TELSTRA GROUP LIMITED — Capital/Financing Update 2006

Oct 2, 2006

3 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 U.S. \$4,000,000,000 Commercial Paper Program Private Placement Memorandum

Attached is a copy of the 2006 updated U.S. \$4,000,000,000 Commercial Paper Program Private Placement Memorandum to be issued by Telstra on 3 October 2006.

Yours sincerely

Port braken.

Douglas Gration Company Secretary

TELSTRA CORPORATION LIMITED

(ACN 051 775 556)

U.S. \$4,000,000,000

Privately Placed Commercial Paper Program

THE NOTES HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE SECURITIES LAW. BY ITS ACCEPTANCE OF NOTES THE PURCHASER (A) ACKNOWLEDGES THAT, IF IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS THAT TERM IS DEFINED IN RULE 144A UNDER THE SECURITIES ACT, (1) IT IS PURCHASING NOTES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER OUALIFIED INSTITUTIONAL BUYER AND (2) IT IS AWARE THAT THE SELLER MAY RELY ON AN EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, (B) REPRESENTS THAT IT IS EITHER (1) AN INSTITUTIONAL ACCREDITED INVESTOR, AS THAT TERM IS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT. THAT HAS SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT IT IS CAPABLE OF EVALUATING AND BEARING THE ECONOMIC RISK OF AN INVESTMENT IN THE NOTES, INCLUDING, WITHOUT LIMITATION, A BANK, AS DEFINED IN SECTION 3(a)(2) OF THE SECURITIES ACT, WHETHER ACTING IN ITS INDIVIDUAL OR FIDUCIARY CAPACITY, PROVIDED THAT, IF ACTING IN A FIDUCIARY CAPACITY, IT HAS SOLE INVESTMENT DISCRETION WITH RESPECT TO ANY ACCOUNT FOR WHICH IT IS PURCHASING A NOTE, (2) A FIDUCIARY OR AGENT (OTHER THAN A U.S. BANK OR SAVINGS AND LOAN ASSOCIATION OF THE TYPE DESCRIBED IN CLAUSE (B) (1)) PURCHASING NOTES FOR AN ACCOUNT WHICH IS AN INSTITUTIONAL ACCREDITED INVESTOR THAT ITSELF POSSESSES SUCH KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT IT IS CAPABLE OF EVALUATING AND BEARING THE ECONOMIC RISK OF AN INVESTMENT IN THE NOTES OR WITH RESPECT TO WHICH SUCH PURCHASER HAS SOLE INVESTMENT DISCRETION, OR (3) A OUALIFIED INSTITUTIONAL BUYER AND (C) AGREES THAT, THE NOTES ARE NOT BEING ACQUIRED WITH A VIEW TO DISTRIBUTION AND (1) ANY RESALE OF SUCH NOTES WILL BE MADE ONLY (1) TO THE ISSUER. (II) TO ANY OF THE DEALERS DESIGNATED BY THE ISSUER AS SUCH ON THE ISSUER'S U.S. COMMERCIAL PAPER PROGRAM. NONE OF WHICH THE PURCHASER OF NOTES ACKNOWLEDGES SHALL HAVE AN OBLIGATION TO ACOUIRE NOTES, (III) THROUGH ANY SUCH DEALER TO AN INVESTOR REASONABLY BELIEVED BY SUCH DEALER TO BE AN INSTITUTIONAL ACCREDITED INVESTOR OR REASONABLY BELIEVED TO BE A QUALIFIED INSTITUTIONAL BUYER, IN EITHER CASE, ONLY IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT. OR (IV) TO A OUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REOUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT. AND IN EACH OF CASES (I) TO (IV), ONLY IN A MINIMUM AMOUNT OF U.S.\$250.000 FOR EACH HOLDER OF NOTES REPRESENTED HEREBY OR ACCOUNT TO WHICH NOTES MAY BE SOLD OR TRANSFERRED, AND (2) THAT SUCH NOTE WILL BEAR A LEGEND SUBSTANTIALLY AS SET FORTH IN THIS PARAGRAPH.

