.’

5: ELECTION AND RE-ELECTION OF DIRECTORS

In accordance with the Company’s constitution:

• (a) Mr John Mullen who was appointed since the last AGM,being eligible,offers himself for election;

• (b) Ms Catherine Livingstone retires by rotation and,being eligible,offers herself for re-election;

• (c) Mr Donald McGauchie retires by rotation and,being eligible,offers himself for re-election; and

• (d) Mr John Stewart who was appointed since the last AGM,being eligible,offers himself for election.

NOTES

Item 2: The remuneration report forms part of the statutory Annual Report which is available for shareholders to access and download from www.telstra.com/annualreport .

The vote on this item is advisory only and does not bind the directors or the Company.However,the Board will take the outcome of the vote into consideration when reviewing the remuneration practices and policies of the Company.

The Chairman of the meeting intends to vote undirected proxies in favour of the adoption of the remuneration report.

Item 4: An explanation of the proposed changes to the constitution are contained in the explanatory notes to the notice of meeting on page 6.This resolution is a special resolution and in order to be successful must be passed by at least 75% of the votes cast.

The Chairman of the meeting intends to vote undirected proxies in favour of the adoption of the new constitution.

Item 5: The order in which candidates appear in this notice of meeting has been independently determined by Ernst & Young.To be successfully elected or re-elected as a director,a candidate must receive more votes cast “for” than “against” .

As Donald McGauchie is standing for re-election,Dr John Stocker will chair the meeting for this item.

The Chairman of the meeting intends to vote undirected proxies in favour of the election and re-election of John Mullen,Catherine Livingstone,Donald McGauchie and John Stewart.

In the interests of representing the views of as many shareholders as possible,the Chairman of the meeting intends to call a poll in relation to items 2,4 and 5.

More details for items 2,4 and 5 are contained in the explanatory notes on pages 5,6 and 7.

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Notice of Annual General Meeting 2008

CONDUCTING TELSTRA’S ANNUAL GENERAL MEETING

Telstra’s Annual General Meeting is intended to give shareholders the opportunity to:

• Hear presentations by the Chairman and CEO about the operations and performance of the Company and the outlook for the year ahead.

• Consider and vote on the resolutions before the meeting including a non-binding resolution on the adoption of the remuneration report.

• Ask questions of the Board,management and the auditor.The Chairman and CEO will generally answer questions on behalf of the Board and management.

To help achieve these objectives Telstra will:

• Webcast the meeting for the benefit of those shareholders unable to attend in person.Shareholders can view the meeting live at www.telstra.com/agm and the webcast will be archived after the meeting for replay.

• Allow shareholders to raise questions in writing before the meeting by either completing the attached form or via the internet at www.linkmarketservices.com.au/telstra/agm .

• Allow a reasonable opportunity for shareholders as a whole at the meeting to ask questions of the Board, management or the auditor about the operations,performance and management of the Company.

• Provide sign language and hearing loop facilities for shareholders with hearing difficulties.

• Answer shareholders’questions honestly and fairly.If we can’t answer a question at the meeting we will seek to provide a response to the shareholder asking the question after the meeting.

• Inform shareholders as to the proxy and direct voting position with respect to the resolutions to be considered by the meeting and the manner in which the Chairman of the meeting intends to vote undirected proxies.

To help achieve these objectives we ask that shareholders:

• Are courteous and respectful to all shareholders and others attending the meeting.

• Keep their questions and comments to a reasonable length of time to allow as many shareholders as possible who wish to speak at the meeting an opportunity to do so.Generally a maximum of three minutes each time a shareholder addresses the meeting will be appropriate.

• Confine their questions to matters before the meeting and matters relevant to shareholders as a whole.If a shareholder’s question appears to be more relevant to the shareholder’s own circumstances than to shareholders as a whole,we will ask that the shareholder raise the matter with management outside the meeting.

• Respect the privacy of individual shareholders attending the meeting and assist in the orderly conduct of the meeting by not photographing,video taping or recording the proceedings of the meeting.

ACCESS YOUR ANNUAL REPORT ONLINE

The statutory Annual Report and the periodic Shareholder Updates are available for shareholders to access and download from www.telstra.com/annualreport .If you would like to receive a hard copy of the statutory Annual Report free of charge you can contact Telstra Share Registry on 1300 88 66 77 .

Shareholders who have specifically requested a hard copy of the statutory Annual Report will receive it separately in the mail.

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Notice of Annual General Meeting 2008

APPOINTING PROXIES OR NOMINEES

Shareholders and ESOP 97 or 99 participants,OwnShare participants or DirectShare participants (Participants) who are entitled to attend and vote at the AGM are able to appoint a proxy (in the case of a shareholder) or appoint a nominee (in the case of a Participant) to act generally at the meeting on their behalf,and to vote in accordance with their instructions on either section A of the blue voting form or the green nominee form.

If no directions have been given on section A of the blue voting form or on the green nominee form,the proxy or nominee may vote as they see fit.A proxy or nominee need not be a shareholder of the Company.

A shareholder or Participant entitled to attend and vote can appoint up to two proxies or nominees as appropriate,and may specify the proportion or number of votes each proxy or nominee is appointed to exercise.If no proportion or number is specified each proxy or nominee may exercise half of the shareholder’s or Participant’s votes.If you wish to appoint two proxies or two nominees,please call 1300 88 66 77 and request an additional form.

DIRECT VOTING

Shareholders are also able to vote their intentions directly by marking section B of the voting form.If you mark section B you are voting your shares directly and do not appoint a third party such as a proxy,to act on your behalf. Shareholders who wish to vote their shares directly should mark either the “for” or “against” boxes next to each item on the voting form. Do not mark the “abstain”box.

