TELSTRA GROUP LIMITED — Call Transcript 2006

Oct 8, 2006

9 October 2006

The Manager

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

Office of the Company Secretary

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ELECTRONIC LODGEMENT

Dear Sir or Madam

Transcript of Analyst & Media Q & A at the Telstra Investor Day

In accordance with the listing rules, I attach a copy of the transcript of the Analyst & Media Q & A, at Telstra's Investor Day 6 October 2006, for release to the market.

Yours sincerely

Pont brake

Douglas Gration Company Secretary

TELSTRA INVESTOR BRIEFING 6th OCTOBER 2006

Analyst and Media Q & A

SOL TRUJILLO: All right. Bill, thank you very much. Hopefully you have seen we have thought about this Next G capability end to end and it is going to make a big difference in terms of our business. But enough of that. We are going to open it up for questions. I know it is late. I apologise for the events of the day. But for those of who you still have the energy and still have the desire to ask whatever questions, we will do it now.

IAN MARTIN (ABN AMRO): That is all very impressive and it seems to be going on track, but it seems to me the biggest, riskiest part of the transformation, the IT component, is the least developed. I guess there is a lot of preparation work you have to do before that really gathers pace. I got the impression from Greg Winn that the bulk of that work is going to be done over the next 12 months. I just wonder if you can elaborate on what the different tasks are over that period in the IT transformation and a little bit more detail on what the risks might be and the consequences, if that does take a bit longer or costs a bit more.

SOL TRUJILLO: Let me start and then if, David, we can get the mike to Greg over here. In terms of the transformation and the IT when you looked at at least the chart I had up, we have been essentially tilling the ground, getting everything ready in terms of the work, in each platform area, whether it be those that have been retired and need to be converted in terms of its utility into a new platform and a new system capability, all of that work is under way and we are actually ahead or on schedule on most of those elements.

But I'm also realistic enough to say that there is a lot there. If you think about transitioning from 1,250 systems, if you will, and we have uncovered a few more in the last six months that somehow people didn't know about within Telstra, but when you think about converting those down to 250, there is a lot of work there and it does take time and we are going through the detailed work just like what you saw on the detail of this network transformation that we undertook with the wireless.

But it does take time because, one, we have to stop doing some work. We have to then initiate the code building and the programming and all the work that is part of the new systems, clearly with all of the partners that we have in our ecosystem, and once that gets done then it takes time to turn up. It doesn't just happen that you turn on the switch one day. But it is about removing work, changing process and doing other things. But in terms of the specifics and maybe some added colour, I will turn it over to Greg who can tell you more about what is the work program and how he thinks about managing as you say the risk here.

GREG WINN: Sol pretty well nailed it, but the first thing we had to do was we had to map everything that we have today. That is no small task with a business as complex and the systems as complex as they are at Telstra. So there has been kind of like parallel paths. We have mapped all of the functionality that we have today. We have placed values on it by organisation, by unit, by customer group. Then we created the mapping of the new world of what we wanted it to be and how did we want our systems to perform, how were we going to operate in the future and then how did those two transact each other. So that has been all the work that has been going on, and then looking at what are the most have things that we have today that we have to take into the new world, a lot of it around requirements for collections, how things mapped to the general ledger in the billing et cetera like that. Those are absolute mandatory things to make sure we have them all locked down.

Two, what were all of the asks or all of the new capabilities from our market based management? Go to market capability, everything from campaign management, understanding customers, single identity or presence across the systems, and we laid all of those out and then again mapped what we are going to be able to deliver out of box and not out of box. So all of the work that has gone on for the last 10 months has been very detailed, agonising, pick and shovel work.

The next stage actually starts in just a few weeks. We are locking down all of our current capabilities and our systems and we are going into what we call a black-out starting 1 November, which means that we are going to do very little systems work in our legacy environment other than just price change, some stuff we have to do from a competitive standpoint and what we call break fix. But we are not going to do new capabilities there.

All of our effort, all of our resources are pointed towards the new capabilities, and with that becomes getting all of the data ready to do the migration across to the new systems. So our first drop is the consumer drop which is in the late third quarter of this coming calendar year, and then we are going to be moving millions of accounts at a time. So there is a lot of work to this. It is not easy work. We are very well progressed on it. It is just that you see it come in chunks, and it is in big chunks because there is so much planning and detailed work and testing and user acceptance testing and soaking and regression testing, all that has to go on because we can't afford to have a hiccup.

