TELSTRA GROUP LIMITED — Call Transcript 2005

Nov 14, 2005

15 November 2005

The Manager

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

Office of the Company Secretary

Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA

Telephone 03 9634 6400 Facsimile 03 9632 3215

ELECTRONIC LODGEMENT

Dear Sir or Madam

Transcript of presentation by GMD Telstra Consumer & Small Business at the Telstra Investor Day

In accordance with the listing rules, I attach a copy of the transcript of the presentation by David Moffatt, Group Managing Director Telstra Consumer & Small Business at today's Telstra Investor Day, for release to the market.

Yours sincerely

North book

Douglas Gration Company Secretary

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

DAVID MOFFAT: Thanks, Sol.

Good morning, everyone, it's great to be with you today and to have the chance to talk a little bit about our business, the consumer and marketing activities in Telstra. Telstra is putting itself on a path to become world class. Our goal is to move from good to better to great. What this is about is three things; speed, simplicity and mobility. For consumers and small business customers Telstra is changing. We're changing everything that we do, with the goal of becoming a truly customer oriented organisation.

In the new Telstra things will be very different from what you've experienced before. The customer experience will drive everything that we seek to do in every interaction, whether it's face to face, whether it's on-line or whether it's over the telephone. A broadband connected customer will be at the centre of our world. As we strive to improve everything that we do, we're going to leverage ideas from everywhere, from Silicon Valley to Sydney, from Madrid to Melbourne. What we'll be seeking to do is leverage global relationships and find the best talent and the best ideas to help us win in the marketplace, to help us consolidate and develop these differentiated offerings for our customers.

We have four specific activities and actions which will help us to drive revenue. They are, firstly, migration to higher value platforms.

This is narrow brand to broadband, 2G to 3G. Secondly, we will shift the mix to customers who have higher value. We will value every customer though, because we know that if we drive more solutions, we'll be able to drive more value.

Third, we will deliver on the power of integration. Not triple plays, as Sol said, but many things working seamlessly together in an integrated way, based on the customer needs and the customer experience. Finally, we'll drive

the penetration and adoption of new services through every channel that we operate. For every revenue initiative we'll be thinking about speed, ever higher speeds, we'll be thinking about simplicity, always simpler for the customer, and we'll be thinking about mobility - Every application a mobile application. Across these four areas we'll give particular attention to our mobility solutions and we intend to increase the activity around bundles across both broadband and wireless, because, as Justin said, we see considerable opportunity in the wireless, as well as the fixed line broadband markets. So, for example, today, with Telstra 3G you can have your BigPond email pushed to your 3G handset. We're going to extend this capability with the introduction of unified messaging and common user interfaces that will allow the service to come together in something called 'My Communication Manager.' You'll be able to see examples of that in the demonstration experience breakouts at the back of the room. Finally, we will also focus on our coverage. It's a very, very important differentiator, and particularly when it comes to $3G.$ In addition, we have five operating execution strategies which will drive through every channel for every customer interaction. Those strategies will also deliver value for our shareholders. Here they are: Simplicity and the delivery of a differentiated customer experience, always based on a deep customer insight and driven by what Bill talked about in market-based management; Supply chain, activation and fulfilment, lower cost channels and segment-driven channel strategies.

Now I'm going to come back and talk about each of those in detail and give you some specific metrics that we'll be prepared to be held accountable for. "But wait," you say, "this is not the Telstra that I know. That's not the Telstra that I see today. What about things like the market structure? Where is this growth going to come from?" We're obviously, in our view, at an inflexion point in the industry, an inflexion

point of higher speed access, more services and where a values-based customer interaction is going to be key to the competitive future. We really do welcome the competition for intense competitiveness around these new services because at Telstra we will be happy to compete with all comers. You could say, "What about the PSTN decline? What are you going to do about that?" There is no doubt that the traditional calling patterns are changing. This also represents for us an opportunity. Let's talk about the extent of the opportunity. It's a 5 million consumer customer opportunity across Australia. It's a 1.4 million small business customer opportunity. Everyone is valued and every one, also, an integrated services opportunity for us. We're developing unique and special services, which are just emerging, to apply to each and every one of those customer groups. So I think there is still plenty of life yet in the PSTN. For many years to come it will remain a key link to our customers, over which we can deliver an ever increasing variety of services.

You might also say, "Well, hold on, I've had a bad experience with Telstra in the past. It was very poor." Well I can assure you that it is going to get better, we're really working on this very intensely at the moment. We have increased the investment in staff training and you can experience that first hand if you meet some of our Telstra shop staff out in the foyer. Grea is going to talk more about the investment necessary in the fundamental underlying infrastructure. Bill has already talked about the systems investment and how it will come together. This is all about how we will improve the customer experience because we know that we have to improve everything we do, every day, and that understanding the complete customer need and simplifying what we do is a massive opportunity for Telstra.

Then there are our competitors. You'd say, "Well, hold on, there are new competitor networks

everywhere. What about the competitor networks?" Well technology is just a tool. It's an enabler. At Telstra we are building the differentiators and they're coming ever faster into our innovation pipeline. The technology is just the platform. So no matter what the customer needs, they'll be able to access Telstra through multiple platforms. It will be the services that are the differentiator. But, in the end, for every customer it is, as Sol said, about value. Much more than price, it's about delivering the best value, the functionality and the service that the customers want in the way that they want it. We are, and we will, invest to do this, as you'll see in the breakout sessions. With the "out and about" scenario that we have, you'll see how we're pulling some of these things together.

So how will Telstra put the customer first? What can you expect from us? We've got eight specific activities. Here they are. Whole of customer. Whole of customer in everything that we do. A better customer experience. As Bill said, we've just completed this very comprehensive mapping exercise that looks at every aspect of the customer's interaction with Telstra, from the way they gather information, to the way they evaluate their purchase interaction, to the service experience, and the finally to the management of the ongoing relationship. We've also costed every one of those interactions in great detail. We've used this detail to improve every aspect of the customer experience, but also the economics of the way we intend to manage the business. Seqmentation and market-based management is our road map. Working together with Bill, we've now not just got the foundations together, we've actually got a complete architecture to give us something to look forward to in the future. It's also about right channel, right consultant. Our customers expect us to know them and they expect us to anticipate their needs. This is all about an investment in the underlying systems of CRM and the corporate data warehouse to bring everything together, and this is clearly, now,

underway.

Next we will go local. Street by street, house by house, customer by customer. Our offers will be highly targeted. Then we will continue to reward loyalty for our customers. Not just the high spend customers, but all customers. All this will be delivered by a diverse, dynamic, youthful, professional workforce, over half of whom are under the age of 30 in our part of the business and they communicate in nine primary languages and over 30 other languages.

So let's try and bring our growth strategy to life through one example, an example of a small business customer interaction that follows a customer call to Telstra's front of house seeking a specific service. What's different about this particular experience is the integrated consultative nature of the solution, which showcases some current offers and others that we're now working on. Thank you.

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