NO PROSPECTUS OR OTHER DISCLOSURE DOCUMENT IN RELATION TO THE NOTES HAS BEEN LODGED WITH OR REGISTERED BY THE AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION OR THE AUSTRALIAN STOCK EXCHANGE LIMITED. ACCORDINGLY:

• NO NOTE, OR ANY INTEREST OR RIGHT IN RESPECT OF A NOTE, MAY BE OFFERED FOR $(1)$ SUBSCRIPTION OR PURCHASE:
• $(II)$ NO INVITATION TO SUBSCRIBE FOR OR TO BUY A NOTE OR ANY INTEREST OR RIGHT IN RESPECT OF A NOTE, MAY BE MADE: AND

• $(III)$ THE PRIVATE PLACEMENT MEMORANDUM OR OTHER OFFERING MATERIAL RELATING THERETO MUST NOT BE DISTRIBUTEDIN THE COMMONWEALTH OF AUSTRALIA. ITS TERRITORIES OR POSSESSIONS, UNLESS:

• THE MINIMUM AGGREGATE CONSIDERATION PAYABLE BY EACH OFFEREE IS AT LEAST $(A)$ AUDS500,000 (DISREGARDING MONEYS LENT BY THE OFFEROR OR ITS ASSOCIATES) OR THE OFFER OR INVITATION OTHERWISE DOES NOT REQUIRE DISCLOSURE TO INVESTORS IN ACCORDANCE WITH PART 6D.2 OF THE CORPORATIONS LAW OF AUSTRALIA: AND

• SUCH ACTION COMPLIES WITH ALL APPLICABLE LAWS AND REGULATIONS. $(B)$

AN ASSOCIATE (AS DEFINED IN SECTION 128F OF THE INCOME TAX ASSESSMENT ACT OF 1936 OF AUSTRALIA ("TAX ACT")) OF TELSTRA CORPORATION LIMITED ("TELSTRA") ("ASSOCIATE") MAY NOT (DIRECTLY OR INDIRECTLY) ACOUIRE THE NOTES ISSUES BY TELSTRA ("TELSTRA NOTES") OR ANY INTEREST IN OR RIGHT IN RESPECT OF THE TELSTRA NOTES (OTHER THAN SUCH A PERSON WHO ACOUIRES SUCH NOTES OR SUCH INTEREST OR RIGHT THEREIN, IN THE CAPACITY OF A DEALER, MANAGER OR UNDERWRITER IN RELATION TO THE PLACEMENT OF THE TELSTRA NOTES).

EACH PERSON WHO ACQUIRES A TELSTRA NOTE OR SUCH INTEREST OR RIGHT BY SUCH ACQUISITION WARRANTS TO TELSTRA THAT SUCH PERSON IS NOT AN "ASSOCIATE" OF TELSTRA.

ANY "ASSOCIATE" OF TELSTRA WHO HOLDS A TELSTRA NOTE OR ANY INTEREST IN OR RIGHT IN RESPECT OF THE TELSTRA NOTES WILL NOT BE ENTITLED TO RECEIVE ANY PAYMENT OF ADDITIONAL AMOUNTS FROM TELSTRA IN RESPECT OF ANY AMOUNT DEDUCTED BY TELSTRA ON ACCOUNT OF AUSTRALIAN INTEREST WITHHOLDING TAX FROM THE INTEREST (OR AMOUNTS IN THE NATURE OF INTEREST) PAYABLE UNDER THE TELSTRA NOTES.

PLACEMENT AGENT:

Merrill Lynch Money Markets Inc. (Up to 270 days from date of issue)

Merrill Lynch, Pierce, Fenner & Smith Incorporated (Bevond 270 days and up to 365 days from date of issue)

The date of this Private Placement Memorandum is October 2006

TERMS OF U.S. COMMERCIAL PAPER NOTES (THE "NOTES")

Securities:	Unsecured Notes, ranking pari passu as to priority of payment with all other unsecured and unsubordinated indebtedness of Telstra Corporation Limited (the "Company", "Issuer" or "Telstra"), except indebtedness mandatorily preferred by law.
Amount:	Not exceeding at any one time outstanding an aggregate face or principal amount of U.S. \$4,000,000,000.
Exemption:	The Notes are exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) thereunder, and cannot be resold or otherwise transferred unless registered or an exemption from registration is available.
Offering Price:	Par less a discount representing an interest factor or, if the Notes are interest bearing, at par.
Interest Rates
or Discount Factors:	As agreed upon by the purchaser and the Company.
Interest Discount Payments:	Payable at maturity.
Face or Principal Amounts:	U.S. \$250,000 minimum face or principal amount.
Maturities:	Up to 365 days from date of issue.
Redemption:	The Notes will not be redeemable by the Company or subject to voluntary prepayment prior to maturity.
Form:	Each note will be evidenced by a master note (interest bearing or discount) registered in the name of the nominee of The Depository Trust Company's nominee. Each master note (the "Book-Entry Notes") will be deposited with the Issuing and Paying Agent as sub-custodian for The Depository Trust Company ("DTC") or its successor. DTC will record by appropriate entries on its book- entry registration and transfer system, the respective amounts payable in respect of Book-Entry Notes. Payments by DTC participants to purchasers for whom a DTC participant is acting as agent in respect of Book-Entry Notes will be governed by the standing instructions and customary practices under which securities are held at DTC through DTC participants.
Settlement:	Unless otherwise agreed to, same-day basis, in immediately available funds.
Issuing & Paying Agent:	Citibank, N.A. 111 Wall Street, 5 th Floor New York, NY 10043

PURPOSE

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 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.

