TELSTRA GROUP LIMITED — Investor Presentation 2007

Oct 31, 2007

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1 November 2007

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

Investor Day – Part 2 of slide presentations by Telstra Senior Executives

In accordance with the listing rules, I attach a copy of this afternoon’s presentations to be delivered at Telstra’s Investor Day for release to the market.

Regards

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Claire Elliott Acting Company Secretary

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

Winning in the Market Bill Stewart

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Winning in the market

1

Driving significant results

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Future of Marketing
at Telstra
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2

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Business Unit Performance
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Thank You
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3

Investor Day David Moffatt

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Telstra Consumer FY07 performance

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H107 H207
H107 H207
Revenue EBIT
PSTN
Sales Momentum- All products
All products ServiceMobile
New Products
Internet
World Leading Performance -
Pay TV Quarter 1 Quarter 2 Quarter 3 Quarter 4
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• Strong Sales Momentum- All products

• Market Leader – All products

• Market Leader – New Products

• World Leading Performance - Mature Products

A world class performance

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1

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Our sustainable value creation strategy
Driven by customer needs
5. Business
operating
performance& 1. T elstra
cycle corp. strategy
4. Shareholder
Competitive Value
advantages
from scale Cycle
2. Business
Unit
Strategy
3. Business
enablers
IT and
networks
Corporate Capital and Business Cycle Operating “Growth” cycle
Accelerating The Generation of Free Cash Flow
ROI + Technical Feasibility Filter
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In FY08… marketing transformation accelerates
Network & IT
Transformation
Continued
Transform GTM implementation
& Channels of Market Based
Management
Cultural
Transformation
Speeding up the cycle…Customer Idea to Cash Flow
Supports Enables
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2

The big customer experience initiatives for ‘08

Retail and Call centre Transformation…

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We will enhance the customer experience Market Based Management IT Transformation Cultural Transformation Channel Transformation = Marketing Transformation 6 6 ....Investing to Sustain our Competitive Advantage

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3

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How we acquire and retain more users…
Increased Targeting - MBM
44%
26%
Multi- Channel Distribution Strategy
Jun-06 Jun-07
3G Market Share % - FY07
Training and Leadership Development
4x Outselling nearest
BB competitor
Detailed focus on Performance Metrics
Best Customer Retention Rates in the Industry
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How we drive multi-product holdings
Think total lifetime customer value
% of 3+ MP H Customers
25%
Jun-06 Jun-07
Think “integrated” Needs based Offers
MPH Customer Churn
47%
Think “integrated” Contact Strategies 2+ 3+
…True Integration drives Product Depth
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4

How we increase usage….

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• Market Based Management
• Propensity Based Usage Modelling 27% Sales per contact
•
Segmented, Usage Based Offers
3x Customer usage
of non-SMS data
•
Unique, Integrated Products & Services
Demonstrating the Value of Integration
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How we drive lower operating costs….
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•
Optimised Go-to-Market processes
60% Log-in times
• Reduced Time-to-Market
22% Transaction times
•
Strategic partnerships
Brightstar cost
$246M savings
•
Reduced Subscriber Acquisition Costs
“Locking –in” sustainable productivity improvements…
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5

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More to come post transformation
• 7 to 37M targeted contacts Targeted Customer Contacts
• Reduced process times 5x
Pre-Transformation Post-Transformation
•
Enhanced training cycles
Induction time
17%
Toward “world-class” in every aspect of Operations…
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Our consumer value creation strategy…
Customer Needs
Satisfying our
Delivering Superior
Customer’s
Shareholder Returns
Integrated Needs
Consumer
Led
Growth
Transforming to Drive Building Sustainable
Operating Excellence Competitive Advantage
A sustainable, Revenue and Profit Growth Engine
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6

Telstra Business

Deena Shiff Group Managing Director

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“Open for Business”…

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Telstra Business Revenue Trend 200 YOY Revenue Net Growth
850 05/06 Actual 06/07 Actual
$3164m $3247m
Declining Trend 2.7% YoYGrowth 150 Internet/Data
+13.1%
100
825 +~4.5%
Mobile
50 +11.6% +~6.0%
800 0 Fixed Voice -~1.5%
-50 -3%
775 -100
Q3 Q4 Q1 Q2 Q3 Q4 Telstra Business Competition
TB is growing its revenue and leading the market in mobile and internet
Management estimates
$M Revenue
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1

Strategic Focus…

1. Offering communications solutions over Next G and Next IP that are business relevant

2. Enabling channels to capture business opportunities

3. Offering a service experience matched to segment preferences

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The Customer Story

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2

1. Relevant Business Communications Solutions

• We are at the early stages of a wireless data adoption curve

• Customers appetite for data and IP relative to PSTN values varies significantly by segment

• Modular solutions have been created to serve individual segment needs

• To data customer ARPU has increased even as PSTN declines

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Quarterly Mobile Data APRU
$12.00
$9.00
$6.00
$3.00
$-
Q4 Q1 Q2 Q3 Q4
05/06 06/07 06/07 06/07 06/07
Outstanding – the Broadband/IP
customer penetration
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1. Relevant Business Communications Solutions

