TELSTRA GROUP LIMITED — Capital/Financing Update 2004

Mar 7, 2004

8 March 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

Sensis Acquisition of the Trading Post Group

In accordance with the listing rules, I attach an announcement for release to the market.

Yours sincerely

North brake

Douglas Gration Company Secretary

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

FOR IMMEDIATE RELEASE

MEDIA RELEASE

Sensis acquires leading Australian classified advertising business, Trading Post

MELBOURNE: March 8, 2004 – Sensis Pty Ltd today announced it had acquired 100 percent ownership of the Australian-based Trading Post Group from wholly-owned subsidiaries of Dutch company Trader Classified Media NV for a cash consideration of A\$636 million.

Sensis assumes immediate ownership of The Trading Post Group in Australia, a market leader in Australian classified advertising, operating twenty two popular print publications, five complementary online sites, two automotive inserts and Australia's number one classified advertising brand, Trading Post®. The Trading Post Group generates revenue from three principal sources: classified advertisements; commercial display advertisements; and circulation.

Telstra Chief Executive Officer, Dr Ziggy Switkowski, said "This strategic acquisition brings together two leading advertising businesses to create a powerful presence in Australia's fastest growing advertising market – local print and online advertising".

Mr Bruce Akhurst, Group Managing Director Broadband and Media, confirmed that "Stand-alone Trading Post Group revenues will be around A\$148 million in calendar year 2004, and there will be further substantial Sensis and Trading Post Group revenue and cost synergies resulting from this acquisition. The incremental EBITDA to Sensis from this investment and its associated benefits will exceed A\$64 million in the 2004/05 operating year and I'm delighted one of our key growth vehicles, Sensis, has been able to secure a deal that will deliver significant value to Telstra shareholders".

The acquisition meets Telstra's strict investment criteria. It will be cashflow positive in the first year, EPS accretive in year two, provides full operational control, and will deliver attractive EBITDA uplift.

The Chief Financial Officer, John Stanhope, emphasised that this investment left Telstra still within its capital management ratios and would not affect the Board's ability to continue with their current shareholder value enhancing initiatives.

Sensis Chief Executive Officer, Mr Andrew Day, said "We're extremely pleased to have the Australian-based Trading Post operation join the Sensis stable of high quality directory and non-directory advertising assets. The Trading Post acquisition increases our total advertising market share from 13% to around 15% and our online advertising revenue share to approximately 26%, and creates a strong base for further extension into the classified advertising market in Australia.

Mr Day commented "Trading Post is a high growth company and a very strong business in its own right. It's on track to deliver solid revenue growth of around 15% in CY 2004, and has many opportunities for further growth through product enhancement, new publications, new territories and new online category web sites.

"Sensis can deliver significant value to Trading Post to help it grow as the market leader in Australian classified advertising. We will do so by drawing on our core expertise in local advertising and sales, market and product development, and IT".

In return, Trading Post can deliver significant value to Sensis, allowing its Yellow Pages® and White Pages® directory customers access to new products in print and online publications published on a more frequent basis, adding a leading icon Australian brand to the already strong Sensis® brand portfolio, and providing deeper functional content to enhance Sensis' consumer offerings.

Sensis will operate the Trading Post initially as a stand-alone business. Trading Post Group Chief Executive Officer, Mr Roderick McAllery, will continue as CEO and become a member of the Sensis Executive Leadership Team. There will be no change to the current Trading Post Group management structure, which is well established and high performing. Trading Post's staff base of nearly 830 people, and its Australian-based operations and facilities will now come under Sensis management.

Amongst others, the Trading Post Group print publications include Trading Post (general classifieds). Things that Go (automotive), Collectormania (collectables), Auto Trader Xtra (automotive) and Zest For Life (retirement). Its complementary online sites include tradingpost.com.au, autotrader.com.au, thingsthatgo.com.au, buysell.com.au and collectormania.com.au.