If no direction is given on all of the items,or if you complete both box A and box B,your vote may be passed to the Chairman of the meeting as your proxy.If you mark the “abstain” box for an item,your vote for that item will be invalid.

If you hold Telstra shares in more than one capacity you need to use the forms that are relevant to your holdings.For example,if you are an ordinary shareholder and an ESOP participant and you wish to appoint a proxy for your entire holding,you must complete section A of the blue voting form for your ordinary shares and the green nominee form for your ESOP holding.

For further information on lodging a direct vote or on proxies or nominees generally,including the appointment of proxies or nominees,the proportion of votes per proxy or nominee,voting by proxy or voting directly,and lodging your form,please refer to the back of the relevant voting or appointment of nominee form enclosed with this notice of meeting.

QUESTIONS

If you have any questions about this notice or the accompanying documents,please contact:

Telstra Share Registry Link Market Services Limited Level 12,680 George Street,Sydney NSW 2000 Telephone: 1300 88 66 77 Overseas: +61 2 8280 7756 Facsimile: +61 2 9287 0309

By order of the Board

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Carmel Mulhern Company Secretary 7 October 2008

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Notice of Annual General Meeting 2008

RIGHT TO VOTE AND RIGHT TO ATTEND THE MEETING

Investor	Right to vote and attend the meeting	Which form?	Deadline for lodgement
Shareholders	Shareholders registered as at 7.00pm on Wednesday 19 November 2008	Use thebluevoting form to either appoint a proxy (section A) or vote directly (section B)	10.00am on Wednesday 19 November 2008
Telstra ESOP 97 and ESOP 99 Participants	Telstra ESOP 97 and ESOP 99 participants registered at 5.00pm on Friday 14 November 2008	Use thegreennominee form	5.00pm on Friday 14 November 2008
Telstra OwnShare and DirectShare participants	Telstra OwnShare and DirectShare participants registered at 5.00pm on Friday 14 November 2008	Votes should be lodged online at www.linkmarketservices.com.au/telstra	5.00pm on Friday 14 November 2008

EXPLANATORY NOTES

ITEM 2 – ADOPTION OF THE REMUNERATION REPORT

During this item there will be opportunity for shareholders at the meeting to comment on and ask questions about the Telstra remuneration report.The remuneration report forms part of the statutory Annual Report and is available for shareholders to access and download from www.telstra.com/annualreport .

The vote on this proposed resolution is advisory only and will not bind the directors or the Company.However the Board will take the outcome of the vote into consideration when reviewing the remuneration practices and policies of the Company.

Board Recommendation: The Board recommends that shareholders vote in favour of item 2.

The Chairman of the meeting intends to vote undirected proxies in favour of the adoption of the remuneration report.

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Notice of Annual General Meeting 2008

ITEM 4 – NEW CONSTITUTION

The Company’s current constitution was adopted by members at the 2006 Annual General Meeting.In recognition of the importance of ensuring that the constitution is a contemporary document,the Board considers that there are now two areas of the constitution that require further change.These are:

• (a) the director and officer indemnity and access provisions; and

• (b) those parts of the constitution that ceased to be effective in 2006 when the Commonwealth Government’s period of majority ownership of the Company ended and associated minor amendments to bring the constitution up to date.

A copy of the Company’s existing constitution and the proposed constitution are available on the Company’s website at www.telstra.com/agm .You can also obtain a copy by contacting the Telstra Share Registry on 1300 88 66 77.A copy of the proposed Constitution will also be available at the Annual General Meeting.

The proposed amendments to the constitution are summarised below:

Director and officer indemnity and access provisions

The indemnity and access provisions relating to officeholders are being simplified.The proposed amendments give the company the flexibility to indemnify officeholders to the full extent permitted by law.The circumstances in which an indemnity or access to records will be provided have not materially changed from the current constitution.

Commonwealth ownership provisions

Prior to the Telstra public share offer in October and November 2006,the constitution included provisions specific to the Commonwealth Government’s majority ownership of the Company.These provisions ceased to form part of the constitution in 2006 when the Commonwealth Government ceased to hold a majority of the voting shares in the Company.Other provisions were included to deal with the sale of the shares in two instalments but,with the payment of the final instalment in May 2008,are no longer necessary.

The proposed constitution removes the provisions and all references to them in the constitution.The changes are inconsequential in nature as they relate to provisions that have ceased to be effective.

The rest of the proposed amendments are administrative or relatively minor in nature.

Board Recommendation: The Board considers that the new constitution is appropriate and in the interests of shareholders.Accordingly,the Board recommends that shareholders vote in favour of item 4.

The Chairman of the meeting intends to vote undirected proxies in favour of the adoption of the new constitution.

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Notice of Annual General Meeting 2008

ITEM 5 – ELECTION AND RE-ELECTION OF DIRECTORS

John Mullen - Age 53

Mr Mullen joined Telstra as an independent non-executive Director on 1 July 2008.Mr Mullen has worked for over two decades in a multitude of senior positions with different multinationals.His corporate experience includes 10 years with the TNT Group,with two years as its Chief Operating Officer.From 1991 to 1994,he held the position of Chief Executive Officer of TNT Express Worldwide,based in the Netherlands.Mr Mullen joined Deutsche Post World Net (DPWN) as an Advisor in 1994,becoming Chief Executive Officer of DHL Express Asia Pacific in 2002,Joint Chief Executive of DHL Express in 2005 and Global Chief Executive Officer of DHL Express in 2006.