• We are at the early stages of a wireless data adoption curve

• Customers appetite for data and IP relative to PSTN values varies significantly by segment

• Modular solutions have been created to serve individual segment needs

• To data customer ARPU has increased even as PSTN declines

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Content & Business Marketing Hosted Email
Services Content
IT Management & Services Server Hosting
Support Management
Vertical PC Backup
IT Applications / Horizontal
SaaS Network
Wireless Security
InfrastructureManaged StorageHosting Bus BroadbandNextIP –
Security Next G –
Transaction wireless data
Communication
Applications Collaboration NextG – 4 PDAs
VAS & Messaging
Devices Wireless Key System + Maintenance
CPE
WAN Fax – 1 SIO
Core
Communications InternetAccess PSTN – 4 SIOs
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3

1. Relevant Business Communications Solutions

• We are at the early stages of a wireless data adoption curve

Customer ARPU

• Customers appetite for data and IP relative to PSTN values varies significantly by segment

• Modular solutions have been created to serve individual segment needs

• To data customer ARPU has increased even as PSTN declines

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7.4%
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* 06/07FY
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2. Enabling Channels to Capture Business Opportunities

• Direct Marketing

• Contact Centres

• Direct Sales

• Industry Channels

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4

1. Enabling Channels to Capture Business Opportunities

2. Direct Marketing

3. Contact Centres

4. Direct Sales

5. Industry Channels

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1. Enabling Channels to Capture Business Opportunities

2. Direct Marketing

3. Contact Centres

4. Direct Sales

5. Industry Channels

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5

1. Enabling Channels to Capture Business Opportunities

2. Direct Marketing

3. Contact Centres

4. Direct Sales

5. Industry Channels

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1. Offering a Service Experience Matched to Segment Preferences

2. Start / move / expand my business

3. Learn about business services

4. Order and provision a new service

5. Use new services and applications

6. Resolve problems

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6

1. Offering a Service Experience Matched to Segment Preferences

2. Start / move / expand my business

3. Learn about business services

4. Order and provision a new service

5. Use new services and applications

6. Resolve problems

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1. Offering a Service Experience Matched to Segment Preferences

2. Start / move / expand my business

3. Learn about business services

4. Order and provision a new service

5. Use new services and applications

6. Resolve problems

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7

1. Offering a Service Experience Matched to Segment Preferences

2. Start / move / expand my business

3. Learn about business services

4. Order and provision a new service

5. Use new services and applications

6. Resolve problems

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1. Offering a Service Experience Matched to Segment Preferences

2. Start / move / expand my business

3. Learn about business services

4. Order and provision a new service

5. Use new services and applications

6. Resolve problems

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8

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Tracking Our Progress…
• Slow PSTN rate of decline by 40% compared to 05/06 Exceeded
Reverse
Revenue • Grow Mobile and Broadband above SME market rate Exceeded
Decline
• Grow Multi-Product customers from 40%-70% by June 2009 ~8pp
Jun-06 Jun-07
Build • Grow 3G proportion of Mobile subscribers to > 60% in 08/09 4% 32%
Platform Jun-06 Jun-07
for Growth • Grow Broadband & IP customer penetration to > 50% in 08/09 39%
31%
Jun-06 Jun-07
Rebalance
47%
Revenue • Grow proportion of non-Fixed Voice revenue to > 60% by 2008/09 43%
from Old Jun-06 Jun-07
to New
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9

Enterprise & Government David Thodey

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E&G Market Segmentation: Deep customer understanding

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1,500 Enterprise & Government Customers
Key
Customer ‘Reliable’ ‘Fast’ ‘Simple’ ‘Secure’ ‘Scaleable’ ‘Control’
Needs
Government Industry MNCs Integrated
Segments
Specific • Effective policy • Improved • Global coverage • Outsourced end
Customer delivery & business to end solutions
Needs performance performance and services
Telstra’s differentiated offerings fulfil our customers needs
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1

	Grow revenue faster than addressable market of >1% • Normalised revenue growth of 2% We are on track to meeting our nine commitments Milestones to meet by 2010 Progress made in FY’07
	New wave revenue mix >45% • New wave revenue now accounts for 41% of the total revenue base
	New wave revenue growth 15% • New wave revenue growth of 14%
	Slower decline in core carriage • Slowed our decline to -2%
	Longer term contracts • Average contract length has risen by 8 months
	Strong EBITDA from applications • Some early success, but still more to do
	Lower cost support due to NGN • NGN is driving lower access costs and delivers multiple services over our Next IPTM and Next GTM networks
	10% productivity improvement • We continue to make good progress and are on track to meeting the 10% productivity improvement
	Lower Capex intensity & strong cash flow • Strong cash flow results

