TELSTRA GROUP LIMITED — Interim / Quarterly Report 2004

Dec 21, 2004

22 December 2004

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

Accounting Separation - Limb 2 results

In accordance with the listing rules, I attach 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

22 December 2004

456/2004

Consistent accounting separation results prove sufficient margins

Telstra today said that the first full year of accounting separation results had consistently demonstrated sufficient resale margins for its wholesale customers.

Telstra Group Managing Director of Regulatory Corporate and Human Relations Mr Bill Scales said "The data has continued to show that service providers who purchase fixed telephony services from Telstra at wholesale prices and resell in retail markets are able to make satisfactory returns."

The Government's accounting separation rules require Telstra to provide data to the ACCC to show the margins available between Telstra's retail prices for services like local calls, STD, and fixed to mobile services and a competitor's costs in supplying these services if it were using only Telstra's wholesale products.

"These results, which we have now been providing for over a year, give the ACCC and the industry the transparency they have been seeking."

The ACCC also today released, for the first time, data from new tests which attempt to identify the margin available for wholesale customers using Telstra's unconditioned local loop service, which can be used to provide retail ADSL services.

Mr Scales said Telstra believes the tests will require further refinement before they provide an accurate representation of the margins available using this service.

"Essentially the economic modelling used does not accurately reflect real-life conditions in the marketplace. Telstra remains committed to accounting separation and will continue to work with the ACCC to resolve any outstanding issues, particularly as we work to identify an accurate ULLS test, " he said.

In the past two years Telstra has invested significant time and resources in implementing the requirements of the extensive enhanced accounting separation regime. The reports released today represent only one quarter of this work, with regulatory accounts released last week and data comparing Telstra's service performance between wholesale and retail expected by the end of the year.

For more information about these results and the other reports produced under accounting separation, see http://www.telstra.com.au/communications/corp/accounting.cfm

Telstra Media Contact: Rod Bruem Tel: 02 9206 0092 Mbl: 0438 288 010

Telstra's national media inquiry line is 13 1639 and the Telstra Newsroom is located at: www.telstra.com.au/newsroom

Imputation testing

Record Keeping and Reporting Rules

Section 151BU

Part XIB Trade Practices Act 1974

Fixed Telephony and ULLS

June - September 2004 quarter

Table - 1 Fixed Telephony Report for September 04 Quarter on historic cost basis

	Local carriage service			Domestic PSTN originaling and terminating access SEMICES			Domestic PSTN originating access service			Total Bundle of Fixed Voice Products
	Local calls and Line rental			Domestic long distance		International long CISCHOL		Eked to mobile		Euncle
	Ensiness	Residental	Business	Restanta	Eusiness	Residential	EITSINGSS	Residential	EDISINGSS	Residental	mer
Revenues दिन्ता	327,288,865	614,116,014	71,778,255	190,479,903	11,276,706	49,900,024	118,162,890	202,979,170	528,506,715	1,057,475,110	1,585,981,826
official	0	0	0	0	$\Omega$	0	$\overline{0}$	$\Omega$	$\Omega$	$\mathbf{0}$	0
toal	327,288,865	614,116,014	71,778,255	190,479,903	11,276,706	49,900,024	118,162,890	202,979,170	528,506,715	1,057,475,110	1,585,981,826
Retail Costs
organisation product and	34,214,018	76,871,491	3,309,631	10,614,184	663,456	3,333,782	4,858,118	6,482,010	43,045,222	97,301,467	140,346,690
consumer	22,114,043	48,094,347	3,804,779	12,202,155	4,132,279	20,764,182	80,761,676	107,757,376	110,812,778	188,818,060	299,630,837
for 1	56,328,061	124,965,837	7,114,410	22,816,339	4,795,735	24,097,964	85,619,794	114,239,387	153,858,000	286,119,527	439,977,527
Other Costs
Organisation	0	0	154,986	497,050	29,575	148,609	246,682	329,138	431,242	974,797	1,406,039
product and consumer	0	0	16,816	53,930	4,633	23,280	30,977	41,332	52,426	118,542	170,968
TIERWORK
BIOGRESS	0	0	1,017,672	3,263,735	207,057	1,040,437	1,391,783	1,857,006	2,616,512	6,161,177	8,777,690
real	0	0	1,189,474	3,814,715	241,265	1,212,326	1,669,442	2,227,476	3,100,181	7,254,516	10,354,697
Anoillary
Cost of Captial	13,226,888	28,648,206	3,357,614	10,768,070	640,275	3,217,302	6,255,550	8,346,553	23,480,327	50,980,132	74,460,459
Retail Volumes**	2,553,229	5,909,105	469,084,811	1,504,383,057	24,126,679	121,233,524	350,721,417	467,954,870
Relationes	128.1862	103.9271	0.1530	0.1266	0.4674	0.4116	0.3369	0.4338	206.9954	178.9569	187.4166
Accessionee	124.4845	98.0391	0.0218	0.0183	0.0101	0.0091	0.0122	0.0115	130.2636	103.7904	111.7778
Unit cost	27.2420	25.9962	0.0249	0.0249	0.2353	0.2353	0.2667	0.2667	70.6707	58.2752	62.0151
Implifed			0.1063
marcin THE REAL PROPERTY	$-23.5402$	$-20.1082$		0.0835	0.2220	0.1672	0.0580	0.1555	6.0611	16.8914	13.6237
mare In 124	$-18.3641%$	$-19.3484%$	69.4911%	65.9366%	47.5004%	40.6269%	17.2160%	35.8488%	2.9281%	9.4388%	7.2692%