Chairman,National Foreign Trade Council (Washington DC (2008 - ); Director,Deutsche Post World Net,Board of Management, Germany (2005 - ) and Embarq Corporation USA (2006 - ); Member,Australian Graduate School of Management (2005 - ) and Advisory Council to the City of Seoul (2006 - ).

Catherine Livingstone - AO,BA (Hons),FCA,FTSE Age 52

Ms Livingstone joined Telstra as an independent non-executive Director in November 2000.She is a member of the Audit Committee and the Technology Committee.Ms Livingstone has a degree in accounting and has held several finance and general management roles predominantly in the medical devices sector.Ms Livingstone was the Chief Executive of Cochlear Limited (1994 – 2000).

Director,Macquarie Bank Limited (2003 - ),Macquarie Group Limited (2007 - ),Worley Parsons Ltd (2007 - ),Macquarie Graduate School of Management Pty Ltd (2007 - ) and Future Directions International Pty Ltd (2007 - ); Member,New South Wales Innovation Council (2007 - ) and Federal Government’s National Innovation System Review Panel (2008 - ).

Donald McGauchie - AO,FAICD Age 58

Mr McGauchie joined Telstra as an independent non-executive Director in September 1998 and was appointed as Chairman in July 2004.He is Chairman of the Nomination Committee and is a member of the Audit and Remuneration Committees.Mr McGauchie has wide commercial experience within the telecommunication,food processing,commodity trading and finance sectors.He also has extensive public policy experience,having previously held several high-level advisory positions to the government including the Prime Minister’s Supermarket to Asia Council,the Foreign Affairs Council and the Trade Policy Advisory Council.

Director,James Hardie Industries NV (2003 - ),Nufarm Limited (2003 - ) and Reserve Bank of Australia (2001 - ); Partner,C&E McGauchie - Terrick West Estate.

John Stewart - BA,FCIB,ACII Age 59

Mr Stewart joined Telstra as an independent non-executive Director on 28 April 2008.Mr Stewart has had a long and successful career in the finance industry since he first joined Woolwich PLC in 1977.Mr Stewart was appointed to the Board of Woolwich in 1995 and became Chief Executive in 1996.Following Woolwich’s acquisition by Barclays PLC in October 2000,Mr Stewart was appointed Deputy Chief Executive Officer and became a member of the Barclays Group Board and Group Executive Committee.In August 2003 he joined the Group comprising National Australia Bank (NAB), the Clydesdale & Yorkshire banks in the UK,the Bank of New Zealand,and nabCapital,as Chief Executive,Europe and Principal Board Member.In February 2004 Mr Stewart was appointed Group Chief Executive Officer of NAB.Mr Stewart has announced his retirement from the NAB effective 31 December 2008.

Director and Chief Executive Officer,National Australia Bank (2004 - ); Director,Business Council of Australia (2006- ); Chair,Australian Bankers’Association (2007 - ); Member,Scottish Enterprise’s International Advisory Board (2006 - ) and Member,the Federal Attorney General’s Business-Government Advisory Group on national security.

Board recommendation: The Board (other than the relevant director in relation to his/her own election or re-election) recommends the election and re-election of John Mullen,Catherine Livingstone,Donald McGauchie and John Stewart.

The Chairman of the meeting intends to vote undirected proxies in favour of the election and re-election of John Mullen,Catherine Livingstone,Donald McGauchie and John Stewart.

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Notice of Annual General Meeting 2008

QUESTIONS FROM SHAREHOLDERS

Your questions are important to us.Please use this form to submit any questions concerning Telstra that you would like us to respond to at the Annual General Meeting and return it in the reply paid envelope provided or fax it to +61 2 9287 0309 .Shareholders can also lodge questions on-line at www.linkmarketservices.com.au/telstra/agm .

We will respond to as many of the more frequently asked questions as possible at the AGM.Please note that we will not be able to reply individually.You will be able to view the AGM live by webcast and after the meeting at www.telstra.com/agm .

Shareholder’s name: ................................................................................................................................................................. Address:...................................................................................................................................................................................... .................................................................................................................................................................................................... ....................................................................................................................................................................................................

Securityholder Reference Number (SRN) or Holder Identification Number (HIN): ..................................................................

Question(s):

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Telstra Corporation Limited Shareholder Statement pursuant to Section 249P of the Corporations Act 2001

TELSTRA BOARD’S RESPONSE TO SECTION 249P STATEMENT

Dear Shareholder

The accompanying statement, titled “Shareholder risks associated with the National Broadband Network” has been received from a group of shareholders. Pursuant to section 249P of the Corporations Act, we are required to provide this statement to all our shareholders with the notice of meeting for our Annual General Meeting.

With regard to the issues raised in the statement, the Directors can assure shareholders that they are working towards a result from the National Broadband Network (NBN) Request for Proposals (RFP) that provides maximum benefits for shareholders.

The Board is working closely with senior management in developing Telstra’s final response to the RFP. The NBN is a very large infrastructure project which is vital to Australia’s future economic prosperity and social advancement. Telstra is well-placed to build the NBN given the company’s proven record, its financial capacity, its skilled workforce and the fact the NBN is likely to be an upgrade of Telstra’s fixed network.

The statement raises three specific shareholder risks associated with the NBN.