SOL TRUJILLO: I guess, Ian, I would just add one last thought. The reason why I had Bill Green here from Accenture is that, because it is of such magnitude for the business, they literally have imported a lot of world-class experts that are sitting here in Australia working side by side with our Telstra employees so that again we mitigate a lot of that risk, because what we are doing is not new science, it is not the billing systems or other platforms that we have in the business haven't been changed out before; it is just the number that we are doing simultaneously. So when you bring in

people that have done it, people that know the transformation, have done it in other telcos, it mitigates a lot of that risk because you are using processes and capabilities that exist and science that has worked in other companies.

PATRICK RUSSEL (Merrill Lynch): I just wanted to explore a little bit on the cost side. It just seems in light of the target to take 12.000 employees out by 2010 that you would probably expect maybe slightly lower cost growth and maybe total cost to actually come down in absolute terms over that period. Rule of thumb: if you take that amount of staff out of the business you would probably be looking at the best part of a billion dollars of absolute costs out, maybe possibly more. So I just wanted to get a feel for why the costs are probably not trending down. You still have a reasonable cost CAGR over the next five years in light of that headcount reduction.

The other quick question is just your thoughts on fibre to the node. I mean, if you don't proceed with it, do we now expect the next gen wireless network to be the replacement to that? I guess the concern is you are not rolling out ADSL2 plus and you do have relatively aggressive market share targets in broadband on the fixed line side presumably, or are those market share targets including next gen cards as part of the market share count. So I just wanted to clarify that.

SOL TRUJILLO: Patrick, do you have about an hour? We will take those in pieces. I will give my initial comments on the cost structure item and then ask John to comment, and then after that we will deal with the fibre to the node, kind of the broadband play.

In terms of the cost structure, the big issue that we talked about last year, both John and I, was the fact that we are going through a mix of revenue shift, meaning we used to have PSTN as kind of the primary source of our revenue growth and our revenue base. Now, as you have seen, you know, from a few years ago our PSTN revenues accounted for about 50 per cent of our revenue base. As of end of last fiscal year it was at about 30 per cent of our revenue base. You know, we expect it to continue to decline.

Therefore it has been substituted with things like broadband, things like our mobile, 3G services and others that have a different - they have a cost of goods characteristic to them that PSTN, its legacy PSTN, historical PSTN didn't have. So you would expect to see some different cost characteristics in terms of how you generate revenues. Notice what I said: how you generate the revenues.

What will change and is declining is the core infrastructure side of the business in terms of how we operate the business. Those costs, the underlying costs, are definitely declining. It is hard to quite tell today because of the overlay of our transformation spend, but when we move into next year you are going to start seeing the full impact of a lot of what we have been doing on the operating costs.

JOHN STANHOPE: Let me just add, Patrick, that I did say it several times during what I said that the DVCs or the variable costs will increase to support the revenue target. The revenue target stayed at 2 to 2.5 per cent, and it does because we have got a higher variable cost to support that revenue target than when we had the opportunity to bring products and services to market with fibre. There is no doubt about that. But inherent in the assumptions as well of course is you still have wage increases, you still have CPI. So they are inherent in it as well.

But the other thing of course when you look at the program of the transformation and where we are up to, in fiscal year 2010 you are just starting to realise the platform costs out per se. So it is a timing thing. We expect to be able to do better as the years go on as the platforms are introduced, soft switches are introduced and so on. So it is out to fiscal year 2010.

SOL TRUJILLO: In terms of the broadband question and the ADSL question, I commented this morning that we are going to be aggressive, as you have seen with Justin's presentation in terms of keeping share and growing share economically, and I said this back in August that I want to make sure that ARPU sustains itself or even grows over the next three/five years as we evolve our business and we redefine the formula of how we grow. In the case of broadband, we will be aggressive on the DSL platforms. We didn't say anything today because we are still working on what makes sense for us in terms of our plans leveraging DSL.

However, we are also aggressively, as Greg pointed out in his presentation, working on another broadband platform, which is our hybrid fibre coax cable. The third platform that we don't know enough yet about but we are going to be doing trials on is this wireless capabilities where we can start looking at wireless local loop and how leveragable that is for us as we evolve and as you heard Carl-Henric talk about the migration from 3.6 to $14.4$ to perhaps 40 megabits in the next few years. 2009 is not very far away. So we are going to be looking to economically leverage whatever platforms that we have.