-ends-

About Sensis

Sensis is one of Australia's leading directory, advertising, and information providers. Our vision is to connect people, businesses and places 24 hours a day, seven days a week. In realising this vision we accept the challenge that we must provide our customers with innovative new ways to advertise, communicate and do business. To achieve this we offer a powerful, multi-channel solutions portfolio that incorporates directories advertising, voice and online information and advertising, electronic procurement and cataloguing services. These solutions enable us to achieve annual revenues exceeding \$1.2 billion.

Sensis is the advertising subsidiary of Telstra Corporation Limited and manages some of Australia's leading brands such as White Pages®, Yellow Pages®, CitySearch® and Whereis®.

About Trading Post Group Australia Pty Ltd (TPG)

The Trading Post brand is the leading publishing and internet classified business in Australia. TPG's portfolio of titles occupy strong positions in each content category and geographic region with the two oldest brands dating back to 1966 and 1968. TPG's primary focus remains the generalist Trading Post paid ad/paid circulation advertising publications. Most publications are paid ad/paid circulation with classifieds on the pre-paid basis, however, The Melbourne Trading Post and Personal Trading Post also offer pay-on-sale reflecting their original point of differentiation from newspapers. TPG has also strengthened its market penetration and depth of content via the production and distribution of category specific publications.

Historically the company's strength has been its offline products, however, increasing the content of such publications is being replicated to the online environment. TPG manages 5 online publications including Australia's number one classified online site, www.tradingpost.com.au. The company began its online presence in 1996 with the launch of melbournetradingpost.com.au. Classified content on the web is sourced from the business' print databases where advertisers are provided with the option of listing their goods online.

For further information please contact:

Felicity Hand General Manager Sensis Corporate Communications Ph: 61 3 9201 4785 Mb: 0417 566 061

TGISTE CODOCEION LINICO Saisk Acquisitor The TIC CING POST CROUD Monday, 8 March 2004

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ZICCY SWILLOWS 4

Chef Executive Officer TEISTE COTOORTONIKO

Sensis)

Revenue Growth - Both Organic and Acquisitive

Maximise traditional revenues

• Rebalancing
• Value Added Services
• Increase utilisation
• Price innovation
• Customer service
• Reduce costs / improve margin

Transformation 21^st Century IP Network

Téléva k customer driver

Grow Naw WAYA

• E Biogologico
• Modity
• Advertising

Services + Relationships + Efficiency = Profitable Growth

BRUGGVAKINI ISL

Group Managing Director Broadering Reine Medite

Telstifa Corporation Limited

SQIBIS

Trading Post Group Pty Ltd: A High Performance Acquisition

• Sensis acquires Trading Post Group Pty Ltd
• An Australian icon in classified advertising
• A high performance business $\bullet$
• Fits Telstra acquisition criteria value EPS accretive in year 2
• Significant upsides in the future
• High growth business in Telstra's New Wave'

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• A key step in realising the Sensis growth strategy $\bullet$ The eader in local, Australian advertising
• Sensis Will: Ō

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Manage organic growth / Unlock synergies and new value

HARRE HVALGO

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ANTENODISTIC

Our Last Update

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ET SANGER TOOSTER

• Sensis is aiming to achieve 6% sustainable growth $\bullet$
• 4% in print $\frac{1}{2}$
• 25% in online / electronic

Maria A

• Sensis has a clear strategy for growth
• Excellent performances across the business:

RANGE BR

• e.g. Product innovation / Customers / People / Sales / Brand
• Sensis will be the leader in local, Australian advertising
• Sensis will undertake value accretive acquisitions in support of this goal
• LookSmart Australia assets
• Invizage Technology Pty Ltd
• Trading Post Group Pty Ltd

Acquisition of Trading Post Group Pty Ltd

Katalog ay na

• Agreement reached with Trader Classified Media MV $\bullet$
• Sensis will acquire 100% of Trading Post Group Pty Ltd
• Ownership, management control, IP rights $\frac{1}{2}$
• A\$636m cash payment

Ida da An

THE REAL PROPERTY

The Company of the Company

• Operational control assumed immediately
• A key milestone in the achievement of the Sensis growth strategy
• A significant opportunity for Sensis, Telstra and our shareholders

Arierew Day

Chief Executive Officer SERSENTE

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Sensis: Creating the Leader in Local, Australian Advertising

