TELSTRA GROUP LIMITED - Annual Report 2016

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11 August 2016

The Manager

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

Office of the Company Secretary

Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA

General Enquiries 08 8308 1721 Facsimile 03 9632 3215

ELECTRONIC LODGEMENT

Dear Sir or Madam

Full Year 2016 Financial Results – CEO/CFO Analyst Briefing Presentation

In accordance with the Listing Rules, I enclose:

a) a presentation;
b) CEO and CFO speeches;
c) Telstra’s Full Year Operating and Financial Review (including financial and statistical tables) for release to the market.

This announcement has been released simultaneously to the New Zealand Stock Exchange.

Yours faithfully

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Damien Coleman Company Secretary

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

Full Year 2016 Results

Andrew Penn, Chief Executive Officer

Disclaimer

These presentations should not be construed as, and are not intended to (nor do they) constitute, an offer or invitation by or on behalf of Telstra, its subsidiaries, or any other person to subscribe for, purchase or otherwise deal in any shares, debt instrument or other securities, nor are they intended to be used for the purpose of or in connection with offers or invitations to subscribe for, purchase or otherwise deal in any shares, debt instruments or other securities. In particular, no indications of interest in respect of either the off-market buy-back or the subsequent on-market buy-back described in this presentation in this presentation are being sought and such buy-backs are not, and will not, be made directly or indirectly in or into the United States (including any of its states, territories and possessions). Certain shareholders will not be eligible to participate, directly or indirectly, in the buy-backs described in this presentation, including: (i) any person who is located or resident in the United States; (ii) any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended); (iii) any agent, fiduciary or other intermediary acting on a nondiscretionary basis for a principal giving instructions from within the United States or (iv) any person who has a registered address in Canada. American Depositary Receipts representing shares of Telstra will not be subject to the buy-backs described in this presentation. These presentations are not intended to (nor do they) constitute an offer or invitation by or on behalf of Telstra, its subsidiaries, or any other person to subscribe for, purchase or otherwise deal in any debt instrument or other securities, nor are they intended to be used for the purpose of or in connection with offers or invitations to subscribe for, purchase or otherwise deal in any debt instruments or other securities.
All forward-looking figures in this presentation are unaudited and based on A-IFRS. Certain figures may be subject to rounding differences.
All market share information in this presentation is based on management estimates based on internally available information unless otherwise indicated.
All amounts are in Australian Dollars unless otherwise stated.
nbn™, nbn co and other nbn™ logos and brands are trade marks of nbn co limited and used under licence.
® ™ Registered trademark and trademark of Telstra Corporation Limited (ACN 051 775 556) and its subsidiaries. Other trademarks are the property of their respective owners.

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Agenda

1	Highlights	Andrew Penn
2	Financial results	Warwick Bray
3	Strategic future investment	Andrew Penn
4	Capital management framework and guidance	Warwick Bray
5	Q&A	Andrew Penn, Warwick Bray
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Full Year 2016 Highlights
Reported, continuing and discontinued basis Added 560,000 retail Retail fixed
mobile customer broadband customer
Net profit after tax services growth of 235,000
$5.8 billion, +35.9%
nbn GES income grew by 11.5%
Retail fixed bundle connections including 55.5% growth from
growth of 322,000 grew by GES International
289,000 to
500,000 $1.5 billion to be returned to
$1.8 billion profit on the
shareholders via capital
sale of Autohome shares EPS of 47.4
management
cents, +37.4%
(31.6 cents,
Final dividend of
-5.7% on a Strategic NPS 4 points lower
15.5 cents per share
continuing basis)
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We are committed to strengthening our network leadership

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Network interruptions Speed Recovery
• Network interruptions impacted customers in 2H16 Average speed of a 4G Mobile network recovery
• Undertaken extensive end to end review of core networks customers device has time 8x faster compared
improved by 25% to February 2016
involving international experts to help pinpoint sources of
potential risk and reduce the likelihood of future outages
Network resilience program Coverage
$250 million investment announced in FY16 including: Largest mobile coverage reaching 99.3% of the
population and extending over 2.4 million sq. km
• Mobiles: $50 million to improve recovery time and improve
monitoring
• Core: $100 million to improve resilience and reliability
• Broadband: $100 million to increase ADSL
capacity to meet customer demand
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Telstra Full Year 2016 Results Announcement

Warwick Bray, Chief Financial Officer

Agenda

Agenda	Agenda	Agenda
Page 7	1	Group results
	2	Business unit and product performance
	3	Expenses and productivity
	4	Capital management

Group results – Income Statement

FY151	FY151	FY16	GROWTH (reported basis)	GROWTH (guidance basis2)	GROWTH (guidance & ex-Pacnet3)
Sales revenue	$25.4b	$25.8b	1.9%	4.7%	3.2%
Total income4	$26.1b	$27.1b	3.6%	6.3%	4.8%
Operating expenses	$15.6b	$16.6b	6.4%	8.9%	6.7%
EBITDA	$10.5b	$10.5b	-0.6%	2.6%	2.1%
Depreciation and amortisation	$4.0b	$4.2b	4.6%
EBIT	$6.6b	$6.3b	-3.8%
Net finance costs	$0.7b	$0.7b	1.6%
Income tax expense	$1.7b	$1.8b	1.3%
NPAT from continuing operations	$4.1b	$3.8b	-6.9%
Basic earnings per share from continuing operations (cents)	33.5	31.6	-5.7%
Profit from discontinued operations1	$0.2b	$2.0b	n/m
NPAT from continuing and discontinued operations	$4.3b	$5.8b	35.9%
Basic earnings per share (cents)	34.5	47.4	37.4%

FY15 reclassified to reflect Autohome being a discontinued operation. FY16 profit from discontinued operations includes $1.8b profit from the sale of Autohome shares.
This guidance assumed wholesale product price stability from the beginning of the financial year and no impairments to investments, and excluded any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum. Capex to sales guidance excluded externally funded capex.
Guidance and ex-Pacnet is on a guidance basis and excluded FY16 Pacnet $503m sales revenue (FY15 $99m), $433m operating expenses (FY15 $84m) and $70m EBITDA (FY15 $15m). 4. Total income excludes finance income.

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Group results – financial measures

FY15	FY15	FY16	GROWTH (reported basis)	FY16 (guidance basis1)
Capex2	$3.6b	$4.0b	12.7%
Free cashflow	$2.6b	$5.9b	126.3%	$4.8b
Ordinary DPS from continuing operations (cents)	30.5	31.0	1.6%
Ratios
Capex to sales2	13.9%	15.2%	+1.3pp	15.2%
Payout ratio3	91%	98%	+7pp
ROE4	29.5%	25.7%	-3.8pp
ROIC5	15.7%	13.6%	-2.1pp
Gearing	48.3%	43.9%	-4.4pp

This guidance assumed wholesale product price stability from the beginning of the financial year and no impairments to investments, and excluded any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum. Capex to sales guidance excluded externally funded capex.
Capex is defined as additions to property, equipment and intangible assets including capital lease additions, excluding expenditure on spectrum, measured on an accrued basis. Capex excludes externally funded spend.
Payout ratio from continuing operations. FY16 payout ratio excluding impairment 93%. Payout ratio from continuing and discontinued operations FY16 65% (FY15 88%).
ROE is calculated at PATMI from continuing operations as a percentage of equity. ROE from continuing and discontinued operations FY16 38.6% (FY15 30.3%).
ROIC is calculated as NPAT from continuing operations as a percentage of total capital. ROIC from continuing and discontinued operations FY16 20.7% (FY15 16.4%).

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Business Unit results

Income FY15	Income FY15	FY16	Consumergrowth 1.0% ex-MTAS. Consumer fixed data growth of 6.2% due to subscriber adds including nbn services. Fixed voice decline broadly maintained at 7.7%
Telstra Retail1	$16.9b	$16.7b
			BusinessNAS grew strongly across managed network services and cloud. Fixed voice decline broadly maintained at 9.5%. Decline in mobile services due to lower excess data and international roaming
Consumer	$12.0b	$11.9b
Business	$4.9b	$4.8b
Global Enterprise and Services2	$5.6b	$6.3b	GES domesticgrowth through NAS and enterprise mobility. Ongoing data & IP and fixed voice declines
GES domestic	$4.6b	$4.6b	GES internationalincludes increased global connectivity and acquisition of Pacnet
GES international	$1.1b	$1.7b	Wholesalegrowth due to increased Infrastructure Services Agreement ownership receipts in line with nbn rollout, offset by price reduction from ACCC fixed line services FAD
Telstra Wholesale	$2.6b	$2.6b

Telstra Retail segment includes Telstra Consumer and Telstra Business. Telstra Retail comparative reclassified to exclude Telstra Media Group and Telstra Health. Telstra Media Group income includes Foxtel distribution, cable access revenue and advertising revenue. Other media entertainment, services and content income is allocated to Telstra Retail.
Global Enterprise and Services (GES) includes $214m (FY15 $187m) of GES global inter-segment revenue treated as external expense in Telstra Retail and Telstra Wholesale. GES comparative restated to exclude Telstra Software Group.

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Product framework
Recurring core NBN one-off and new business
Mobile NBN one-off
• PSAA income
• ISA: Ownership receipts
Fixed excluding nbn cost to connect (C2C) •• Retrainingnbn cost to connect
Recurring NBN Definitive Agreements New business
• ISA: Duct, Rack and Backhaul • Telstra Health
• Telstra Universal Service Obligation Performance Agreement (TUSOPA) • Telstra Software Group
• Telstra Ventures
• Muru-D
Data & IP, NAS and global connectivity
Other including media, cable access revenue and Foxtel distribution
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Product income performance[1]

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Recurring core
1.5% or $381m growth, 3.1% growth ex-MTAS & FAD
+$96m $27,050m
+$461m
+3.6%
+$566m -$35m +72.2% Reported
+5.2% ex-
$26,112m -$424m -2.3% +146.3% FAD [2]
$143m -$94m +$13m -$50m +$262m
+64.4%
+1.3% -1.3% +3.5% -1.7% +11.3%
(-2.0% incl. (-2.2% incl. (-1.9% incl.
MTAS) FAD) FAD)
FY15 MTAS & Mobile Fixed [3] Recurring Data & NAS Global Other core [5] Net one- New FY16
Reported FAD [2] NBN DA IP connectivity [4] off NBN business [6] Reported
DA
1. Refer to supporting material product income slide for FY15 and FY16 detailed income performance. income
2. MTAS and FAD income impacts across Mobile $356m, Fixed $64m and Data & IP $4m as per guidance schedule.
3. Fixed domestic includes TUSOPA income FY16 $187m (FY15 $122m).
4. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile.
5. Other core includes distribution from Foxtel, media and other miscellaneous income.
6. New business includes Telstra Health, Telstra Software Group and Telstra Ventures.
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Product EBITDA performance

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Recurring core
1.0% or $103m decline
+$371m -$90m
-$246m
$10,533m -$145m $10,465m
+$42m
-0.6%
Reported
FY15 NBN Remaining Net one- New Impairment FY16
Reported recurring core [2] off NBN business [3] Reported
impact [1] DA
income
1. NBN recurring impact identified across fixed products and recurring NBN DA income. Other recurring NBN impacts not identified across remaining core (including Data & IP).
2. Remaining core includes mobile, data & IP, NAS, global connectivity and other core (including distribution from Foxtel, media and other miscellaneous income).
3. New business includes Telstra Health, Telstra Software Group and Telstra Ventures.
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Product EBITDA performance EBITDA FY15 FY16 GROWTH GROWTH Mobile $4,250m $4,384m $134m 3.2% Fixed excl. nbn C2C1,2 $3,499m $3,341m -$158m -4.5% Recurring NBN DA income $374m $387m $13m 3.5% Data & IP $1,853m $1,752m -$101m -5.5% NAS $67m $142m $75m 111.9% Global connectivity3 $141m $265m $124m 87.9% Other core4 $308m $118m -$190m -61.7% Recurring core $10,492m $10,389m -$103m -1.0% Net one-off NBN DA income2 $187m $558m $371m 198.4% New business5 -$146m -$236m -$90m -61.6% Impairment - -$246m -$246m n/m Total Reported $10,533m $10,465m -$68m -0.6% 1. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 2. Fixed excludes nbn cost to connect (C2C) FY16 $218m (FY15 $128m). nbn C2C represented against “Net one-off nbn DA income”. 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures. NBN recurring impact -$145m Recurring core ex-NBN +$42m	Product EBITDA performance EBITDA FY15 FY16 GROWTH GROWTH Mobile $4,250m $4,384m $134m 3.2% Fixed excl. nbn C2C1,2 $3,499m $3,341m -$158m -4.5% Recurring NBN DA income $374m $387m $13m 3.5% Data & IP $1,853m $1,752m -$101m -5.5% NAS $67m $142m $75m 111.9% Global connectivity3 $141m $265m $124m 87.9% Other core4 $308m $118m -$190m -61.7% Recurring core $10,492m $10,389m -$103m -1.0% Net one-off NBN DA income2 $187m $558m $371m 198.4% New business5 -$146m -$236m -$90m -61.6% Impairment - -$246m -$246m n/m Total Reported $10,533m $10,465m -$68m -0.6% 1. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 2. Fixed excludes nbn cost to connect (C2C) FY16 $218m (FY15 $128m). nbn C2C represented against “Net one-off nbn DA income”. 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures. NBN recurring impact -$145m Recurring core ex-NBN +$42m	Product EBITDA performance EBITDA FY15 FY16 GROWTH GROWTH Mobile $4,250m $4,384m $134m 3.2% Fixed excl. nbn C2C1,2 $3,499m $3,341m -$158m -4.5% Recurring NBN DA income $374m $387m $13m 3.5% Data & IP $1,853m $1,752m -$101m -5.5% NAS $67m $142m $75m 111.9% Global connectivity3 $141m $265m $124m 87.9% Other core4 $308m $118m -$190m -61.7% Recurring core $10,492m $10,389m -$103m -1.0% Net one-off NBN DA income2 $187m $558m $371m 198.4% New business5 -$146m -$236m -$90m -61.6% Impairment - -$246m -$246m n/m Total Reported $10,533m $10,465m -$68m -0.6% 1. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 2. Fixed excludes nbn cost to connect (C2C) FY16 $218m (FY15 $128m). nbn C2C represented against “Net one-off nbn DA income”. 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures. NBN recurring impact -$145m Recurring core ex-NBN +$42m	Product EBITDA performance EBITDA FY15 FY16 GROWTH GROWTH Mobile $4,250m $4,384m $134m 3.2% Fixed excl. nbn C2C1,2 $3,499m $3,341m -$158m -4.5% Recurring NBN DA income $374m $387m $13m 3.5% Data & IP $1,853m $1,752m -$101m -5.5% NAS $67m $142m $75m 111.9% Global connectivity3 $141m $265m $124m 87.9% Other core4 $308m $118m -$190m -61.7% Recurring core $10,492m $10,389m -$103m -1.0% Net one-off NBN DA income2 $187m $558m $371m 198.4% New business5 -$146m -$236m -$90m -61.6% Impairment - -$246m -$246m n/m Total Reported $10,533m $10,465m -$68m -0.6% 1. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 2. Fixed excludes nbn cost to connect (C2C) FY16 $218m (FY15 $128m). nbn C2C represented against “Net one-off nbn DA income”. 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures. NBN recurring impact -$145m Recurring core ex-NBN +$42m	Product EBITDA performance EBITDA FY15 FY16 GROWTH GROWTH Mobile $4,250m $4,384m $134m 3.2% Fixed excl. nbn C2C1,2 $3,499m $3,341m -$158m -4.5% Recurring NBN DA income $374m $387m $13m 3.5% Data & IP $1,853m $1,752m -$101m -5.5% NAS $67m $142m $75m 111.9% Global connectivity3 $141m $265m $124m 87.9% Other core4 $308m $118m -$190m -61.7% Recurring core $10,492m $10,389m -$103m -1.0% Net one-off NBN DA income2 $187m $558m $371m 198.4% New business5 -$146m -$236m -$90m -61.6% Impairment - -$246m -$246m n/m Total Reported $10,533m $10,465m -$68m -0.6% 1. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 2. Fixed excludes nbn cost to connect (C2C) FY16 $218m (FY15 $128m). nbn C2C represented against “Net one-off nbn DA income”. 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures. NBN recurring impact -$145m Recurring core ex-NBN +$42m
		FY16	GROWTH	GROWTH
Mobile	$4,250m	$4,384m	$134m
Fixed excl. nbn C2C1,2	$3,499m	$3,341m	-$158m
Recurring NBN DA income	$374m	$387m	$13m
Data & IP	$1,853m	$1,752m	-$101m
NAS	$67m	$142m	$75m
Global connectivity3	$141m	$265m	$124m
Other core4	$308m	$118m	-$190m
Recurring core	$10,492m	$10,389m	-$103m
Net one-off NBN DA income2 New business5	$187m -$146m	$558m	$371m -$90m
		-$236m
Impairment	-	-$246m	-$246m
Total Reported	$10,533m	$10,465m	-$68m
1. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 2. Fixed excludes nbn cost to connect (C2C) FY16 $218m (FY15 $128m). nbn C2C represented against “Net one-off nbn 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures.

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Product performance: Mobile

Mobile FY15	Mobile FY15	FY16	Mobile revenue growthof 1.3% on a like-for- like basis, excluding MTAS decision
Revenue1	$10,654m	$10,441m
			Retail mobile customer growthof 560,000, including 169,000 postpaid handheld
Postpaid handheld	$5,389m	$5,385m
Prepaid handheld	$994m	$959m	Postpaid handheldrevenue flat due to increased subscribers and a reduction in ARPU
Mobile broadband	$1,290m	$1,230m
Machine to Machine	$113m	$132m
			Prepaid handheldrevenue decline due to lower ARPU offset by 3.3% unique user growth
Hardware	$1,886m	$2,076m
Other2	$982m	$659m
EBITDA Margin	$4,250m 40%	$4,384m 42%	Mobile broadbandrevenue decline due to prepaid with lower ARPU and unique users
Customers – retail	16.7m	17.2m	Mobile EBITDA margingrowth including margin benefit from MTAS
Postpaid handheld ARPU ex. MRO	$69.51	$68.40
Postpaid handheld ARPU inc. MRO	$61.94	$60.71	Postpaid handheld churnincreased marginally in 2H16 but remains low
Postpaid handheld churn3	10.3%	10.9%

FY15 revenue restated to include $3m in other mobile revenue from global connectivity. FY16 global other mobile revenue $3m.
Other includes wholesale resale, satellite and interconnection.
FY15 churn restated from 11.5% to correct for internal customer transfers that were previously stated as churn.

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Product performance: Fixed

Fixed	FY15	FY16	GROWTH	Fixed revenuelike-for-like decline of -1.3% excluding Fixed Services FAD impact. Rate of
				decline lowest in over three years
Revenue1,2	$7,188m	$7,029m	-2.2%
				Fixed datarevenue growth of 5.6% due to
Fixed voice	$3,746m	$3,437m	-8.2%	retail 235,000 net subscriber adds. Highest number of net adds in more than five years.

Fixed data	$2,379m	$2,513m	5.6%	Rate offixed voicerevenue decline broadly
				maintained due to success in retention
Other fixed2,3	$1,063m	$1,079m	1.5%	activities and momentum from bundling
EBITDA – fixed voice	$2,059m	$1,766m	-$293m	Retail bundlegrowth of 322,000 with 83% of
Margin	55%	51%	-4pp	fixed data customers on a bundled plan
EBITDA – fixed data Margin	$966m 41%	$1,021m 41%	+$55m -	nbn connectionsgrew by 289,000 to 500,000. nbn connections include 407,000
Fixed voice customers – retail	6.0m	5.7m	-4.5%	bundled and 34,000 data only
				More than 1.1m customers activated to use
Fixed data customers – retail	3.1m	3.4m	7.5%	Telstra Air
Fixed bundle customers – retail4	2.4m	2.7m	13.4%	Fixed marginsinclude upfront costs in connecting our nbn customers and growing
				network payments to nbn co

Revenue excludes non sales revenue income from TUSOPA $187m (FY15 $122m). TUSOPA income included in NBN Definitive Agreements slide within Commonwealth agreements.
FY15 revenue restated to include $244m other fixed revenue from global connectivity. FY16 global other fixed revenue $308m. FY16 fixed revenue excluding global and including TUSOPA $6,907m (FY15 $7,065m).
Other fixed revenue includes intercarrier services, platinum services, payphones, customer premises equipment and narrowband.
Fixed bundle customers including consumer and business bundles.