Fibre to the node was taken off the table because under the pricing regimes that the regulator has in place with currently the copper business as well as how they think about spectrum sharing, the economics wouldn't work for our shareholders. As you have heard us say over and over again, we will only do those things that are shareholder friendly at least knowingly in terms of running the business.

But we have no concerns about how aggressive we will be and how well positioned we will be in the market, and we will talk specifically about broadband at another point in Today we wanted to focus on probably the most significant point of time. differentiation we have ever had at Telstra, and that is our broadband high-speed wireless network.

MARK McDONNELL (BBY): Just on 3G, a couple of questions, if I may. Is the mobile

content sourced from the channels or from an aggregator? Are the advised data transfer rates - the 3.6, 7.2, 14.4 - are they download only? What is the upload capability? Is it the same or is it less? Can the exclusivity of the offers be protected particularly in the context of prospective regulatory intervention that would seek to make equivalent wholesale access for your competitors?

SOL TRUJILLO: Okay, let me take the first part and then if Justin or Holly can get a mike to talk about the content and some of the questions there. In terms of the last part of your question of how protectable or sustainable is our competitive advantage, I think that the thing that I have heard the regulator speak to is this idea about encouraging facility based competition, and what they like about the whole DSL play that has been going on is in fact that there are now other players investing to compete, which personally I agree with, I think is a good thing in the marketplace to be able to do.

Now that we have taken shareholder money and built a new network, to say to Telstra shareholders, "Now you need to send your investment and the associated returns to Singapore or to Hong Kong or to London," I don't think makes good policy and I don't think it makes sense and I'm not sure that that's what the regulator would want to see happen given their policy statement around facility based competition.

So we made a decision to go forward, drive differentiation and if the companies from Singapore or from Hong Kong or London want to compete, let them risk their capital. So we are doing that. In terms of the content, Justin, do you want to deal with that, and the upload and download speeds issues?

JUSTIN MILNE: On the content story, the content is of course a mixture. Some content is entirely aggregated. If you take the Foxtel content, of course that is provided to us by Foxtel who package it, but they aggregate it from various suppliers like CNN and other people around. Then there is content that we aggregate on the BigPond side of things as well. So, for example, BigPond movies. We don't make movies. We go to our partners like Sony and Warner Bros and we aggregate movies for those and put them into a sort of convenient storefront for people, same with games.

Then there is content that we do kind of manufacture in that we go and buy rights for things like AFL, NRL, V8 Super Cars, but we have crews who shoot, we have crews who edit and put together, and we put stories alongside them and we put those up. Then, finally, there is a user generated content. That comprises things like blogs, video blogs, mobile blogs, that kind of stuff with some interesting stuff coming down the track on the user generated side as well.

On the upload side - Greg can test me on this - I think we have 128k upload on a 512 to 1.5 meg download. So these are asymmetric networks like most broadband networks are.

HOLLY KRAMER: They are asymmetric, but the HSDPA gets married with HSUPA, which is the uplink upgrade, and the path sort of follows in a relative sense going forward. So it is about 300, actually, in the next iteration, which is really next year. Most of the services, the uplink is less critical for those services. So, yes, it does improve quickly and it improves in relation to the increase of the download speed.

TIM SMEALLIE (Citigroup): Sol, congratulations, nine months, a great outcome with the Next G Network in that time frame. Looking at the Australian market, I guess the regulator is still a far greater threat to your business than anything your competitors can throw at you. In that context, how does Telstra respond to the threat of declaration of 850, because obviously that is something that has been bandied around in Canberra? Secondly, in terms of the long-range guidance, how many of your I guess product segments do you assume that you will have market share greater than 50 per cent? I guess the final question is I think John has given some indications previously that he couldn't give any guidance on FY08 dividends given the uncertainty around ULL. In that context, how much comfort do we take in the long-range guidance that we have been given out to FY10?

