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telstra.annual.review. 2000
Think of the potential...
Making life easierª TEL0011 Cover 14/9/00 4:04 PM Page 2
...that broad
The Annual Review is a ‘short form’ overview only. It is If you prefer, you can access both the Annual Report designed to give a concise summary of Telstra’s activities and the Annual Review through the Internet at and financial position for the year ended 30 June 2000. http://www.telstra.com.au/investor/ The Annual Review does not represent or summarise Nothing in this Annual Review is or should be taken all publicly available information in relation to Telstra. to be an invitation or application or offer to subscribe There is other publicly available information in relation for or buy securities in Telstra. to Telstra in both Telstra’s full Annual Report and information that has been notified to the ASX and the Telstra Corporation Limited ABN 33 051 775 556 ASIC. To obtain a free copy of the Annual Report, please call FREECALL™ 1800 06 06 08.* *A free call unless from a mobile phone which will be charged at the applicable mobile rate.
CONTENTS Financial highlights Chairman and CEO’s Voice Services and Data and internet Strong earnings creating letter A year of change broad customer Shaping the future shareholder value. and challenge. demand. See page 12 of this high potential See page 2 See page 5 market. See page 16 Wireless An exciting How we are driving future.See page 14 growth. A clear overview of Telstra. See page 3 TEL0011 Text 14/9/00 2:54 PM Page 1
Make a call. View an image. Access data. Share an idea. At home. In the car. Across town and country. Around the world. band will deliver. This year’s Annual Review is focused on faster services, newer technologies and greater convenience. Any device. Any access. Any service. And the potential that it offers our company, our customers and our shareholders.
Networks Important Pan-Asian Growth Board of Directors. Concise Financial Harnessing the power steps to expand on A shared vision and a See page 26 Report. See page 38 of the internet. network capabilities. high growth industry. See page 56 See page 18 See page 22 Corporate Governance. Emoluments. See page 51 Five year financial See page 28 summary. See page 58 Broadband Speed...it’s Community Reaching Investor Information. just faster.See page 20 into the life of every Directors’Report. See page 54 Financial Calendar Australian. See page 24 See page 30 and Contact details. See inside back cover
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Financial Highlights
Strong earnings creating shareholder value.
The strong performance of the company in the past 12 months is reflected in the following: • Earnings per share before abnormals: Increased by 16 per cent to 31.4 cents. • Total revenue: Increased by 8.9 per cent to $19.8 billion. • Operating profit after tax: Grew by 5.5 per cent to $3.7 billion.
Consolidated Profit and Loss 2000 1999 change $m $m % Total revenue 19,840 18,218 8.9 Operating expenses 13,919 12,898 7.9 Operating profit before income tax expense 5,921 5,320 11.3 Profit after tax and minority interest before abnormals 4,043 3,486 16.0 Abnormal items (net of tax) 366 – – Operating profit after tax and minority interests 3,677 3,486 5.5 Retained profits 5,170 3,809 35.7
Earnings per share 28.6¢ 27.1¢ 5.5 Normal dividends per share 18.0¢ 17.0¢ 5.9 Special dividend – 16.0¢ – Return on average assets 23.2% 22.5% 3.1 Number of full-time employees 50,761 52,840 (3.9)
Ordinary dividends per share Earnings per share (before abnormals)
cents 1997 9* cents 1997 20.0 1998 14 1998 23.3 1999 17* 1999 27.1 2000 18 2000 31.4
* excludes special dividend.