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:
Value Based Management
Transformation is the enabler
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Customer Marketing Sales
• A deeper understanding of • Sophisticated market analysis • IP consultative selling
E&G customer satisfaction & research – needs based
• Value based selling
• Thought leadership programs segmentation incentives
by industry • Greater alignment of • Extending offerings through
• Differentiated levels of service priorities against segments strategic partnerships
• Innovative solution bundles
• The Telstra Difference
Creating and delivering value through more targeted marketing,
selling and delivery of our differentiated enterprise services and solutions
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2

Next Dimension Working – a unique & differentiated product portfolio

Next Dimension Working[TM] offers our enterprise & government customers new ways to generate revenues, productivity improvements and efficiencies through changing the way they do business

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Telstra Next G[TM ] Network coverage and speed driving value to Enterprise customers

• Over 100 times bigger than our nearest competitor

• Speeds of up to 7.2Mbps

• Telstra Next G[TM] Network value proposition driving win-back opportunities

• Mobile IP – providing true mobile desktop

• Over 150,000 Telstra Next G[TM] Network SIO’s

• Over 80,000 mobile broadband devices

• 59% Mobile Data growth

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3

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Telstra Next IP [TM] Network is the fastest network in
Australia scaleable up to 92 terabytes and 600% more
coverage than our nearest competitor
Nearest Competitor Telstra
+600%
Our nearest competitor has The Telstra Next IP [TM] Network has
2,221 locations nationally 15,804 locations nationally
Note: Shows points of presence lit by fibre. Based on public available information
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Next Dimension Working:

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Old Solution The Challenge New Solution
• Travelling sales and field staff • Communicate and organise
had disparate coverage in “…improve customer field staff anytime and
metro and regional areas experience across all anywhere they need it
120 metro and regional • Coverage in hard to reach
places
hotels…”
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4

Next Dimension Working:

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Old Solution The Challenge
• Satellite content transmission “…getting content to
from a stationary truck the newsroom… fast
• Labour and time intensive and cost effective…”
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• Expensive infrastructure

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New Solution
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• Speed and coverage, everywhere they need it

• Flexible, able to use it on the move

• Communicate real time

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Next Dimension Working:

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Old Solution
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The Challenge
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New Solution
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• Separate Voice, Data and Mobile networks

• Main frames and PC’s connected with dedicated ISDN lines

• Manual, paper based processes

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“…providing great • One integrated network
customer service and • All 200 branches and field staff
finding rental connected to core network
equipment …” • Online automated processes
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5

We will deliver sustainable profitable growth and strong cash flows by focusing on....

• Customer Value Based Services & Transformation

• Value Management Solutions

• • Creating & • Understanding & • Telstra Next G[TM] & • Continuous Service delivering value meeting customer Next IP[TM] Networks Improvement

• • Telstra only needs • World class Telstra• Delivering multiple differentiation • Thought leadership only solutions & services over one

• • Responsive & & innovative services network bundles

• simple to do • Differentiated • Developing strategic business with • Value based selling levels of service partnerships • Operational excellence

Our vision: To be the leading provider of network services and solutions to enterprise and government customers in Australia and New Zealand

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• We have made good progress executing our strategy and are focused on delivering our commitments • Core Carriage growth

• • Next G driving wireless growth

• • Continued growth in solutions

• • Enhanced Network Services

• • Customer Service and Satisfaction

• • Improved productivity

• ….. and we are focused on execution

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6

Geoff Booth

CDMA Migration Investor Community Update

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CDMA migration : Journey so far

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Next G™network Next G™ Marketing Blitz Launch of
announcement Network commences Country Phone Planned
CDMA Launch Next G™ Increased Network CDMA
Customers Prepaid Handset equivalence Network
advised Launch Range announced Closure
Nov Jan Oct May Jun Jul Oct 15 Nov 1 28 Jan
2005 2006 2006 2007 2007 2007 2007 2007 2008
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1

Journey so far

• �

• Network equivalence/Superiority

• • � Increased handset range

• • Handsets specifically designed for Regional coverage �

• �

• Business, Enterprise & Government customers’ plans in place

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The road ahead

• Marketing in full swing

• −SMS, direct mail and outbound telemarketing campaigns to all CDMA customers

• −Retail shops and Dealer programs are in place

• −784 local customer events planned

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2

Countdown to closure

• �

• Systems and processes in place

• • � Our stores are ready

• • � We have the stock

• • � Our Next G™network and services meet the Carrier Licence Conditions The time is right for customers to make the move to*