The first risk is the potential for another bidder to be selected to build the NBN, including the possibility that Telstra may decide not to bid. The Board has not made a final decision on whether the company will lodge a bid for the NBN by the due date of 26 November 2008. This decision will be based on a thorough examination of the business case and an assessment of whether the company is in a position to lodge a proposal that is in its shareholders’ interests and will not devalue shareholders’ investments in the company. In the current financial climate and given the RFP criteria and associated regulatory risks, the Directors do not discount the possibility that it may not be in the interests of shareholders to bid for the NBN. For example, if structural or functional separation of Telstra is a pre-condition, I have publicly made clear that Telstra is not in a position to bid for the NBN.

The second risk referred to in the statement is that of further separation of Telstra. The Directors agree that further separation would result in a significant loss of value for Telstra’s shareholders who have bought into the company on the basis that it would remain vertically integrated. Telstra’s transformation is predicated on the fact that Telstra is a vertically integrated company. Further separation would significantly increase costs, reduce efficiencies and make it more difficult for Telstra to offer world-leading services to its customers. Any forms of further separation would be value destructive. Telstra is working hard to educate key decision makers and their advisers that both functional and structural separation are unnecessary, discourage innovation, discourage investment in broadband infrastructure and have not worked anywhere in the world.

The third risk in the statement relates to concerns that adverse pricing and regulatory decisions around the NBN will put shareholder value at risk. The Directors agree that this is a significant risk. It would be irresponsible of the Board to contemplate an investment of the size and magnitude of the NBN, without a guaranteed commitment of regulatory certainty for the life of the investment. The Board recognises the need for wholesale and retail prices to encourage take-up but equally the prices must enable shareholders to achieve a competitive, non-dilutive return on their invested capital.

In closing, the Directors fully recognise the long-term risks associated with the NBN and are committed to an approach that minimises these risks and protects shareholders’ investments in the company. Telstra has a productive working relationship with government and will continue to firmly advocate its position on behalf of shareholders, including where it faces the prospect of adverse regulatory or political decisions. In all cases, this advocacy will seek to protect and promote the interests of its shareholders in the most effective manner.

Yours sincerely

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Donald G McGauchie AO Chairman

Telstra Corporation Limited ABN 33 051 775 556

Telstra is required to give this statement at the request of 100 shareholders in accordance with section 249P of the Corporations Act

Shareholder risks associated with the National Broadband Network

The Federal Government’s proposed National Broadband Network (NBN) is being billed as the largest infrastructure project in Australia’s history. Its importance to the future of Australia’s economy and to society as a whole cannot be underestimated. It will be the central infrastructure over which will run telephony services, high speed internet and data services, IP television services, e-health, education, business and scientific applications.

Telstra is bidding for the tender to build the NBN and, as Australia’s largest telecommunications company, should be the front runner for the contract. However, we are concerned that the approach the senior management team is taking in relation to the tender may be decreasing the likelihood of an outcome which is in shareholders interests. There are at least three serious risks for Telstra regarding this project.

Non Participation

Firstly, there is the risk that Telstra isn’t involved in the build. Senior management have stated that Telstra will not participate in the tender under certain conditions. Yet Analysts at Merrill Lynch and Citigroup recently identified non participation as the biggest risk to the company in the future[1] . Citigroup actually modelled a value erosion of $13.4 billion from the company; that’s more than $1 lost from the share price. If a competitor wins the tender and is granted exclusive licence to build a fibre network, Telstra might find itself with no place left in Australia to expand its network.

Can the Board explain how “walking away” from the NBN tender fits with maximising shareholder value, or how threatening to do so increases the likelihood of winning the tender?

Separation

Secondly, even if Telstra wins the contract, the Government has indicated that it is determined to see the implementation of a stricter separation regime on the company. Senator Conroy said that “Labor [opposes] the current operational separation regime that applies to Telstra… The regulatory arrangements and structures around the National Broadband Network are a central consideration”[2] .

We are concerned about the potential loss of value this may entail for shareholders. Merrill Lynch analysts estimated a potential 30 cents per share decline in valuation “on the imposition of an aggressive separation regime”[3] . While they believe that this situation is unlikely to occur, there is no evidence that the senior management team’s approach toward government will help create the most favourable outcome for the company in this regard. Indeed Citigroup say the only instance where separation is not value destructive is if Telstra co-operates with the government. Alarmingly, analysts suggest the likelihood for this scenario is only 1%[4] .

Several recent press articles suggest that the senior management team’s relationship with government is far from constructive[5] .

Regulation

Thirdly, a poor outcome in the pricing and regulatory regime will put shareholder value at risk. JP Morgan and Citigroup analysts list the amount of regulatory risk for Telstra as “high” and “extremely high”[6] . We are concerned that senior management’s approach to these issues is increasing the likelihood of negative outcomes for shareholders. Over the last 3 years this approach has resulted in few regulatory victories. In particular, as Michael Sainsbury pointed out in The Australian

Telstra has … failed twice to negotiate a deal with the ACCC and the federal government that would see Telstra build a national fibre-to-the-node network. That project is now out to tender.

We have no confidence that the same approach this time around will result in a better outcome. The reality seems to be that the government will build the NBN regardless of whether or not all of Telstra senior management’s regulatory recommendations are met.

Telstra appears to have acknowledged some of these risks[7] . The company notes in the end of year financial results that “both S&P and Moody’s continue to hold Telstra on a “negative outlook” with major factors being the uncertain regulatory environment and NBN process”. We wonder whether senior management’s performance hurdles for remuneration relate to mitigating the risks outlined here.

There is a tremendous opportunity for the company to move forward in a collaborative way. There can be nothing more important to shareholders than a positive outcome on the NBN. However, we believe that the long term risks to the company relating to the NBN tender have not been sufficiently appreciated. We ask that the Board explain how the long term interests of shareholders are being effectively protected and promoted with regard to this project.