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Product performance: Data & IP

	Data & IP	FY15	FY16	GROWTH	Stronginternationalgrowth with customers
					responding strongly to the combination of the
	Revenue1	$3,417m	$3,789m	10.9%	Pacnet network with the Telstra brand, product and network expertise
	IP access	$1,205m	$1,169m	-3.0%
					Domesticdata & IP down 1.9% in a declining
	ISDN	$662m	$603m	-8.9%	market
	International data & calling products2	$509m	$930m	82.7%	IP accessdecline reflects decreasing yield
	Other data & calling products	$1,041m	$1,087m	4.4%	from increased competitive pressure, offsetting growth in IP customer connections
	EBITDA – domestic	$1,853m	$1,752m	-$101m
	Margin	64%	62%	-2pp	IP MANrevenue up 2.4% with services in
	IP MAN SIOs	35k	40k	14.3%	operation up 14.3% reflecting customer wins and demand for IP value added services

	IP WAN SIOs	111k	112k	0.9%
					ISDNreflects accelerated decline due to
	Data & IP revenue by segment				migration to IP access, NAS and nbn
	Domestic3	$2,883m	$2,829m	-1.9%	DomesticEBITDA marginimpacted by yield
					trends in the IP market and revenue decline
	GES international	$534m	$960m	79.8%
1.	FY15 revenue restated to include $534m data & IP revenue from global connectivity ($509m international data & calling products and $25m IP access). FY16			global data & IP revenue $960m ($930m international data & calling products and
	$30m IP access).
2.	FY16 international revenue including Pacnet data & IP revenue $423m (FY15 $83m). The acquisition of Pacnet was completed Apr-15.
3.	Domestic including Telstra Business, Telstra Consumer, Telstra Wholesale and GES domestic
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Product performance: NAS

	NAS	FY15	FY16	GROWTH	Continued growth inNASin both domestic
					and international segments. Lower sequential
	Revenue	$2,418m	$2,763m	14.3%	2H16 revenue growth due to timing of milestones
	Managed network services	$592m	$630m	6.4%	Managed servicesgrowth through expansion
	Unified communications	$762m	$822m	7.9%	of security services and global capability
	Cloud services	$286m	$386m	35.0%	Unified communicationsgrowth due to increased IP Telephony connections and
	Industry solutions	$636m	$757m	19.0%	contact centre solutions
	Integrated services	$142m	$168m	18.3%	Cloudgrowth across public cloud solutions and from Pacnet
	EBITDA – domestic	$67m	$142m	+$75m
	Margin	3%	6%	+3pp	Industry solutionsgrowth due to increased commercial works for nbn co
	NAS revenue by segment1
					Awarded two NAS Frost and Sullivan Asia
	Business	$553m	$652m	17.9%	Pacific ICT Awards in June
	GES domestic	$1,766m	$1,928m	9.2%	EBITDA marginimprovement due to ongoing
					operational leverage, scalable standardised
	GES international2	$99m	$183m	84.8%	offerings and lower cost delivery model
1.	Business including Telstra Business and Telstra Consumer. GES domestic including nbn commercial works in “Ops” segment.
2.	FY16 GES international revenue includes Pacnet NAS revenue $73m (FY15 $15m).
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Product performance: Media - Foxtel

Foxtel ($ amounts in AUD under Australian IFRS) FY15	Foxtel ($ amounts in AUD under Australian IFRS) FY15	FY16	Revenuegrowth due to customer growth, with a 3.4% growth in subscriber revenue
Revenue	$3,165m	$3,310m	LowerEBITDAprimarily due to increased investment in programming to support subscriber growth, higher offer costs and continued investment in Presto
EBITDA1	$900m	$880m
EBIT1,2	$513m	$558m	Vast majority ofsubscriber growthdue to 4.7% growth in broadcast subscribers4
Total subscribers3	2,807k	2,938k
			Higher broadcastchurndue to increased use of no fixed-term contract offers in FY16
Churn	10.9%	12.2%
Receipts in Telstra’s books5			Lower distributions due to Foxtel’s investment in Ten Network and focus on debt management Lower Cable Access Revenue due to a reduction in the contracted cable access rate starting from Jan-16
Distribution received	$125m	$37m
Cable access revenue	$118m	$110m

Excludes unusual cost items (FY16 $17m, FY15 $3m). 2. Excludes share of profits/(loss) from associates (FY16 ($8m), FY15 $1m).
FY15 subscribers restated to include Presto paying subscribers only.
Broadcast subscribers represent active residential subscribers receiving the Foxtel service via cable/satellite and a connected set-top-box (excluding Foxtel on T-Box). 5. Excludes interest received and Telstra Wholesale revenue received from Foxtel.

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Product performance: Media

Media entertainment services and content FY15	Media entertainment services and content FY15	FY16	Telstra Mediadelivers content experiences, to differentiate and add value to our core access products
Revenue1	$813m	$864m
			In the Home, Foxtel from Telstra revenue growth of 8.6% due to 128,000 subscriber adds. Highest level of net subscriber adds
Media In the Home	$734m	$794m
- Foxtel from Telstra	$662m	$719m
			300,000Telstra TV devicesin market by the end of June
- IPTV2	$72m	$75m
Media On the Go	$79m	$70m	The decline inIPTV subscribersincluded growth in SVOD offset by the continued migration of our higher value Foxtel on T-Box customers to Foxtel from Telstra
Foxtel from Telstra subscribers	623k	751k
IPTV subscribers3	221k	196k	In FY16,On the Goadded Apple Music and Netball Live to our portfolio of AFL and NRL products
Telstra TV devices in market4	-	300k

Total media revenue excludes cable access revenue and distribution received from Foxtel.
IPTV revenue comprises Foxtel on T-Box, BigPond Movies, T-Box and Telstra TV device sales, and SVOD.
IPTV subscribers includes Foxtel on T-Box and SVOD subscribers.
Telstra TV devices in market is defined as cumulative sales, i.e. sale appears on customers bill.

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NBN Definitive Agreements

NBN FY15	NBN FY15	FY16
Income	$811m	$1,350m
Commonwealth agreements and other Govt. policy commitments1	$132m	$204m
Recurring ISA: Duct, Rack and Backhaul2	$374m	$387m
One-off NBN DA	$305m	$759m
- ISA: Ownership receipts2	$142m	$256m
- PSAA3	$163m	$503m
nbn commercial works revenue4	$167m	$233m

This includes retraining and income from government grants under the Retraining Deed and Telstra Universal Service Obligation Performance Agreement (TUSOPA). TUSOPA included as other income in “All other” segment FY16 $187m (FY15 $122m). TUSOPA is run by Department of Communications and the Arts and the income is net of the levy paid.
Infrastructure Services Agreement (ISA) included in Telstra Wholesale segment. Recurring ISA included as other sales revenue. One-off ISA included as other income, including ownership receipts for assets transferred and commercial works recognised under the NBN Definitive Agreement.
This includes income from nbn disconnection fees (Per Subscriber Address Amount (PSAA)) included as other income and recognised in “All other” segment.
nbn commercial works included as NAS sales revenue in the “Ops” segment.

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Operating expenses

	Operating expenses	FY151	FY16	GROWTH	GROWTH	Core sales costsgrowth
						net of MTAS FAD impact.
	Core sales costs2	$6,782m	$7,125m	$343m	5.1%	Net sales and variable cost growth supported
	Core fixed costs (incl. corporate)	$8,409m	$8,546m	$137m	1.6% Underlying -0.6%4	revenue growth
	New business costs3	$279m	$465m	$186m	66.7%	Excluding significant transactions and events,
						core fixed declineof
	nbn Cost to Connect (C2C)	$128m	$218m	$90m	70.3%	0.6%
	Impairment	-	$246m	$246m	n/m	Growth innew business
	Total Reported	$15,598m	$16,600m	$1,002m	6.4%	costsincluding Telstra Health and Telstra
						Software Group
	Plus Guidance adjustments	$283m	$689m
	Total Guidance	$15,881m	$17,289m	$1,408m	8.9%	Increased nbn C2C due to nbn rollout. Cost per
	Less Pacnet	$84m	$433m			connection reduced by ~40%
	Total Guidance and ex-Pacnet	$15,797m	$16,856m	$1,059m	6.7%
1.	FY15 reclassified to reflect Autohome being a discontinued operation.
2.	Core sales costs excludes goods and services purchased associated with new business and nbn Cost to Connect.
3.	New business includes Telstra Health, Telstra Software Group and Telstra Ventures.
4.	Underlying excludes significant transactions and events, including costs associated	with NAS commercial works and labour, global connectivity costs including Pacnet, and corporate items.
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Productivity (1 of 2)
Productivity Theme Focus Example initiatives Outcomes
Improving Customer Reduce nbn cost • [Increased the number of nbn orders fully ] • [~40% reduction in the cost to connect ]
Interactions Through to connect captured in upfront sales conversations compared to FY15
Digitisation & • [Reduced pre-connection calls to nbn customers ] • [70% of customer orders fully captured by ]
Simplification by combining two calls into one channel sales staff
• [Increased the number of customer interactions ] • [70% of customers chose to contact us via ]
via digital channels SMS and email post-sale
Fixed line • [Customers can now connect to a fixed line ] • [185k truck rolls avoided]
activation service “ASAP” where infrastructure is in place • [Faster connection times for ADSL and ADSL ]
(removing previous 3 day minimum lead time) bundle orders
• [Improved cable activation system validations and ]
online tool to improve the customer experience
Improve • [Expanded the range of self service tools from ] • [1.2 million assurance interactions completed ]
customer self ADSL to PSTN and cable so that customers can via self service capability up from 600k in
service be guided through online resolution to common FY15
capability problems • [513k customer calls and truck rolls avoided]
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Productivity (2 of 2)
Productivity Theme Focus Example initiatives Outcomes
Enabling the Future IT Proactive • [Proactively identified and remediated unstable ] • [Increased the stability of ADSL services for ]
Network assurance ADSL lines prior to customers contacting us 2.2 million customers
about issues • [281k customer calls and truck rolls avoided]
Proactive • [Repaired parts of our copper network before a ] • [48% reduction in faults in target areas]
maintenance fault occurs to reduce costs • [88k field technician tasks avoided]
Benefits from new • [Expanded the use of new technologies like ] • [Lower energy and floor space requirements ]
technology software defined networking to reduce costs within our exchange sites
Improve first call • [Made it easier for contact centre consultants to ] • [Improved FCR for Digital Office Technology ]
resolution (FCR) solve customer enquiries through simplified tools products by 2pp to 74% and FCR for Telstra
and processes Broadband by 2pp to 76%
• [26k customer calls and truck rolls avoided]
Acquisition Synergies Pacnet integration • [Simplified service offerings, customer impacting ] • [Achieved FY16 synergy targets]
processes and IT systems
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Capital and portfolio management

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Shareholder returns Dividend
FY16 ordinary dividend of 31.0c (+1.6%)
Dividend
$0.25b
Off-market buyback $1.5b Capital Management Program
On-market buyback $1.25b $1.25b off-market buy-back
Tender discount range of 6% to 14% to the market price [1]
Important dates:
• 30 September 2016: Closing date for tenders [2]
• 3 October 2016: Buy-back date
For Australian tax purposes, the off-market buy-back price will have two components:
$3.70b $3.79b • Capital component of $1.78 per share
• Fully franked dividend component equal to the difference between the buy-back price
and the capital component
$0.25b on-market buy-back
Expected to commence following completion of off-market buy-back
CY15 CY16
1. Market price means the weighted average price of Telstra’s ordinary shares on the ASX as Telstra may determine in its discretion over the five trading days up to and including the date the Tender Period closes, calculated to four decimal places,
as determined by Telstra.
2. Neither the off-market buy-back nor the subsequent on-market buy-back will be made directly or indirectly in or into the United States.
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Capital management

					FY15	1H16	FY16
								The 1H16 increase in gross debt reflects build
	Gross debt1				$15.0b	$16.2b	$16.0b	up of additional liquidity to provide prudent coverage for funding requirements
	Liquidity				$1.4b	$2.2b	$3.6b
	Net debt				$13.6b	$14.1b	$12.5b	The FY16 increase in liquidity predominantly reflects the proceeds from sale of Autohome
	Average gross borrowing	costs2			5.8%	5.6%	5.6%
	Average debt maturity (years)				5.0	4.6	4.8	Reduction in average gross borrowing costs reflects the benefit of lower cost term debt
								issuance
	Financial parameters	Comfort Zones
	Debt servicing3		1.3 – 1.8x		1.3x	1.3x	1.2x
								Financial parameters remain at the
	Gearing3	50%		to 70%	48.3%	48.7%	43.9%	conservative end of our comfort zones. These parameters include the impact of the
								Autohome disposal
	Interest cover3			>7x	14.4x	13.8x	13.0x
1.	Represents position after hedging based on accounting carrying values. Gross debt comprises borrowings and derivatives.
2.	Represents gross interest cost on gross debt.
3.	Debt servicing calculated as net debt over EBITDA. Gearing			calculated as net debt over total net debt and equity. Interest cover calculated as EBITDA over net interest expense (excluding capitalised interest). Financial parameters reclassified to
	reflect Autohome as a discontinued operation.
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Telstra Full Year 2016 Results Announcement

Andrew Penn, Chief Executive Officer

The demand for connectivity services continues to grow

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+60% Average monthly data consumption [1]
Network usage
(CAGR)
2011 2015
Share of Australian ~ 9x
38
retail banking via mobile 24
(%) 2013 2015 ~ 6x
Time spent watching
online videos on mobile 4
1
(hours per month) 2011 2015
Jun Jun Jun Jun
Source: Bain & Company, Nielsen, Roy Morgan.People watching online 2011 2016 2011 2016
videos on mobile 222 438
(millions per month) 2011 2015 Mobiles Fixed Broadband
Source: Bain & Company, Nielsen, Telstra network data 1. Average Monthly Data Consumption is defined as the total amount of data across Telstra’s 3G/4G and fixed networks
divided by the total number of mobile and broadband users including Retail, GES and Telstra Wholesale customers.
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Historic capex to sales ratio (excluding spectrum and M&A)

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25%
24% 24%
22% 22%
20%
19%
18% ~18% ~18% ~18%
17%
16% 16%
15% 15% 15% 15%
14% 14% 14% 14%
FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17F FY18F FY19F
2G 3G LTE
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Lifting our investment to match our aspiration

Up to $3 billion additional capital expenditure over the next three years, resulting in increased capex to sales[1] of ~18%

Networks – to deliver next generation networks
Digitisation – to radically simplify our core and improve the ways we work
Customer experience – to offer a seamless and simple customer experience across all interactions

Investments will deliver significant customer and financial benefits and drive market differentiation

Targeting returns in excess of our Return on Invested Capital and consistent with investment guidelines for organic investments

Our capital management framework will continue to underpin all future capital allocation decisions

This assumes wholesale product price stability and excludes mergers and acquisitions and purchase of spectrum. The capex to sales ratio also assumes the nbn™ rollout is in accordance with the nbn Corporate Plan 2016 and excludes externally funded capex.

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Our investments will deliver a distinctive experience and significant benefits to all our customers

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Consumers Business and enterprise customers
Enabling next • Next gen communications and media services (e.g., • Internet of Things
generation VoLTE, LTE-B, OTT video) • Software defined networking / network function
experiences • Connected home virtualisation
• Virtual and augmented reality
• Autonomous vehicles
Seamless and • Consistent experience and seamless integration • Deeper integration into individual customer network/
customised across all networks compute environments
network • Better network speeds, lower network latency, better • Configurable network experiences
experiences coverage • Ability to elastically scale up / down
• Platform for new managed network services
Increased • Reliable connectivity • Reliable connectivity
reliability, security • Removed complexity leading to better products that • Do more, faster through modular product architecture
and reduced are easier to understand • Unmatched scale, reach, security and performance
complexity • Unmatched scale, reach, security and performance
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To deliver these customer experiences we will drive major initiatives across the business

Network architecture • Building the network 2020 architecture to enable future customer experiences • Improving services levels and capacity on Mobile and Fixed • Improving network resilience Digitally enabled sales, service, and product experiences • Seamless, interactive front-end across all channels • Digital assurance and order-to-activate processes • Product rationalisation Adaptable digital core • Move to a single digital core IT architecture with a single and common access point to our underlying systems through common APIs
• Replace aged and bespoke systems with modern cloud-based systems • Scalable and agile delivery model Page 32

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Telstra Full Year 2016 Results Announcement

Warwick Bray, Chief Financial Officer

Capital Management Framework

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FISCAL DISCIPLINE
1 2 3
MAXIMISING MAINTAINING RETAIN
RETURNS FOR FINANCIAL FINANCIAL
SHAREHOLDERS STRENGTH FLEXIBILITY
1. Maintain balance sheet settings consistent with a single-A credit rating
2. Ensure dividend remains fully-franked and seek to increase it over time [1]
3. Target medium-term capex/sales ratio ~14% excluding spectrum payments
4. Over a full year we will not borrow to pay the dividend or fund capital returns
5. Maintain flexibility for portfolio management and to make strategic investments
Capex/sales ratio [2] will increase to ~18% in FY17, FY18 and FY19
Cumulative excess free cash: $4.4b as at 30 June 2016
1. Any dividend is subject to the Board’s normal semi annual approval process for dividend declaration and there being no unexpected material events.
2. This assumes wholesale product price stability and excludes mergers and acquisitions and purchase of spectrum. The capex to sales ratio also assumes the nbn™ rollout is in accordance with the nbn Corporate Plan 2016 and excludes
externally funded capex.
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OBJECTIVES
PRINCIPLES
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2017 guidance[1]

	Measure	FY16 BASELINE	FY17 GUIDANCE
	Total income	$27.1b	mid to high-single digit
	EBITDA	$10.7b	low to mid-single digit
	Capex to sales	15.2%	~18%
	Free cashflow	$4.8b	$3.5b - $4.0b
1.	This guidance assumes wholesale product price stability and no impairments to	investments, and excludes any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum. The guidance also assumes the nbn™ rollout
	is in accordance with the nbn Corporate Plan 2016. Capex to sales guidance excludes externally funded capex. Guidance excludes the Ooyala impairment in FY16		and restructuring costs in FY17 of $300m to $500m.
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Q&A
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Supporting material

1 Product income 2 Product operating expenses

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Product income Income FY15	Product income Income FY15	Page 38 ule. FY16 GROWTH (reported basis) GROWTH (reported basis) GROWTH (ex-FAD1) $10,438m -$213m -2.0% 1.3% $6,907m -$158m -2.2% -1.3% $387m $13m 3.5% $2,829m -$54m -1.9% -1.7% $2,581m $262m 11.3% $1,445m $566m 64.4% $1,458m -$35m -2.3% $26,045m $381m 1.5% 3.1% $776m $461m 146.3% $229m $96m 72.2% $27,050m $938m 3.6% 5.2%	Page 38 ule. FY16 GROWTH (reported basis) GROWTH (reported basis) GROWTH (ex-FAD1) $10,438m -$213m -2.0% 1.3% $6,907m -$158m -2.2% -1.3% $387m $13m 3.5% $2,829m -$54m -1.9% -1.7% $2,581m $262m 11.3% $1,445m $566m 64.4% $1,458m -$35m -2.3% $26,045m $381m 1.5% 3.1% $776m $461m 146.3% $229m $96m 72.2% $27,050m $938m 3.6% 5.2%	Page 38 ule. FY16 GROWTH (reported basis) GROWTH (reported basis) GROWTH (ex-FAD1) $10,438m -$213m -2.0% 1.3% $6,907m -$158m -2.2% -1.3% $387m $13m 3.5% $2,829m -$54m -1.9% -1.7% $2,581m $262m 11.3% $1,445m $566m 64.4% $1,458m -$35m -2.3% $26,045m $381m 1.5% 3.1% $776m $461m 146.3% $229m $96m 72.2% $27,050m $938m 3.6% 5.2%	Page 38 ule. FY16 GROWTH (reported basis) GROWTH (reported basis) GROWTH (ex-FAD1) $10,438m -$213m -2.0% 1.3% $6,907m -$158m -2.2% -1.3% $387m $13m 3.5% $2,829m -$54m -1.9% -1.7% $2,581m $262m 11.3% $1,445m $566m 64.4% $1,458m -$35m -2.3% $26,045m $381m 1.5% 3.1% $776m $461m 146.3% $229m $96m 72.2% $27,050m $938m 3.6% 5.2%
		FY16	GROWTH (reported basis)	GROWTH (reported basis)	GROWTH (ex-FAD1)
Mobile	$10,651m	$10,438m	-$213m	-2.0%
Fixed2	$7,065m	$6,907m	-$158m	-2.2%
Recurring NBN DA income	$374m	$387m	$13m	3.5%
Data & IP	$2,883m	$2,829m	-$54m	-1.9%
NAS	$2,319m	$2,581m	$262m	11.3%
Global connectivity3	$879m	$1,445m	$566m	64.4%
Other core4	$1,493m	$1,458m	-$35m	-2.3%
Recurring core	$25,664m	$26,045m	$381m	1.5%
Net one-off NBN DA income	$315m	$776m	$461m	146.3%
New business5	$133m	$229m	$96m	72.2%
Total Reported	$26,112m	$27,050m	$938m	3.6%
1. Growth ex-FAD includes FAD impact across mobile $356m, fixed $64m and data & IP $4m in line with guidance sched 2. Fixed excludes global connectivity and includes TUSOPA income FY16 $187m (FY15 $122m). 3. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 4. Other core includes distribution from Foxtel, media and other miscellaneous income. 5. New business includes Telstra Health, Telstra Software Group and Telstra Ventures.

Product operating expenses

Operating expenses FY15	Operating expenses FY15	FY16	GROWTH (reported basis)	GROWTH (reported basis)	GROWTH (ex-FAD1)
Mobile	$6,401m	$6,054m	-$347m	-5.4%	0.2%
Fixed excl. nbn C2C	$3,566m	$3,566m	-	-
Data & IP	$1,030m	$1,077m	$47m	4.6%
NAS	$2,252m	$2,439m	$187m	8.3%
Global connectivity2	$738m	$1,180m	$442m	59.9%
Other core3	$1,204m	$1,355m	$151m	12.5%
Recurring core	$15,191m	$15,671m	$480m	3.2%	5.5%
nbn C2C	$128m	$218m	$90m	70.3%
New business4	$279m	$465m	$186m	66.7%
Impairment	-	$246m	$246m	n/m
Total Reported	$15,598m	$16,600m	$1,002m	6.4%	8.7%
1. Growth ex-FAD includes FAD impact in mobile $362m in line with guidance schedule. 2. Global connectivity includes GES international results across fixed, data & IP, NAS and mobile. 3. Other core includes distribution from Foxtel, media and other miscellaneous income. 4. New business includes Telstra Health, Telstra Software Group and Telstra Ventures.		Page 39

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CFO SPEECH NOTES FINAL 10/8 TELSTRA FULL YEAR RESULTS 11 AUGUST 2016

ANDREW PENN - CEO SLIDE 1: FULL YEAR 2016 RESULTS

Thank you Peter

Welcome to Telstra’s results for the year ended 30 June 2016.