Table - 2 Fixed Telephony Report for Sept 04 Quarter on current cost basis

	Local carriage service			Domestic PSTN originaling and terminating access SEMICES			Domestic PSTN originating access service			Total Bundle of Fixed Voice Products
	Local calls and Line rental			Domestic long distance		International long CISCHOL	Eked to mobile			Euncle
	Ensiness	Residental	Business	Rostdanial	Ensmass	Residential	EITSINGSS	Residential	EDISINGSS	Residental	mer
Revenues दिन्ता	327,288,865	614,116,014	71,778,255	190,479,903	11,276,706	49,900,024	118,162,890	202,979,170	528,506,715	1,057,475,110	1,585,981,826
official	0	0	0	0	$\Omega$	0	$\overline{0}$	$\Omega$	$\Omega$	$\mathbf{0}$	0
toal	327,288,865	614,116,014	71,778,255	190,479,903	11,276,706	49,900,024	118,162,890	202,979,170	528,506,715	1,057,475,110	1,585,981,826
Retail Costs
organisation product and	34,222,141	76,889,812	3,310,316	10,616,383	663,599	3,334,503	4,859,153	6,483,391	43,055,209	97,324,090	140,379,299
consumer	22,114,563	48,095,517	3,804,827	12,202,306	4,132,289	20,764,232	80,761,749	107,757,473	110,813,428	188,819,528	299,632,956
for 1	56,336,704	124,985,329	7,115,143	22,818,689	4,795,888	24,098,735	85,620,902	114,240,865	153,868,637	286, 143, 618	440,012,255
Other Costs
Organisation	0	0	129,168	414,250	26,503	133,174	8,445	11,268	164,116	558,692	722,808
product and consumer	0	0	16,218	52,013	4,562	22,923	1,309	1,746	22,089	76,683	98,772
TIERWORK
BIOGRESS real	0 0	0 0	1,017,672 1,163,058	3,263,735 3,729,998	207,057 238,122	1,040,436 1,196,533	42,956 52,710	57,314 70,329	1,267,685 1,453,890	4,361,485 4,996,860	5,629,170 6,450,750
Anoillary
Cost of Captial	13,228,243	28,651,253	3,635,540	11,659,394	685,469	3,444,397	6,588,120	8,790,289	24, 137, 372	52,545,333	76,682,705
Retail
Volumes**	2,553,229	5,909,105	469,084,811	1,504,383,057	24,126,679	121,233,524	350,721,417	467,954,870
Relationes	128.1862	103.9271	0.1530	0.1266	0.4674	0.4116	0.3369	0.4338	206.9954	178.9569	187.4166
Accessionee	124.4845	98.0391	0.0218	0.0183	0.0101	0.0091	0.0122	0.0115	130.2636	103.7904	111.7778
Unit cost	27.2459	26.0000	0.0254	0.0254	0.2371	0.2371	0.2631	0.2631	70.2874	58.1621	61.8205
mone: marcin	$-23.5442$	$-20.1120$	0.1058	0.0829	0.2203	0.1655	0.0617	0.1592	6.4443	17.0045	13.8183
mans mare In 124	$-18.3671%$	$-19.3521%$	69.1396%	65.5119%	47.1261%	40.2019%	18.3019%	36.6922%	3.1133%	9.5020%	7.3730%