SOL TRUJILLO: Let me start with the first part of the question. I cannot predict what the regulator will or will not do. All I know is what they have stated as their policy. I think in terms of what I would call good policy is obviously we have three other facility based players of size and of substance: SingaporeTel, their market cap is \$35 billion, \$40 billion; Vodafone is the fifth largest market cap company in the world, or thereabouts; and the other player, 3, they have an owner that is worth more than most companies or at least ownership structure that is that way. So they are very capable of investing and doing the things that we did. Do they have the competency? Do they have the desire to invest in Australia? I can't answer that. But all I know is we will take control of our future in doing what we need to do to advantage ourselves in the marketplace. We have shown that today.

You heard the statistic. Every 25, 28 minutes we were turning up a site every day for the last nine or ten months. A lot of work was going on, a lot of hard work by a lot of people. That's a competency that is not just spending money. So we intend to compete hard and we intend to compete for advantage.

In the case of the regulator, we will deal with the regulator as appropriate and as required. As you have seen, we are allocating resources to those things that are not regulated or not controlled in terms of pricing and other issues that may constrain our growth or may affect our profitability, because we are going to be very shareholder friendly in virtually everything that we do.

JOHN STANHOPE: Tim, as you would know, we are in a very critical point in preparing for the T3 sale, so I'm not going to make any statements about market share assumptions in our long-term objectives. With respect to dividends, of course in a model of long-term objectives you have an assumption on dividends, but I'm not going

to tell you that either, and make the point that dividends will always be and remain subject to board consideration every half year in our normal cycle.

TIM SMEALLIE (Citigroup): Just on that, John, in terms of the FY07 I think you were at pains to highlight that this assumes there is no adverse regulatory outcomes for the rest of this year. We only have an interim decision at 17.70 on band 2 at the moment. It would seem that that might have been a bit of a rushed decision ahead of potential issuance. If we see the ACCC come out and they come up with a final at \$13, what implications does that have I guess for the '07 dividend outlook and also for the longrange guidance?

JOHN STANHOPE: That is something we would have to consider if it happened. I don't want to speculate on it.

SOL TRUJILLO: I think the key point there, Tim, is that operationally hopefully everybody is getting the picture: this team is a competitive leadership team. Just because people have price opportunities doesn't mean they win the customer, because at the end of the day it still takes a service, it takes a deliberate service capability, it takes a service that customers want to buy for them ultimately to get a customer. So we are going to go hard at the market in a very pro-competitive way and building advantage on things that have nothing to do with core infrastructure, but all about adding value for the customer.

GARY PINGE (Macquarie Securities): Just a very quick question, actually, John. A couple of my questions have already been answered. But, with regards to PSTN decline, you are saying that that has stabilised. Can you tell us what the underlying decline for the PSTN would have been in the first two months if you strip out the benefits from the wholesale line rental increase?

JOHN STANHOPE: No, I don't have the number off the top of my head. When we stripped out the increase - I think I said this at the full year - the decline first half to second half was still a decline of about the same order. So it is still where it was in the first half. This is a better way to put it: the rate of decline is still the same.

SOL TRUJILLO: Justin, you had your hand up, and then I am being instructed I have to cut it off because there is other use for the room.

JUSTIN CAMERON (Credit Suisse): Just one more question, Sol. There has been a lot of discussion today obviously along the capex of Telstra going forward, obviously a peak year this year and then going forward, trending down to the 10 to 12 per cent capex to sales target. If you look obviously internationally now and look at your competitors on the PTT side, the average capex to sales ratio is anywhere between kind of 14 to 16 per cent. Looking at '08/'09, and obviously this will have a pretty meaningful impact on your cashflows, how can we look at the Telstra business posttransformation given '07 is the big year? Could we see a step down from the 22 to 24

per cent capex to sales rates down to kind of 17 to 18, which obviously we can see there is kind of potential changes in your free cashflow forecast?

SOL TRUJILLO: We are not giving year-by-year guidance, but if you think about it just logically - I just want to help you think about it - the wireless network build essentially is getting completed in this fiscal year. So that comes out of our spend base. Now, we are also accelerating some of our fixed line spend associated with soft switches and other things that are going to be deployed.

At the same time in this year we are launching all of the big IT spend because, as Greg said, all the boats have been launched. So, as we look at the fiscal year next year, there will be a ratchet down and each year thereafter there is going to be a further ratcheting down because when we get to 2010 we are going to start hitting what I would call the steady state of the business. We will have changed out all of our processes, our systems, we will have built out the networks, we will have retired or have in that year begun most of the retirements of old legacy systems, if we haven't already. So all of that will have allowed us to get to that 10 to 12 per cent.