1 Tim Smeallie and Phil Campbell, “Telstra Corp Ltd: Beware the Elephant in the Room”, Citigroup Global Markets Equity Research , 7 August 2008, p. 4. Stephen Myers and David Kaynes, “Telstra Corporation Limited Company Update: Separation Anxieties”, Merrill Lynch , 15 July 2008, p. 8.

2 Senator Conroy address to the Sydney Institute, Tuesday May 6 2008

• 3 Stephen Myers and David Kaynes op. cit. p. 1

• 4 Tim Smeallie and Phil Campbell op. cit. p. 4

• 5 Josh Gordon, “Crossed lines as Gillard warns Telstra of ‘breach’”, Sunday Age , 7 Sep 2008, p. 9

6 Matt O’Sullivan, “Telstra flags risk of split under plans for broadband network”, Sydney Morning Herald , Friday 5 Sep 2008, p. 23

• 7 See Telstra Annual Debt Issuance Program Prospectus, 4 September 2008, pp. 14-15

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Shareholder Update 2008

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Telstra Limited Corporation ABN 33 051 775 556

a fully integrated telecommunications business. Our one-click, one-touch

Delivering… more time, opportunities, benefits, experiences, speed, savings, coverage, convenience, productivity, and freedom… for everyone.

One Telstra.

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www.telstra.com 1

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Many experiences.

Telstra is the central nervous system of Australia and we touch the lives of nearly all Australians. Every customer has their own story, their own needs and their own experience. We have been listening to and understanding our customers so we can deliver to their needs.

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Chairman’s Update

Our five-year end-to-end transformation strategy is delivering results across the business as our operational and financial performance gathers pace. We are creating shareholder value by focusing on delivering value to our customers, and providing products and services they want and need.

The relentless energy, commitment and focus of the Telstra management team and staff are driving the financial and operational success. The management team has delivered another great result for shareholders and customers alike, as they deliver on the aggressive transformation targets set back in November 2005.

The diverse management team has already achieved many of the key transformation milestones which is a tremendous result given the scale and scope of Telstra’s transformation which is unparalleled amongst its global peers and is being achieved amidst a challenging economic environment.

The strong financial result has allowed the Board to maintain the final ordinary dividend at 14 cents per share fully franked, taking the ordinary dividend for the year to 28 cents per share.

National Broadband Network

We are actively participating in the Federal Government’s process to select a proponent to deliver the National Broadband Network (NBN). In August, Telstra received written confirmation from the relevant government authorities that we had met our NBN information provision requirements. In September the Government announced that the closing date for the submission of NBN proposals will be 26 November 2008. It is our objective to be successful in the process. Success means that we will be able to deliver the NBN in a manner that is value creating for our shareholders – and that we will be operating in an environment of regulatory certainty.

Structural Separation

In recent months, and linked to the NBN process, ill-informed individuals have sought to foster a debate that is contrary to Telstra shareholders’ interest – a proposal to structurally separate Telstra. Structural separation involves splitting Telstra’s retail, wholesale and network operations into different companies. Comprehensive structural separation has not been implemented by any incumbent telecommunications operator in the world.

The Board unequivocally rejects the notion and will act to ensure shareholders’ interests are protected. We will not build the National Broadband Network if further separation is required. Further separation is unnecessary given Telstra’s repeated commitments that we will facilitate open access to any NBN network.

From detailed review we know there have been forms of separation implemented in the United Kingdom and New Zealand for example, but they not only impose substantial costs on the business that are ultimately born by consumers, they also strongly discourage investment. Major investment is needed to bring Australian businesses broadband speeds they will need to increase their productivity in the competitive Australian and international marketplace and to meet the multitude of online needs of households of the future.

Board Changes

During the year we welcomed two new non-executive directors to the Board, John Stewart and John Mullen. John Stewart has led a distinguished career in the financial services and products industry in Australia, New Zealand, the United States and the United Kingdom. On 31 July 2008, the National Australia Bank announced that Mr Stewart will be succeeded as Group CEO effective 1 January 2009. John Mullen is a proven non-executive director and is highly respected for his strategic abilities. He is currently the CEO of DHL Express worldwide.

Outlook

I am confident in the future and have confidence in our strategy. We will continue to innovate and create new and exciting ways for our customers to communicate. We remain committed to continually meeting our objective of creating long term shareholder value.

Regards,

Donald G McGauchie AO Chairman

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www.telstra.com 4 | 5

Customer Experiences

Telstra’s next generation networks are changing our customer experiences and shaping the way we work, live and play. As you can see from the following case studies, Telstra is helping improve the experiences for a wide variety of people and organisations.

Simply… coverage

ROyAl Flying DOcTOR SERvicE

Just as the Royal Flying Doctor Service (RFDS) pioneered the ground-breaking pedal-powered two-way radio in the 1920’s, Telstra’s next g™ mobile broadband network is revolutionising mobile communications today.

Before the Next G™ network, RFDS medical staff needed to download patient information from a number of databases before heading to remote community health clinics. If a person arrived at a clinic who wasn’t on the downloaded patient information a new patient record needed to be created because there was no way to see if they were already on the system.

Today, the RFDS is using the superior coverage and speed of the Next G™ network to give their medical staff secure and real-time access to patient records and other data necessary to make informed critical care decisions. This is resulting in improved patient safety and improved patient care and helping the RFDS save time by eliminating the need to write duplicate patient records.