SLIDE 3: AGENDA SLIDE

This morning we have made an important announcement regarding a significant investment for the future in our core business. I will come to that soon but firstly Warwick and I will take you through the results for the year.

I will make some comments on the highlights before Warwick takes you through the results in detail.

SLIDE 4: HIGHLIGHTS

2016 was a year of strong performance against the background of increased competitive dynamics.

Net profit after tax from continuing and discontinued operations was up 35.9 per cent to $5.8bn and we delivered against guidance in our three key measures of income, EBITDA and free cash flow.

Importantly we continued to attract new customers with 560,000 net new mobile services and 235,000 fixed broadband services. We also saw 322,000 customers taking bundles.

2016 was an important year for the NBN.

During the year we added 289,000 net new NBN customers. The year also marked our 500,000th new customer since the beginning of NBN. This event coincided with NBN’s announcement of its 1 millionth connected home.

We also signed significant contracts with the NBN in relation to both build and maintenance to the value of over $1.6bn over the next few years.

Our GES business continued to grow strongly with income up 11.5 per cent with particularly good performance from services, including cloud, in the first half of the year.

We are particularly pleased with our performance internationally with revenue up 55.5 per cent following the successful integration of Pacnet.

We have seen some significant customer wins domestically and internationally in GES which will further underpin future growth.

We have also achieved our targeted margin improvement in services.

The fixed broadband business has performed strongly with the customer wins I have mentioned, leading to solid revenue growth. We saw a particularly strong performance from Belong now in its third year since launch.

Our fixed broadband margin has also been strong notwithstanding the acceleration of the migration to the NBN.

CHECK AGAINST DELIVERY

Page 1

There is no doubt the mobiles market has been very competitive and this has been reflected in ARPUs. We have performed well in that environment and while underlying revenue growth was flat, EBITDA and margins both grew.

Our mobiles performance in the business segment was strong and reflects the increasing use of our mobile assets to drive new solutions for industries, mobile workers and connected devices.

Our productivity program has been dialled up with an underlying decrease of 0.6 per cent in core fixed costs. Warwick will comment more on this later.

It has also been an important year for our media business and we have signed long term agreements for exclusive digital media rights for the AFL, NRL and Netball, Australia’s biggest broadcast and grass roots sports.

These leverage the growing trend of watching live sport on your mobile - which has never been more evident than the (record-breaking) mobile consumption of the Rio Olympics this week, enjoyed for free only for Telstra customers.

We are using these media assets to enhance the value of our fixed and mobile services to customers.

For our fixed customers, we now have more than 300,000 Telstra TVs in customer homes following launch in October of last year.

2016 was also our biggest year ever for Foxtel from Telstra, with 20 per cent growth in customers.

Already more than 750,000 mobile customers are enjoying premium sport and music content experiences through their Telstra mobile plans.

During the year we took the next step in the evolution of our brand in line with our vision. We launched to market in July and we are extremely pleased with the overwhelming positive response from our customers.

The financial results for the year include the $1.8bn profit on the sale of the majority of our shareholding in Autohome.

Autohome has been an incredibly successful investment for Telstra. Our decision to sell the majority of our shares reflects the opportunity to underpin the next phase of Autohome’s growth through a significant strategic partnership between Autohome and Ping An.

Ping An is well positioned to leverage their very large customer base and significant interests in motor vehicle insurance and financing.

We retain a 6.5 per cent shareholding and board seat in Autohome.

The results for the year also included in a $246m impairment of Ooyala.

The Ooyala impairment reflects the changing dynamics in the intelligent video market and the business performance.

Ooyala remains a young and exciting company with leading offerings in intelligent video which continue to evolve and scale.

Earnings per share for the year was up 37.4 per cent to 47.4 cents per share or 31.6 cents per share on a continuing basis.

The Board has declared a final dividend of 15.5 cents per share. This takes the total dividend for the year to 31 cents, up 1.6 per cent compared to last year.

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Further to our announcement of 2 May, we will be undertaking a $1.5bn capital management initiative which will be implemented through an on and off market buy back over the next few months.

The one thing I am disappointed about for the year, despite the strong performance, was that our customer advocacy result fell 4 points.

SLIDE 5 – NETWORK LEADERSHIP

We did not deliver to the extent we should for our customers.

It is clear that we have more to do to improve our systems and processes to ensure that we consistently deliver a great customer service experience.

We also know our customers, whether they be individuals or business, enterprise or government, retail or wholesale, domestic or international have come to rely significantly on their smart devices and connectivity.

This is why the network experience is so important.

Over the second half of the year we experienced a number of issues within the mobile, fixed broadband and IP networks. These caused disruptions for a significant number of our customers.

We have undertaken extensive and end to end reviews of the networks involving international and independent experts.

As a consequence of these reviews, in June we announced a $250m program of investment and initiatives from within our current capital budgets. These include.

A $50m investment in mobiles to improve recovery times and network monitoring.
A $100m investment in the core network to improve resilience and reliability, and
A further $100m investment to increase ADSL capacity to meet customer demand from very significant growth in video streaming.

We are well progressed in relation to this program of investment and we have already substantially improved our mobile network recovery times.

In parallel with this resilience program we have also continued to build out our network capabilities.

During the year we upgraded more than 2000 network sites to 4GX and achieved 98 per cent population coverage for 4G.

On average our customers experienced a 25 per cent increase in the average download speed of their 4G devices on Telstra’s network.
We launched Australia’s first voice over LTE service in September and more than 1 million customers now have access to high definition calling over 4G through VOLTE.
In 5G we are actively engaged in setting new international standards and we are well progressed in relation to our 5G readiness.

We should not lose sight of the fact that we continue to have the best networks in Australia with our mobile network providing the best coverage and the fastest speeds.

We have always been ahead of the technology curve and we are committed to continue to be so.

I am confident the up to $3bn strategic investment in digitisation and networks of the future that we announced this morning will further enhance our leadership position.

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We are also committed to continue to put the customer at the heart of everything we do and it is improving customer experience that has driven our decision to make this further very significant investment.

Let me now hand over to Warwick to take you through the results in detail and I will then come back and talk more about the future.

WARWICK BRAY - CFO

SLIDE 6 – TELSTRA FULL YEAR RESULTS ANNOUNCEMENT 2016

Thank you Andy and good morning everybody.

SLIDE 7 - AGENDA

The presentation this morning breaks down as:

First, the overall results and comments on performance against guidance and the prior period.
Second, the business unit and product performance.
Third, our expenses and productivity;
Finally, our capital management program and an update on our main balance sheet movements

Firstly, let me take you through the overall performance of the business in FY16.

SLIDE 8 – GROUP RESULTS – INCOME STATEMENT

Our FY16 results were consistent with our guidance across income, EBITDA, capex and free cash flow.

On a reported and continuing operations basis:

Sales revenue for the year was up 1.9% to $25.8bn
Total income was up 3.6% to $27.1bn; and
EBITDA was down 0.6% to $10.5bn

The reported EBITDA number is including the effects of the:

Impairment of Ooyala intelligent video subsidiary which decreased EBITDA by $246m; and
Regulatory pricing decisions which decreased EBITDA by $62m

On a reported and continuing operations basis:

Net profit after tax was down 6.9% to $3.8bn; and
Basic EPS was down 5.7% to 31.6 cents

The guidance basis removes the effects of impairment, regulatory pricing decisions and in year M&A.

On a guidance basis:

Total income was up 6.3%; and
EBITDA was up 2.6%

This is our first full year operating with Pacnet, which was acquired in April 2015.

On a guidance basis and excluding Pacnet:

Income growth was 4.8%; and
EBITDA growth was 2.1%

From continuing and discontinued operations, Net profit after tax was up 35.9% to $5.8bn.

Basic EPS was up 37.4% to 47.4 cents.

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This included a $1.8b profit on the sale of 47.4% of Autohome, the Chinese online car business, in June 2016. As a result of the sale, Autohome was classified as a discontinued operation and excluded from reported results. We retain a 6.5% stake in Autohome.

We have reported an increase in depreciation and amortisation of 4.6%. This was mostly due to the acquisition of spectrum in the prior period.

Net finance costs were broadly flat.

Income tax was up 1.3% to $1.8bn. The effective tax rate on continuing operations was 31.6%.

We now move to our other main financial measures.

SLIDE 9 – GROUP RESULTS – FINANCIAL MEASURES

This year capex was up 12.7% to $4.0bn, including increased investment in our mobile network.

Our capex to sales ratio of 15.2% was consistent with our full year guidance of approximately 15%.

On a reported basis, free cash flow increased from $2.6bn in FY15 to $5.9bn.

The FY16 free cash was influenced by

$1.3bn associated with the sale of Autohome
Proceeds from the sale of PP&E increased by $376m mainly due to the transfer of assets to nbn co under the NBN Definitive Agreements (DA).
Capex in FY16 was $456m higher than FY15;

The increase in free cash flow compared to FY15 was also due to FY15 outflows including:

$1.3bn invested in spectrum; and
$508m related to M&A and associated transactions.

As Andy mentioned, the Board has declared a fully franked final dividend for FY16 of 15.5 cents per share, the same level as the FY15 final dividend. FY16 aggregate declared dividends of 31.0 cents per share are up 1.6% on FY15.

Our payout ratio increased to 98%. Excluding the impairment, our payout ratio was 93% and close to our FY15 payout ratio.

Our dividend policy remains unchanged and future dividends will be subject to the Board’s normal semi-annual approval process, and in line with our capital management framework that sets out our goal to seek to increase the dividend over time based on growth in EPS on a sustainable basis.

In addition to the final dividend, today we are announcing details of our $1.5bn capital management program. This will be covered later in my presentation.

Return on Equity and Return on Invested Capital remain sound. On a continuing operations basis, ROE decreased by 3.8 points due to the impairment and increased equity from the profit on sale of Autohome. ROIC decreased by 2.1 points mostly due to the investment in spectrum in FY15. Our future ratios will continue to be influenced by the changing mix in our major products, including the recurring and one-off nbn impacts.

Gearing fell 4.4 points to 43.9% including cash received from the sale of Autohome. Our credit metrics and balance sheet settings remain at the conservative end of our comfort zones and we retain our sound liquidity position.

Now, turning from our overall results to income performance across our business units.

SLIDE 10 – BUSINESS UNIT RESULTS

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Our retail income growth was influenced by the mobile terminating access service (MTAS) regulatory decision. This reduced our retail revenue by $329m with only a small impact on EBITDA.

Total retail income was down 1.5% to $16.7bn.

Consumer was up 1.0% excluding the impact of the MTAS decision. This growth was achieved through fixed data and mobile subscriber additions somewhat offset by declines in ARPU and voice revenues.
Business was down 1.0% excluding the impact of the MTAS decision. Growth in NAS was strong across managed network services and cloud. This growth was offset by lower revenue in fixed voice, mobile excess data and international roaming. In business, we have now reached the milestone of having more revenue across NAS and data & IP, than from fixed services.
Global enterprise and services income grew 11.5% including the acquisition of Pacnet.
GES domestic grew 1.1% due to strong NAS and enterprise mobility, including postpaid and M2M. NAS growth included the achievement of significant delivery milestones on some major accounts in 1H16.
GES international grew 55.5% to $1.7b. Including Pacnet, we have expanded our geographical presence and base of enterprise and wholesale customers.

Finally, Telstra Wholesale income was up 1.4% largely due to an increase in ISA ownership receipts. Telstra Wholesale income was reduced by the implementation of the ACCC Final Access Determination (FAD) for fixed line services from 1 November 2015.

Turning now to our product framework.

SLIDE 11 – PRODUCT FRAMEWORK

At our Investor Day in May, we outlined the four factors that will influence our long term sustainable earnings:

First, the growth and change in mix of our existing products;
Second, the migration of fixed services to nbn[TM] , where we identified a $2-3bn per annum long term negative EBITDA impact;
Third, productivity; and
Fourth, our investment in long term new growth businesses.

Consequently, we are changing our financial disclosure to identify each of those factors. This new disclosure separately identifies performance from:

our recurring core, including separating the recurring influence of the NBN; and
new business and NBN DA one-off impacts.

Now let me take you through income performance within this product framework.

SLIDE 12 – PRODUCT PERFORMANCE INCOME

Overall, we saw continued growth in reported income, up 3.6% to $27.1bn.

Our recurring core income growth was 1.5%.

Within our core income, the implementation of the MTAS and FAD decisions resulted in a $424m reduction. Excluding this impact, our core income grew by 3.1%:

Mobile was up $143m or 1.3%, a slower rate of growth than previous years.
Fixed was down $94m or 1.3%, a slower rate of decline than previous years. We continue to be encouraged by our fixed line performance.
Recurring NBN DA was up $13m or 3.5%.
Data and IP was down $50m or 1.7%, broadly in line with previous years
NAS continued its double-digit rate of growth, up $262m or 11.3%.
Global connectivity was up $566m or 64.4% including Pacnet.

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Outside our recurring core income:

One-off NBN DA receipts was up $461m
New business was up $96m or 72.2%.

Turning now to product EBITDA performance.

SLIDE 13 – PRODUCT PERFORMANCE EBITDA SUMMARY

Overall, we saw a decline in reported EBITDA, down 0.6% to $10.5bn.

Our recurring core was down $103m.

This was the first year that we saw a major impact from the long term recurring influence of the NBN. This negative influence was $145m in the year and this is the number that we expect to grow to $23bn per annum over the course of the rollout of the nbn network. The biggest component of the recurring impact of the NBN was increases in CVCs and AVCs.

Outside recurring NBN impacts, the remaining core was up $42m – we will go through this on the next slide.

One-off NBN DA receipts, net of nbn costs to connect, were up $371m in line with the nbn rollout. This included $90m of increased nbn costs to connect.

New business EBITDA was down $90m due to continued investment in Telstra Health and the Telstra Software Group. And we also recognised the $246m impairment in the value of Ooyala intelligent video subsidiary.

Turning now to recurring core product EBITDA performance in detail.

SLIDE 14 – PRODUCT PERFORMANCE EBITDA DETAIL

This table now further expands the EBITDA performance of our core business. Working from the bottom, the difference between the reported EBITDA figure of $10,465m and the recurring core of $10,389m, is the nbn one-off, new growth businesses and the impairment.

Turning to our recurring core, the EBITDA was down $103m, or as identified on the last slide, up $42m excluding the recurring impact from NBN:

Mobile was up $134m or 3.2%
Data and IP was down $101m or 5.5%.
NAS was up $75m or over 100%.
Global connectivity was up $124m, including an additional $55m EBITDA from Pacnet; and
Other core was down $190m including the reduced distributions from Foxtel

Turning to the product performance in detail starting with the mobile portfolio.

SLIDE 15 - MOBILE

Mobile revenue was down 2.0%, or up 1.3% excluding MTAS.

During the year, we added a further 560,000 domestic retail mobile services, including 169,000 postpaid handheld customers, to bring our total subscriber base to 17.2 million.

In postpaid handheld, revenue was flat due to subscriber growth being offset by a reduction in ARPU. Postpaid handheld ARPU excluding MRO was down $1.11 to $68.40. Encouragingly, we continue to see customer migration to higher minimum monthly commitment plans and the quality of revenue improving. This ARPU growth was offset by lower excess data and voice charges, and tactical offers.

More than 73% of our consumer postpaid handheld base are now on Extra Data plans. Extra Data gives customers the option to receive additional data in 1GB blocks when they reach their monthly data limit for a flat rate of $10 per block.

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Prepaid handheld revenues fell 3.5% due to lower ARPU from increased allowances, leading to fewer recharges. We continue to see growth in prepaid unique users, up 3.3% for the year.

Mobile broadband revenue fell 4.7% due to lower prepaid ARPU and a decline in unique users. We however continue to see opportunity in consumer shared plans, and growth in connected tablets to help our business customers further improve their productivity, in particular, with field force and sales force solutions.

Machine to machine revenue grew 16.8%. We added 307,000 M2M SIOs in the year, exceeding recent trends. Over the year, we have implemented multiple M2M solutions. These solutions have addressed productivity, driver safety, asset utilisation, long-haul vehicle tracking and fleet management for our customers.

Mobile hardware revenue increased 10.1% as a result of higher average retail prices on high end smartphones.

The mobile EBITDA margin increased 2 points to 42%. Excluding the margin accretive impact from MTAS, mobile margins were closer to 40%. Mobile margins also benefited from the timing of lumpy costs and one-offs in 2H16.

Our postpaid handheld churn remains low but increased to 10.9%. Postpaid handheld churn was higher in 2H16, due to increased competition and some effect from network outages.

Turning to our fixed performance.

SLIDE 16 - FIXED

Overall, we had a strong year in fixed products in comparison to prior periods and relative to market.

Fixed product revenue was down 2.2%, or down 1.3% excluding the Fixed Services FAD.

Fixed data revenue grew 5.6%. Retail fixed broadband subscribers grew by 235,000 – our best net subscriber additions in more than five years. This result was due to the continued focus on providing customers with simple, flexible, and great value bundle plans together with unique inclusions like Telstra Air, Telstra TV, and more capable home internet devices. Our challenger brand Belong also contributed to the subscriber and revenue growth again this year.

The fixed voice revenue decline was contained to 8.2%. Retail fixed voice customer line loss was maintained at 271,000, or 4.5%, due to continued focus on retention in our save cells and proactive migration of ‘home phone only’ customers to new bundled plans with broadband and WiFi. The ARPU decline of 5.1% was broadly in line with the prior corresponding period.

Our bundled products are performing well, including the “best bundle ever” launched in March 2016 with free Telstra Air and Telstra TV, and the Telstra BizEssentials bundles with double the data for our small business customers. These innovations have continued to deliver strong growth in retail bundles with bundled customers up 322,000 to 2.7 million. 83% of our retail broadband customer base is now on a bundled plan, including our entertainment offers.

Demand for our nbn services continues. During the year we added 289,000 nbn connections. As at 30 June 2016, we had 500,000 nbn connections, made up of:

407,000 voice and data bundles;
34,000 data only services; and
59,000 voice only services.

Our nbn market share remains above our core broadband market share and increased in 2H16. Like all of our broadband and bundled products, we differentiate our nbn services based on unique content experiences that are only with Telstra, like Telstra TV and Telstra Air.

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In June 2015, we launched Telstra Air – our residential and public WiFi offering – with over 1.1m activated customers by the end FY16, and growing to be the largest WiFi network in Australia..

The fixed voice margin fell by 4 points due to lower revenues, while the fixed data margin was flat. Both fixed voice and data margins were negatively affected by the cost of connecting customers to the nbn, and the ongoing nbn network costs. Excluding nbn, underlying fixed data margins increased on the prior period.

Turning now to data and IP.

SLIDE 17 – DATA & IP

In data and IP we saw revenue growth due to higher global connectivity revenue including from our Pacnet acquisition.

GES international data & IP revenue growth was 79.8% with international customers responding strongly to the combination of the Pacnet network with the Telstra brand, product and network expertise.

Domestic data & IP revenue declined at 1.9% in line with recent trends, however we performed well against market with customers embracing our complementary NAS products; and Next IP network flexibility, scalability and security.

While we are achieving volume growth in IP access, we are seeing some price competition. IP access declined 3.0% reflecting these yield trends, offset by growth in customer connections.

IP MAN revenue, which represents 69% of IP access, was up 2.4%, with connections up 14.3%, reflecting customer wins and demand for IP value added services.

ISDN declined 8.9% due to continued steady migration to IP access, unified communications, fixed data and nbn products.

Our domestic EBITDA margin of 62% was impacted by yield pressures in the IP market and the domestic revenue decline.

Now, turning to Network Applications and Services, or NAS.

SLIDE 18 - NAS

We are pleased with our NAS performance. In FY16, we achieved strong revenue growth of 14.3% to $2.8b, and expanded margins. Growth was achieved across domestic and international segments, including an increased contribution from Pacnet.

As indicated at our half year results, growth in NAS revenue in 2H16 was slower than 1H16 due to the timing of contract milestones. We expect FY17 NAS revenue to grow above market rates.

Managed network services revenue for the year grew by 6.4% due to increased professional service and security activity, including from our Bridgepoint acquisition. We are pleased with the progress of this acquisition as it has brought greater capability in our managed network and security portfolio.

Unified communications revenue was up 7.9% as a result of increased IP telephony customer connections.

Cloud revenue grew by 35% across public cloud solutions – or infrastructure as a service – and from Pacnet.

Industry Solutions revenue growth of 19% was principally due to increased nbn commercial works.

Integrated Services revenue was up 18.3% due to the achievement of transition and transformation milestones on major accounts, and growth from annuity managed services.

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The NAS EBITDA margin improved 3 points through operational leverage and scalable standardised offerings

Turning now to media and firstly Foxtel.

SLIDE 19 – MEDIA - FOXTEL

As announced on the 8[th] August, Foxtel’s revenue was up 4.6% due to subscriber growth.

Total subscribers were up to more than 2.9m with the vast majority of growth due to 4.7% growth in broadcast subscribers. Broadcast residential ARPU for the full year was $89, a mid-single digit decline compared to the prior year.

Churn for Foxtel increased due to increased use of no fixed-term contract offers in 2H16.

EBITDA decreased by 2.2% to $880m due to:

Firstly, increasing programming costs – particularly across sport and drama; and
Secondly, planned higher offer costs associated with sales, and continued investment in Presto.

EBIT improved 8.8% to $558m, including lower depreciation resulting from the increase in the useful lives of cable and satellite installations.

In Telstra’s books, the distribution received from Foxtel was down 70.4% to $37m due to Foxtel’s investment in Ten Network and focus on debt management. We received no distribution from Foxtel in 2H16.

