TELSTRA GROUP LIMITED — Capital/Financing Update 2006

Aug 30, 2006

31 August 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

Telstra sells Australian Administration Services (AAS)

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

Yours sincerely

Pont Gration

Douglas Gration Company Secretary

Media Release

31 August 2006

161/2006

Telstra sells Australian Administration Services (AAS)

Telstra today announced it had sold Australian Administration Services (AAS), the superannuation administration business of its subsidiary KAZ Group, to Link Market Services Limited (Link) for \$215 million, recognising a profit on the sale of approximately \$56 million.

Approved by the Telstra Board and part of Telstra's strategic review announced in November 2005, the sale followed a comprehensive review that determined the superannuation administration services was no longer strategic to the business going forward.

Group Managing Director, Telstra Enterprise and Government, Mr David Thodey, said KAZ remained an important part of Telstra's strategy to provide comprehensive end to end ICT solutions to its enterprise and government customers.

"KAZ has performed extremely well since being acquired by Telstra in July 2004 and this transaction means it can focus on its core services of consulting and providing managed and outsourced services, applications management and systems integration," Mr Thodey said.

KAZ will continue to offer business process outsourcing services which are IT and communications intensive – such as document management and contact centre services – and aligned to the core capabilities of KAZ and Telstra.

The transaction includes 100 per cent of Atune Financial Solutions Pty Ltd and the remaining 50 per cent equity in Money Solutions Pty Ltd.

Link is a leading provider of services and technology to financial market participants in Australasia and has a deep understanding of administration for financial services clients.

Media Contacts: Dawn Willis, KAZ - 0408 271 771 Andrew Maiden, Telstra - 02 9298 5259

Telstra's national media inquiry line is 1300 769 780 and the Telstra Media Centre is located at: www.telstra.com.au/abouttelstra/media

For news, views and discussion on telecommunications in Australia see www.nowwearetalking.com.au

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