• *** Government review is underway**

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3

Sustainable Growth through Product Differentiation and Innovation

Holly Kramer

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Only with Telstra
Customer
1 click, 1 touch, 1 screen customer experience
experience
Integrated
Integrated across access types
services
Unique
brand assets
World class Wireless Wireline OSS/BSS
network assets
3G 850 HSUPA IP MPLS core IT Transformation
& capabilities
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Differentiation delivering ARPU growth
Customer
experience
Business ARPU
Integrated
services
Broadband
Home ARPU
Unique Home
brand assets
World class
Wireless ARPU
network assets
& capabilities
A reality today. Sustainable tomorrow
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Next IP [TM] today
Telstra IP Networks & Traditional Data
revenues: FY06/07 vs pcp
Total revenue: +6%
IP revenue growth +14%
IP Networks
offsetting traditional
Traditional Data
data decline
-4%
FY 05/06 FY 06/07
Customer Integrated Unique brand World class
experience services assets network
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Next IP [TM] today
Medium enterprise Large enterprise
customer customer
• Basic carriage • Basic carriage
(Frame, ISDN) (Frame, ISDN)
Customers using more • IP access • IP MAN & IP WAN
services, driving ARPU • IP MAN • Multiple business units
• Managed network • Increased bandwidth
services for apps
• Security & co-location • Managed network services
ARPU +13%
ARPU +25%
(IP solutions +120%)
Customer Integrated Unique brand World class
experience services assets network
IP
Before
After
migration
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Next IP [TM] today
Telstra ‘Best IP Provider’ Managed network services:
Gartner, Australian MPLS Providers 2007 10% chum reduction
Australia’s best IP
provider across
network and services
IP solution bundles: +35% YoY
Connect = + + + + +
IP router access WAN port SLA security IP TelephonyQ2 07/08
Customer Integrated Unique brand World class
experience services assets network
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Sustaining growth tomorrow
IP Video Collaboration Education Solutions
New wave IP services
continue to drive
growth
Software as a Service IP Contact Centres
Customer Integrated Unique brand World class
experience services assets network
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Broadband Home today
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ARPU & Market Share change of Broadband Providers
H1 CY2007, domestic business only
BigPond is growing
+
ARPU and market
share
–
– +
Market share change
Customer Integrated Unique brand World class
experience services assets network
ARPU change
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Broadband Home today
BigPond access plan mix (%)
Customers demanding +83%
Plans 1.5 Mbps
more speed or more
Plans less
than 1.5 Mbps
Sep 06/07 Sep 07/08
Customer Integrated Unique brand World class
experience services assets network
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Broadband Home today
From PC access To home networking
BigPond home gateway
More devices
More bandwidth
More usage
Customer Integrated Unique brand World class
experience services assets network
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Broadband Home today
Premium support
� Phone
Transforming customer
� In-home
support and reducing
costs
Trouble
� shooting
� Diagnostics
Remote management
Customer Integrated Unique brand World class
experience services assets network
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Sustaining growth tomorrow
Video
telephony
Video
telephony
The next generation
of consumer
communication! Integrated
Unified address book
messaging
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
3G SIOs as % of base: Leading global peers
Company reports
50-70%
in 2010
30%
Next G [TM] leading
25%
Australia up the charts! 20%
- 3G SIOs 15%
10%
5%
1H06 2H06 1H07 2H07 1Q08
Telstra VOD EU Average TIM Telefonica AT&T
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
Data as % of ARPU: Developed countries Q2 CY2007
Merrill Lynch Global Wireless Matrix 2Q07
35% Sep Q 07
31.3%
Next G [TM] leading 30% 24.2%Jun Q 0727%
25% Dec Q 06
Australia up the charts! 20% 19%
- Data % of ARPU 15%
10%
5%
0%
Up 6 places from Q2 CY06
Customer Integrated Unique brand World class
experience services assets network
Japan UK Australia Ireland NZ Singapore Germany Switzerland Italy Norway Austria Belgium Sweden Netherlands Finland Denmark France Spain US Portugal Greece Canada
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Next G [TM] today
Telstra retail mobile revenue: Sep qtr 07/08 vs pcp
Interactive data
We are growing across Wireless broadband
all categories Messaging
Core voice
Sep qtr 06/07 Sep qtr 07/08
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
% ARPU growth of consumer customer cohorts
migrating from 2G to 3G
260%
Interactive data
8% 15% 14% penetration
Consumers using more doubled54% to
data on Next G [TM]
Core Voice Messaging Interactive Total
Data
188%
Browsing
penetration up
37% 2.5x to 78%
22%
9%
Core Voice Messaging Interactive Total
Data
Customer Integrated Unique brand World class
experience services assets network
Postpaid
Prepaid
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Next G [TM] today
ARPU uplift of Email and Apps business
customers: Sep qtr 07/08
Applications stimulating
+117% +105%
business ARPU
Average voice ARPU uplift of ARPU uplift of
ARPU Email customer Apps customer
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
Leading edge Multi vendor
Prepaid range
Full range of 23 innovation support
devices!
Mobile
PDAs
broadband
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
100% Next
G devices
Realising the 1-click
Customised
principle keys
Usability
lab
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
Information Communication
Compelling services
and brands for
consumers…
Entertainment
Customer Integrated Unique brand World class
experience services assets network
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Next G [TM] today
Business Workforce
Communications Management
…and the leading suite
of apps for business
Office Mobility Contact Solutions
Remote & Mobile
Asset Management
Customer Integrated Unique brand World class
experience services assets network
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Sustaining growth tomorrow
Choice of
4 themes
EasyTouch
Active
EasyTouch: The next “Ticker” phone
Content
evolution of 1-click Customer
shortcuts
1-click
quicklinks
Customer Integrated Unique brand World class
experience services assets network
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Sustaining growth tomorrow
EPG
Introducing…
Featured
Mobile FOXTEL devices
from Telstra!
Foxtel iQ Rich media
remote record client []
On featured devices
Customer Integrated Unique brand World class
experience services assets network
• 12
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Investor Day

Justin Milne, BigPond

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Telstra is increasing its market leadership position in broadband . . .