Cable access revenue was down 6.8% to $110m.

Now, moving to our other media assets.

SLIDE 20 – MEDIA

The role of Telstra Media is to add differentiated content experiences that complement our network advantage.

In the Home, we continued our strategy to bundle media with core fixed products. Foxtel from Telstra revenue grew by 8.6% to $719m, with net subscribers up 128,000 – our highest level of net subscriber adds in a year.

We also launched Telstra TV in October. By the end of FY16, we had 300,000 Telstra TV devices in market.

IPTV revenue was up 4.2% including increased revenue from Telstra TV device sales and SVOD. This revenue growth was partly offset by the continued migration of our higher value Foxtel on TBox customers to Foxtel from Telstra.

The IPTV subscriber decline of 11.3% included 44,000 new SVOD subscribers across T-Box and Telstra TV. SVOD growth was offset by a decline in Foxtel on T-Box subscribers – down from 165,000 in FY15 to 96,000 in FY16.

Media ‘On the Go’ revenue decreased 11.4% due to declining legacy mobile download services. This reflects a shift in strategy from direct media revenue towards differentiation and data usage across Telstra's core products.

In FY16, we added Apple Music and Netball to our portfolio of AFL and NRL products.

Turning now to income from the NBN Definitive Agreements or “DA”.

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SLIDE 21 – NBN DA

During the year we recognised NBN DA related income of $1,350m, up 66.5%. This included strong growth from the ISA ownership receipts and PSAA, which were up 80.3% and 208.6% respectively, in line with the progress of the nbn roll out and migration.

Whilst the ownership receipts and PSAA will be influenced by the timing of the nbn rollout, the timing of related cashflows will vary between periods.

Revenue from the Commonwealth Agreements increased 54.5% due to the timing of income recognition from the Telstra Universal Service Obligation Performance Agreement. Within the Commonwealth Agreements, retraining deed revenues of around $10-15m per annum will continue to be recognised over the next two to three years.

Recurring ISA revenue from ducts, racks and backhaul was up 3.5% to $387m. These receipts reflect nbn co ongoing use of our infrastructure.

The NBN DA income represented on this slide was recognised across “sales revenue” and “other income” categories in our financial statements. Sales revenue included NBN ISA revenue related to access to our infrastructure. Other income included the remainder of NBN DA income, including all income from the PSAA.

NBN DA income does not represent all of the income we receive from nbn co. Outside the NBN DA, we also received Industry Solutions revenue within NAS through the two commercial agreements – the Planning Design Services Agreement and the Joint Deployment Works Contract.

nbn commercial works revenue was up 39.5% to $233m. Future nbn commercial works revenue will also include the HFC Delivery Agreement, Copper Sub-Loop Agreement and Operate and Maintain Master Agreement.

In addition to commercial works revenue, we received additional data and IP sales revenue for wholesale ethernet transmission and facilities access.

Turning from our business and product performance, now let me take you through our expenses and productivity.

SLIDE 22 – OPERATING EXPENSES

Our total operating expenses increased 6.7% to $16.9bn on a guidance and ex-Pacnet basis.

On a reported basis, total operating expenses increased 6.4% to $16.6bn.

We have updated our disclosed cost categories to match our product framework presented earlier. Compared to our first half disclosure, costs related to global connectivity and corporate costs are now recognised in our core.

Excluding impairment, going through each of the four cost categories in turn:

First, growth in core sales costs - or Directly Variable Costs.

Our core sales costs grew $343m or 5.1%. The five biggest contributors to the increase in sales costs were:

Global connectivity, including Pacnet where we saw income growth of 64.4% and margin expansion
NAS domestic, where we saw income growth of 11.3% and margin expansion.
Mobile costs of goods sold associated with hardware revenue growth of 10.1%. Our hardware margin increased as a result of lower unit subsidy.
nbn access payments increased to support nbn connection growth of 289,000 customers; and
Foxtel service fees where we saw revenue growth of 8.6%.

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Core sales costs growth was offset by a benefit from reduced interconnect costs due to MTAS. Excluding this impact, core sales costs grew at 10.4%.

So, where we saw the largest dollar increase in reported costs, this increase directly supported our growth categories across the core. Overall, we saw an increase in efficiency of our core sales costs.

Second, growth in costs in our new businesses.

New business costs grew $186m and supported Telstra Health, Telstra Software Group, as well as Telstra Ventures.

Third, growth in our nbn costs to connect

Our nbn costs to connect increased $90m. Over the period however, we reduced the average cost per nbn connection by around 40%;

The nbn costs to connect include consumer connections and more complex business connections, and exclude revenue we receive from customers for connecting nbn services.

Fourth, growth in our core fixed costs .

Core fixed costs increased $137m or 1.6%.

On an underlying basis, our core fixed costs declined 0.6%.

This means that the results of our cost productivity programmes more than offset inflation and reinvestment. This “net” measure is our primary measure of cost productivity. We remain committed to reducing core fixed costs on an underlying basis in FY17 and beyond.

The difference between reported and underlying costs included increased nbn commercial works and DA costs; increased NAS labour on large contracts; increased global connectivity costs including our Pacnet acquisition, offset by reduced corporate costs.

Let me now turn to our productivity program in more detail.

SLIDE 23 - PRODUCTIVITY

We achieved the underlying fixed cost reduction through six productivity initiatives in FY16:

improving customer interactions through digitisation and simplification
product and sales optimisation
enabling the future IT network
organisation and process
building supplier partnerships for business outcomes; and
realising synergies from acquisitions.

In many cases, digitisation and simplification of our products and processes have led to better outcomes for our customers as well as cost benefits.

I will go through some examples.

We have reduced the cost to connect to the nbn by:

increasing the number of orders fully captured in upfront sales conversations
reducing the number of calls to customers during the connection process; and
increasing the number of customer interactions via digital channels.

These changes have improved the experience for our customers and staff, and resulted in an around 40% reduction in the cost per nbn connection.

For fixed line activation , we have changed how we activate ADSL and bundle services eliminating a three day minimum activation lead time for customers where infrastructure is available. This has also

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resulted in a 65% improvement in our ability to connect the service at the time nominated by our customers. When combined with improvements to our tools and processes for connecting customers to our cable network and how we dispatch technicians, we have reduced the number of truck rolls by 5% or 185,000.

We have improved our customer self service capability by expanding the coverage and capability of our customer self-service assurance tools. This has improved the ability of our ADSL, PSTN and cable customers to resolve common problems related to modem connectivity, outages, hardware faults, email and Wi-Fi quality. This has resulted in 600,000 additional completed self-care interactions and the avoidance of over 500,000 customer calls and truck rolls.

SLIDE 24 - PRODUCTIVITY

To enable our the Future IT Networks , investment in proactively identifying and remedying unstable ADSL services before a customer needs to contact us has resulted in more stable ADSL services for 2.2 million customers; and the avoidance of over 280,000 customer calls and truck rolls.

Additionally targeted proactive maintenance of our copper access network has resulted in a 48% reduction in the fault rate within target areas and a 2.5% or 88,000 reduction in field technician tasks.

Our adoption of new technologies has allowed us to take advantage of associated cost reductions, for example using software defined networks has resulted in cost reductions from lower power consumption and reduced floor space requirements within our exchanges.

To improve first call resolution , we have simplified tools and processes to make it easier for our staff to serve our customers and resolve their enquiries. For example we have implemented improvements to our guided step-by-step workflows for contact centre consultants to help our Digital Office Technology and Telstra Business Broadband customers resolve fault enquiries. This has resulted improved first call resolution rates by 2 points across these customers, and avoided 26,000 customer repeat calls and truck rolls.

Finally, we continue to deliver synergies from our acquisitions . We have realised synergies from our Pacnet acquisition and optimised the performance of the combined business. In the last year, for the combined business, we have:

rationalised over 27 Pacnet products into around 16 single Telstra product offerings.
migrated to a single set of delivery and support IT platforms for CRM, ordering, activation and ticketing.
consolidated 17 network points of presence and 102 transmission circuits.
renegotiated over 40 contracts; and
merged 13 offices.

Turning now to capital management.

SLIDE 25 – CAPITAL AND PORTFOLIO MANAGEMENT

At our Investor Day in May, we announced our intention to use the proceeds from the sale of Autohome shares to fund a Capital Management Program.

Today, we are announcing a $1.5bn capital management program, comprising of a $1.25bn offmarket buy-back and a $250m on-market buy-back. The buy-back program is expected to benefit all Telstra shareholders, whether or not they participate, through an increase in EPS.

The off-market buy-back will be conducted through a tender process. Eligible shareholders can choose to tender shares at specified discounts to the Market Price in a range of 6% to 14%.

Eligible shareholders will receive further information on how they can participate in the off-market buyback tender.

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For those eligible shareholders who successfully participate in the off-market tender, the ATO has indicated that for Australian tax purposes the Capital Component of the price paid for each share bought back will be $1.78 and the remainder of the price will be a fully franked dividend.

While participation in the off-market Buy-Back Tender will result in a shareholder selling shares at a price which is lower than the Market Price, depending on tax circumstances, they may still be better off by selling shares through the off-market Buy-Back Tender.

The $250m on-market buyback is expected to commence shortly after the completion of the offmarket buy-back tender.

Neither the off-market buy-back nor the subsequent on-market buy-back will be made directly or indirectly in or into the United States.

This $1.5bn capital management program is another example of our balanced approach towards capital management, including active management of our investment portfolio and the creation of shareholder value in accordance with our capital management framework.

Turning now to some of the more detailed capital and balance sheet movements in 2016.

SLIDE 26 – CAPITAL POSITION

Overall, our balance sheet remains strong.

The increase in our gross debt in part reflects the issuance of $1.6bn long term debt during the year ahead of maturities in FY17.

Our closing net debt was reduced by additional liquidity reflecting the proceeds from the sale of Autohome. This additional liquidity will be used to fund our capital management program in FY17.

Our average debt maturity has increased to 4.8 years from 4.6 years at the half. We continue to refinance at much lower average rates, as evidenced by our 10 year 750 million Euro bond in April 2016 with interest payable at 4.165% per annum. We believe at time of issuance, this was the lowest ever 10 year rate for an Australian company.

Our finance costs on an accounting basis were broadly flat year on year.

Positive influences on finance costs were

a reduction on our average borrowing costs from 5.8% to 5.6%; and
a small non cash benefit from adoption of AASB 9.

Offset by

higher average net debt on issue; and
lower finance income due to lower average cash balances and a reduction in interest income received from Foxtel.

Net cash finance costs on a cash basis were down 2.7% to $729m

Our gearing ratio has decreased to 43.9% at 30 June 2016 reflecting the proceeds from the sale of Autohome.

Importantly, all of our financial parameters remain at the conservative end of our comfort zones to meet our criteria of a long term single A credit rating. We maintain strong investment grade long and short term credit ratings with S&P of A and A1, and Moody’s of A2 and P1.

Thank you and I will now hand back to Andy before I return to talk to our capital management framework and guidance

ANDREW PENN – CEO

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SLIDE 28: THE DEMAND FOR CONNECTIVITY SERVICES

Thank you Warwick.

Let me now turn to the significant strategic investment that we announced this morning.

Demand for services in our industry continues to grow very strongly.

Over the last five years the data traffic on our network has increased on average 60 per cent per annum. That is a seven fold increase.

If we look at the breakdown between fixed and mobile, mobile traffic in a similar period grew almost nine fold.

In 2013, mobile banking represented 24 per cent all banking transactions in Australia. In less than 2 years that number nearly doubled to 38 per cent.

Since the end of 2011 mobile video consumption has increased eight fold with twice as many people watching four times as much video on a mobile device.

Last week we launched the Seven Telstra Olympic app simultaneously streaming 36 channels of coverage.

Since launch there has been more than 10 million live streams and 1 million people have downloaded the app.

To put this in perspective, there were no mobile digital rights for the London Olympics.

If we have seen this much change in the last five years just imagine what 2020 will look like as the rate and pace of technology innovation accelerates.

This is the world of the future. This is the world we are building for. This is the world we are investing in so our customers can enjoy brilliant connected experiences.

SLIDE 29: CAPEX

We have a history of making investments ahead of the curve to create strategic differentiation.

This has led to significant programs of investments every decade. As we did with 2G in the late 90s. As we did with 3G ten years ago and as we did with our NextG IP network and as we did with LTE.

We believe there is the opportunity to do so again now.

Our customers and our networks are our biggest assets. It is important that we invest in them.

SLIDE 30: LIFTING OUR INVESTMENT

So we will be lifting our level of investment to match our level of aspiration.

Over the next three years we will be investing up to an additional $3bn of capital expenditure and lifting our capex to sales ratio to 18 per cent.

We will be investing in three key areas of critical importance to our customers:

We will be investing in the network of the future which is the foundation of the program
We will be investing in accelerating the digitisation of our business; and
Ultimately we will be investing in improving our customers experience.

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These investments will deliver significant benefits for our customers while driving market differentiation and delivering significant financial benefits for shareholders.

The investments will be made in line with our criteria in our capital management framework with a target in excess of our return on invested capital.

SLIDE 31: BENEFITS FOR CUSTOMERS

Let me turn to the benefits for customers.

Once again we will define and deliver the next generation of customer experience, enabled by new network infrastructure and a supporting digital architecture.

Consumers will experience new rich communication services using capabilities such as Voice over LTE, integrated messaging and video and document sharing.

Sporting events and other media will be greatly enhanced using broadcast services and video streaming based on LTE-Broadcast technology.

The world of augmented reality, autonomous driving and robotics will be enabled across our networks.

For our business customers, new opportunities in productivity and business insight will be offered. Everything from agriculture to banking, health care to transportation services will be enhanced by the millions of sensors and devices that are arriving with the internet of things.

Similarly, applications in areas such drone technology and remote healthcare diagnostics will explode over the next 4 years.

The second key benefit to our customers is providing a seamless and customised experience across all of our networks – mobile, fixed, IP, NBN and WiFi. Truly interconnected networks is a key deliverable of the program.

With these investments we will offer the network of networks - an unparalleled range of contiguous assets giving customers the ability to move seamlessly across them.

And as we have done repeatedly in the past, we intend to lead the market with the introduction of 5G.

For all customers, this will mean faster speeds, lower latency and supporting the explosion in the number of connected devices.

For business and enterprise customers both domestically and internationally, we will invest in our enterprise network stack of technologies and capabilities. In cloud, in collaboration and in security.

We will offer our customers a deeper integration between their compute environment and our networks through the use of API’s. This will give them the ability to configure their network experience and scale capacity up or down dynamically based on individual demands.

Finally, our investments will deliver greater reliability, greater resilience, and greater security for all our customers, consistent with our commitment to deliver the best network experience.

SLIDE 32: MAJOR INITIATIVES

So how will we do this?

We are going to drive a number of major initiatives across the business.

To deliver the future network experiences, we will utilise software defined networking architecture to build a more programmable and flexible network that we can scale easier at lower unit cost.

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We will deliver the next generation of wireless services, 5G.

In the very near term we will further improve service levels on our ADSL Fixed Broadband network to deliver faster speeds to more of our customers.

From a mobile perspective we will further enhance depth and breadth of the network.

In metro areas this will mean greater in-building coverage - in your home and in your office.

We will also extend 4G coverage in regional areas provided the regulatory setting which characterises the Australian mobile market remains conducive to supporting investment.

We will invest in the digital enablement of our sales, service, and product experiences.

Our customers will increasingly be able to interact with Telstra on their terms, and will be able to do so more easily, more digitally.

We will also accelerate the move of apps and services to the cloud and overhaul systems that disrupt our customers today such has billing.

We will digitise the assurance and order-to-activate processes.

We expect that these changes will deliver customers a fundamentally better experience when they interact with Telstra as well as create financial benefits for shareholders.

Underpinning all of these initiatives is the establishment of an adaptable digital core IT architecture that will deliver a single access point to our underlying systems and move away from the myriad of systems we have today.

This morning I wanted to give you a sense of the scale and significance of our investments and the changes we will be making.

We are building for a world where technology innovation is accelerating and offering wonderful experiences for customers and great opportunities for businesses.

We will have the technology and networks to match that.

Let me be clear about one thing though – this is about investing in our core. A core where for our customers, the services and applications above the layer of the network are as important as the network itself.

We will continue to invest in and build these capabilities, domestically and internationally.

We also remain committed to continuing to invest and grow Telstra Health for which there are tremendous opportunities ahead and which has had a very successful year with key contract wins.

We will provide an opportunity to discuss our plans later in the year at our investor market briefing and progressively thereafter. In this regard it will be critical that we maintain strategic advantage in an intensely competitive environment.

Let me now hand back to Warwick to talk through what this means for our capital management framework and guidance and we can then open up for questions on both results and our future plans.

But let me also say before closing that I am immensely proud that once again we will deliver the next generation of customer experience enabled by new network infrastructure and a supporting digital architecture.

Thank you

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WARWICK BRAY - CFO

Thank you Andy.

SLIDE 34 – CAPITAL MANAGEMENT

Let me put our strategic finance investment announced today in the context of our capital management framework and investment criteria.

This framework is underpinned by a clear focus on optimising for:

Maximising returns to shareholders
Maintaining financial strength; and
Retaining financial flexibility

These core objectives are supported by five principles that provide the structure and definition for what this means at a practical level. We remain committed to each of these principles which I will now go through.

We will maintain our Balance Sheet settings consistent with a single A credit rating.

We will ensure our dividend remains fully franked and seek to increase it over time based on growth in EPS on a sustainable basis. This is exactly what today’s announcement is about. Investing in our core business to support future growth in earnings.

Over the next three years, capex to sales will increase to approximately 18% of sales, however we remain of the view over the medium term that we will target 14%.

The fourth principle forces important disciplines around making sure that over the longer term we're not borrowing from the future to pay our dividends or undertake capital management initiatives. Rather, we use the free cash flow that's either generated from the business today or our cumulative excess free cash that we have generated in recent years.

On the last principle, we will continue to maintain flexibility for portfolio management.

Our strategic investment meets our organic investment criteria and is expected to deliver a return on investment above our existing ROIC.

Finally, turning to guidance, which takes into account our strategic finance investment.

SLIDE 35 – GUIDANCE

In FY17, we expect to deliver mid to high-single digit income growth and low to mid-single digit EBITDA growth.

We expect to spend capex at approximately 18% of sales.

We expect FY17 free cash flow to be in the range of $3.5bn – $4.0bn.

As is usually the case, our guidance assumes wholesale product price stability from the beginning of the financial year and no impairments to investments, and excludes any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum. The guidance also assumes the nbn rollout is in accordance with the nbn Corporate Plan 2016. Capex to sales guidance excludes externally funded capex.

FY17 guidance also excludes the $246m Ooyala intelligent video subsidiary impairment in FY16; and excludes restructuring costs in FY17 of $300-$500m.

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Page 18

Our FY17 income and EBITDA growth on a reported and guidance basis will be impacted by the wholesale pricing decisions implemented in FY16. This will include a full 12 month impact from MTAS and FAD.

Thank you. I will now ask Peter back on stage to moderate the Q&A.

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Extract from the Telstra Annual Report 2016

Full year results and operations review

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FY16 FY15 Change
Summary fi nancial results $m $m %
Continuing operations
Total revenue 25,911 25,528 1.5
Total income (excluding fi nance income) 27,050 26,112 3.6
Operating expenses 16,600 15,598 6.4
Share of net profi t from joint ventures and associated entities 15 19 (21.1)
EBITDA 10,465 10,533 (0.6)
Depreciation and amortisation 4,155 3,974 4.6
EBIT 6,310 6,559 (3.8)
Net fi nance costs 710 699 1.6
Income tax 1,768 1,746 1.3
Profi t for the year from continuing operations 3,832 4,114 (6.9)
Profi t for the year from discontinued operations 2,017 191 n/m
Profi t for the year from continuing and discontinued operations 5,849 4,305 35.9
Profi t attributable to equity holders of Telstra 5,780 4,231 36.6
Capex [1] 4,045 3,589 12.7
Free cashfl ow from continuing and discontinued operations [2] 5,926 2,619 126.3
Earnings per share from continuing operations (cents) 31.6 33.5 (5.7)
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Capex is defi ned as additions to property, equipment and intangible assets including capital lease additions, excluding expenditure on spectrum, measured on an accrued basis. Excludes externally funded capex.
Includes proceeds from the sale of Autohome of $1,323 million.

n/m = not meaningful

Full year results and operations reviewExtract from the Telstra Annual Report 2016 | Telstra Annual Report 2016

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Telstra Customer Insight Centre, Level 2, 400 George Street Sydney.

Reported results

Following the completion of the sale of a 47.4 per cent stake in online business Autohome on 23 June 2016, the numbers and commentary in the segment, product and expense sections have been prepared on a continuing operations basis and align with the statutory fi nancial statements. That is, they exclude the trading results and sale of Autohome shares. We continue to hold a 6.5 per cent stake in Autohome. The fi nancial position section has been prepared on a continuing and discontinued operations basis (that is, they include the trading results and sale of Autohome shares), unless otherwise noted.

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Results on a guidance basis [1] FY16 FY16 guidance
Total income growth [2] 6.3 per cent Mid-single digit growth
EBITDA growth 2.6 per cent Low-single digit growth
Capex/sales ratio 15.2 per cent ~15 per cent
Free cashfl ow $4.8 billion $4.6 – $5.1 billion
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This guidance assumed wholesale product price stability from the beginning of the fi nancial year and no impairments to investments, and excluded any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum. Capex to sales guidance excluded externally funded capex.

