TELSTRA GROUP LIMITED — Capital/Financing Update 2015

Mar 26, 2015

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27 March 2015

The Manager

Market Announcements Office Australian Securities Exchange 4[th] Floor, 20 Bridge Street SYDNEY NSW 2000

Office of the Company Secretary

Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA

General Enquiries 08 8308 1721 Facsimile 03 9632 3215

ELECTRONIC LODGEMENT

Dear Sir or Madam

Letter to Shareholders

In accordance with Listing Rules, I enclose the following letter to Shareholders provided with Shareholders’ personalised DRP application forms.

Yours faithfully

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Damien Coleman Company Secretary

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

27 March 2015

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DIVIDEND REINVESTMENT
PLAN
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Dear Shareholder

On 12 February 2015 we announced we were reactivating our Dividend Reinvestment Plan (DRP) for shareholders, making it available from the Financial Year 2015 final dividend, to be paid in September 2015.

Our decision to reactivate the DRP followed feedback from our shareholders and is consistent with Telstra’s capital management framework. Telstra’s capital management framework is supported by clearly defined objectives and the principles of maintaining a tight financial discipline, delivering growth and maximising returns for shareholders.

Telstra expects shares allocated to participants under the DRP for the final dividend to be sourced through an on-market purchase and transfer of shares to participating shareholders. No discount will apply to the allocation price under the DRP and no new share capital will be issued, although Telstra has the discretion to issue new shares in the future. The plan has been structured and will be managed in the most efficient way possible to minimise costs to Telstra and shareholders.

From September 2015 the DRP will enable shareholders to reinvest either all or part of their dividend payments into additional fully paid Telstra shares.

Key features of the DRP (Subject to the DRP Rules)

• Participation in the DRP is optional and available to shareholders with registered addresses in Australia and New Zealand.

• No brokerage or other transaction costs will be payable by shareholders on shares acquired under the DRP.

• Shareholders may participate for all or part of their shareholding and there is no minimum or maximum limit on the number of their shares that may participate.

• Shares allocated under the DRP will rank equally with existing shares on issue.

• Statements will be provided for each dividend the DRP applies to.

• Once a shareholder elects to participate, the DRP will continue to apply for future dividend payments, unless a participating shareholder advises otherwise.

Donating your residual to charity – collectively our shareholders can make a difference.

There are many ways that Telstra works to create a brilliant connected future for everyone. This initiative to donate DRP residual amounts provides an opportunity to contribute to this aspiration. After the DRP share allocation is calculated, a residual amount may result for your shareholding that is less than the price of one share. Under the DRP, this residual will be donated to one or more selected charities recommended by the Telstra Foundation.

For over a decade the Telstra Foundation has worked closely with charities on “tech for good” projects that through this opportunity, our shareholders can also contribute to this work to enable Australians to enjoy Before each DRP Election Date, the Telstra Foundation website (www.telstrafoundation.com) will feature the DRP charity and showcase how your donations will change lives. We hope our shareholders will embrace this initiative – collectively we can make a difference.

Your dividend statement will show your donation amount and if it is more than $2 you can use this statement for tax purposes.

TELSTRA CORPORATION LIMITED (ABN 33 051 775 556)

What if I do not wish to donate my residual to Charity?

If you do not wish to make a donation of your DRP residual amount to help this cause, you may opt out by contacting the Telstra Share Registry on 1300 88 66 77 (Australia) or 0800 835 787 (New Zealand). If you opt out, your residual amount (if any) will be carried forward, without interest and added to your next dividend.

For further information on the DRP including the rules of the DRP, please visit our website www.telstra.com/drp.

Telstra recommends shareholders seek financial advice and read the full terms and conditions set out in the DRP Rules before deciding whether to participate.

In order to participate in the DRP for the final dividend, you will need to ensure your enclosed DRP application form is lodged, or your online election is made, by no later than 28 August 2015.

For more information please visit www.telstra.com/drp or contact the Telstra Share Registry by phone on 1300 88 66 77 (Australia) or 0800 835 7872 (New Zealand).

Yours sincerely

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Catherine B Livingstone AO Chairman

TELSTRA CORPORATION LIMITED (ABN 33 051 775 556)

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Dividend Reinvestment Plan
FAQs
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Who can participate?

All shareholders of fully paid Telstra ordinary shares who are resident in, and whose address on the register of shareholders is in, Australia or New Zealand may participate in the DRP, subject to certain limits (set out in the DRP plan rules).

How do I participate in the DRP?

Make your election online or complete a participation notice and return it to our share registry (Link Market Services).

Can I participate in the DRP for some of my shares?

Yes, you can nominate all of your shares or a specific number of your shares to participate in the DRP. For shares not participating in the DRP, dividends will be paid in the usual way.

new participation notice. The variation will be effective from the next dividend payment, provided that the election is received by 5.00 pm (Melbourne time) (or such other time as Telstra specifies) on the DRP Election Date for the relevant dividend. Telstra will announce the relevant dividend record date and DRP Election Date for each dividend to the ASX at the time it announces the dividend and make it available on its website www.telstra.com.au/aboutus/investors/.