Gelstra

Notes to Tables:1 and 2

• $\ast$ As per discussions with the ACCC ancillary charges are not separately reported this quarter. Currently ancillary charges are included with other costs.
• All retail volumes are reported in minutes with the exception of the local carriage service where volumes are in SIOs. $\ast\ast$

Table - 3 ULLS Report for Sept 04 Quarter on historic cost basis

	Unconditioned Local Loop Service
	ADSL Service			ADSL, local calls, line rental, domestic long distance, international anche de Comobile
	Business	Residential	Voice Lines	Business - I x ADSI Service 74 > Residential 4 x ADSI Service 11 XVoice Enes
Revenues
raan	12,091,080	32,894,152	73,279,056	75,717,982
CHEL	$\Omega$	$\Omega$	$\Omega$	0
រកកា	12,091,080	32,894,152	73,279,056	75,717,982
Realicosis
organisation	6,381,645	19,086,934	11,365,214	22,726,475
Drochtegald georsting	9,748,422	29,156,664	22,577,787	36,219,358
រកគា	16,130,067	48,243,598	33,943,001	58,945,833
Other Costs
organisation	1,591,956	4,761,400	4,751,813	7,167,831
product and consumer.	845,367	2,528,417	1,304,741	2,957,458
network expenses	4,859,405	14,534,049	14,198,853	22,043,333
roal	7,296,728	21,823,866	20,255,407	32,168,622
Andilary Charges (TEEA)	1,104,220	3,302,625	1,104,220	3,302,625
Dostotoania	4,564,736	13,652,721	16,322,842	22,560,577
Refail Volume 4	73,900	221,029	73,900	221,029
Retail price	163.6137	148.8229	991.5953	342.5706
Access price	73.6900	73.6900	151.0824	103.9713
Unicosa	393.7170	393.7170	969.2194	529.2416
Imputed margin	$-303.7933$	$-318.5841$	$-128.7064$	$-290.6423$
Imputed margin %	$-185.6772%$	$-214.0693%$	$-12.9797%$	$-84.8416%$

Table - 4 ULLS Report for Sept 04 Quarter on current cost basis

	Universitation of Asia Moon Convice
		ADSL Service	ADSL, local calls, line rental, domestic long distance, international and fixed to mobile
	Eusiness	Residental	x Voice Lines	Business - Lx ADSL Service + 4 Residential - Lx ADSL Service +1 x Voice Lines
Revenues
reem	12,091,080	32,894,152	73,279,056	75,717,982
Former	$\Omega$	$\Omega$	$\mathbf 0$	$\Omega$
TOEL	12,091,080	32,894,152	73,279,056	75,717,982
Refall costs
organisation	6,383,552	19,092,636	11,368,276	22,733,022
product and consumer.	9,748,544	29, 157, 029	22,577,985	36,219,779
toan	16,132,095	48,249,665	33,946,261	58,952,801
Other Costs
organisation	1,655,064	4,950,148	4,909,663	7,401,299
product and consumer	846,838	2,532,816	1,308,422	2,962,907
network expenses	4,859,407	14,534,054	14,198,858	22,043,339
m	7,361,308	22,017,018	20,416,943	32,407,545
Analiary Charges (11324)	1,104,220	3,302,625	1,104,220	3,302,625
Costologoral	3,888,571	11,630,370	20,848,805	24,412,777
Relativolume	73,900	221,029	73,900	221,029
Refall price	163.6137	148.8229	991.5953	342.5706
Accessibiles	73.6900	73.6900	151.0824	103.9713
Linicost	385.4686	385.4686	1032.6936	538.7340
Imputed margin	$-295.5449$	$-310.3357$	$-192.1807$	$-300.1347$
Imputed margin %	-180.6358%	-208.5269%	$-19.3810\%$	$-87.6125%$

Celstra

Notes to Tables: 3 and 4

• $\ast$ As per instructions from the ACCC, ancillary charges are calculated as TEBA revenues per ULL service that are reasonably expected in a mature market. This is calculated as the TEBA revenue for the September quarter divided by the adjusted number of installed tie cable pairs. The adjustment factor set by the ACCC is 66%.
• $\ast\ast$ Retail volumes are reported in terms of SIOs.