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Telstra Retail Broadband Market Share
47%
46% 45%
44%
43%
42%
42%
41% 41%
37%
Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
02 03 03 04 04 05 05 06 06 07 07
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1

. . .due to continued innovation in access

BigPond Access Awards

• Best International Wireless, 2007 Broadband World Forum Europe Awards

• Best Wireless Broadband, 2007 Australian Personal Computer Internet Technology Awards

• Best Broadband Supplier, 2007 Australian Telecoms Awards

• Internet Technology of the Year, 2007 Australian Personal Computer Internet Technology Awards

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Australia’s fastest fixed broadband
in Sydney and Melbourne
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“BigPond’s ARPU: International best practice,
and increasing”
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Retail Broadband ARPU Growth1 The ‘ARPU escalator’ at work
Proportion of $29.95 volumetric cohort who
1.1
upgrade to cap plans
1.0
32%
0%
Q106/07 Q107/08 Month 0 Month 12
1) Includes ADSL, Cable, Wireless and Satellite including hardware sales
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2

Home Networking is an exciting new initiative which will continue to drive ARPU to the next level…

Launched in October with very promising results

• Over 20% take up by customers since launch

• 7% greater spend on access

• 50% less churn

Home Networking Campaign

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….by stimulating usage

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1 Home Network 2 Customer chooses 3 Customer migrates to
modem sold higher value plan higher speed
• Additional household • Increase use of content
members connect
• Requirement for more • Higher retention
• Customer selects plan usage and higher speed • More ARPU
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3

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Telstra’s online network is the 4 [th] largest
publisher in Australia
–
Unique Audience [1] Sept 07 (000’s)
Key media businesses
9,323
8,083
5,492 5,441
5,040 5,017
1) Nielsen//NetRatings NetView, September 2007
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Content value includes direct acquisition, retention and cross product revenue

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Cumulative Total Revenue Attributable to Online
Content FY06 – FY10 How Broadband drives PSTN retention
8% 100% High PSTN …which is reducing
20% market share [1] in PSTN churn
BigPond…
56%
94% 2
71%
93% 1
16%
Direct Broadband Broadband Incremental Total Online Market BigPond PSTN Broadband
Revenue Pull Retention broadband Content Only & PSTN
through ARPU Revenue
Direct Source Indirect Source
1) Roy Morgan Single Source
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4

Next G™is stimulating take-up of mobile content

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Proportion of BigPond Mobile handset users that use the mobile portal1
49%
36%
5%
2G 3G
1 # visitors to BigPond portal / # SIOs (September 2007)
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Telstra’s mobile TV offering is the best in market

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Mobile FOXTEL BigPond TV
33 Mobile FOXTEL Channels Over 450 videos on demand on BigPond TV
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5

We are continuing to innovate with Web 2.0 applications: document editing and sharing with BigPond Office

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®
®
®
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3D Sydney in Second Life

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Hype Reel to follow
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6

Only Telstra can provide this integrated access, content, and cross platform advertising value proposition

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Sensis
AdServer
Interactive
banners
Click to call
features
Thank you and good night
In video streaming
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7

Sensis

Bruce Akhurst, CEO

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Sensis update

• ™

• Yellow print returns to positive growth

• White Pages[®] delivering world class results

• Trading Post[®] on track to deliver improved earnings

• Systems & processes transformation on track & budget

1

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We continue to execute our strategy to
drive profits from the core
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Global leader delivering world class growth in a highly attractive industry

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• 8% five year CAGR media market driven by high consumer spend [1]
Favourable industry and • Strong online market: 60% CY06 growth almost double US market [2]
market dynamics • Sensis global top 3 for directory share of advertising market [3]
• 13% share of main media market / >95 of directories market [4]
Dominant competitive • Global #1 (of top 10) for directory share of GDP and revenue per capita,
position
directories title, distributed copy and sales representative [3]
• Almost 600,000 customers; over 150,000 online
diversified customer baseWell-penetrated, • Top ten directories customers account for <1% of directories revenue
• Diversified customers: SME / corporate advertisers and consumers
• Strong cashflows
Attractive operating • >50% EBITDA margin
model
• Low capital intensity
• Strong print portfolio, although print now <70% of total revenue
Significant opportunities • Fully integrated print/online/mobile/sat nav/voice ad sales (Yellow™)
for future growth • 37% of revenue growing at >9%/an, 20% growing at >25%/an
Directories revenue growth of 4%: global benchmark of 3% [5]
EBITDA margins compare well with global benchmarks around 50% [6]
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1: CEASA Mai n Media Report, Dec 2006; 2: PWC Online Advertising Expenditure Report, December 2006, IAB Internet Advertising Revenue R eport, 2006; 3: The Kelsey Group, Global Yellow Pages™2007; 4: Sensis analysis utilising CEASA, PWC, company reports and related data; 5: The Kelsey Group, Global Yellow Pages™2007; 6: Sensis analysis, company reports