CREDIT RATINGS

Ratings are based on current information furnished to the rating agencies by the Company and information obtained by the rating agencies from other sources. Because ratings may be changed, superseded or withdrawn as a result of changes in, or unavailability of, such information, a prospective purchaser should verify the current long-term and commercial paper ratings of the Company before purchasing Notes.

Ratings are not a recommendation to purchase, hold or sell the Notes, inasmuch as the ratings do not comment as to market value or suitability for a particular investor. Such ratings are only accurate as of the date hereof, as they have been obtained with the understanding that Standard & Poor's Rating Group and Moody's Investors Service. Inc. would continue to monitor the credit of the Company and make future adjustments to such ratings to the extent warranted. The ratings may be changed, superseded or withdrawn, and therefore, a prospective purchaser should check the current ratings before purchasing the Notes.

The credit ratings of the Issuer can be found at: www.moodys.com and www.standardandpoors.com.

COMPANY INFORMATION

We are Australia's leading telecommunications and information services company, with one of the best known brands in the country. We offer a full range of services and compete in all telecommunications markets throughout Australia and certain overseas countries.

Our main activities include the provision of:

• basic access services to most homes and businesses in Australia;
• local and long distance telephone calls in Australia and international calls to and from Australia;
• mobile telecommunications services:
• broadband access and content;
• a comprehensive range of data and Internet services (including through Telstra BigPond®, Australia's leading Internet service provider (ISP));
• management of business customers' IT and/or telecommunications services;
• wholesale services to other carriers, carriage service providers (CSPs) and ISPs;
• advertising, search and information services (through Sensis, Australia's leading directory and search company); and
• cable distribution services for FOXTEL's cable subscription television services.

Our international business includes CSL New World Mobility Group ("CSL"), one of Hong Kong's leading mobile operators, TelstraClear Limited ("TelstraClear"), the second largest full service carrier in New Zealand and Reach Ltd ("REACH"), a provider of global connectivity and international voice and satellite services, as well as SouFun, China's leading real estate and home furnishings website.

One of our major strengths in providing integrated telecommunications services is our extensive geographical coverage through both our fixed and mobile network infrastructure. This network and systems infrastructure underpins the carriage and termination of the majority of Australia's domestic and international voice and data telephony traffic.

INCORPORATION BY REFERENCE

The Issuer's Annual 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 these announcements may be downloaded from the following internet location: www.telstra.com.au/abouttelstra/investors/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

Any other questions can be directed to:

Investor Marketing Department Merrill Lynch Money Markets Inc. 4 World Financial Center - 11th Floor New York, New York 10080 $(212)$ 449-4843

AUSTRALIAN INTEREST WITHHOLDING TAX

In the event the Company is required by law to withhold or make any deduction for any taxes, levies, duties, charges, assessments or other governmental charge imposed by the Commonwealth of Australia or any political subdivision or taxing authority thereof or therein ("taxes") from amounts payable on any Note, the Company will pay such additional amounts as will result in the receipt by the holder of such Note of an amount which, after deduction of all taxes, equals the amount that would have been payable had no such deduction or withholding been required, except that no such additional amounts will be payable with respect to any taxes that would not have been imposed but for the holder of such Note:

• (a) being a resident, domiciliary or national of, or engaging in business or maintaining a permanent establishment or being physically in, the Commonwealth of Australia or any of its territories or any political subdivision thereof or having some connection with the Commonwealth of Australia other than the mere holding of such Note:
• (b) presenting such Note for payment in the Commonwealth of Australia or any of its territories or any political subdivision thereof, unless such Note could not be presented for payment elsewhere;
• (c) presenting such Note more than thirty (30) days after the date on which the payment in respect of such Note first became due and payable except to the extent that the holder would have been entitled to such additional amounts on presenting such Note for payment on the last day of such period of thirty (30) days;
• (d) failing to comply with any application certifications, information, documentation or other reporting requirements of the Commonwealth of Australia or any political subdivision or taxing authority thereof as a precondition to relief or exemption from such taxes; or
• (e) being an associate of the Issuer for the purposes of section 128F(6) of the Income Tax Assessment Act 1936 of Australia.

CONSENT TO SERVICE OF PROCESS

The Company has agreed to accept the jurisdiction of the United States District Court for the Southern District of New York and the courts of the State of New York in respect of any action instituted by the holder thereof and has irrevocably appointed CT Corporation System of 1633 Broadway, New York, New York 10019, as its authorized agent therein upon whom process may be served in any such action.