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Gary Oldman, RFDS Information Technology and Communications Manager said the RFDS medical staff use the Next G™ camera and video phones to record information when critical care patients are airlifted to hospital.

“When we bring a patient back to a higher level of medical care, we need to explain how the patient sustained the injuries, and images taken using Next G™ camera and video phones assist that process,” he said.

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cUSTOMER ExpERiEncES cOnTinUED

Simply… faster

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Simply… faster
QScAn
When time is critical, Qscan turned to the Telstra next g™
mobile broadband network to provide surgeons and
physicians with rapid feedback on radiology scans of
trauma patients.
Dr Eric Sclavos, Qscan Managing Partner said “before the Next G™
network, if I was called to assess a scan at two in the morning;
I would have to get dressed, spend forty minutes driving and then
get through all the hospital gates and doors, review the image,
write a report and come home again.”
“Today, the Next G™ network allows us to respond rapidly to
requests from surgeons and other medical professionals for the
information they need to make timely, informed critical care
decisions ,” he said.
Telstra also provides Qscan with a 100 megabyte Managed Telstra
IP network, accessed via an IP Wireless Port. This links Qscan’s head
office and seven other sites and allows Qscan doctors to share the
workload because of the ease of sharing large files.
Dr Sclavos said the ability to share the workload delivers significant
Simply… integrated increases in productivity – we have estimated it’s the equivalent of
having an extra doctor available full time for two days a week.
HARvEy nORMAn OFiS
When one of Australia’s leading retail companies
Harvey norman added Harvey norman OFiS to
their stable they wanted to ensure customer
service was streamlined and payment of goods
and services could be made as quickly as possible.
Telstra developed for Harvey Norman OFIS a solution
that fully integrates the Telstra Next IP™ network
and the Next G™ network for both voice and data.
Harvey Norman OFIS use the Telstra Next IP™
network to ensure that the barcode scanning, data
and communications between their stores and the
central main office is consistent and in real time
improved the efficiency of EFTPOS communications,
translating to savings in the long term.
Paul English, General Manager of Harvey Norman
OFIS said “one of the important things that we found
going through this solution with Telstra, was if the
system was to fall over, it would automatically
switch over to the Next G™ network, which means
we have no loss of business and no loss of efficiency
in store.”
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cUSTOMER ExpERiEncES cOnTinUED

Simply… more time

RSpcA

Telstra’s next g™ mobile broadband network is helping the RSpcA in the Australian capital Territory (AcT) protect all creatures great and small.

Before the Next G™ network, when the RSPCA inspectors received a call about an animal in distress for instance, they would have to return to their office to access information such as address and case history, then drive to the address for inspection.

Now, the inspectors use a Telstra Turbo Card™ and laptop to access RSPCA files and other relevant information from the passenger seat of the RSPCA car.

Michael Linke, CEO RSPCA ACT said the Telstra Turbo Cards™ save inspectors about six hours a week driving to and from the office, so they can fit more into a day.

“We wanted inspectors to have easy and consistent access to the internet and electronic data stored at RSPCA. The Telstra Turbo Cards™ met this need, and they’re easy to use and reliable ,” he said.

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Simply… benefits

King DAviD ScHOOl

Telstra has helped the King David School in Melbourne implement a tailored, integrated technology solution for their school to replace outdated servers that offered unreliable internet connections and discouraged teachers and students from embracing the technology.

Telstra installed an IP telephony solution that allows calls to be made at a fixed rate and phone numbers to stay the same. Telstra also introduced an interactive whiteboard, m-View capability and video conferencing.

Steve Timmerman, King David’s Financial Controller said Telstra has lifted us out of a poor communicating environment into one where the campuses are communicating effectively.

“The IP telephony solution provided by Telstra has been a tremendous boon to the administration. Within the campuses we can redirect calls, meaning we don’t need to use outside lines all the time. This solution saves the school money – savings that can ultimately flow on to the families of students,” he said.

Telstra’s integrated technology solutions are helping the King David School stay ahead of the curve and deliver the best education possible for students in an increasingly technologically savvy environment. The school community benefits from the costeffective, innovative and interactive Telstra solutions and the school is able to keep its fees down while offering students cutting-edge technology as part of its daily education offering.

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www.telstra.com 10 | 11

Business Unit Summary

Retail

We have realigned our business to put the customer at the centre of everything we do. Our retail business is focused on delivering value to our millions of consumer, business, corporate and government customers. During the financial year our retail business delivered another strong set of results across the key markets of fixed line, mobiles, internet and ip in a very competitive market, with retail revenue growing 5.9%. Our retail business consists of Telstra consumer Marketing and channels (Tc&c), Telstra Enterprise and government (TE&g) and Telstra Business (TB).

Consumer Marketing and Channels

Telstra Consumer Marketing and Channels is responsible for serving consumer customers with a full range of Telstra’s products and services including fixed lines, mobiles, Internet and Pay TV services. Our consumer segment has thrived since the introduction of customer segmentation and market-based management. Close to 600,000 customers are on one of Telstra’s HomeLine® subscription pricing plans and more customers are “bundling” Telstra’s products and services.

This year, we launched five world-class T[Life]™ stores with more set to open in the 2009 financial year. The stores are designed as a state-of-the-art environment that is both welcoming and functional to provide customers with the opportunity to use and experience our full range of integrated products and services.

Enterprise and Government

Telstra Enterprise and Government is the leading provider of network based solutions and services to enterprise and governments in Australia and New Zealand. Telstra has developed a set of world-class programs and capabilities that enable our enterprise and government customers to experience a new way of working that is not constrained by time, distance, devices or infrastructure. This has been enabled by Telstra’s world leading and growing suite of next generation solutions and products, which harness the power of Telstra’s integrated Next G™ and Next IP™ networks.