Maria Alberta

Growth will come from five areas: two areas of organic growth complemented by 2 areas of acquisition growth

CONTRACTOR

Domestic Local Advertising M&A Trading Post

Domena Biblings Samker MOZ Invizacio

Evolution to Sensis Interactive Media LookSmart

bitan ohes WAS FINE BEACS

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Terment

3

2

Mallow (Paciets^e White Pages

Non-Directories Advertising Brands

Sensis MediaSmart® CitySearch^®

MINICIAL SCIAL COST Products and Brands

SONSIS

Sensis Direct Access Electronic Write Pages? Magnificio Where S

Print Maline Voice n av Molina

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$\bigcap \mathsf{nlim}\,\square$ Mirolacc

Enhanced Reach to Ready Buyers

RACTES

Audience quality sets Sensis apart

Mariation

THE LEADER

LANDER SERVICE

Eurther enhanced by Whereis^® digital mapping: serving 6.7m maps per month

dependent research of 18 - 64 year olds conducted by TNS in Sydney, Melbourne, Brisbane, Adelaide and Perth. April to September 2003. 2 Independent earch of 18 – 64 year olds conducted by TNS Sydney, Melbourne, Brisbane, Adelaide and Perth, January 2004. 3 Red Sheriff Customer Measurement Sep

The Trading Post Group Pty Ltd

atan ng Kabupat

A high-performance leader in Australian classifieds

SONSIS

Is Ale Channel

Background

TANADA LA PERSONAL

a kacamatan ing Kabupatèn Bandar

• Australian print and online classifieds leader
• $\bullet$ First brands: 1966 and 1968
• Previous owner: Trader Classified Media NV
• Aggressive acquisition platform

An Iconic Classifieds Portfolio

WA TELES

Istrator

22 Publications

TATION COMPANY

THE REAL PROPERTY

27 million circulation

• 17.2million paid
• 9.8million free

Well known titles

• Trading Post
• Things That Go
• Collectormania
• Local Trader
• Buy and Sell
• Zest 4 Life
• Auto Trader xTra

Five Web Sites

• Approx $0.725m$ unique users¹
• Approx 34m page views¹

999 - 999 - 999 - 999 - 999
2000 - 900 - 910 - 910 - 910 - 910 - 920 - 930 - 940 - 940 - 940 - 940 - 940 - 940

Maria Barat Manazira Constantinople ANA TELEVISION STARTES A National Footprint in Print and Online Classifieds TARA TARA diana Kuampisan juun TRADING POST QLD The Oceanal Copies sold: 3.6m Crading Post NT. Copies sold: 0.1m TEATER GADINARY autotrader NSW Copies sold: 4.9 VА opies sold: 0.4m Bwllean 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 1999 - 199 aann mu Erading Oost ${F, {1, 1}, \ldots }$ Crading Oost
contrato means VIC Copies sold: 5.6m SA: TAS Things That Go Copies sold: 2.0m Copies sold: 0.6m TANA ADAMAN

Sensis and The Trading Post Group: A Logical Combination

District

MARTINER

Powerful fundamentals

. Classifieds business leadership

TERRETA DE LA CONSTITUCIÓN DE LA CONSTITUCIÓN DE LA CONSTITUCIÓN DE LA CONSTITUCIÓN DE LA CONSTITUCIÓN DE LA

. Brands

The Company of the Company

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Gallullullul

• C2C audience
• . Deeper content
• . Weekly publication
• . Proven management
• Expanded product portfolio

Operational overlap:

• $.CRM$
• . Sales
• Content management - Publishing
• . Local advertising focus
• . Market leaders
• Growth businesses

Directory business leadership

Brands

gammanaga sa

• Proven management
• Cross-channel publishing capabilities

SANS

• Customer audience
• Advertiser base

Content enhancement... Broader solution base... Weekly publication... A moka novem presenca na mina or letova teho saco d

Powerful Enhancement Opportunities

Checher 4

SALL

Ward is a

The Control State

MANAGE STAR

Sales and Marketing
Bundling and cross-selling across brands
Stronger portfolio: Grow yield / reduce churn
Call centre realignment and sharing
of best practices
Sales force management and sharing of best practices ASLIM BEIDA from
Combined Sensis 12G
Internet Revenue Synergies in FY04/05
Effective channelling of Internet traffic
Cross-selling and bundling of print and online products
Significant IT benefits

Trading Post Group Pty Ltd: A High Performance Business

1. . . . . . . . . . . . . . . . . . .

