TELSTRA GROUP LIMITED — Capital/Financing Update 2006

Oct 18, 2006

19 October 2006

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

2006 Updated New Zealand Commercial Paper Program Information Memorandum

Attached for your information is a copy of the 2006 updated New Zealand Commercial Paper Program Information Memorandum to be issued today by Telstra.

Yours sincerely

North braking

Douglas Gration Company Secretary

TELSTRA CORPORATION LIMITED $(ABN 33 051 775 556)$

New Zealand Commercial Paper Program

Information Memorandum

Effective Date: 13 October 2006

Arranger ANZ National Bank Limited

CONTENTS

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IMPORTANT NOTICE
PROGRAM SUMMARY
DEALER DIRECTORY
ISSUER ARRANGER and REGISTRAR

IMPORTANT NOTICE

Purpose of this Information Memorandum

This Information Memorandum has been prepared solely for private circulation to selected institutions or other sophisticated investors who are able to properly assess the risks and benefits of investing in securities, either as principal or agent. This Information Memorandum is not intended to provide the sole basis of any credit or other evaluation and it is not a recommendation, offer or invitation to purchase any Notes (as described in the Program Summary below).

Copies of this Information Memorandum may be downloaded from the following internet location:

www.telstra.com.au/abouttelstra/investor/treasury/foreign_documentation.cfm

Source of the information

The Issuer accepts responsibility for the information contained in, and has authorised the distribution of, this Information Memorandum. No representation or warranty, expressed or implied as to the accuracy or completeness of any information in this Information Memorandum, or the Accounts (defined below), is made by ANZ National Bank Limited as Arranger or by any of the Dealers.

Neither the Arranger nor the Dealers shall have any liability for any errors or omissions (including for negligence) in this Information Memorandum, and each recipient waives all claims in this regard.

Currency of the information

The information contained in this Information Memorandum, and the information contained in the audited balance sheet and profit and loss accounts of the Issuer in the form most recently published for the time being (the Accounts), have been prepared and are correct:

• $(a)$ in the case of this Information Memorandum, as at the date of this Information Memorandum; and
• $(b)$ in the case of any Accounts, as at the last date of the period to which those Accounts relate.

(in each case, the Effective Date).

The delivery of this Information Memorandum and the Accounts at any time after their Effective Date does not imply that the information contained in this Information Memorandum or those Accounts is correct at any time subsequent to its Effective Date. Accordingly, none of the delivery of this Information Memorandum or the Accounts or any invitation or offer for sale or sale of the Notes is a representation or warranty that:

• there has been no change since the Effective Date of this Information Memorandum or, as $(a)$ the case may be, the Accounts in the affairs or financial condition of the Issuer; or
• the information contained in this Information Memorandum is correct at any time after its $(b)$ Effective Date.

The Issuer has undertaken to the Arranger and the Dealers to update this Information Memorandum if it becomes aware that this Information Memorandum is inaccurate or incomplete in any material respect.

Restriction on provision of other information

No person has been authorised by the Issuer to give any information or to make any representation unless it is:

• $(a)$ contained in or consistent with this Information Memorandum:
• $(b)$ comprised of copies of written confirmations of ratings issued by a rating agency in relation to the Notes:
• $(c)$ information that the Issuer has approved in writing or that the Issuer has authorised to be released (unless it has been withdrawn by the Issuer or the Issuer has advised the person that it is incorrect or out of date); or
• $(d)$ information that is in the public domain (unless it has been withdrawn by the Issuer or the Issuer has advised the person that it is incorrect or out of date).

If any other information or representation is given or made, it must not be relied upon as having been authorised by the Issuer, the Arranger or the Dealers.

Recipients must make own investigations and decision

This Information Memorandum has been prepared solely for general information purposes and is not specific advice to any particular recipient or person.

Each recipient of this Information Memorandum is taken to have made its own investigation and appraisal of the condition (financial and otherwise) of the Issuer. Neither the Arranger nor any of the Dealers (nor their respective officers, directors or employees) undertakes to review the business or financial affairs of the Issuer or advise the holders of Notes of any information coming to its attention with respect of the Issuer.

Each recipient of this Information Memorandum must also determine for itself whether to purchase or otherwise acquire any of the Notes without reliance on the Arranger or the Dealers and based on such documentation and information as it deems appropriate at that time.

Dealer disclosures

The Dealers disclose that they, their subsidiaries, directors and employees:

• $(a)$ may have pecuniary or other interests in the Notes and they also have interests pursuant to other arrangements; and
• $(b)$ may receive fees, brokerage and commissions, and may act as principal in any dealing in the Notes.