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FY16 FY16 FY16 FY15
Guidance
versus reported Reported Adjustments Guidance Guidance
results [1] results $m $m basis $m basis $m
Total income [2] 27,050 1,243 28,293 26,607
EBITDA 10,465 554 11,019 10,745
Free cashfl ow 5,926 (1,130) 4,796 2,619
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1. Please refer above for details of the guidance adjustments and guidance versus reported results reconciliation on pages 164 and 165 for further information. This reconciliation has been for further information. This reconciliation has been reviewed by our audito r s.eviewed by our auditors.

2. Excludes f i nance income.

On 11 August 2016, the Directors of Telstra resolved to pay a fully franked fi nal dividend of 15.5 cents per share. Shares will trade excluding entitlement to the dividend on 24 August 2016 with payment on 23 September 2016.

212

Extract from the Telstra Annual Report 2016

Segment performance

We present our reportable segments and measure our segment results on the same basis as our internal management reporting structure. Our reportable segments represent the respective business units which offer our main products and services in the market. Further information on each reportable segment can be found in Note 2.1 of the Annual Report.

Segment information from continuing operations

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FY16 FY15 Change
Total external
income $m $m %
Telstra Retail 16,656 16,911 (1.5)
Global Enterprise
6,262 5,618 11.5
and Services
Telstra Wholesale 2,622 2,586 1.4
Telstra Operations 602 424 42.0
All Other 908 573 58.5
Total Telstra
27,050 26,112 3.6
segments
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Total external
income $m $m
Telstra Retail 16,656 16,911
Global Enterprise
6,262 5,618
and Services
Telstra Wholesale 2,622 2,586
Telstra Operations 602 424
All Other 908 573
Total Telstra
27,050 26,112
segments
62% Telstra Retail
23% Global Enterprise and Services
10% Telstra Wholesale
2% Telstra Operations
3% All Other
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Telstra Retail

Telstra Retail income declined by 1.5 per cent to $16,656 million while EBITDA declined by 3.9 per cent to $9,220 million. The decline in EBITDA is largely a result of the decline in fi xed voice margins and the impact of the migration to the nbn[™] network. Telstra Retail comprises our Consumer and Business business units.

Income in our Consumer business unit declined by 1.2 per cent. Excluding the impact of the Mobile Termination Access Service (MTAS) decision, on a like-for-like basis, income grew by 1.0 per cent. The MTAS decision relates to regulatory changes to voice and SMS terminating rates which became effective from 1 January 2016. While there was subscriber growth in mobiles and fi xed data, lower average revenue per user (ARPU) impacted overall revenue growth. An increase in the take up of bundles and nbn[™] plans saw fi xed data revenue grow by 6.2 per cent. The rate of consumer fi xed voice revenue decline was broadly stable at 7.7 per cent. During the year we adjusted mobile data and international roaming rates which impacted revenues in the mobile business. ARPU (excluding the impact of mobile repayment options) decreased as a result, however minimum monthly commitment grew over the period for post-paid handheld.

Pre-paid also experienced lower ARPU’s however there was growth in unique users of 2.3 per cent.

In Telstra Business, income declined by 2.4 per cent with mobile services revenue falling by 5.8 per cent as a result of lower excess data and international roaming. On a like-for-like basis, income declined by 1.0 per cent, excluding the MTAS impact. The Network Applications and Services (NAS) portfolio in Telstra Business, in particular managed network services, cloud and unifi ed communications, continued to see good momentum, increasing by 18.3 per cent.

Global Enterprise and Services (GES)

Income for GES increased by 11.5 per cent to $6,262 million. GES International income grew by 55.5 per cent with contributions resulting from our Pacnet acquisition last fi nancial year. Excluding Pacnet, GES International income increased by 18.2 per cent. GES Domestic income increased by 1.1 per cent due to strong growth in NAS and enterprise mobility, in particular in post-paid and machine to machine (M2M). This growth was partially offset by a revenue decline in Data and IP products. Other acquisitions including Bridge Point and O2 also continue to contribute to growth. GES EBITDA was stable at $2,456 million.

Telstra Wholesale

Telstra Wholesale income grew by 1.4 per cent to $2,622 million. This was largely a result of an increase in Infrastructure Services Agreement ownership receipts which have increased in line with the nbn[™] rollout, offset by price reductions from the ACCC’s fi xed line service Final Access Determination (FAD) which became effective on 1 November 2015. EBITDA contribution increased by 1.4 per cent to $2,426 million.

Telstra Operations

Telstra Operations is primarily a service delivery centre supporting the revenue generating activities of other segments. It also has nbn[™] and property sale revenue. The EBITDA contribution improved by 3.0 per cent with increases in nbn[™] and property sale revenue, partially offset by higher maintenance costs to support nbn[™] related works.

All Other

Certain items of income and expense relating to multiple reportable segments are recorded by our corporate areas and included in the All Other category. This category also includes Telstra Innovation and Strategy (including the Telstra Software Group), International and New Business (including the Telstra Ventures Group and Telstra Health[®] ) and Media & Marketing.

Full year results and operations reviewExtract from the Telstra Annual Report 2016 | Telstra Annual Report 2016

Product performance

Product sales revenue breakdown

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FY16 FY15 Change
Key product
revenue $m $m %
Fixed 7,029 7,188 (2.2)
Mobile 10,441 10,654 (2.0)
Data and IP 3,789 3,417 10.9
NAS 2,763 2,418 14.3
Media 974 931 4.6
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FY16
Key product
revenue $m
Fixed 7,029
Mobile 10,441
Data and IP 3,789
NAS 2,763
Media 974
27% Fixed
40% Mobile
11% NAS
15% Data and IP
4% Media
3% Other
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FY16 FY15 1H16 2H16
EBITDA margins [1] % % % %
Mobile 42 40 39 46
Fixed voice [2] 51 55 54 49
Fixed data [2] 41 41 41 40
Data and IP 62 64 62 62
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The data in this table includes minor adjustments to historic numbers to refl ect changes in product hierarchy.
Margins include nbn™ voice and data products.

We now have 3.4 million fi xed retail data customers, an increase of 235,000 for the year, the highest rate of net adds in over fi ve years. This solid result has been driven by the continued focus on customer retention and momentum from bundling. Our challenger brand Belong[®] also contributed to the subscriber and revenue growth.

Fixed

Fixed revenue declined by 2.2 per cent to $7,029 million with fi xed voice revenue decreasing by 8.2 per cent to $3,437 million. Excluding the adverse impact of the ACCC Final Access Determination (FAD) decision of $64 million, on a like-forlike basis, fi xed revenue declined by 1.3 per cent. The FAD relates to pricing for fi xed services, set by the ACCC, which became effective 1 November 2015.

Our bundled products, including our “best value bundle ever”, launched in March 2016, and the Telstra BizEssentials Bundles[®] for our small business customers are both performing well. The total number of retail customers on a bundle increased by 322,000 and there are now 2.7 million retail customers on a bundled plan, or 83 per cent of the retail fi xed data customer base.

Retail fi xed voice line loss in the year was 271,000, a rate consistent with the prior year, taking total retail fi xed voice customers to 5.7 million. The decline in fi xed voice revenue was partially offset by the growth in fi xed data revenue of 5.6 per cent to $2,513 million as a result of growth in subscribers.

Demand for our nbn[™] services continues. As at 30 June 2016, we have a total of 500,000 nbn[™] connections, made up of 407,000 voice and data bundles, 34,000 data only and 59,000 voice only services. This is an increase of 289,000 over the last year.

Other fi xed revenue increased by 1.5 per cent to $1,079 million with an increase in global connectivity and inter-carrier access services revenue offset by lower customer premise equipment and other fi xed telephony revenue.

The upfront costs of connecting our nbn[™] customers, and increased operational access costs, principally Access Virtual Circuit (AVC) and Connectivity Virtual Circuit (CVC) payments to nbn co, had an impact on our fi xed data and fi xed voice EBITDA margins. The fi xed data EBITDA margin was steady at 41 per cent as these costs were largely offset by the increase in fi xed data revenue. Fixed voice EBITDA margins declined by 4 percentage points to 51 per cent as a result of these costs, in addition to a decline in fi xed voice revenue.

234

Extract from the Telstra Annual Report 2016

Domestic retail customer services (millions)

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----- Start of picture text -----

5.7
6.0
6.2
3.4
3.1
3.0
16.0 16.7 17.2
FY14 FY15 FY16
Fixed voice Fixed data Mobile
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Mobile

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----- Start of picture text -----

Mobile revenue ($b)
10.7 10.4
9.7
FY14 FY15 FY16
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Revenue in our mobile portfolio decreased by 2.0 per cent to $10,441 million for the 2016 fi nancial year. Excluding the impact of the MTAS decision (re-pricing of mobile terminating rates) which became effective from 1 January 2016 of $356 million, on a like-for-like basis, mobile revenue grew by 1.3 per cent.

Retail customer services increased by 560,000, bringing the total number to 17.2 million. We now have 7.5 million post-paid handheld retail customer services, an increase of 169,000. Post-paid handheld revenue was broadly fl at at $5,385 million. The subscriber growth was offset by a reduction in ARPU of 1.6 per cent, from $69.51 to $68.40 (excluding the impact of mobile repayment options). ARPU continues to be impacted by lower excess data charges but we have seen growth in minimum monthly commitments.

Pre-paid unique user growth was strong with 83,000 unique users added during the year. With higher voice and data inclusions, recharge frequency declined and pre-paid handheld ARPU declined by 4.3 per cent to $20.40. As a result, pre-paid handheld revenue declined by 3.5 per cent to $959 million.

While M2M revenue grew by 16.8 per cent to $132 million with strong subscriber growth, mobile broadband revenue declined by 4.7 per cent to $1,230 million. This was a result of pre-paid mobile broadband which experienced lower ARPU and a decline in unique users.

Mobile hardware revenue continues to grow, increasing by 10.1 per cent to $2,076 million as a result of higher average recommended retail prices on high end smartphones.

While mobile churn increased slightly in the second half it still remains at world-leading lows. Mobile EBITDA margin increased by 2 percentage points to 42 per cent.

Data and IP

Data and IP revenue increased by 10.9 per cent to $3,789 million largely as a result of revenue received from our GES International customers following the acquisition of Pacnet. The acquisition has opened up signifi cant opportunities for Telstra, positioning us as a leader in international connectivity and elevating our brand globally as a signifi cant Asia centric operator.

Within Data and IP, other data and calling products, which include wholesale internet and data, inbound calling products and other global products and solutions, increased by 30.1 per cent to $2,017 million. This growth is largely a result of the Pacnet acquisition. IP Access revenue declined by 3.0 per cent to $1,169 million due to increased competitive pressures offsetting the growth in IP customer connections. ISDN revenue declined by 8.9 per cent to $603 million as customers continue to migrate from legacy to next generation products, including unifi ed communications within our NAS portfolio.

EBITDA margins were impacted by yield trends in the IP market and domestic revenue decline, decreasing 2 percentage points to 62 per cent.

Network Applications and Services (NAS)

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----- Start of picture text -----

NAS revenue ($b)
2.0 2.4 2.8
FY14 FY15 FY16
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NAS revenue grew by 14.3 per cent to $2,763 million with strong growth in both our domestic and international segments across all NAS portfolios. As highlighted at the fi rst half 2016 results, the growth in NAS revenue in the second half was slower than the fi rst due to the timing of contract milestones.

Within the NAS portfolio, managed network services revenue grew by 6.4 per cent through the expansion of security services. Revenue growth of 7.9 per cent in unifi ed communications was a result of innovative cloud collaboration and contact centre solutions. Industry solutions revenue growth of 19.0 per cent was led by nbn commercial works and monitoring services acquisitions. Progress at our telkomtelstra joint venture in Indonesia also contributed to revenue growth.

EBITDA margins improved by 3 percentage points through ongoing operational leverage, scalable standardised offerings, and a lower cost global delivery model.

Media

Media product portfolio revenue increased by 4.6 per cent to $974 million. Telstra Media delivers content experiences, to differentiate and add value to our core access products.

Media ‘In the Home’ includes Foxtel** from Telstra, Telstra TV[®] device sales, Foxtel on T-Box[®] , BigPond Movies[®] , Presto^^, and relationships with all free to air providers. Foxtel from Telstra revenue increased by 8.6 per cent to $719 million. We continued our strategy to bundle these products with our core fi xed products with a 20.5 per cent growth in Foxtel from Telstra subscribers. There are now 300,000 Telstra TV devices in market since the launch in October 2015.

Media ‘On the Go’ revenue declined by 11.4 per cent to $70 million. The On the Go business is transitioning from a bespoke standalone suite of content to one that differentiates the mobility portfolio and adds value to customers.

Full year results and operations reviewExtract from the Telstra Annual Report 2016 | Telstra Annual Report 2016

During the year, we renewed our partnerships with both the AFL and NRL for 2016 and beyond. In May 2016, we also announced a new fi ve-year partnership with Netball Australia, giving all fans the ability to watch every game live on their mobile from 2017.

Cable revenue declined by 6.8 per cent to $110 million due to a reduction in the contracted cable access rate starting from January 2016.

Other

Other sales revenue includes revenue related to nbn[™] access to our infrastructure. It also includes revenue from Telstra Health and Telstra Software. Other income includes gains and losses on asset and investment sales (including assets transferred under the nbn[™] Defi nitive Agreements), income from government grants under the Telstra Universal Service Obligation Performance Agreement (TUSOPA), income from nbn[™] disconnection fees (Per Subscriber Address Amount (PSAA)), subsidies and other miscellaneous items. The increase in other income of 95.0 per cent during the period is largely a result of an increase in one-off PSAA and Infrastructure Services Agreement receipts in line with the progress of the nbn[™] rollout.

Expense performance

Operating expenses

Total operating expenses increased by 6.4 per cent to $16,600 million. This is a result of an increase in our core sales costs of 5.1 per cent and new business costs of 66.7 per cent. Core sales costs are direct costs associated with revenue and customer growth. The increase in new business costs supported growth in the Telstra Health and Telstra Software Group as well as Telstra Ventures. Growth in these costs is an investment decision and we are continuing to invest in our new businesses to allow them to grow. Core fi xed costs (excluding signifi cant transactions and events) declined by 0.6 per cent. Signifi cant transactions and events that had an impact on fi xed costs included increased nbn[™] commercial works and Defi nitive Agreement costs, and increased NAS labour costs on large, new contracts.

The following commentary relates to movements in our reported expenses of labour, goods and services purchased, and other expenses.

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FY16 FY15 Change
Operating expenses $m $m %
Labour 5,041 4,782 5.4
Goods and services purchased 7,247 6,845 5.9
Other expenses 4,312 3,971 8.6
Total operating expenses 16,600 15,598 6.4
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Network payments decreased by 4.3 per cent or $75 million to $1,650 million largely a result of regulatory changes to mobile terminating rates as part of the ACCC’s fi nal decision in the Mobile Terminating Access Service FAD process, and lower mobile roaming charges. These were partially offset by increased nbn[™] access payments as we move customers to the nbn[™] network and higher offshore network payments within our GES business.

Labour

Total labour expenses increased by 5.4 per cent or $259 million to $5,041 million. Total full time staff equivalents (FTE) decreased by 197 to 33,482. The movement in FTE includes the acquisition of Readify completed on 30 June 2016 (193 FTE). There were also FTE increases in Telstra Health (204 FTE) and Telstra Business (37 FTE). Offsetting these increases were reductions in FTE in the core business, in line with restructuring activity conducted throughout the year.

Other goods and services increased by 15.6 per cent or $323 million to $2,393 million. Within other goods and services purchased, managed services cost of sales increased by $140 million. These are costs to connect, migrate, activate and maintain services of Telstra supplied NAS equipment and increased during the period to support domestic NAS revenue growth within our GES and Telstra Business segments. There were also increases in usage commissions ($52 million), service fees ($93 million), in line with the increase in Foxtel from Telstra subscribers, and dealer performance commissions ($17 million).

Salary and associated costs increased by 4.0 per cent or $141 million to $3,690 million, largely a result of increased costs in relation to our new business growth of $98 million. This refl ects a full 12 months of ownership of acquisitions, in particular Pacnet, which was acquired in April 2015. Salary and associated costs also incorporated a 0.5 per cent increase in fi xed remuneration for all employees (except the Telstra Executive Team) to enable superannuation contributions to be increased from 9.5 per cent to 10 per cent without a reduction in take-home pay.

Labour substitution costs increased by 8.1 per cent or $66 million to $882 million. This increase was largely a result of increased outsourcing of fi eld technicians and the establishment of global operations to support the expansion of our NAS business.

Other expenses

Total other expenses increased by 8.6 per cent or $341 million to $4,312 million as a result of increased accommodation costs and impairment expenses, partially offset by decreases in promotion and advertising.

Accommodation costs increased by $85 million, largely a result of new business and M&A activity in our GES and Health businesses. Promotion and advertising costs decreased by $13 million as more retail campaigns were undertaken in the previous period. Impairment expenses increased by $253 million as a result of the impairment of goodwill in the Ooyala Holdings Group cash generating unit of $246 million.

Redundancy costs increased by 46.9 per cent or $53 million to $166 million as a result of an increased focus on accelerating restructuring activity throughout the year.

Goods and services purchased

Goods and services purchased increased by 5.9 per cent or $402 million to $7,247 million. Cost of goods sold (COGS) (which includes directly variable costs, including mobile handsets, tablets, dongles and broadband modems) increased by 5.0 per cent or $154 million to $3,204 million impacted by increased mobile handset unit costs (largely a result of a weaker Australian dollar) and increased NAS COGS.

256

Extract from the Telstra Annual Report 2016

Foreign currency impacts

For the purposes of reporting our consolidated results, the translation of foreign operations denominated in foreign currency to Australian dollars increased our expenses by $184 million on the prior period, across labour, goods and services purchased, and other expenses. This foreign exchange impact has been offset by a benefi t to sales revenue, resulting in a favourable EBITDA contribution of $20 million.

Net fi nance costs increased by 1.6 per cent or $11 million to $710 million primarily due to lower fi nance income of $61 million offset by a reduction in fi nance costs of $50 million.

The reduction in fi nance income of $61 million was due in part to a reduction in interest earned on cash and liquid investments from holding lower average cash balances compared to the prior period. We also recorded a $42 million accounting adjustment to recognise a reduction in interest rate applied to our Foxtel loan.

Gross borrowing costs increased by $9 million as a result of higher average gross debt largely offset by the refi nancing of debt at lower prevailing interest rates. Average physical debt was $15.9 billion (2015: $14.9 billion). This increase refl ects in part the issuance of term debt during the period of $2.0 billion ahead of maturities occurring in FY17.

Our average borrowing costs on gross debt for the period was 5.6 per cent compared to 5.8 per cent in fi nancial year 2015. This refl ects refi nancing at rates below our current cost of funds and a reduction in short term market rates impacting our variable rate debt. We will continue to see the favourable impact of refi nancing as debt with higher cost of funds mature.

We continue to see the benefi t of the early adoption of AASB 9 (2013) in relation to our hedged borrowings portfolio with favourable re-measurements period on period of $49 million. This is driven both by accounting adjustments resulting from a transition to the new methodology as well as residual volatility associated with market movements remaining low as a result of deferral of hedging costs in equity.

Capitalised interest increased by $9 million compared to the prior period due to lower average interest rates, which are derived from our cost of borrowing, being more than offset by higher capital expenditure.

==> picture [331 x 331] intentionally omitted <==

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FY16 FY15 Change
Summary Statement
of Cash Flows $m $m %
Net cash provided by operating
8,133 8,311 (2.1)
activities
Total capital expenditure
(4,391) (6,206) (29.2)
(including investments)
Sale of business and shares
in controlled entities 1,340 1 n/m
(net of cash disposed)
Other investing cash fl ows 844 513 64.5
Net cash used in investing activities (2,207) (5,692) (61.2)
Free cashfl ow 5,926 2,619 126.3
Net cash used in fi nancing activities (3,777) (6,882) (45.1)
Net increase/(decrease) in cash
2,149 (4,263) 150.4
and cash equivalents
Cash and cash equivalents at the
1,396 5,527 (74.7)
beginning of the year
Effects of exchange rate changes
5 132 (96.2)
on cash and cash equivalents
Cash and cash equivalents at the
3,550 1,396 154.3
end of the year
----- End of picture text -----

Financial position

	Increase in debt Drawn bank loans and facilities1 Capital markets debt issuance	$m 300 1,631
	Net short term commercial paper issuances	514
	Other loans2	39
	Finance lease additions Total	144 2,628

Our operating capital expenditure for the year was 15.2 per cent of sales revenue or $4,045 million, in line with our fi nancial year 2016 guidance of around 15 per cent of sales. Compared to the previous year spend of $3,589 million, we are spending much of the increased capital expenditure on mobile, in particular to extend our 4G and 4GX[™] services to deliver more square kilometres of coverage, more reliable voice and data, fewer dropouts and faster download speeds.

Reported free cashfl ow was $5,926 million, representing an increase of $3,307 million on the prior period. On a guidance basis, free cashfl ow was $4,796 million. Guidance has been adjusted in the current period for free cashfl ow associated with the sale of Autohome ($1,323 million) and mergers and acquisitions (M&A) activity of $126 million.

During the period we also drew down, and subsequently repaid, a further $1,850 million under our bank facilities. This is shown on a gross basis in our Statement of Cash Flows.
Includes loans from associated entities of $35 million.

During the year we raised $1,631 million of new capital markets fi nancing through two new debt issuances, including a $498 million ($500 million face value) domestic bond in September 2015, and a ten year €750 million Euro bond (Australian dollar equivalent $1,133 million) in April 2016.

Funding and net debt

Our gross debt position as at 30 June 2016 was $16,009 million, comprising borrowings of $17,302 million and net derivative assets of $1,293 million. The increase of $1,047 million compared to 30 June 2015 refl ects $1,581 million debt maturities offset by a $2,628 million increase in debt. The increase in debt can be seen in the following table.

