TELSTRA GROUP LIMITED — Capital/Financing Update 2004

Sep 5, 2004

6 September 2004

The Manager

Company Announcements Office Australian Stock Exchange 10th Floor, 20 Bond 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

Telstra secures Damovo Australia for \$64.3 million

In accordance with the listing rules, attached is a copy of a media announcement for release to the market.

Yours sincerely

Pont Grati

Douglas Gration Company Secretary

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

Media Release

6 September 2004 300/2004 Telstra secures Damovo Anstralia for \$64.3 million

Telstra today announced it had signed an agreement to acquire leading business solutions provider Damovo Australia for an enterprise value of \$64.3 million, positioning it well in the fast growing IP Customer Premises Equipment (CPE) sector.

Damovo is a large national multi-vendor CPE maintenance provider covering leading CPE brands including Ericsson, NEC, Fujitsu, Nortel, Mitel, Cisco, Siemens and Alcatel. Damovo also resells PABX and IP enabled PABX products and applications for Ericsson, Mitel and other leading vendors and also provides call centre solutions for large and medium sized companies.

This acquisition underpins Telstra's strategy to deliver growth by offering business customers the ability to source the full range of telecommunications and IT services through a single provider.

Telstra Business and Government Group Managing Director, David Thodey, said Damovo provided Telstra with additional capability to provide PABX services as a part of an integrated telecommunication solution and also the provision of services such as voice and call centre solutions that Telstra manages on behalf of our customers.

"Additionally, as businesses consider IP in the coming years. Damovo will give us significant CPE maintenance and product capability alongside our industry leading IP networks and applications such as telephony and multi-media."

Telstra's Business and Government Managing Director, Business segment, Christine Holgate, said Telstra's ability to package IP CPE with carriage and applications was critical at a time when many businesses were upgrading their CPE.

"Damovo allows Telstra to tailor end to end communication packages for small and medium businesses that provide them with the productivity and competitive advantages of new technologies," Ms Holgate said.

According to analysts, Frost and Sullivan, IP PABX is expected to make up more than 50 per cent of the CPE market from the current 35 per cent by 2007. Damovo is well positioned to take advantage of this trend as a leading provider of CPE equipment and maintenance services supported by a well-respected national dealer network.

"Telstra will have a strong platform from which it can benefit as many businesses commence upgrading their CPE capability in 2005 when the six year life cycle for PABX systems finishes following Y2K upgrades," Ms Holgate said.

Telstra's national media inquiry line is 13 1639 and Media Centre is located at: www.telstra.com.au/communications/media

"Telstra will complement its core strength in telecommunications with Damovo's capabilities in designing, installing, maintaining and managing customers' CPE requirements using its well established sales and maintenance businesses and dealer networks.

The acquisition recognises Telstra's customer feedback that they want a single point of contact for all CPE and network related issues."

Ms Holgate said customers were seeking a staged transition to IP environments that maximised the use of their existing PABX equipment.

"The move to IP has been supported by significant investments in PABX functionality and this has ensured that both CPE and network based IP services remain important solutions for customers," she said.

The acquisition met Telstra's investment criteria providing operational control, being EPS accretive and cash flow positive in year two and was consistent with its capital management strategy. The acquisition price represents an EBITDA multiple of approximately five times Damovo's latest management forecasts.

Damovo currently manages more than 4000 business customers including ANZ Bank, Australian Taxation Office, and Department of Foreign Affairs. It also partners with Telstra on several of its largest services contracts including National Australia Bank.

Completion of the transaction is subject to some contractual conditions and Telstra expects to complete the acquisition in the coming weeks.

Telstra media contact:

Warwick Ponder 02 9298 4619