Australian interest withholding tax

Notes are to be offered for sale in such a way as to satisfy the "public offer test" for Australian tax purposes and therefore qualify for an exemption from Australian interest withholding tax. Therefore, any interest (including notional interest) payable to Noteholders on the Notes should not be subject to Australian interest withholding tax. To ensure compliance with the requirements of the public offer test, prospective Noteholders must notify the Arranger, the Dealers or the Issuer if they are an associate of the Issuer. If the public offer test is not satisfied, Australian interest withholding tax will apply at a rate of 10% to any interest (including notional interest) payable to Noteholder on the Notes.

Selling and distribution restrictions

Notes or interests in Notes may only be sold or offered for sale, and this Information Memorandum may only be distributed:

• $(a)$ within New Zealand; and
• $(b)$ $(i)$ to a person whose principal business is the investment of money or who, in the course of and for the purposes of its business, habitually invests money or who in all the circumstances can properly be regarded as having been selected otherwise than as a member of the public: or
• $(ii)$ to persons who are each required to pay a minimum subscription price of at least NZ\$500,000 for the Notes before the allotment of those Notes (disregarding any amounts payable, or paid, out of money lent by the Issuer or any associated person of the Issuer); or
• in other circumstances where there is no contravention of the Securities Act 1978 of $(iii)$ New Zealand (or any statutory modification or re-enactment of, or statutory substitution for, the Securities Act 1978 of New Zealand).

No Noteholder or person holding an interest in a Note may sell or offer for sale any Note or any interest in a Note except in accordance with paragraphs (a) or (b). By its purchase of a Note or of an interest in a Note, the purchaser agrees to indemnify the Issuer in respect of any expense, loss or liability sustained or incurred by the Issuer as a result of the breach by that person or this restriction.

Transfer restrictions

While the Notes are lodged in the Austraclear New Zealand System, Notes or interests in Notes may only be transferred to a person that satisfies all of the following requirements:

• $(a)$ it is an Austraclear member that is permitted by the Austraclear System to hold Notes (unless the relevant Note has been Uplifted from the Austraclear System as allowed by the terms of the Note – see the Program Summary below);
• $(b)$ it is either:
• $(i)$ a tax resident of New Zealand and has provided an exemption certificate issued under Section NF 9 of the Income Tax Act 1994 or Section NF 9 of the Income Tax Act 2004, or a certified copy of one, to the Registrar; or
• $(ii)$ a registered bank under the Reserve Bank of New Zealand Act 1989; and
• $(c)$ it holds the Note in its own right or as nominee, trustee or agent for the benefit of another person that is also either:
• a tax resident of New Zealand and in respect of which it has provided an exemption $(i)$ certificate issued under NF 9 of the Income Tax Act 1994 or Section NF 9 of the Income Tax Act 2004, or a certified copy of one, to the Registrar; or
• $(ii)$ a registered bank under the Reserve Bank of New Zealand Act 1989.

Each beneficial holder of any interest in a Note indemnifies the Issuer against any liability to withhold resident withholding tax or non-resident withholding tax that may be imposed on the Issuer due to a failure to comply with the transfer restrictions in paragraphs (a) to $(c)$ .

References to credit ratings

There are references in this Information Memorandum to the corporate credit rating of the Issuer. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the relevant rating agency. The credit ratings of the Issuer can be found at:

www.telstra.com.au/abouttelstra/investor/treasury/index.cfm

Documents incorporated by reference

The Accounts are incorporated by reference in, and form part of, this Information Memorandum.

Copies of the Accounts may be downloaded from the following internet location:

www.telstra.com.au/abouttelstra/investor/annual reports.cfm

All announcements provided by the Issuer to the Australian Stock Exchange Limited pursuant to the Issuer's continuous disclosure obligations under the Corporations Act 2001 are incorporated by reference in, and form part of, this Information Memorandum. Copies of the announcements may be downloaded from the following internet location:

www.telstra.com.au/abouttelstra/investor/asx announcements.cfm.

To the extent that a statement contained in a subsequent document which is or is deemed to be incorporated in this Information Memorandum by reference modifies or supersedes any earlier statement, that earlier statement is modified or superseded for the purpose of this Information Memorandum.

Date of this Information Memorandum

This Information Memorandum is dated 13 October 2006.