Full year results and operations reviewExtract from the Telstra Annual Report 2016 | Telstra Annual Report 2016

Debt maturities included $1,415 million of term debt, $36 million loans from associated entities and $101 million fi nance lease repayments. The remainder of $29 million is due to non-cash revaluation impacts such as unrealised movements on our derivatives.

Net debt decreased by $1,107 million to $12,459 million as a result of an increase in cash and cash equivalents of $2,154 million offsetting the increase in gross debt. This is driven by reported free cashfl ow of $5.9 billion, more than offsetting outfl ows from interest, dividends, and other fi nancing fl ows of approximately $4.7 billion, as well as non-cash movements such as foreign exchange of $0.1 billion.

At 30 June 2016, liquidity was $3,550 million which includes receipt of proceeds from our sale of 47.4 per cent of total issued shares in Autohome. This liquidity will be used to fund our capital management program in FY17.

Financial settings FY16 Actual	Comfort zones
Debt servicing1 1.2x 1.3 – 1.8x
Gearing2 43.9% 50% to 70%
Interest cover3 13.0x >7.0x

Debt servicing ratio equals net debt to EBITDA.
Gearing ratio equals net debt to net debt plus total equity.
Interest cover equals EBITDA to net interest.

We remain at the conservative end of our comfort zones for our credit metrics. Our gearing ratio is 43.9 per cent following the sale of our Autohome stake, down from 48.3 per cent at 30 June 2015. Debt servicing (net debt/EBITDA) was 1.2 times. We also monitor interest cover, which is a measure of the cash fl ows we generate compared with the net interest cost of servicing our borrowings. Interest cover was 13.0 times. Our comfort zone for interest cover is in excess of 7.0 times.

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30 June 30 June Change
2016 2015
Summary Statement
of Financial Position $m $m %
Current assets 9,340 6,970 34.0
Non current assets 33,946 33,475 1.4
Total assets 43,286 40,445 7.0
Current liabilities 9,188 8,129 13.0
Non current liabilities 18,191 17,806 2.2
Total liabilities 27,379 25,935 5.6
Net assets 15,907 14,510 9.6
Total equity 15,907 14,510 9.6
Return on average assets (%) 16.2 18.2 (2.0)pp
Return on average equity (%) 25.7 29.5 (3.8)pp
----- End of picture text -----

Current liabilities increased by 13.0 per cent or $1,059 million to $9,188 million. Current borrowings increased by $1,159 million primarily due to a reclassifi cation of debt due to mature within the next 12 months, including a Euro bond of face value €1 billion more than offsetting maturities during the year. Short term commercial paper, which is held principally to support working capital and liquidity requirements, also increased. The movement in current borrowings was partially offset by a reduction in current tax payables of $115 million due to an increase in PAYG instalments paid during the year.

Statement of Financial Position

Our balance sheet remains in a strong position with net assets of $15,907 million.

Current assets increased by 34.0 per cent or $2,370 million to $9,340 million largely a result of an increase in cash and cash equivalents of $2,154 million. This increase is predominantly due to the gross cash proceeds of approximately $2.1 billion from the sale of 47.4 per cent of the total issued shares in Autohome.

Non current assets increased by 1.4 per cent or $471 million to $33,946 million. An increase of $390 million in derivative fi nancial assets was driven by foreign currency movements and other valuation impacts arising from measuring to fair value. As our derivatives are used to hedge foreign currency and interest rate exposures, the movement in derivative position is largely offset by corresponding movements in borrowings and reserves (equity). Investments – other also increased by $257 million largely a result of the recognition of our residual 6.5 per cent interest in Autohome. Autohome was previously recorded as a controlled entity. These movements were offset by a decrease in intangible assets, mainly due to the Ooyala impairment of $246 million, and a reduction in defi ned benefi t asset of $281 million due to an actuarial loss on our defi ned benefi t plan assets with the discount rate falling from 4.3 per cent at 30 June 2015 to 3.3 per cent at 30 June 2016.

Non current liabilities increased by 2.2 per cent or $385 million to $18,191 million. Borrowings increased by $509 million primarily as a result of long term debt issuance, offset by the reclassifi cation of debt due to mature within 12 months to current borrowings. Also driving the increase were unfavourable exchange rate movements impacting our offshore borrowings. As we hedge all foreign currency risk arising from offshore borrowings, this movement is fully offset by the increase in our net derivative asset position.

The decrease in non current derivative fi nancial liabilities of $248 million was driven by foreign currency movements and other valuation impacts arising from measuring to fair value.

278

Reference tablesExtract from the Telstra Annual Report 2016 | Telstra Annual Report 2016

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Guidance versus reported results

This schedule details the adjustments made to the reported results for the current year to refl ect the performance of the business on the basis which we provided guidance to the market.

Our guidance assumed wholesale product price stability from the beginning of the fi nancial year and no impairments to investments, and excluded any proceeds on the sale of businesses, mergers and acquisitions and purchase of spectrum. Capex to sales guidance excluded externally funded capex.

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Reported Adjustments June 2016 June 2015 Guidance Basis
Full year ended 30 June M&A: M&A: JVs/ M&A: Other M&A: Fixed MTAS DTCS Ooyala Spectrum [6] Autohome [7] Autohome [7] Autohome [7] Full year ended 30 June
Controlled Associates [1] Investments [1] Disposals Services FAD [3] FAD [4] Impairment [5]
Entities & excluding FAD [2]
2016 2015 Growth 2016 2015 Growth
Business [i] Autohome [1]
$m $m % $m $m $m $m $m $m $m $m $m $m $m $m $m $m %
Sales revenue 25,834 25,350 1.9% (14) 0 0 0 64 356 4 0 0 0 827 495 27,071 25,845 4.7%
Total revenue 25,911 25,528 1.5% (14) 0 0 0 64 356 4 0 0 0 827 495 27,148 26,023 4.3%
Total income (excl. fi nance income) 27,050 26,112 3.6% (14) 0 0 0 64 356 4 0 0 (1,788) 2,621 495 28,293 26,607 6.3%
Labour 5,041 4,782 5.4% (14) 0 0 0 0 0 0 0 0 0 259 139 5,286 4,921 7.4%
Goods and services purchased 7,247 6,845 5.9% (1) 0 0 0 0 362 0 0 0 0 116 2 7,724 6,847 12.8%
Other expenses 4,312 3,971 8.6% (1) 0 0 0 0 0 0 (246) 0 0 214 142 4,279 4,113 4.0%
Operating expenses 16,600 15,598 6.4% (16) 0 0 0 0 362 0 (246) 0 0 589 283 17,289 15,881 8.9%
Share of net profi t/(loss) from joint ventures 15 19 (21.1%) 0 0 0 0 0 0 0 0 0 0 0 0 15 19 (21.1%)
and associated entities
EBITDA 10,465 10,533 (0.6%) 2 0 0 0 64 (6) 4 246 0 (1,788) 2,032 212 11,019 10,745 2.6%
Depreciation and amortisation 4,155 3,974 4.6% (1) 0 0 0 0 0 0 0 0 0 10 9 4,164 3,983 4.5%
EBIT 6,310 6,559 (3.8%) 3 0 0 0 64 (6) 4 246 0 (1,788) 2,022 203 6,855 6,762 1.4%
Net fi nance costs 710 699 1.6% 0 0 0 0 0 0 0 0 0 0 (15) (10) 695 689 0.9%
Profi t before income tax expense 5,600 5,860 (4.4%) 3 0 0 0 64 (6) 4 246 0 (1,788) 2,037 213 6,160 6,073 1.4%
Income tax expense 1,768 1,746 1.3% 1 0 0 0 19 (2) 1 0 0 12 31 41 1,830 1,787 2.4%
Profi t for the year 3,832 4,114 (6.9%) 2 0 0 0 45 (4) 3 246 0 (1,800) 2,006 172 4,330 4,286 1.0%
Profi t/(loss) for the year from 2,017 191 956.0% 0 0 0 0 0 0 0 0 0 0 (2,006) (172) 11 19 (42.1%)
discontinued operations
Profi t for the year from continuing 5,849 4,305 35.9% 2 0 0 0 45 (4) 3 246 0 (1,800) 0 0 4,341 4,305 0.8%
and discontinued operations
Attributable to:
Equity holders of Telstra Entity 5,780 4,231 36.6% 2 0 0 0 45 (4) 3 240 0 (1,800) 0 0 4,266 4,231 0.8%
Non controlling interests 69 74 (6.8%) 0 0 0 0 0 0 0 6 0 0 0 0 75 74 1.4%
Free cashfl ow 5,926 2,619 126.3% 94 38 67 (73) 64 (6) 4 0 5 (1,323) 0 0 4,796 2,619 83.1%
----- End of picture text -----

This table has been subject to review by our auditors.

Note:

There are a number of factors that have impacted our results this year. In the table above, we have adjusted the results for:

1. Mergers & Acquisitions:

Adjustments relating to acquisition of controlled entities and businesses. This includes the acquisition of the controlled entities, Readify Limited, The Silver Lining Consulting Group Pty Ltd (Kloud Solutions (National) Pty Ltd and its controlled entities), Health IQ Pty Ltd and the acquisition of the EOS Technologies business. Joint Ventures/Associates includes the acquisition by Autohome of associates Shanghai You Che You Jia Financial Leasing Co Ltd and Hunan Mango Autohome Automobile Sales Co Ltd. During the year we disposed of our controlled entity Pacnet Internet (Thailand) Ltd, and also disposed of our shareholdings in other investments including Elemental Technologies Inc, Elastica Inc, Box Inc and Nexmo Inc. We also disposed of our ISP businesses held by the controlled entities Pacnet Internet (Singapore) Ltd and Pacnet internet (HK) Ltd.

Fixed Services Final Access Determination (FAD) adjustments:

Adjustments for ACCC FAD pricing for fi xed services which became effective on 1 November 2015.

3. Mobile Terminating Access Service Final Access Determination (MTAS FAD) adjustments:

Adjustments for the re-pricing of mobile terminating rates, with Voice termination from 3.60 cents to 1.7 cents per minute and SMS termination from 7.4 cents to 0.03 cents per SMS which became effective from 1 January 2016.

4. Domestic Transmission Capacity Service adjustments:

Adjustments for ACCC FAD pricing for Transmission Capacity Service which became effective on 21 April 2016.

5. Ooyala impairment adjustments:

Adjustments relating to an impairment of goodwill of $246m.

6. Spectrum adjustments:

Adjustments relating to the impact on Free Cashfl ow associated with our Spectrum purchases and renewals for the year ($5m for Spectrum licences in the 3.4GHz band).

7. Autohome is classifi ed as discontinued operation adjustments:

The Autohome Group is disclosed as a discontinued operation for the years ended 30 June 2016 and 30 June 2015. The sale was completed on 23 June 2016. Autohome trading results before its disposal have been included for guidance. Adjustments relating to the impact of $1,788m Autohome profi t on sale and Free Cashfl ow associated with the sale ($1,323m) have been made to exclude these from guidance.

164

1659

Results of operations

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Results of operations
	2016 2015 Change Change $m $m $m % Year ended 30 June
Continuing Operations Sales revenue Other revenue(i) Total revenue Other income(ii) Total income (excl. finance income) Labour Goods and services purchased Other expenses Operating expenses Share of net profit from joint ventures and associated entities Earnings before interest, income tax expense, depreciation and amortisation (EBITDA) Depreciation and amortisation Earnings before interest and income tax expense (EBIT) Net finance costs Profit before income tax expense Income tax expense Profit for the year from continuing operations Profit for the year from discontinued operations Profit for the year from continuing and discontinued operations Attributable to: Equity holders of Telstra Entity Non-controlling interests Effective tax rate on continuing operations EBITDA margin on sales revenue EBIT margin on sales revenue Basic earnings per share from continuing operations(iii) Diluted earnings per share from continuing operations(iii) Basic earnings per share(iii) Diluted earnings per share(iii)	25,834 25,350 484 1.9 77 178 (101) (56.7) 25,911 25,528 383 1.5 1,139 584 555 95.0 27,050 26,112 938 3.6 5,041 4,782 259 5.4 7,247 6,845 402 5.9 4,312 3,971 341 8.6 16,600 15,598 1,002 6.4 15 19 (4) (21.1) 10,465 10,533 (68) (0.6) 4,155 3,974 181 4.6 6,310 6,559 (249) (3.8) 710 699 11 1.6 5,600 5,860 (260) (4.4) 1,768 1,746 22 1.3 3,832 4,114 (282) (6.9) 2,017 191 1,826 n/m 5,849 4,305 1,544 35.9 5,780 4,231 1,549 36.6 69 74 (5) (6.8) 5,849 4,305 1,544 35.9 31.6% 29.8% 1.8 pp 40.5% 41.6% (1.0) pp 24.4% 25.9% (1.4) pp cents cents Change cents Change % 31.6 33.5 (1.9) (5.7) 31.5 33.5 (2.0) (6.0) 47.4 34.5 12.9 37.4 47.3 34.5 12.8 37.1

Results of operations

2016
2015
Change
Change
$m
$m
$m
%
Year ended 30 June

Continuing Operations
Sales revenue
Other revenue(i)
Total revenue
Other income(ii)
Total income (excl. finance income)
Labour
Goods and services purchased
Other expenses
Operating expenses
Share of net profit from joint ventures and associated entities
Earnings before interest, income tax expense, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Earnings before interest and income tax expense (EBIT)
Net finance costs
Profit before income tax expense
Income tax expense
Profit for the year from continuing operations
Profit for the year from discontinued operations
Profit for the year from continuing and discontinued operations
Attributable to:
Equity holders of Telstra Entity
Non-controlling interests
Effective tax rate on continuing operations
EBITDA margin on sales revenue
EBIT margin on sales revenue
Basic earnings per share from continuing operations(iii)
Diluted earnings per share from continuing operations(iii)
Basic earnings per share(iii)
Diluted earnings per share(iii)

25,834
25,350
484
1.9
77
178
(101)
(56.7)
25,911
25,528
383
1.5
1,139
584
555
95.0
27,050
26,112
938
3.6
5,041
4,782
259
5.4
7,247
6,845
402
5.9
4,312
3,971
341
8.6
16,600
15,598
1,002
6.4
15
19
(4)
(21.1)
10,465
10,533
(68)
(0.6)
4,155
3,974
181
4.6
6,310
6,559
(249)
(3.8)
710
699
11
1.6
5,600
5,860
(260)
(4.4)
1,768
1,746
22
1.3
3,832
4,114
(282)
(6.9)
2,017
191
1,826
n/m
5,849
4,305
1,544
35.9
5,780
4,231
1,549
36.6
69
74
(5)
(6.8)
5,849
4,305
1,544
35.9
31.6%
29.8%
1.8 pp
40.5%
41.6%
(1.0) pp
24.4%
25.9%
(1.4) pp
cents
cents
Change
cents
Change
%
31.6
33.5
(1.9)
(5.7)
31.5
33.5
(2.0)
(6.0)
47.4
34.5
12.9
37.4
47.3
34.5
12.8
37.1

(i) Other revenue primarily consists of distributions received from Foxtel (30 June 2016: $37m; 30 June 2015: $125m) and rental income.

(ii) Other income includes gains and losses on asset and investment sales (including assets transferred under the nbn Definitive Agreements), income from government grants under the Telstra Universal Service Obligation Performance Agreement, income from nbn disconnection fees, subsidies and other miscellaneous items.

(iii) Basic and diluted earnings per share are impacted by the effect of shares held in trust by Telstra Growthshare Trust (Growthshare) and by the Telstra Employee Share Ownership Plan Trust II (TESOP99).

n/m = not meaningful

==> picture [22 x 16] intentionally omitted <==

Revenue

Revenue

Continuing Operations

2016
2015
Change
Change
$m
$m
$m
%
Year ended 30 June

Fixed products
Fixed voice
Fixed data
Other fixed revenue(i)
Total fixed revenue
Mobiles
Postpaid handheld
Prepaid handheld
Mobile broadband
Machine to Machine (M2M)
Satellite
Mobile interconnection
Mobile services revenue - wholesale resale
Total mobile services revenue
Mobiles hardware
Total mobile revenue
Data & IP
ISDN products
IP Access
Other data and calling products
Total Data & IP
Network applications and services
Media
Foxtel from Telstra
IPTV
Mobility and other content
Cable
Total media
Other sales revenue(ii)
Sales revenue
Other revenue(iii)
Total revenue
Other income(iv)
Total income

3,437
3,746
(309)
(8.2)
2,513
2,379
134
5.6
1,079
1,063
16
1.5
7,029
7,188
(159)
(2.2)
5,385
5,389
(4)
(0.1)
959
994
(35)
(3.5)
1,230
1,290
(60)
(4.7)
132
113
19
16.8
15
16
(1)
(6.3)
551
849
(298)
(35.1)
93
117
(24)
(20.5)
8,365
8,768
(403)
(4.6)
2,076
1,886
190
10.1
10,441
10,654
(213)
(2.0)
603
662
(59)
(8.9)
1,169
1,205
(36)
(3.0)
2,017
1,550
467
30.1
3,789
3,417
372
10.9
2,763
2,418
345
14.3
719
662
57
8.6
75
72
3
4.2
70
79
(9)
(11.4)
110
118
(8)
(6.8)
974
931
43
4.6
838
742
96
12.9
25,834
25,350
484
1.9
77
178
(101)
(56.7)
25,911
25,528
383
1.5
1,139
584
555
95.0
27,050
26,112
938
3.6

(i) Other fixed revenue includes intercarrier services, payphones, customer premises equipment and narrowband.

(ii) Other sales revenue primarily includes revenue related to nbn access to our infrastructure and miscellaneous revenue. It also includes revenue from Telstra Health and Telstra Software.

(iii) Other revenue primarily consists of distributions received from Foxtel (30 June 2016: $37m; 30 June 2015: $125m) and rental income.

(iv) Other income includes gains and losses on asset and investment sales (including assets transferred under the nbn Definitive Agreements), income from government grants under the Telstra Universal Service Obligation Performance Agreement, income from nbn disconnection fees, subsidies and other miscellaneous items.

Expenses

==> picture [23 x 17] intentionally omitted <==

Expenses
Continuing Operations	2016 2015 Change Change $m $m $m % Year ended 30 June
Salary and associated costs Other labour expenses Labour substitution Redundancy Total labour Cost of goods sold Network payments Other Total goods and services purchased Service contracts and other agreements Impairment expenses (incl bad and doubtful debts) Other Total other expenses Total operating expenses Depreciation Amortisation Total depreciation and amortisation Net Finance Costs	3,690 3,549 141 4.0 303 304 (1) (0.3) 882 816 66 8.1 166 113 53 46.9 5,041 4,782 259 5.4 3,204 3,050 154 5.0 1,650 1,725 (75) (4.3) 2,393 2,070 323 15.6 7,247 6,845 402 5.9 1,549 1,553 (4) (0.3) 482 229 253 110.5 2,281 2,189 92 4.2 4,312 3,971 341 8.6 16,600 15,598 1,002 6.4 2,957 2,915 42 1.4 1,198 1,059 139 13.1 4,155 3,974 181 4.6
	Year ended 30 June
	2016 2015 Change Change
	$m $m $m %
Finance Income Finance Costs Net Finance Costs	86 147 (61) (41.5) 796 846 (50) (5.9) 710 699 11 1.6

Statement of cash flows

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Statement of cash flows
	2016 2015 Change Change $m $m $m % Year ended 30 June
Cash flows from operating activities Receipts from customers (inclusive of goods and services tax (GST)) Payments to suppliers and employees (inclusive of GST) Government grants received Net placement of deposits that are not part of cash equivalents Net cash generated by operations Income taxes paid Net cash provided by operating activities Cash flows from investing activities Payments for property, plant and equipment Payments for intangible assets Capital expenditure (before investments) Payments for business and shares in controlled entities (net of cash acquired) Payments for joint ventures and associated entities Payments for other investments Total capital expenditure (including investments) Proceeds from sale of property, plant and equipment Proceeds from sale of business and shares in controlled entities (net of cash disposed) Proceeds from sale of other investments Distributions received from joint ventures and associated entities Interest received Other Net cash used in investing activities Operating cash flows less investing cash flows Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Repayment of finance lease principal amounts Share buy-back Purchase of shares for employee share plans Proceeds from sale of controlled entity shares Finance costs paid Dividends paid to equity holders of Telstra Entity Other Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the year	31,163 29,521 1,642 5.6 (21,179) (19,621) (1,558) 7.9 182 166 16 9.6 (173) - (173) n/m 9,993 10,066 (73) (0.7) (1,860) (1,755) (105) 6.0 8,133 8,311 (178) (2.1) (3,051) (2,845) (206) 7.2 (1,143) (2,257) 1,114 (49.4) (4,194) (5,102) 908 (17.8) (92) (986) 894 (90.7) (38) (48) 10 (20.8) (67) (70) 3 (4.3) (4,391) (6,206) 1,815 (29.2) 470 94 376 n/m 1,340 1 1,339 n/m 56 3 53 n/m 82 184 (102) (55.4) 131 167 (36) (21.6) 105 65 40 61.5 (2,207) (5,692) 3,485 (61.2) 5,926 2,619 3,307 126.3 4,987 1,793 3,194 178.1 (3,954) (3,413) (541) 15.9 (101) (47) (54) 114.9 - (1,004) 1,004 n/m (68) (54) (14) 25.9 - 333 (333) n/m (860) (916) 56 (6.1) (3,787) (3,699) (88) 2.4 6 125 (119) (95.2) (3,777) (6,882) 3,105 (45.1) 2,149 (4,263) 6,412 150.4 1,396 5,527 (4,131) (74.7) 5 132 (127) (96.2) 3,550 1,396 2,154 154.3