As we said this morning, this is going to be a different kind of business from a physical element business to a really software driven business. So, as you stair step down, you can probably make whatever reasonable assumptions that you want to make.

Okay. Sorry I have to end it, but before we adjourn today I do have to thank all the people here who what I would call make things work. Now, you saw with the wireless network build that we will work through anything, and as you saw today hopefully we had a surprise, we had a rouge sprinkler that affected us at the passenger terminal. But it didn't stop us. It didn't stop us because we had a team of people that do amazing things here with us today.

I regret that all of that happened, but again there is no stopping us because this is a new Telstra. We have launched this new network that shows what is possible. Again, in two hours, as we think about when the event happened this morning, we were here up and running again. I want to thank all the people that have been involved in making things work. Phenomenal job. I would like to thank the Hilton Hotel, who again responded literally on the minute when we called them and said, "Can we move our meeting here," and all the people that have been involved in reloading the materials, moving the equipment and again getting everything done.

So, you know, most of us always get sage advice from our parents as we are growing up. My father always said to me, "Sol, it is not the bad or the unexpected things that happen that define you, but how you recover is really what counts." In this case I am just extremely proud of the people that have been associated with here today to make today get back on plan so that we can communicate our important message to all of you about the new Telstra.

I want to thank all of you who have had the perseverance, the patience and the desire to hear this story. So thank you for coming. Don't forget, the drinks are on me out here. Enjoy. Thank you very much.

Media O & A

TONY BOYD (Financial Review): Sol, I noticed in your forecast you have obviously increased the amount of revenue from new products. I think it is now in excess of 30 per cent. I wonder if you could give us some more detail about where you think that revenue is going to come from.

SOL TRUJILLO: First and foremost you saw today we launched the most significant, most high-speed broadband wireless network in the world here in Australia, and that is a big part of our future because, as we have done consumer research, here in Australia people have a lot of needs not just to be in one city or one location but to be able to move throughout the country, and not only throughout the country but offshore on occasion, and they like that simplicity of what we can do, but not just by voice but they want to do other things. They want to be entertained, they want to do business, they want to do a lot of things.

The second layer that we talked about that happens within our wireless 3G network, David Thodey talked about, Deena talked about in terms of other services in terms of delivering health care, if you are a State government, if you are a federal government, if you are anybody that is thinking about delivering services remotely, there is a new set of capabilities now that you really couldn't contemplate in the past but now you are going to be able to - educational services and I can go on and on.

At the same time on our broadband platform, on the fixed line side, when you look at BigPond and you look at the growth now that we are starting to generate with additional services beyond just the pure connection for access for speed for whatever customers might choose to do, that is growing. Again, within all of the business, whether it be in the consumer segment, the SME segment or the enterprise segment, it is all about applications and services. So the theme there is about additional benefits, additional services.

Finally, you look at Sensis and you look at the growth that we are generating in that business. Bruce talked about double digit growth at the bottom line, and you saw the second half of the last year getting us to near double digits at the top line. Now, the way that the year unfolds is a little bit lumpy because of the way the books get produced. But at the end of the day we are looking at near double digit growth in our Sensis business as well. So we have a lot of that and we are investing to grow. The nice thing about most of what we are growing is that it is higher margin growth than what we saw a year ago or two years ago in this business.

MATT PEACOCK (7.30 Report, ABC): From your point of view what is worse, do you think: what Telstra management refers to as screwball regulation or government ownership?

SOL TRUJILLO: What Telstra management spends most of our time doing is thinking about customers. We really spend - I hope you saw it today - a lot of our time focused on understanding customers' needs and then spending the rest of our time figuring out how we deliver to customers' needs. So that's our focus.

What happens with the government, what happens with regulators we need to deal with and we need to recognise and we also need to influence to the extent that we can and I think you have seen that we are aggressive in that space. But the vast majority of what we focus on in our time, in our resources, our people and asset allocation is around what we can control and you have seen it today with the launch of our Next G Network.

JANE SCHULZE (The Australian): Firstly, there have been reports that the change of control at Telstra may trigger management gaining a share bonus or share windfall. Can you tell us whether or not that is correct? Secondly, the government is also going to auction spectrum for what they are calling channel A and channel B as part of media reforms. Given what Telstra have announced today with their wireless 3G service, would you be at all interested in the DVBH service or the other services that could possibly be provided on the other channel?