For the year ended 30 June 2008, the sales revenue growth in TE&G of 3.6% was the best performance since competition began. Revenue growth came from winning new contracts with over $960 million of new business deals signed during 2008. At the same time, customer satisfaction remains at all time highs.

Telstra Business

Telstra Business is now in its third year of operation serving the needs of our small to medium sized enterprise (SME) businesses. For the year TB grew sales revenue 8.6% with strong results across the board and market share gains in key products. SME customers are realising the productivity benefits from the superior speed coverage, security and reliability on offer from TB.

TB delivered a strong mobiles result with services revenue up 19.5% and mobile data revenue accounted for 23% of services revenue. In broadband, revenue grew 51% and in fixed we grew revenue 1% despite the market declining 2%.

FY08 Absolute Sales Revenue Growth

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BUSinESS UniT SUMMARy cOnTinUED

and home media centres. BigPond’s music will be easier to find, simpler to download and cheaper to buy. BigPond’s leadership in innovation extends on the competitive advantage we have built around speed, coverage, content, reliability and services.

Media-Comms

With the line between telecommunications and media companies becoming blurred, Telstra is well ahead of the game and is evolving into a media communications company through its ever expanding and innovative portfolio of media assets in Sensis, Bigpond® and FOxTEl.

Sensis

Sensis makes complex lives easier by helping customers find, buy and sell. Sensis has grown from a telephone book company to become one of the world’s most advanced information providers. In addition to the traditional print businesses of Yellow™ and White Pages®, Sensis’ network has grown to include iconic brands such as Trading Post®, Citysearch® and Whereis®.

We are also leading the charge into digital media with our location and navigation portfolio and online display solutions experiencing strong double-digit growth. Our businesses in China are also managed through Sensis.

Over the past year, Telstra expanded its presence in China with the acquisition of a 55% stake in two internet businesses with leading positions in the fast-growing Chinese online auto and digital device advertising sectors. These acquisitions complement our strong position in the online business for real estate and home furnishings achieved by the growth of previously acquired SouFun, which will be in 100 cities by year’s end.

BigPond

Telstra’s broadband business, BigPond, is Australia’s leading internet service provider (ISP), growing at four times that of its nearest competitor. With almost 3.3 million customers, BigPond’s market share now stands at 49%, a gain of 2 percentage points in the year. Our strategy of simple value based offers is also paying dividends as the number of customers signing up to high-speed plans grows.

BigPond is also changing the game in music with the recent launch of the new BigPond Music service. This service will offer tracks from all major record labels in a format that can be transferred between most music players, including the iPod, Sony Walkman, Xbox, PS3

Foxtel

Telstra’s 50% interest in leading Pay-TV provider Foxtel completes our suite of media-comms assets. During the year, Foxtel subscribers passed the 1.5 million mark with revenues also growing strongly. In June, FOXTEL launched the FOXTEL HD+[(1)] service which includes five dedicated 24/7 HD channels, on-demand HD premiere block buster movies and the FOXTEL iQ2[(1)] , a new high definition personal digital recorder. Almost 40,000 subscribers have already signed up for this service.

International

CSL New World

CSL New World is Telstra’s 76.4% owned subsidiary in Hong Kong responsible for providing full mobile services including handset sales, voice and data products to the Hong Kong market. The company is also investing in new network technologies. Growth in handset sales, data, international voice and mobile virtual network operator revenues has seen total income at CSL New World increase this year.

REACH

REACH is the premier provider of international voice and satellite services in Asia and is a 50:50 joint venture held between Telstra and PCCW. The REACH network stretches over 364,000 km around the globe, with nearly half of our traffic terminating at our major hubs in Hong Kong and Australia.

TelstraClear

TelstraClear is our wholly owned New Zealand subsidiary responsible for providing full telecommunications services to the New Zealand market. TelstraClear’s Hybrid Fibre Coaxial (HFC) cable network in Wellington and Christchurch has experienced strong growth with broadband penetration increasing by 13 percentage points during the year. The regulatory environment in New Zealand continues to be challenging.

(1) Registered trade mark of Twentieth Century Fox Film Corporation.

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5 Year Financial Summary

	2008(6) $m	2007(6) $m	2006(6) $m	2005(6)(7) $m	2004(7)(8) $m
Sales revenue EBITDA(1) EBIT(2) Proft before income	24,657 10,416 6,226	23,673 9,861 5,779	22,712 9,575 5,497	22,161 10,464 6,935	20,737 10,175 6,560
tax expense	5,140	4,692	4,564	6,055	5,848
Proft for the year after
minority interests Dividends declared for the fscal year(3) Dividends declared per share	3,711 3,476	3,275 3,479	3,183 4,231	4,309 4,978	4,117 3,284
(cents per share)	28.0	28.0	34.0	40.0	26.0
Total assets Gross debt	37,921 16,141	37,837 15,410	36,224 13,712	35,211 13,319	34,993 11,854
Net debt	15,242	14,587	13,022	11,772	11,167
Equity	12,245	12,580	12,834	13,658	15,361
Capital expenditure
and investments(9) Free cash fow	4,897 3,855	5,879 2,899	4,303 4,579	4,129 5,194	3,683 4,163
Financial ratios
Return on average assets	16.8%	15.9%	15.7%	20.6%	19.4%
Return on average equity	30.3%	26.1%	24.3%	30.6%	26.8%
EBIT net fnance costs cover (times) EBITDA net fnance costs cover (times)	5.7 9.6	5.3 9.1	5.9 10.3	7.9 11.9	9.2 14.3
Gross debt to capitalisation(4) Net debt to capitalisation(5)	56.9% 55.5%	55.1% 53.7%	51.7% 50.4%	49.4% 45.9%	43.6% 42.1%
Net debt to EBITDA	1.5	1.5	1.4	1.1	1.1

• (1) Operating profit before interest, depreciation and amortisation and income tax expense. EBITDA is used as a measure of financial performance by excluding certain variables that affect operating profits but which may not be directly relate to all financial aspects of the operations of the company. EBITDA is not a measure of operating income, operating performance or liquidity under Australian equivalents to International Financial Reporting Standards (A-IFRS) or US GAAP. Other companies may calculate EBITDA in a different manner to us.