Statement of cash flows

2016
2015
Change
Change
$m
$m
$m
%
Year ended 30 June

Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax (GST))
Payments to suppliers and employees (inclusive of GST)
Government grants received
Net placement of deposits that are not part of cash equivalents
Net cash generated by operations
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Capital expenditure (before investments)
Payments for business and shares in controlled entities (net of cash acquired)
Payments for joint ventures and associated entities
Payments for other investments
Total capital expenditure (including investments)
Proceeds from sale of property, plant and equipment
Proceeds from sale of business and shares in controlled entities (net of cash disposed)
Proceeds from sale of other investments
Distributions received from joint ventures and associated entities
Interest received
Other
Net cash used in investing activities
Operating cash flows less investing cash flows
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of finance lease principal amounts
Share buy-back
Purchase of shares for employee share plans
Proceeds from sale of controlled entity shares
Finance costs paid
Dividends paid to equity holders of Telstra Entity
Other
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year

31,163
29,521
1,642
5.6
(21,179)
(19,621)
(1,558)
7.9
182
166
16
9.6
(173)
-
(173)
n/m
9,993
10,066
(73)
(0.7)
(1,860)
(1,755)
(105)
6.0
8,133
8,311
(178)
(2.1)
(3,051)
(2,845)
(206)
7.2
(1,143)
(2,257)
1,114
(49.4)
(4,194)
(5,102)
908
(17.8)
(92)
(986)
894
(90.7)
(38)
(48)
10
(20.8)
(67)
(70)
3
(4.3)
(4,391)
(6,206)
1,815
(29.2)
470
94
376
n/m
1,340
1
1,339
n/m
56
3
53
n/m
82
184
(102)
(55.4)
131
167
(36)
(21.6)
105
65
40
61.5
(2,207)
(5,692)
3,485
(61.2)
5,926
2,619
3,307
126.3
4,987
1,793
3,194
178.1
(3,954)
(3,413)
(541)
15.9
(101)
(47)
(54)
114.9
-
(1,004)
1,004
n/m
(68)
(54)
(14)
25.9
-
333
(333)
n/m
(860)
(916)
56
(6.1)
(3,787)
(3,699)
(88)
2.4
6
125
(119)
(95.2)
(3,777)
(6,882)
3,105
(45.1)
2,149
(4,263)
6,412
150.4
1,396
5,527
(4,131)
(74.7)
5
132
(127)
(96.2)
3,550
1,396
2,154
154.3

Statement of financial position

==> picture [24 x 18] intentionally omitted <==

Statement of financialposition
	30 Jun 1630 Jun 15 Change Change $m $m $m % As at
Current assets Cash and cash equivalents Trade and other receivables Inventories Derivative financial assets Current tax receivables Prepayments Total current assets Non current assets Trade and other receivables Inventories Investments - accounted for using the equity method Investments - other Property, plant and equipment Intangible assets Derivative financial assets Deferred tax assets Defined benefit assets Total non current assets Total assets Current liabilities Trade and other payables Employee benefits Other provisions Borrowings Derivative financial liabilities Current tax payables Revenue received in advance Total current liabilities Non current liabilities Other payables Employee benefits Other provisions Borrowings Derivative financial liabilities Deferred tax liabilities Defined benefit liability Revenue received in advance Total non current liabilities Total liabilities Net assets Equity Share capital Reserves Retained Profits Equity available to Telstra Entity shareholders Non-controlling interests Total equity Gross debt Net debt EBITDA interest cover (times)(i) Net debt to EBITDA ROA - Return on average assets(ii) ROE - Return on average equity(ii) ROI - Return on average investment(ii) ROIC - Return on invested capital(ii) Gearing ratio (net debt to capitalisation)(ii)	3,550 1,396 2,154 154.3 4,737 4,721 16 0.3 557 491 66 13.4 62 7 55 n/m 8 9 (1) (11.1) 426 346 80 23.1 9,340 6,970 2,370 34.0 1,293 1,171 122 10.4 29 32 (3) (9.4) 171 201 (30) (14.9) 394 137 257 187.6 20,581 20,450 131 0.6 9,229 9,332 (103) (1.1) 2,180 1,790 390 21.8 54 66 (12) (18.2) 15 296 (281) (94.9) 33,946 33,475 471 1.4 43,286 40,445 2,841 7.0 3,948 4,080 (132) (3.2) 913 844 69 8.2 92 126 (34) (27.0) 2,655 1,496 1,159 77.5 286 214 72 33.6 176 291 (115) (39.5) 1,118 1,078 40 3.7 9,188 8,129 1,059 13.0 66 74 (8) (10.8) 169 147 22 15.0 127 137 (10) (7.3) 14,647 14,138 509 3.6 663 911 (248) (27.2) 1,493 1,558 (65) (4.2) 4 4 - 0.0 1,022 837 185 22.1 18,191 17,806 385 2.2 27,379 25,935 1,444 5.6 15,907 14,510 1,397 9.6 5,167 5,198 (31) (0.6) 62 372 (310) (83.3) 10,642 8,533 2,109 24.7 15,871 14,103 1,768 12.5 36 407 (371) (91.2) 15,907 14,510 1,397 9.6 16,009 14,962 1,047 7.0 12,459 13,566 (1,107) (8.2) 13.0 14.4 (1.4) (9.7) 1.2 1.3 (0.1) (7.7) 16.2% 18.2% (2.0) pp 25.7% 29.5% (3.8) pp 22.4% 25.0% (2.6) pp 13.6% 15.7% (2.1) pp 43.9% 48.3% (4.4) pp

Statement of financialposition

30 Jun 1630 Jun 15
Change
Change
$m
$m
$m
%
As at

Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial assets
Current tax receivables
Prepayments
Total current assets
Non current assets
Trade and other receivables
Inventories
Investments - accounted for using the equity method
Investments - other
Property, plant and equipment
Intangible assets
Derivative financial assets
Deferred tax assets
Defined benefit assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Other provisions
Borrowings
Derivative financial liabilities
Current tax payables
Revenue received in advance
Total current liabilities
Non current liabilities
Other payables
Employee benefits
Other provisions
Borrowings
Derivative financial liabilities
Deferred tax liabilities
Defined benefit liability
Revenue received in advance
Total non current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained Profits
Equity available to Telstra Entity shareholders
Non-controlling interests
Total equity
Gross debt
Net debt
EBITDA interest cover (times)(i)
Net debt to EBITDA
ROA - Return on average assets(ii)
ROE - Return on average equity(ii)
ROI - Return on average investment(ii)
ROIC - Return on invested capital(ii)
Gearing ratio (net debt to capitalisation)(ii)

3,550
1,396
2,154
154.3
4,737
4,721
16
0.3
557
491
66
13.4
62
7
55
n/m
8
9
(1)
(11.1)
426
346
80
23.1
9,340
6,970
2,370
34.0
1,293
1,171
122
10.4
29
32
(3)
(9.4)
171
201
(30)
(14.9)
394
137
257
187.6
20,581
20,450
131
0.6
9,229
9,332
(103)
(1.1)
2,180
1,790
390
21.8
54
66
(12)
(18.2)
15
296
(281)
(94.9)
33,946
33,475
471
1.4
43,286
40,445
2,841
7.0
3,948
4,080
(132)
(3.2)
913
844
69
8.2
92
126
(34)
(27.0)
2,655
1,496
1,159
77.5
286
214
72
33.6
176
291
(115)
(39.5)
1,118
1,078
40
3.7
9,188
8,129
1,059
13.0
66
74
(8)
(10.8)
169
147
22
15.0
127
137
(10)
(7.3)
14,647
14,138
509
3.6
663
911
(248)
(27.2)
1,493
1,558
(65)
(4.2)
4
4
-
0.0
1,022
837
185
22.1
18,191
17,806
385
2.2
27,379
25,935
1,444
5.6
15,907
14,510
1,397
9.6
5,167
5,198
(31)
(0.6)
62
372
(310)
(83.3)
10,642
8,533
2,109
24.7
15,871
14,103
1,768
12.5
36
407
(371)
(91.2)
15,907
14,510
1,397
9.6
16,009
14,962
1,047
7.0
12,459
13,566
(1,107)
(8.2)
13.0
14.4
(1.4)
(9.7)
1.2
1.3
(0.1)
(7.7)
16.2%
18.2%
(2.0) pp
25.7%
29.5%
(3.8) pp
22.4%
25.0%
(2.6) pp
13.6%
15.7%
(2.1) pp
43.9%
48.3%
(4.4) pp

(i) EBITDA Interest cover equals EBITDA to net interest.

(ii) Ratio has been measured on a continuing basis.

n/m = not meaningful

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ARPU ($)

Jun 2016Dec 2015 Jun 2015 Continuing Operations ($) ($) ($) Fixed voice 38.96 40.66 41.37 Fixed data 50.35 51.60 51.15 Mobile services retail (incl. Interconnect and MRO) 38.23 43.24 43.60 Postpaid handheld (incl. MRO) 60.08 61.38 61.45 Postpaid handheld (excl. MRO) 67.82 69.03 69.08 Prepaid handheld 19.89 21.20 21.19 Mobile broadband 25.02 27.38 27.84 M2M 6.69 6.15 6.58 Satellite 39.86 43.60 43.88 Half year ended	ChangeChange ($) % (2.41) (5.8) (0.80) (1.6) (5.37) (12.3) (1.37) (2.2) (1.26) (1.8) (1.30) (6.1) (2.82) (10.1) 0.11 1.7 (4.02) (9.2) Jun 16 vs Jun 15	ChangeChange ($) % Jun 16 vs Dec 15
		(1.70) (4.2) (1.25) (2.4) (5.01) (11.6) (1.30) (2.1) (1.21) (1.8) (1.31) (6.2) (2.36) (8.6) 0.54 8.8 (3.74) (8.6)

Services in operation

Services in operation
Continuing Operations	Jun 2016Dec 2015 Jun 2015 ('000) ('000) ('000) 5,710 5,852 5,981 1,328 1,353 1,338 7,038 7,205 7,319 3,379 3,265 3,144 840 850 841 4,219 4,115 3,985 1,049 1,102 1,137 1,547 1,570 1,563 478 516 544 7,476 7,387 7,307 3,914 3,864 3,923 3,960 3,914 3,866 1,854 1,714 1,547 29 29 30 17,233 16,908 16,673 530 478 465 2,614 2,603 2,531 751 660 623 Half year ended	ChangeChange ('000) % (271) (4.5) (10) (0.7) (281) (3.8) 235 7.5 (1) (0.1) 234 5.9 (88) (7.7) (16) (1.0) (66) (12.1) 169 2.3 (9) (0.2) 94 2.4 307 19.8 (1) (3.3) 560 3.4 65 14.0 83 3.3 128 20.5 Jun 16 vs Jun 15	ChangeChange ('000) % Jun 16 vs Dec 15
Fixed products Basic access lines in service Retail(i) Wholesale Total fixed voice lines in service Fixed data SIOs - retail(ii) Fixed data SIOs - wholesale Fixed data ISDN access (basic line equivalents) Unconditioned local loop (ULL) SIOs Line spectrum sharing services (LSS)(iii) Mobiles SIOs Postpaid handheld retail mobile Prepaid handheld retail mobile Total mobile broadband (data card) M2M Satellite Total retail mobile Total wholesale mobile Prepaid handheld unique users(iv) Foxtel from Telstra			(142) (2.4) (25) (1.8) (167) (2.3) 114 3.5 (10) (1.2) 104 2.5 (53) (4.8) (23) (1.5) (38) (7.4) 89 1.2 50 1.3 46 1.2 140 8.2 - n/m
			325 1.9
			52 10.9 11 0.4 91 13.8

(i) Includes nbn.

(ii) Includes nbn and Belong SIOs.

(iii) Excluded from wholesale broadband SIOs.

(iv) Prepaid unique users defined as the three month rolling average of monthly active prepaid users.

Note: Statistical data represents management’s best estimates. n/m = not meaningful

Workforce

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Jun 2016Dec 2015 Jun 2015 Continuing Operations Employee data Full time staff equivalents 33,482 33,639 33,679 Half year ended	ChangeChange % (197) (0.6) Jun 16 vs Jun 15	ChangeChange % Jun 16 vs Dec 15
		(157) (0.5)

Note: Statistical data represents management’s best estimates.

Segment information from continuing operations

Segment information from continuing operations
	Total external income 2016 2015 Change $m $m % Year ended 30 June
Telstra Retail Global Enterprise and Services Telstra Wholesale Telstra Operations All Other Total Telstra segments	16,656 16,911 (1.5) 6,262 5,618 11.5 2,622 2,586 1.4 602 424 42.0 908 573 58.5 27,050 26,112 3.6

==> picture [21 x 16] intentionally omitted <==

EBITDA contribution	EBITDA contribution	EBITDA contribution
Year ended 30 June
2016	2015	Change
$m	$m	%
9,220	9,591	(3.9)
2,456	2,457	(0.0)
2,426	2,393	1.4
(2,652)	(2,733)	3.0
(985)	(1,175)	16.2
10,465	10,533	(0.6)

Revenue by Business Segment

Revenue by Business Segment
	Year	ended 30 June
	2016	2015	Change
	$m	$m	%
Telstra Consumer
Fixed voice	1,934	2,095	(7.7)
Fixed data	1,775	1,671	6.2
Mobile services revenue	5,164	5,438	(5.0)
Telstra Business
Fixed voice	841	929	(9.5)
Fixed data	366	356	2.8
Mobile services revenue	2,155	2,287	(5.8)
Network applications and services	652	551	18.3
GES Australia
Mobile services revenue	933	908	2.8
Data & IP	1,637	1,706	(4.0)
Network applications and services	1,673	1,589	5.3

Product profitability - EBITDA margins %

==> picture [21 x 16] intentionally omitted <==

	Year ended	Year ended
	Jun 2016	Jun 2015
Mobile	42%	40%
Fixed data(i)	41%	41%
Fixed voice(i)	51%	55%
Data & IP	62%	64%

Note: product margins represent management's best estimates.

(i) Includes nbn voice and data.

Product profitability - EBITDA ($m)

Productprofitability - EBITDA($m)
	Year ended
	Jun 2016	Jun 2015
Mobile	4,384	4,250
Fixed data(i)	1,021	966
Fixed voice(i)	1,766	2,058
Data & IP	1,752	1,853

Note: product margins represent management's best estimates.

(i) Includes nbn voice and data.

Telstra Corporation Limited Half-yearly comparison Year ended 30 June 2016

==> picture [16 x 12] intentionally omitted <==

Summary Reported Half-yearly Data ($ millions) Revenue Fixed products Fixed voice(i) Fixed data(i) Fixed Other Intercarrier Services Total Fixed products(i) Mobiles Postpaid handheld Prepaid handheld Mobile broadband Machine to Machine (M2M) Satellite Mobile interconnection Mobile services - wholesale resale Total mobile services Mobile hardware Total mobiles Data & IP ISDN products IP access Other data and calling products Data & IP Total Network applications and services Media Foxtel from Telstra IPTV Mobility and other content Cable Media - Total Other CSL New World TelstraClear Other sales revenue Total sales revenue Other revenue Total revenue Other income Total income Expenses Labour Goods and services purchased Other expenses Operating expense (before interest) Share of net profit/(loss) from jointly controlled and associated entitie EBITDA Depreciation and amortisation EBIT Net finance costs Profit before income tax expense Income tax expense Profit for the year from continuing operations Profit/(loss) for the year from discontinued operations Profit for the year	Half 1 PCP Half 2 PCP Full year PCP Half 1 PCP Half 2 PCP Full year PCP Half 1 PCP Half 2 PCP Full year PCP Half 1 PCP Half 2 PCP Full year PCP Dec-12 Growth Jun-13 Growth Jun-13 Growth Dec-13 Growth Jun-14 Growth Jun-14 Growth Dec-14 Growth Jun-15 Growth Jun-15 Growth Dec-15 Growth Jun-16 Growth Jun-16 Growth
	2,219 (10.8%) 2,137 (8.2%) 4,356 (9.5%) 2,058 (7.3%) 1,974 (7.6%) 4,032 (7.4%) 1,917 (6.9%) 1,829 (7.3%) 3,746 (7.1%) 1,772 (7.6%) 1,665 (9.0%) 3,437 (8.2%) 1,028 4.4% 1,059 5.7% 2,087 5.0% 1,090 6.0% 1,128 6.5% 2,218 6.3% 1,175 7.8% 1,204 6.7% 2,379 7.3% 1,254 6.7% 1,259 4.6% 2,513 5.6% 234 47.2% 230 58.6% 464 52.1% 231 (1.3%) 231 0.4% 462 (0.4%) 219 (5.2%) 224 (3.0%) 443 (4.1%) 245 11.9% 256 14.3% 501 13.1% 311 21.0% 290 8.2% 601 14.5% 288 (7.4%) 298 2.8% 586 (2.5%) 309 7.3% 311 4.4% 620 5.8% 293 (5.2%) 285 (8.4%) 578 (6.8%)
	3,792 (2.5%) 3,716 (0.7%) 7,508 (1.6%) 3,667 (3.3%) 3,631 (2.3%) 7,298 (2.8%) 3,620 (1.3%) 3,568 (1.7%) 7,188 (1.5%) 3,564 (1.5%) 3,465 (2.9%) 7,029 (2.2%)
	2,377 0.3% 2,427 5.4% 4,804 2.8% 2,495 5.0% 2,511 3.5% 5,006 4.2% 2,701 8.3% 2,688 7.0% 5,389 7.7% 2,706 0.2% 2,679 (0.3%) 5,385 (0.1%) 351 7.7% 376 14.6% 727 11.2% 419 19.4% 460 22.3% 879 20.9% 498 18.9% 496 7.8% 994 13.1% 495 (0.6%) 464 (6.5%) 959 (3.5%) 576 16.8% 620 18.1% 1,196 17.5% 643 11.6% 644 3.9% 1,287 7.6% 649 0.9% 641 (0.5%) 1,290 0.2% 639 (1.5%) 591 (7.8%) 1,230 (4.7%) 44 10.0% 46 15.0% 90 12.5% 47 6.8% 54 17.4% 101 12.2% 55 17.0% 58 7.4% 113 11.9% 60 9.1% 72 24.1% 132 16.8% 7 0.0% 6 20.0% 13 8.3% 7 0.0% 7 16.7% 14 7.7% 8 14.3% 8 14.3% 16 14.3% 8 0.0% 7 (12.5%) 15 (6.3%) 398 (2.2%) 372 2.8% 770 0.1% 407 2.3% 380 2.2% 787 2.2% 418 2.7% 431 13.4% 849 7.9% 448 7.2% 103 (76.1%) 551 (35.1%) 48 (30.4%) 57 (16.2%) 105 (23.4%) 61 27.1% 43 (24.6%) 104 (1.0%) 53 (13.1%) 64 48.8% 117 12.5% 49 (7.5%) 44 (31.3%) 93 (20.5%)
	3,801 2.4% 3,904 7.5% 7,705 4.9% 4,079 7.3% 4,099 5.0% 8,178 6.1% 4,382 7.4% 4,386 7.0% 8,768 7.2% 4,405 0.5% 3,960 (9.7%) 8,365 (4.6%) 766 16.9% 731 7.0% 1,497 11.9% 784 2.3% 708 (3.1%) 1,492 (0.3%) 946 20.7% 940 32.8% 1,886 26.4% 1,121 18.5% 955 1.6% 2,076 10.1%
	4,567 4.6% 4,635 7.5% 9,202 6.0% 4,863 6.5% 4,807 3.7% 9,670 5.1% 5,328 9.6% 5,326 10.8% 10,654 10.2% 5,526 3.7% 4,915 (7.7%) 10,441 (2.0%)
	398 (5.2%) 379 (6.7%) 777 (5.9%) 363 (8.8%) 349 (7.9%) 712 (8.4%) 340 (6.3%) 322 (7.7%) 662 (7.0%) 312 (8.2%) 291 (9.6%) 603 (8.9%) 559 8.1% 570 4.6% 1,129 6.3% 592 5.9% 598 4.9% 1,190 5.4% 601 1.5% 604 1.0% 1,205 1.3% 597 (0.7%) 572 (5.3%) 1,169 (3.0%) 752 24.1% 718 16.9% 1,470 20.5% 728 (3.2%) 723 0.7% 1,451 (1.3%) 723 (0.7%) 827 14.4% 1,550 6.8% 1,005 39.0% 1,012 22.4% 2,017 30.1%
	1,709 10.8% 1,667 6.5% 3,376 8.6% 1,683 (1.5%) 1,670 0.2% 3,353 (0.7%) 1,664 (1.1%) 1,753 5.0% 3,417 1.9% 1,914 15.0% 1,875 7.0% 3,789 10.9%
	662 15.3% 877 27.7% 1,539 22.0% 853 28.9% 1,110 26.6% 1,963 27.6% 1,007 18.1% 1,411 27.1% 2,418 23.2% 1,336 32.7% 1,427 1.1% 2,763 14.3%
	302 0.0% 293 (2.7%) 595 (1.3%) 297 (1.7%) 308 5.1% 605 1.7% 322 8.4% 340 10.4% 662 9.4% 350 8.7% 369 8.5% 719 8.6% 31 10.7% 41 17.1% 72 14.3% 50 61.3% 44 7.3% 94 30.6% 42 (16.0%) 30 (31.8%) 72 (23.4%) 34 (19.0%) 41 36.7% 75 4.2% 54 (89.7%) 48 (94.9%) 102 (93.1%) 41 (24.1%) 40 (16.7%) 81 (20.6%) 41 0.0% 38 (5.0%) 79 (2.5%) 34 (17.1%) 36 (5.3%) 70 (11.4%) 61 5.2% 58 (3.3%) 119 0.8% 60 (1.6%) 60 3.4% 120 0.8% 60 0.0% 58 (3.3%) 118 (1.7%) 58 (3.3%) 52 (10.3%) 110 (6.8%)
	448 (50.9%) 440 (67.2%) 888 (60.6%) 448 0.0% 452 2.7% 900 1.4% 465 3.8% 466 3.1% 931 3.4% 476 2.4% 498 6.9% 974 4.6%
	494 13.3% 517 21.9% 1,011 17.6% 630 27.5% 415 (19.7%) 1,045 3.4% 0 (100.0%) 0 (100.0%) 0 (100.0%) 0 n/m 0 n/m 0 n/m 164 (35.7%) 0 (100.0%) 164 (67.3%) 0 (100.0%) 0 n/m 0 (100.0%) 0 n/m 0 n/m 0 n/m 0 n/m 0 n/m 0 n/m 288 65.5% 322 23.8% 610 40.6% 420 45.8% 470 46.0% 890 45.9% 343 (18.3%) 399 (15.1%) 742 (16.6%) 419 22.2% 419 5.0% 838 12.9%
	12,124 (2.3%) 12,174 (5.1%) 24,298 (3.7%) 12,564 3.6% 12,555 3.1% 25,119 3.4% 12,427 (1.1%) 12,923 2.9% 25,350 0.9% 13,235 6.5% 12,599 (2.5%) 25,834 1.9% 67 378.6% 109 (10.7%) 176 29.4% 62 (7.5%) 139 27.5% 201 14.2% 78 25.8% 100 (28.1%) 178 (11.4%) 54 (30.8%) 23 (77.0%) 77 (56.7%)
	12,191 (1.8%) 12,283 (5.1%) 24,474 (3.5%) 12,626 3.6% 12,694 3.3% 25,320 3.5% 12,505 (1.0%) 13,023 2.6% 25,528 0.8% 13,289 6.3% 12,622 (3.1%) 25,911 1.5% 110 34.1% 192 262.3% 302 123.7% 177 60.9% 799 316.1% 976 223.2% 294 66.1% 290 (63.7%) 584 (40.2%) 512 74.1% 627 116.2% 1,139 95.0%
	12,301 (1.6%) 12,475 (4.1%) 24,776 (2.9%) 12,803 4.1% 13,493 8.2% 26,296 6.1% 12,799 (0.0%) 13,313 (1.3%) 26,112 (0.7%) 13,801 7.8% 13,249 (0.5%) 27,050 3.6%
	2,246 (11.9%) 2,281 (5.7%) 4,527 (8.9%) 2,367 5.4% 2,365 3.7% 4,732 4.5% 2,375 0.3% 2,407 1.8% 4,782 1.1% 2,634 10.9% 2,407 0.0% 5,041 5.4% 3,135 (0.8%) 3,112 3.1% 6,247 1.1% 3,295 5.1% 3,170 1.9% 6,465 3.5% 3,262 (1.0%) 3,583 13.0% 6,845 5.9% 3,897 19.5% 3,350 (6.5%) 7,247 5.9% 1,978 (3.1%) 1,855 (10.9%) 3,833 (7.0%) 1,852 (6.4%) 2,136 15.1% 3,988 4.0% 1,928 4.1% 2,043 (4.4%) 3,971 (0.4%) 1,993 3.4% 2,319 13.5% 4,312 8.6%
	7,359 (5.1%) 7,248 (3.6%) 14,607 (4.3%) 7,514 2.1% 7,671 5.8% 15,185 4.0% 7,565 0.7% 8,033 4.7% 15,598 2.7% 8,524 12.7% 8,076 0.5% 16,600 6.4% s 0 n/m (1) n/m (1) n/m 0 n/m 24 n/m 24 n/m (10) n/m 29 20.8% 19 (20.8%) (5) 50.0% 20 (31.0%) 15 (21.1%)
	4,942 4.0% 5,226 (4.7%) 10,168 (0.6%) 5,289 7.0% 5,846 11.9% 11,135 9.5% 5,224 (1.2%) 5,309 (9.2%) 10,533 (5.4%) 5,272 0.9% 5,193 (2.2%) 10,465 (0.6%) 2,068 (5.4%) 2,010 (9.7%) 4,078 (7.6%) 2,013 (2.7%) 1,937 (3.6%) 3,950 (3.1%) 1,985 (1.4%) 1,989 2.7% 3,974 0.6% 2,031 2.3% 2,124 6.8% 4,155 4.6%
	2,874 12.1% 3,216 (1.3%) 6,090 4.6% 3,276 14.0% 3,909 21.5% 7,185 18.0% 3,239 (1.1%) 3,320 (15.1%) 6,559 (8.7%) 3,241 0.1% 3,069 (7.6%) 6,310 (3.8%) 477 20.5% 456 (7.3%) 933 5.1% 490 2.7% 467 2.4% 957 2.6% 357 (27.1%) 342 (26.8%) 699 (27.0%) 347 (2.8%) 363 6.1% 710 1.6%
	2,397 10.6% 2,760 (0.2%) 5,157 4.5% 2,786 16.2% 3,442 24.7% 6,228 20.8% 2,882 3.4% 2,978 (13.5%) 5,860 (5.9%) 2,894 0.4% 2,706 (9.1%) 5,600 (4.4%) 758 10.0% 759 (7.6%) 1,517 0.5% 825 8.8% 854 12.5% 1,679 10.7% 862 4.5% 884 3.5% 1,746 4.0% 872 1.2% 896 1.4% 1,768 1.3%
	1,639 10.8% 2,001 2.9% 3,640 6.3% 1,961 19.6% 2,588 29.3% 4,549 25.0% 2,020 3.0% 2,094 (19.1%) 4,114 (9.6%) 2,022 0.1% 1,810 (13.6%) 3,832 (6.9%)
	(53) n/m 204 n/m 151 n/m (221) (317.0%) 17 (91.7%) (204) (235.1%) 98 144.3% 93 447.1% 191 193.6% 113 15.3% 1,904 1947.3% 2,017 956.0%
	1,586 7.2% 2,205 13.4% 3,791 10.7% 1,740 9.7% 2,605 18.1% 4,345 14.6% 2,118 21.7% 2,187 (16.0%) 4,305 (0.9%) 2,135 0.8% 3,714 69.8% 5,849 35.9%