At what price will the shares be allocated?

Shares will be allocated at an average of the daily closing market price over a period of at least 5 trading days (Allocation Price), in accordance with the DRP Rules. The Allocation Price may be reduced by a discount, which the Board may determine from time to time and announce to the ASX. Telstra does not currently intend to offer any discount to the Allocation Price.

When will my participation begin?

Your participation in the DRP will take effect for a particular dividend if your online election / participation notice is received by the relevant DRP Election Date. Unless Telstra determines otherwise, the DRP Election Date for a dividend will be 5:00pm (Melbourne time) on the first business day following the record date for that dividend. You can find the Telstra DRP election dates for forthcoming dividends at www.telstra.com.au/ aboutus/investors/.

For elections received after the DRP Election Date, participation will begin from the first dividend record date after receipt of your online election or participation notice.

If I was registered to participate in the DRP prior to its amendment on 12 February 2015, does my election still stand?

No. All participation notices and elections made prior to Telstra’s announcement of the update of the DRP Rules on 12 February 2015 no longer apply. If you wish to participate in the DRP you must make a new election online or complete a new participation notice and return it to our share registry (Link Market Services).

What happens if I have more than one shareholding?

You must lodge a separate election for each shareholding registered under different names or holding numbers.

Can I change my participation at any time?

The Allocation Price may be determined after the DRP Election Date, so you may not know the Allocation Price when you commit to participate in the DRP. However, you will know the formula for calculating the Allocation Price and whether any discount is to be applied.

What will it cost me to participate?

Nothing. No brokerage fees, commission or other transaction costs will be payable for any shares allocated under the DRP.

Can I sell my shares when I choose?

Yes. You can sell any or all of your shares at any time. However, if you sell all of your shares and do not give Telstra notice of termination of your participation in the DRP, your participation will cease with effect from either (i) the date on which the last transfer is registered by Telstra or (ii) if the last transfer is registered after a relevant DRP record date and before the related dividend payment date, the date following that dividend payment date. This deemed termination of your participation will occur even if you repurchase shares at a later date under the same holding.

If you elect for ‘full participation’ and then sell some of your shares, the dividends on your remaining shares will continue to be reinvested under the DRP. If you elect for ‘partial participation’ and then sell some of your shares, the number of shares sold will be deemed to the full extent possible to be non-participating shares and the balance, if any, will be deemed to be participating shares under the DRP.

Yes. Simply notify the share registry online or lodge a

TELSTRA CORPORATION LIMITED (ABN 33 051 775 556)

What about taxation?

The Australian Taxation Office currently treats dividends reinvested under the DRP in the same way as dividends received on shares which are not participating. The New Zealand Inland Revenue currently treats dividends reinvested under the DRP in the same way as dividends received on shares. Telstra takes no responsibility for the taxation consequences of shareholders participating in the DRP, and recommends you obtain professional taxation advice.

Will I receive a dividend statement?

After each dividend, a dividend statement will be provided to you in accordance with your communication election, showing details of your dividend amount, franking credits, the number of shares you have acquired under the DRP and the allocation price you paid for each share, as well as any residual amount donated/retained by you. Your dividend statement will be provided on or as soon as practicable after the dividend payment.

Can the DRP be modified, suspended or cancelled?

Telstra may alter, suspend or terminate the DRP at any time by notifying the ASX and updating the Telstra website.

What happens to any residual value after each DRP?

The application of the dividend reinvestment formula normally results in a residual amount. This is because your dividend amount will be used to acquire a whole number of shares, usually leaving a residual amount which is less than the price of one Telstra share.

For each dividend, if there is a residual amount, you are taken to have directed Telstra to donate that residual amount to one or more charities. Information on the charities will be made available on the Telstra Foundation’s website when available. Where possible, Telstra will provide information on the dividend statement sufficient for the purposes of claiming a deduction.

If you don’t wish to make a tax-deducible charitable donation, you may elect to opt out of making donations by contacting Link Market Services on 1300 88 66 77 and updating your preferences. If you elect to opt out of making donations, then the residual amount on each dividend will be carried forward, without interest, and added to your next dividend.

What happens if I leave the DRP?

If you cease to participate in the DRP for any reason, or the DRP is suspended or terminated by Telstra, Telstra will donate any residual balance (if any) in your DRP account to a charity or charities approved by the Company. There is no ‘opt out’ mechanism in these circumstances.

Need more information?

If you have further questions (other than on taxation) about how the DRP operates and how you can participate, please contact the Telstra Share Registry, Link Market Services Limited, on:

Australia:

1300 88 66 77 telstra@linkmarketservices.com.au

New Zealand:

0800 835 7872 info@linkmarketservices.com

27 March 2015