• (4) Based on gross debt (total current and non current borrowings) as a percentage of gross debt plus equity.

• (5) Based on net debt (gross debt less liquid interest bearing assets) as a percentage of net debt plus equity.

• (6) Prepared under A-IFRS.

• (7) The adoption of UIG4 “Determining Whether an Arrangement Contains a Lease” has been applied from 1 July 2005. As such, 2005 and 2004 have not been restated for the impact of UIG4.

• (8) Prepared under the previous A-GAAP.

• (9) 2008 and 2007 are accrued capex numbers and 2006, 2005 and 2004 and cash capex numbers.

• (2) EBITDA less depreciation and amortisation.

• (3) Dividends declared in 2006 include a 6 cent special dividend paid within the interim dividend. Dividends declared in 2005 include two special dividends amounting to 12 cents.

• Net debt and gross debt balance as at 30 June 2005 do not reflect the impact of the relevant A-IFRS standard for financial instruments as this standard was only adopted 1 July 2005. Had it been adopted at 30 June 2005, Gross Debt would be $13,208 million and Net Debt $11,660 million.

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glossary

Term	Explanation
3GSM	Third Generation Global System for mobile communications
	– is the evolution of the current GSM and CDMA 2G and 2.5G
	technology to support voice and high speed data and
	multimedia services.
ADSL	Asymmetric Digital Subscriber Line – is a broadband
	technology that provides access to the Internet at fast
	speeds. ADSL – sometimes shortened to simply ‘DSL’ – uses
	a data transmission technology that allows high speed data
	to be carried over everyday copper network phone lines.
	These data rates can enable the delivery of voice, data and
	video services.
ADSL2+	An enhanced version of ADSL that provides improved
	performance and even higher data speeds, up to 20 Mbps.
EBITDA	Earnings before interest tax depreciation and amortisation
EBIT	Earnings before interest and tax
IP	Internet Protocol – is a standard set of rules for the carriage
	of digital information such as voice, video, data and images,
	across a global network.
Next G™	Telstra’s trade mark name for its 3GSM850 mobile network.
network	Telstra’s Next G™ high speed mobile network provides
	Australians with the ability to make and receive video calls,
	watch mobile TV, access sports, news and entertainment on
	the move, receive emails and download and play music, as
	well as make voice calls and send text messages from their
	mobile phones.
Next IP™	Cost effective scalable IP end-to-end IP network, supporting
network	richer, faster, broadband and Ethernet services and voice
	services with guaranteed Quality of Service, from copper, HFC
	and 3G access using multiple CPE devices. Telstra’s Next IP™
	network enables legacy network and service rationalisation leading to simplifed networks and services.
PSTN	Public Switched Telephone Network – Generic term for public telephone networks. Often referred to as ‘fxed-line’ the
	PSTN is the standard home telephone service, delivered over
	underground copper wires.

indicative Financial calendar

Annual General Meeting Half Year Results announcement Ex-dividend share trading commences Record date for interim dividend Interim dividend paid Annual Results announcement Ex-dividend share trading commences Record date for fnal dividend	21 Nov 2008 26 Feb 2009 6 Mar 2009 13 Mar 2009 9 Apr 2009 13 Aug 2009 24 Aug 2009 28 Aug 2009
Final dividend paid	25 Sep 2009
Annual General Meeting	4 Nov 2009

Note – Timing of events may be subject to change. Any changes will be notified to the Australian Securities Exchange (ASX).

• ® Registered Trade mark of Telstra Corporation Limited.

• ™ Registered Trade mark of Telstra Corporation Limited.

16

www.telstra.com

contact details

Registered Office level 41, 242 Exhibition Street Melbourne victoria 3000 Australia

carmel Mulhern

company Secretary

email: companysecretary@team.telstra.com

general Enquiries – Registered Office

Australia: 1300 368 387

All Other: +61(8) 8308 1721

Shareholder Enquiries Australia: 1300 88 66 77 All Other: +61(2) 8280 7756

Fax: +61(2) 9287 0303

email: telstra@linkmarketservices.com.au website: www.linkmarketservices.com.au

Telstra corporation limited

incorporated in the Australian capital Territory

Telstra is listed on Stock Exchanges in Australia and in new Zealand (Wellington)

investor Relations

level 36, 242 Exhibition Street Melbourne victoria 3000 Australia

ph: +61(3) 9634 8190

email: investor.relations@team.telstra.com

The Telstra Share Registrar link Market Services limited

pO Box A942

Sydney South nSW 1234 Australia

Websites

Telstra’s investor relations home page: www.telstra.com.au/abouttelstra/investor

Telstra’s interactive advocacy website: www.nowwearetalking.com.au

www.telstra.com.au/abouttelstra/investor

www.telstra.com