TELSTRA GROUP LIMITED — Capital/Financing Update 2005

May 17, 2005

18 May 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

Telstra announces plan to issue a €1 billion Eurobond during June

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

Yours sincerely

Pont brake

Douglas Gration Company Secretary

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

Media Release

18 May 2005

177/2005

Telstra announces plan to issue a $61$ billion Eurobond during June

Telstra today announced plans to issue a Eurobond of up to $\epsilon$ 1 billion with a maturity of five to 10 years.

This bond issue is to meet Telstra's major long term funding requirements for the coming 2005/2006 financial year.

Roadshow presentations will be conducted in several key European centres by Telstra's Chief Financial Officer, John Stanhope, accompanied by Corporate Treasurer, Cliff Davis and will target key institutional investors.

Mr Stanhope said the proposed borrowing, to be conducted under Telstra's Global Debt Program, would further develop Telstra's long standing presence in the Euro market, in which it was a regular issuer.

"Current market conditions are considered strong in an environment where there is a general shortage of new corporate issuance compared to aggregate investor demand," he said.

"We feel confident that European capital markets are in good shape, despite the impact of recent downgrades in the US Motor vehicle industry, and that investors have a sound understanding of Telstra and will provide solid support for the new issue".

Mr Stanhope said he was looking forward to meeting with investors and was confident that the Euro investor community will be quite capable of understanding and evaluating the processes and developments taking place in Telstra and the Australian telecommunications business environment.

The proceeds of the issue will be used principally for general corporate funding purposes and to refinance maturing long term debt.

Telstra has appointed JPMorgan, BNP Paribas, Deutsche Bank and Barclays to act as joint lead managers for the proposed issue.

Telstra is Australia's leading telecommunications services provider with long term rating of $A^+$ (negative outlook) by S&P, A1 (negative outlook) by Moody's and $A+$ (stable) by Fitch.

Kerrina Lawrence

Telstra Media Relations Tel: $+61396345611$ Mobile: $+61419352313$

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