2

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Customer and capability investments are
driving sustainable growth
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Shareholder
Usage Advertiser ROI
Value
A business model for driving sustainable growth
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Our investments and customer focus are already paying off

• Yellow™is performing strongly

• White Pages[®] continues world’s best growth

• Online continues to do well, but there’s more we can do

• Voice best in world

• Sat nav and mobiles gaining traction

3

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Print:
We’re investing in usage growth
Promotion Circulation
Increase consideration 250K increase
Focus on life events Circulation managers
Also impacts advertiser decisions “You can’t use the directory
if you don’t have it”
Circulation to high return locations: apartments, offices, hotels
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Info-rich ads: helping advertisers provide the experience buyers are seeking

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From this To this
(2006) (2007)
Info-rich ads are the number one driver of usage
CRM Associates
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4

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Online:
Improving the search experience
60% of people typing
‘Japanese’ are looking for
a Japanese Restaurant
Now straight through to
‘one-click’ results page
with enhanced refinement
tools
One click results, enhanced search refinements
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New media:
Powerful new services for Whereis users
Whereis.com.au: 150% usage growth in just two years
Nielsen//NetRatings Site Census; based on average monthly unique browsers over comparative 12 month periods
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5

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Improving usage through integration
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We’re improving and demonstrating the value of print and our multi-channel offering

• Info-rich ads • Metered ads

• ROI monitoring • Sales training • Streamlined processes

• Several thousand metered ads to measure and report on ROI

6

Directories: Transformation will deliver speed, efficiency and new integration opportunities

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Phase 1 Phase 2 Phase 3 Phase 4
Sensis Q3 FY08
Telstra Complete (on track) Q4 FY08 Q2 FY09
Integration
Product Designer Online Ad Online Ad •Billing & Finance
Production: Production: •Sales
Print • White Pages [®] •Rest of •Customer Care
• Yellow™ network
an d Transac tion •Self Service
Online •Partner
Management
•Print Logistics
•Print Ad
Production
Digital
•Service Orders
Distribution Marketing
Strategies
Decommissioning 106 systems and eliminating 120 processes
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Trading Post[®] : Driving efficiency and investing in new media growth

• Data and service reliability and stability

• Simplified buyer and seller experience

• New online products

• Further enhancements to transaction capabilities

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Online usage doubles in three years
1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2003/4 2004/5 2005/6 2006/7
33% CAGR
Unique browsers (,000)
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Substantial new product pipeline slated for FY08 launch

• Nielsen//NetRatings Site Census; based on average monthly unique browsers over comparative 12 month periods

7

Soufun: An exciting growth business. On track for 100 cities plan.

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UV (Monthly)
New Home Home Furnishing 50
• New property listing • Advertising by suppliers 45
• Advertising by developers and stores 40
• Promotional events • Promotional events 35
• Total web solution (TWS) 30
25
20
Research Resale & Rental Online 15
• National/local property • Listing by individuals Communities 10
• price indexDatabase and research reports • and brokersAdvertising by brokers •• Myhome spaceLife search 50
• Ranking of projects • Classified online Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul
• Ranking of developers 05 05 05 05 06 06 06 06 07 07 07
World’s largest real estate site: 46 million monthly users
Alexa
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Summary

• ™

• Yellow print returns to growth

• White Pages[®] delivering world class results

• Trading Post[®] on track to deliver improved earnings

• Systems & processes transformation on track & budget

8

TELSTRA INVESTOR DAY SUSTAINABLE GROWTH

Kim Williams AM CEO FOXTEL

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SIGNIFICANT SERVICE EXPANSION
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Number Of Channels On The FOXTEL Platform
(#)
160
140
•••• 100% Digital145+ channels100% Digital145+ channels
120 •• EPGEPG
•• FBOFBO
100 •••••• FOXTEL iQInteractivityWeb EPGFOXTEL iQInteractivityWeb EPG
80 •• Mobile FOXTEL…Mobile FOXTEL…
60
40
20 •••• Analogue46 channelsAnalogue46 channels
0
2002 2003 2004 2005 2006 2007
Source: FOXTEL Management
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1

STRENGTHENED FINANCIAL POSITION

$m	2001/02	2003/04	2005/06	2006/07
Total Subscribers(1) (k)	799	1,099	1,271	1,416
Total Revenue EBIT EBITDA	(94) (47) 632	938 (149) (79)	1,268 39 169	1,421 101 237
Operating Profit	(93)	(156)	4	76