(i) Includes nbn

	Telstra Corporation Limited Half-yearly comparison Year ended 30 June 2016
Summary Reported Half-yearly Data Selected statistical data Fixed Voice Retail basic access lines in service (thousands) Wholesale basic access lines in service (thousands) Fixed voice lines in service (thousands)(i) Unconditioned local loop (ULL) services in operation (thousands) Number of local calls (millions) National long distance minutes (millions) Fixed to mobile minutes (millions) International direct minutes (millions) Average fixed voice revenue per user per month ($) Fixed data Fixed data SIOs - Retail (thousands) Broadband wholesale SIOs (thousands) Fixed data SIOs (thousands)(i) Wholesale line spectrum site sharing (LSS) SIOs (thousands) Average fixed data revenue per user per month ($) ISDN ISDN access (basic access line equivalents) (thousands) ISDN average revenue per user per month ($) IP MAN SIOs (thousands) IP WAN SIOs (thousands) Mobiles Total retail mobile SIOs (thousands) Postpaid handheld mobile SIOs (thousands) Mobile broadband (data cards) SIOs (thousands) Prepaid mobile handheld unique users (thousands) Machine to Machine (M2M) (thousands) Satellite (thousands) Total wholesale SIOs (thousands) Mobile voice telephone minutes (millions) Number of SMS sent (millions) Blended average revenue per user (incl. interconnection and MRO) ($) Average postpaid handheld revenue per user (excl. MRO) ($) Average postpaid handheld revenue per user (incl. MRO) ($) Average prepaid handheld revenue per user ($) Average mobile broadband revenue per user per month ($) Average machine to machine revenue per user per month ($) Average satellite revenue per user per month ($) Premium pay TV Foxtel from Telstra (thousands) Labour Full time staff equivalents	Half 1 PCP Half 2 PCP Full year PCP Half 1 PCP Half 2 PCP Full year PCP Half 1 PCP Half 2 PCP Full year PCP Half 1 PCP Half 2 PCP Full year PCP Dec-12 Growth Jun-13 Growth Jun-13 Growth Dec-13 Growth Jun-14 Growth Jun-14 Growth Dec-14 Growth Jun-15 Growth Jun-15 Growth Dec-15 Growth Jun-16 Growth Jun-16 Growth
	6,695 (4.8%) 6,524 (5.1%) 6,524 (5.1%) 6,356 (5.1%) 6,245 (4.3%) 6,245 (4.3%) 6,104 (4.0%) 5,981 (4.2%) 5,981 (4.2%) 5,852 (4.1%) 5,710 (4.5%) 5,710 (4.5%) 1,207 0.6% 1,239 5.0% 1,239 5.0% 1,277 5.8% 1,285 3.7% 1,285 3.7% 1,318 3.2% 1,338 4.1% 1,338 4.1% 1,353 2.7% 1,328 (0.7%) 1,328 (0.7%)
	7,902 (4.0%) 7,763 (3.6%) 7,763 (3.6%) 7,633 (3.4%) 7,530 (3.0%) 7,530 (3.0%) 7,422 (2.8%) 7,319 (2.8%) 7,319 (2.8%) 7,205 (2.9%) 7,038 (3.8%) 7,038 (3.8%)
	1,245 17.3% 1,322 14.0% 1,322 14.0% 1,400 12.4% 1,482 12.1% 1,482 12.1% 1,528 9.1% 1,563 5.5% 1,563 5.5% 1,570 2.7% 1,547 (1.0%) 1,547 (1.0%) 1,292 (18.0%) 1,143 (19.4%) 2,435 (18.7%) 1,053 (18.5%) 938 (17.9%) 1,991 (18.2%) 876 (16.8%) 750 (20.0%) 1,626 (18.3%) 727 (17.0%) 624 (16.8%) 1,351 (16.9%) 2,066 (14.6%) 1,868 (17.7%) 3,934 (16.1%) 1,706 (17.4%) 1,539 (17.6%) 3,245 (17.5%) 1,378 (19.2%) 1,175 (23.7%) 2,553 (21.3%) 1,170 (15.1%) 1,012 (13.9%) 2,183 (14.5%) 1,371 (8.8%) 1,287 (11.2%) 2,658 (10.0%) 1,241 (9.5%) 1,170 (9.1%) 2,411 (9.3%) 1,112 (10.4%) 996 (14.9%) 2,108 (12.6%) 1,016 (8.6%) 905 (9.1%) 1,921 (8.9%) 222 (7.9%) 240 5.3% 463 (1.3%) 273 23.0% 274 14.2% 546 17.9% 256 (6.2%) 209 (23.7%) 465 (14.8%) 256 0.0% 225 7.7% 480 3.2% 46.34 (7.3%) 45.49 (4.5%) 45.90 (6.1%) 44.54 (3.9%) 43.42 (4.6%) 43.94 (4.3%) 42.73 (4.1%) 41.37 (4.7%) 42.05 (4.3%) 40.66 (4.8%) 38.96 (5.8%) 39.89 (5.1%) 2,684 7.2% 2,772 6.7% 2,772 6.7% 2,847 6.1% 2,955 6.6% 2,955 6.6% 3,043 6.9% 3,144 6.4% 3,144 6.4% 3,265 7.3% 3,379 7.5% 3,379 7.5% 761 (6.6%) 769 0.3% 769 0.3% 777 2.1% 789 2.6% 789 2.6% 816 5.0% 841 6.6% 841 6.6% 850 4.2% 840 (0.1%) 840 (0.1%)
	3,445 3.8% 3,541 5.2% 3,541 5.2% 3,624 5.2% 3,744 5.7% 3,744 5.7% 3,859 6.5% 3,985 6.4% 3,985 6.4% 4,115 6.6% 4,219 5.9% 4,219 5.9%
	658 (8.2%) 631 (9.3%) 631 (9.3%) 614 (6.7%) 589 (6.7%) 589 (6.7%) 569 (7.3%) 544 (7.6%) 544 (7.6%) 516 (9.3%) 478 (12.1%) 478 (12.1%) 50.29 0.9% 50.52 1.1% 50.34 0.8% 50.75 0.9% 50.99 0.9% 50.74 0.8% 51.53 1.5% 51.15 0.3% 51.31 1.1% 51.60 0.1% 50.35 (1.6%) 51.04 (0.5%) 1,282 (1.7%) 1,285 (0.9%) 1,285 (0.9%) 1,265 (1.3%) 1,225 (4.7%) 1,225 (4.7%) 1,181 (6.6%) 1,137 (7.2%) 1,137 (7.2%) 1,102 (6.7%) 1,049 (7.7%) 1,049 (7.7%) 51.47 (3.9%) 49.25 (5.5%) 50.19 (5.1%) 47.41 (7.9%) 46.79 (5.0%) 47.29 (5.8%) 47.07 (0.7%) 46.31 (1.0%) 46.70 (1.2%) 46.39 (1.4%) 45.14 (2.5%) 45.97 (1.6%) 28 7.7% 31 14.8% 31 14.8% 32 14.3% 33 6.5% 33 6.5% 34 6.3% 35 6.1% 35 6.1% 37 8.8% 40 14.3% 40 14.3% 106 0.0% 109 2.8% 109 2.8% 110 3.8% 110 0.9% 110 0.9% 109 (0.9%) 111 0.9% 111 0.9% 113 3.7% 112 0.9% 112 0.9% 14,423 9.2% 15,072 9.1% 15,072 9.1% 15,811 9.6% 16,009 6.2% 16,009 6.2% 16,375 3.6% 16,673 4.1% 16,673 4.1% 16,908 3.3% 17,233 3.4% 17,233 3.4% 6,861 7.2% 7,019 6.4% 7,019 6.4% 7,122 3.8% 7,194 2.5% 7,194 2.5% 7,275 2.1% 7,307 1.6% 7,307 1.6% 7,387 1.5% 7,476 2.3% 7,476 2.3% 3,336 21.5% 3,570 14.5% 3,570 14.5% 3,672 10.1% 3,679 3.1% 3,679 3.1% 3,809 3.7% 3,866 5.1% 3,866 5.1% 3,914 2.8% 3,960 2.4% 3,960 2.4% 2,102 5.7% 2,197 8.3% 2,197 8.3% 2,347 11.7% 2,446 11.3% 2,446 11.3% 2,490 6.1% 2,531 3.5% 2,531 3.5% 2,603 4.5% 2,614 3.3% 2,614 3.3% 888 19.4% 970 19.9% 970 19.9% 1,086 22.3% 1,261 30.0% 1,261 30.0% 1,385 27.5% 1,547 22.7% 1,547 22.7% 1,714 23.8% 1,854 19.8% 1,854 19.8% 26 8.3% 27 8.0% 27 8.0% 28 7.7% 30 11.1% 30 11.1% 30 7.1% 30 0.0% 30 0.0% 29 (3.3%) 29 (3.3%) 29 (3.3%) 67 3.1% 241 322.8% 241 322.8% 348 419.4% 379 57.3% 379 57.3% 408 17.2% 465 22.7% 465 22.7% 478 17.2% 530 14.0% 530 14.0% 9,906 22.9% 10,504 18.5% 20,410 20.6% 11,633 17.4% 12,194 16.1% 23,827 16.7% 13,240 13.8% 13,395 9.8% 26,635 11.8% 14,363 8.5% 14,936 11.5% 29,299 10.0% 6,771 15.1% 6,992 13.4% 13,763 14.2% 7,475 10.4% 7,846 12.2% 15,321 11.3% 8,642 15.6% 9,011 14.8% 17,653 15.2% 9,146 5.8% 8,797 (2.4%) 17,943 1.6% 44.30 (7.1%) 43.48 (1.0%) 43.85 (4.8%) 43.36 (2.1%) 42.49 (2.3%) 43.29 (1.3%) 44.56 2.8% 43.60 2.6% 44.12 1.9% 43.24 (3.0%) 38.23 (12.3%) 40.66 (7.8%) 65.34 (3.1%) 65.92 2.4% 65.90 (0.5%) 66.80 2.2% 66.20 0.4% 66.57 1.0% 69.71 4.4% 69.08 4.4% 69.51 4.4% 69.03 (1.0%) 67.82 (1.8%) 68.40 (1.6%) 58.88 (7.1%) 58.29 (1.3%) 58.80 (4.4%) 58.81 (0.1%) 58.47 0.3% 58.70 (0.2%) 62.22 5.8% 61.45 5.1% 61.94 5.5% 61.38 (1.4%) 60.08 (2.2%) 60.71 (2.0%) 17.79 6.1% 18.44 10.6% 17.94 6.3% 18.90 6.2% 19.79 7.3% 19.98 11.4% 21.50 13.8% 21.19 7.1% 21.32 6.7% 21.20 (1.4%) 19.89 (6.1%) 20.40 (4.3%) 29.75 (8.5%) 29.93 0.3% 29.80 (4.7%) 29.60 (0.5%) 29.20 (2.4%) 29.59 (0.7%) 28.89 (2.4%) 27.84 (4.7%) 28.49 (3.7%) 27.38 (5.2%) 25.02 (10.1%) 26.20 (8.0%) 8.66 (9.8%) 8.30 (2.4%) 8.46 (6.9%) 7.69 (11.2%) 7.60 (8.4%) 7.54 (10.9%) 6.93 (9.9%) 6.58 (13.4%) 6.70 (11.1%) 6.15 (11.3%) 6.69 1.7% 6.46 (3.6%) 43.47 (7.6%) 39.46 13.8% 41.32 1.5% 40.43 (7.0%) 40.44 2.5% 39.98 (3.2%) 46.61 15.3% 43.88 8.5% 45.07 12.7% 43.60 (6.5%) 39.86 (9.2%) 41.12 (8.8%) 507 0.6% 500 (0.2%) 500 (0.2%) 500 (1.4%) 526 5.2% 526 5.2% 560 12.0% 623 18.4% 623 18.4% 660 17.9% 751 20.5% 751 20.5% 35,157 15.6% 34,679 14.8% 34,679 14.8% 35,807 1.8% 32,354 (6.7%) 32,354 (6.7%) 31,809 (11.2%) 33,679 4.1% 33,679 4.1% 33,639 5.8% 33,482 (0.6%) 33,482 (0.6%)

(i) Includes nbn

Note: statistical data represents management's best estimates.

AI assistant

TELSTRA GROUP LIMITED — Annual Report 2016

65927_rns_2016-08-10_f0ff5eea-b430-4904-a313-1b1ebac3d43e.pdf

Office of the Company Secretary

ELECTRONIC LODGEMENT

Full Year 2016 Financial Results – CEO/CFO Analyst Briefing Presentation

Full Year 2016 Results

Disclaimer

Agenda

Telstra Full Year 2016 Results Announcement

Agenda

Group results – Income Statement

Group results – financial measures

Business Unit results

Product income performance[1]

Product EBITDA performance

Product performance: Mobile

Product performance: Fixed

Product performance: Data & IP

Product performance: NAS

Product performance: Media - Foxtel

Product performance: Media

NBN Definitive Agreements

Operating expenses

Capital and portfolio management

Capital management

Telstra Full Year 2016 Results Announcement

The demand for connectivity services continues to grow

Lifting our investment to match our aspiration

Telstra Full Year 2016 Results Announcement

Capital Management Framework

2017 guidance[1]

Supporting material

Product operating expenses

ANDREW PENN - CEO SLIDE 1: FULL YEAR 2016 RESULTS

SLIDE 3: AGENDA SLIDE

SLIDE 4: HIGHLIGHTS

SLIDE 5 – NETWORK LEADERSHIP

WARWICK BRAY - CFO

SLIDE 6 – TELSTRA FULL YEAR RESULTS ANNOUNCEMENT 2016

SLIDE 7 - AGENDA

SLIDE 8 – GROUP RESULTS – INCOME STATEMENT

On a reported and continuing operations basis:

On a reported and continuing operations basis:

On a guidance basis and excluding Pacnet:

SLIDE 9 – GROUP RESULTS – FINANCIAL MEASURES

SLIDE 10 – BUSINESS UNIT RESULTS

SLIDE 11 – PRODUCT FRAMEWORK

SLIDE 12 – PRODUCT PERFORMANCE INCOME

SLIDE 13 – PRODUCT PERFORMANCE EBITDA SUMMARY

SLIDE 14 – PRODUCT PERFORMANCE EBITDA DETAIL

SLIDE 15 - MOBILE

SLIDE 16 - FIXED

SLIDE 17 – DATA & IP

SLIDE 18 - NAS

SLIDE 19 – MEDIA - FOXTEL

SLIDE 20 – MEDIA

SLIDE 21 – NBN DA

SLIDE 22 – OPERATING EXPENSES

First, growth in core sales costs - or Directly Variable Costs.

Second, growth in costs in our new businesses.

Third, growth in our nbn costs to connect

Fourth, growth in our core fixed costs .

On an underlying basis, our core fixed costs declined 0.6%.

SLIDE 23 - PRODUCTIVITY

We have reduced the cost to connect to the nbn by:

SLIDE 24 - PRODUCTIVITY

SLIDE 25 – CAPITAL AND PORTFOLIO MANAGEMENT

SLIDE 26 – CAPITAL POSITION

ANDREW PENN – CEO

SLIDE 28: THE DEMAND FOR CONNECTIVITY SERVICES

SLIDE 29: CAPEX

SLIDE 30: LIFTING OUR INVESTMENT

SLIDE 31: BENEFITS FOR CUSTOMERS

SLIDE 32: MAJOR INITIATIVES

WARWICK BRAY - CFO

SLIDE 34 – CAPITAL MANAGEMENT

SLIDE 35 – GUIDANCE

Full year results and operations review

Reported results

TELSTRA GROUP LIMITED Annual Report 2016