CONTRACTOR

mana matatan

SON N

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TANA SER

In Australia, revenue and EBIIDA growth is strong

strong FY04/05 EBITDA forecast of A\$64m

TO THE STAR

Includes stand-alone Trading Post Group business plus Sensis-Trading Post Group combined synergies

Stand-alone TPG revenue of A\$ 157m, plus \$A4m in combined revenue and cost synergies

Revenue Synergies

•Enhanced product management and yield

PORT START DES

MARTIN ST

• Price management
• Churn reduction
• Product bundling
• Lead referral

The Second Company

• New business

Cost Savings

$\bullet$ IT savings

• •Corporate and call centre realignment
• •Preliminary sales integration
• •Procurement (eg. paper, print, promotions & advertising, travel, consumables)

Trading Post Management Plans

MARITAL

ET SHAKERS TO THE TIME

TTTT TILLET TILLET

• Operate Trading Post as stand-alone for the foreseeable future

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• Roderick McAllery will remain as CEO $\frac{1}{2}$
• Ensure successful integration and value uplift
• Grow position as a leader in national classified advertising
• Maintain and increase circulation volumes
• Build on the strong online position $\overline{\phantom{a}}$
• Explore and leverage significant enhancement opportunities

JORASIE ALORE

Chantra Long TEGIC COPOCIUS INC.

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Maria Barat da Barat da Barat da Barat da Barat da Barat da Barat da Barat da Barat da Barat da Barat da Bar

Proforma Impact on Telstra: As at 31 December 2003 (1)

Profit and Loss

(amortised over 10 years), Mastheads – Indefinite:

Balance sheet

	1H 03'04	1H 03'04		1H 03'04 1H 03'04		Dec'03	Dec'03	Dec'03(2)	Dec't
		Telstra Trading PostAcq adj (2)		Total		Telstra	Trading Post Acq Adjs		Tot
	\$m	\$m	\$m	\$m		\$m	\$m	\$m	\$m
les Revenue	10,456	66		10,522	Current Assets	5,128	9	$-22$	5,
ITDA	5,324	22		5,346	Non Current Assets	28,905	10	624	29,5
П	3,522	20	-6	3,536	Total assets	34,033	19	602	34,6
erest	355		22	377
C	874	6	-7	873	Total current liabilities	5,023	10	$-7$	5, 6
AT	2,293	14	$-21$	2,286
					Non current liabilites
					Other	3,104			3,
					Borrowing	10,796		638	11,4
					Total Non current liabilitel	13,900	1	638	14,5
					Total liabilities	18,923	11	631	19,5
					Net Assets	15,110	8	$-29$	15, (
									Telstr
Proforma numbers shown as if Trading Post was acquired on 1 July 2003.
Adjustments on acquisition include Goodwill \$183 million (amortised over 20 years), Mastheads - Limited Life \$34 million

Financial Priorities: Free Cash Flow & Revenue Growth

Strong Cash Flow gives us Options

ZICCY SWILLOWS 4

Chef Executive Officer TEISTE COTOORTONIKO

Sensis)

Summary

THE REAL PROPERTY

mara ya ma

• Trading Post is a high performance, growth business
• Supports our strategies for growth

RACIONAL COMPOSITION

Meets Telstra's strict investment criteria

ia de 1964

• Extends Sensis' proposition to the critical buyer audience
• Significant organic opportunities
• Sensis can unlock new value
• New asset will contribute to Sensis:
• Audience and customer base
• Portfolio
• Capabilities

Tanzania (h. 1878).
Naskiĝoj

SAMARI SERIKA SERIKA DI

Antonio de Arabia

QUESTIONS

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