(1) Includes Wholesale; excludes sales queue Source: FOXTEL Management

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CONSTANT PERFORMANCE IMPROVEMENT

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FOXTEL Has World-leading ARPU – And Is Still Very Affordable FOXTEL Has World-leading Churn
Entry, Top-end Package and ARPU as % of Recreational Spend Annual Churn
(%) (%)
25
3530 entry price Mid-range Highest ARPU 20 20.2 19.4
252015 Global STV Max/ Min (Leading Range 1510 13.5 11.5 11.4
10 Players) 5
5 FOXTEL
0 0
Entry Package Top-end Package ARPU
FOXTEL’s iQ Shows Rapid Growth FOXTEL Has Strong Viewership
FOXTEL iQ Penetration: Feb 05 – Jun 07 Share Of Viewing, STV Households
(%) (%)
18 70 60
1614 60 48 44
12 50
10 40
8 30
6 20
4 10
2 0
0
Feb-05 May-05 Aug-05 Nov-05 Feb-06 May-06 Aug-06 Nov-06 Feb-07 May-07
Source: STV company annual reports, SEC filings; ACNielsen & OzTAM; ASTRA; FOXTEL
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2

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INCREASING VIEWING SHARE
Share Of Viewing, Australian Households
(%)
35
Share Of Total TV Viewing Across 5 City Metro (%)
30
25
STV
20
15
10
5
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: OzTAM. All Metro Homes Data. 5 City Metro. 0600-2400. Weeks 1-52, 1995-2006 & Weeks 1-40, 2007
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CONTINUING PRODUCT INNOVATION
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3

NEW AND EXCLUSIVE CONTENT

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FOXTEL NEXT GENERATION
New iQ PVRs: For
‘On Demand’:
Simple Navigation Everyone! Optimisation:
And Search With Better TV, Not More
Recommendation TV
iQ 2
Transferability: Content:
Pay Once But Use Carefully Targeted,
Many: Watch Me, Rent Commissioned And
True High Definition:
Me, Buy Me Acquired
A Key Differentiator
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4

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5

People & Culture Andrea Grant Group Managing Director Human Resources

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Our strategy

Two key areas of focus:

Build a world class talent base with quality Talent leaders at all levels Culture & Create a high performing customer intense Capability culture and organisation

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1

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----- Start of picture text -----

Talent Building a world class
talent base
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----- Start of picture text -----

Talent
Talent management
Placing top talent in every position
along the leadership pipeline
Entry Mid-Management Senior-Management
Level Level Level
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2

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----- Start of picture text -----

Diversity
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----- Start of picture text -----

Culture &
Setting the foundations for
Capability
a high performance culture
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3

Culture & Aligning our people with Capability our strategy

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Culture & Capability 2007 Engagement Highlights

• Average 4% point improvement across all categories

• More employees understand future business direction

−77% have clear understanding, highest score in a decade and a 9% point increase

• More employees confident in management

−62% believe Telstra is well-run, highest score in a decade and a 9% point increase

• More employees embrace Telstra’s goals and objectives

• −84% believe strongly in Telstra’s goals and objectives, up 4% points

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4

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Culture &
Capability
Raising the Performance Bar
Year 1 Year 2
Performance expectations
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High performance is what world class companies do

• Telstra is changing

• We are evolving into a media-comms company

• Our customers are expecting more

• We are building a world class workforce

• Performance and development are the name of the game

• Our employees are responding

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5

The Pathway to the FY10 Long Term Management Objectives John Stanhope CFO

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$6b-$7b Free Cash Flow FY10

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1

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Free Cash Flow Drivers
$2.3-2.5b $0.5-0.6b
$6-7b
$0.5-0.7b
$1.2-1.8b
$2.9b
FY07 Revenue Opex Capex Tax & FY10
reduction reduction W/Cap
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A disciplined use of FCF with clear priorities
• Half yearly board decision
Shareholder
First Priority Returns • Committed to fully franked
dividends
Selective • Tight financial controls
Second Priority
M&A
• Remain within target range
Financial
Third Priority Parameters • Retain flexibility
Excess FCF will be allocated once it is generated and following these priorities
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2

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Sales Revenue Movements
400-600m 0-300m
$25.1-25.7b
1.0-1.3b
$23.7b 1.0-1.4b 1.1-1.5b
FY07 Fixed Mobiles Internet Sensis Other FY10
(incl SouFun)
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Revenue Mix – Traditional versus New
FY07 FY10
2006/07 2009/10 New Products over New Products over next
New Products over next generation networks 3% products over next Traditional generation 5% next generation networks 5% New Products over nextgeneration networks generation networksTraditional
3% technology Traditional products oproducts o ve r next r
16% New Products or next generation technologytechnologygeneration
extensions derived 29%
16% from traditional technologies New Products or extensions
11% derived from traditional
28% technologies
products over technologiesTraditional traditional 70% 70% 11% 55% products over technologiesTraditional traditional 54% Traditional products overtraditional technologiesextensions derived New Products or from traditional technologies 12%
12%
New Wave increases from 19% to 33%
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3