PROGRAM SUMMARY

Issuer	Telstra Corporation Limited ABN 33 051 775 556
Arranger	ANZ National Bank Limited
Dealers	The names and contact details of the current Dealers are contained in the Dealer Directory.
Program	A fully revolving non-underwritten program for the issue of commercial paper (Notes) through the Austraclear New Zealand System.
Program Amount	There is no limit on the aggregate face value of Notes that may be issued under the Program.
Minimum Subscription	The minimum subscription price that may be paid by a Noteholder for the Notes or interests in Notes is NZ\$500,000.
Purpose	Proceeds from the issue of Notes will be used for general corporate funding requirements.
Term	The Program continues until terminated by the Issuer giving 10 days' notice to the Arranger and the Dealers.
Form and denomination of Notes	Notes will be constituted under a Deed Poll of the Issuer dated 13 October 2006 (which in respect of Notes issued on and from 13 October 2006 supersedes and replaces a Deed Poll of the Issuer dated 1 October 2002). Notes will be issued as uncertificated instruments, held on a register operated by the Registrar in accordance with a FINEWISS Registry Agreement dated 13 October 2006. As long as Notes remain in the Austraclear New Zealand System, the only registered Noteholder will be New Zealand Central Securities Depository Limited who will hold the Notes on behalf of Austraclear New Zealand members in accordance with the Austraclear New Zealand Rules. Notes will only be issued at a discount and will not bear interest. Notes will be denominated in New Zealand Dollars and be issued, subject to the minimum subscription price of NZ\$500,000, in denominations of NZ\$50,000 or an integral multiple of NZ\$50,000, as agreed by the Issuer and the relevant Dealer.
Holding and trading in Notes	Notes may only be held in and traded through the Austraclear New Zealand System in New Zealand in accordance with the Austraclear New Zealand Rules. A Note may only be uplifted from the Austraclear New Zealand System in accordance with the Austraclear New Zealand Rules if the Issuer is subject to certain insolvency events or where, for any reason, Notes otherwise cease to be traded in significant numbers. Each recipient of the Information Memorandum must make its own

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	enquiries regarding the operation of the Austraclear New Zealand System and the risks associated with owning and dealing in interests in Notes through the Austraclear New Zealand System. The Issuer will not be liable for any loss, liability or expense that any purchaser of an interest in a Note may incur as a result of a failure or ineffectiveness of the Austraclear New Zealand System or the Austraclear New Zealand Rules or of any failure by any person (other than the Issuer) to comply with the Austraclear New Zealand rules. Notes may only be sold or offered for sale within New Zealand and to tax residents of New Zealand (see Selling and distribution restrictions and Transfer restrictions in Important Notice above for more details and other restrictions).
Tenor of Notes	The tenor of the Notes will be between 4 and 365 days, as agreed by the Issuer and relevant Dealer.
Status of Notes	Notes will constitute unconditional debt obligations of the Issuer and rank equally with all other unsecured and non-subordinated indebtedness of the Issuer except liabilities mandatorily preferred by law.
Registrar	Reserve Bank of New Zealand PO Box 2498
	2 The Terrace Wellington New Zealand
Ratings	The credit ratings of the Issuer can be found at:
	www.telstra.com.au/abouttelstra/investor/treasury/index.cfm
Governing law	The Notes will be governed by the laws of New Zealand.
Taxes	Investors should obtain their own taxation advice regarding the taxation implications of investing in Notes.
Copies of documents	Copies of the Deed Poll and the FINEWISS Registry Agreement may be downloaded from the following internet location:
	www.telstra.com.au/abouttelstra/investor/treasury/foreign_documentation.cfm
Deed Poll	Notes will be issued on the terms and conditions contained in the Deed Poll.

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DEALER DIRECTORY

ANZ National Bank Limited

Level 28 ANZ Centre 23-29 Albert Street PO Box 1642 AUCKLAND

Contact: Institutional Dealers Telephone: (09) 377 9450 Facsimile: (09) 357 4030

Westpac Institutional Bank

Level 15 188 Quay Street PO Box 934 Auckland

Contact: Institutional Dealers Telephone: $(09)$ 363 1299 $(09)$ 3673838 Facsimile:

Bank of New Zealand

Level 21 State Insurance Tower 1 Willis Street PO Box 2392 Wellington

Contact: Interest Rate Sales Telephone: (04) 473 9707 Facsimile: (04) 474 6266

ISSUER DIRECTORY

Telstra Corporation Limited

Level 35 242 Exhibition Street Melbourne Vic 3000

Contact: Corporate Treasurer Telephone: (03) 9634 8643 Facsimile: (09) 357 4030 www.telstra.com.au/abouttelstra/contact/index.treasury

ARRANGER

ANZ National Bank Limited

Level 28 ANZ Centre 23-29 Albert Street PO Box 1642 AUCKLAND

Contact: Institutional Dealers Telephone: (09) 377 9450 Facsimile: (09) 357 4030

REGISTRAR

Reserve Bank of New Zealand 2 The Terrace PO Box 2498 Wellington New Zealand

Telephone: 64 4 472 2029 Fax: 64 4 473 8554

LEGAL ADVISERS

Bell Gully

Vero Centre 48 Shortland Street PO Box 4199 Auckland New Zealand