SOL TRUJILLO: Regarding your first question, regarding some sort of change of control with the government, with the ownership changing - - -

JANE SCHULZE (The Australian): (Inaudible).

SOL TRUJILLO: The answer is: if it does, I'm not aware of it. That's not the focus that we have. The Prime Minister has stated for a number of years that the share sale down is part of their objective. So I would say, number 1, I don't think so. Number 2, in terms of the rest of your question on media reform, DVBH - - -

JANE SCHULZE (The Australian): (Inaudible). Would you bid for the spectrum?

SOL TRUJILLO: We are interested in exploring the idea of DVBH. We have done some trials. We have done it in partnership with some other companies here. Obviously that spectrum could be usable in an efficient way to deliver true broadcasting over the air. At the same time, we don't have an interest in getting into very expensive propositions about the cost of that spectrum, just simply because we already have a network now that is capable of delivering broadcast signals the way we think customers want it.

We are now finding in our research that customers like bite size entertainment. They like bite size information. They like doing their work in increments of time. That's why we do e-mail and other things every day on these devices that we carry around. So we are interested, yes, but we are interested in an effective and efficient process that can bring the benefit to Australians in a cost-effective way.

JESSE HOGAN (The Age): How important to achieve this transformation plan is it to have a united board?

SOL TRUJILLO: Having a board that is unified around a strategy is absolutely imperative. When I came here, when the board was recruiting me, obviously I had a long conversation with every board member about the direction, about some of the beliefs that I had and also got a clear understanding of their beliefs because management will always want to make sure that you have a unified board in order to be able to execute what the core strategy is.

JESSE HOGAN (The Age): A lot of today I think has been aimed at high-level investors. In a couple of days probably some lower level investors will be trying to think whether Telstra is worth investing in. Are you thinking about trying to explain at a lower level what is going on with your transformation?

SOL TRUJILLO: Well, we just spent all day long talking about our transformation, providing the information, because all the information that we provide here in this room is lodged so that anybody has access to it, because we are a very open and disclosing company. Since I have been here, telling the truth, saying it like it is, has really been our policy and will always continue to be. We will try to provide as much information as necessary for our customers, for our shareholders and for all those that might be interested in our company.

HELEN McCOMBIE (Lateline Business): A couple of questions. First of all, how wet did you get? Two, on the eve of the prospectus, how would you describe your relationship with the federal government? Three, with the prospectus there has been some talk that you and the federal government have been having conflict about what you are putting in the prospectus about regulation. Has something been resolved there?

SOL TRUJILLO: Well, I can only really address the first part of your question, and that's simply because there are restrictions at this stage in terms of talking about anything to do with T3. Today's series of events, including a bit of a washout, the sprinkler system, the rogue sprinkler head that started pouring water, I personally didn't get wet, but I have to tell you it didn't dampen my enthusiasm for all that we are doing here today.

In terms of what we are here today is not about T3, it is not about prospectuses. This has been planned for a long time. A lot of people have done a lot of hard work across all of Telstra to make today happen. So we are anxious, all employees, if you go into any of our stores, you can go out to our garages, you can go out to almost any part of our company today, I can tell you that the Telstra employee is proud to be wearing that name on their shirt or on their back or with the signage in their store.

GERALDINE CHO (Reuters): Given that the T3 share sale will be launched very soon, would you expect that investors will be put off by the downgrade in earnings to fiscal 20102

SOL TRUJILLO: I can't speculate on what investors are going to do or not. There has been a lot of coverage of our targets, a lot of discounting of our targets since we announced them last November, because they are aggressive targets. But I think what is important is if you are an investor and you look at cashflows of a business that is a key ingredient.

Our fifth vear target in terms of free cashflow generation hasn't changed. If you look at the EBITDA margins that John shared on his chart and that I had earlier in the day, those EBITDA margins will be representative of perhaps some of the best in the world. When you think about a company like Telstra, any telco, any PTT around the world, the biggest challenge for them is replacing old revenues, old PSTN revenues and old revenues that are in decline with new revenues. That means you have to become an innovative company. That means you have to generate new products and new services. That means you have to be aggressive about it. Today you saw a first in the world with Telstra. So we are focused. My view is that should be encouraging and not discouraging.