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$500m-$700m
Opex reduction by FY10
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Opex Drivers
200-400m 100-200m
300-400m
$14.1b
150-200m
100-250m
$500-700m $13.4-13.6b
FY07 Net DVC Net Labour Service Impairment Other Opex FY10
Growth Reduction Contracts Expense
& Other
Agreements
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4

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Opex Profile
Opex Trend ($b)
• Drive top line growth • Cease transformation spend
$b • Transformation spend • Removal of platforms/systems
• Duplicate networks/systems • Productivity gains
14
12
10
FY05 FY06 FY07 FY08 FY09 FY10
Absolute Opex declines FY09 & FY10
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Opex Drivers - Labour
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400-450m 550-600m
$4.0b
$3.8-3.9b
FY07 Natural Growth Net Benefits FY10
(incl. Expansion (incl. Red/
SouFun) Recruit )
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On track to achieve:

• 1) 6-8k reduction by FY08

• 2) 12k reduction FY10

• Transformation and workforce

• management

• High attrition rates in the customer

• facing units at more than 2X the company average, will assist with managing future exits.

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5

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Opex Drivers – Directly Variable Costs
Pre MBM/IT Post MBM/IT
1.7X
1 1
<1X
Sales Rev CAGR Directly Variable Cost Sales Rev CAGR Directly Variable Cost
FY02-FY07 CAGR FY02-FY07 FY07-FY10 CAGR FY07-FY10
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Opex Drivers – Network Payments

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Offshore payments expected to
grow from 56% to 60% of total
Network payments by FY10
FY07
Growth in offshore
2006/07
subsidiaries and
Offshore Reach costs in line Domestic,
Payments with volume growth 44%44% 56%
Offshore,
$1b
56%
Domestic
FY10 2009/10 Offshore
Domestic,
Lower Mobile terminating
Domestic 39%
rates offsetting volumes
Payments
Driving on-net volumes, social networks 40% 60% Offshore, 61%
FY07 FY10
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6

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Opex Drivers
–
Service Contracts & Other Agreements
150-200m
$2.2b 100-150m
150-200m
200-250m
$1.8 – 1.9b
FY07 Growth Contract Productivity Reduced FY10
Rationalisation Benefits from Transformation
Transformation Spend
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Opex Drivers – Other Opex
50m
$2.8b 50m-100m
150-200m
100-200m
$2.3–2.5b
FY07 P&A IT Impairment G&A FY10
Leasing Expense
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7

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Capex / Sales trend
Structural shift in Capex mix:
• Complete transformation build
• Fewer physical platforms/systems
Peak spend driven by:• Next G [TM] • More software defined applications
• Next IP [TM] and services
25% Assumes no FTTN• IT •• Flexibility/ScalabilityClear Evolution path
20%
15%
Low double digit
beyond FY10
10%
10-12%
5%
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12
No significant change in long term Capex profile
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Capex Driver- Fixed Access/Network Core
Next IP [TM] complete
- IP/MPLS Core
- Ethernet Aggregation
- Multi Service Edge
Peak $1.7b MSAN/Soft switches
FY06 FY07 FY08 FY09 FY10
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8

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Capex Driver - IT
TR1/2 build Transformation
spend in excess
TR1 in production of $2.5b over 3yrs
Peak $1.1b
TR2 in production
FY06 FY07 FY08 FY09 FY10
Note: future data points are indicative
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Capex Driver - Wireless
Next G [TM] build
Next G [TM] complete
Peak $1b
• Technology Evolution path
• Scalability
CDMA closure
FY06 FY07 FY08 FY09 FY10
Note: future data points are indicative
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9

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Capex Driver - Transmission
Metro NGN Ethernet
Peak $0.5b
Domestic
Build Sydney-Hawaii
Move traffic on-net
International
FY06 FY07 FY08 FY09 FY10
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Global Capex Benchmarks
CY09E capex/sales for domestic business
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18%
16%
TLS FY10 long term
14% management objectives
12%
10%
8%
6%
4%
2%
0%
TLSN Fi TLSN Se TA TNOR KPN PT EU mean FT TEF DT TI BT
Source: Credit Suisse, Telstra guidance for FY10
includes a fibre build
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10

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Long Term Management Objectives
Previous Long Term Updated Long Term
Management Objectives Management Objectives FY05
Revenue
Growth 2.0% to 2.5% pa to FY10 2.5% to 3.0% pa to FY10 $22.2b
Cost
2.0% to 3.0% pa to FY10 No change $12.0b
growth
EBITDA
2.0% to 2.5% pa to FY10 2.5% to 3.0% pa to FY10 $10.5b
growth
EBITDA
46% to 48% pa by FY10 No change 47.2%
margin
Workforce Down 12,000 by FY10 No change 52k
Capex 10% to 12% of revenue by FY10 No change 16%
Free
cash flow $6b to $7b by FY10 No change $5.2b
Based off FY05 results
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11