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How we are driving growth
Key growth strategies How we will implement the strategy Some of our initiatives
• Implement programs to use our assets • Reorganised our business units to serve our more efficiently customer segments more effectively • Enhance our extensive distribution capabilities • Created a new business unit dedicated to the • Improve productivity in the delivery needs of our remote and rural customers Optimise returns of our traditional telephony services • Created a distinct infrastructure services business from traditional • Improve our marketing and sales activities, with a focus on providing our domestic wholesale control our costs and improve our customer infrastructure customers with world-class telecommunications service technology, unit cost and service delivery • Expanded the use of internet-based tools and products and technologies (e-enabling) throughout the company services in Australia • Continued to offer a broad range of customer focused product packages that will increasingly be mixes of traditional products with newer products, such as high speed internet access and mobile and wireless telecommunications
• Continue to be the market leader in mobile • Expand our GSM coverage, particularly highway telecommunications in Australia and in-building coverage, and use additional • Grow our revenues and earnings in this market spectrum to enhance capacity • Introduce innovative products and services, including a range of data and information services, Focus on key growth such as GPRS (higher speed packet data), SMS (short messaging service) and WAP (internet related opportunities in mobile applications) on GSM • Extend our new CDMA network to provide telecommunications additional digital coverage, particularly in rural and regional Australia, and to complement our GSM network in urban areas
As telecommunications, computing and media • Completed the Data Mode of Operation project technologies converge, we intend to focus on to ensure that our networks and systems are enhancing our capabilities to: appropriately conditioned to cope with • provide services more efficiently exponential growth in data traffic Focus on key growth • develop new and innovative products • Enhanced our ability to offer an expanded range • expand further into these markets by internal of data, internet, e-commerce and content-based opportunities in data, growth and, where appropriate, invest in products and services through strategic partnerships, broadband and synergistic businesses investments and acquisitions and development of • position ourselves to take advantage of this our own products and platforms the internet rapidly changing business environment • Used our broadband capabilities to develop and market additional affordable and widely available broadband applications • Further penetrated the pay television and broadband internet market in Australia
• Optimise our wholesale earnings by improving • Our alliance with PCCW will focus on wireless services and expanding our product and service offerings, in the pan-Asian region, a global backbone network both in Australia and internationally for wholesale services and for linking our own points- • Offer commercially attractive terms and of-presence, and in the provision of information conditions and value-added wholesale services, technology and telecommunications services to Explore growth such as managed network services on a global business customers network • Explore other selected international investment, opportunities in other • Undertake activities aimed at increasing our acquisition and alliance opportunities generally areas of our business revenues and earnings from outside Australia, and, in particular, with enterprises engaged in especially throughout Asia mobile telecommunications, data, the internet or content-based businesses
Not all of our businesses,products,services and activities can be shown. 3 TEL0011 Text 14/9/00 2:54 PM Page 4
More details and performance Our business products and branding Our customers and our contact with them measures on page
MessageBank® • Approximately 8.4 million residential Easycall® Calling Number Display and small business customers 12 and 18 Easycall® Call Waiting, Call Return • Business customers Call Forward, Call Manager • Approximately 78,300 public Telecard™, Phoneaway® and leased payphones Information Services, Freecall™ 1800 • Services to more than 230 countries Priority® One 3, Yellow Pages® directory (printed) and territories worldwide White Pages® directory (printed), • Flexible billing 0018 Easy 1/2 hours® • Almost 100 Telstra shops International Direct®, Facsimile • Approximately 52 information and Qantas Telstra Visa Card/Telstra Visa Card connection call centres responding to more than 476 million calls during fiscal 2000
MobileNet®, MessageBank® • 8.5 million Australians have mobile phones Easycall® Call Waiting, Call Forward • 4.1 million Telstra mobile telephone customers 14 and 18 Facsimile and data services • GSM covering over 95 per cent of Australian Operator assisted paging population Operator through connect • International Roaming in more than Short message services 75 countries Information services • CDMA network covers over 95 per cent of the Australian population • 4,000 retail outlets • 480,000 prepaid customers
Dedicated data services, LAN/WAN services • Largest internet service provider in the country, OnRamp®, Frame Relay, FaxStream® with more than one million online users 16 and 20 Big Pond®, ISDN • 650,000 Big Pond® subscribers SureLink® ShopSafe • Nearly 400,000 directories customers Easymail™ • ISDN available to 96 per cent of customers Yellow Pages® On-Line • FOXTEL is the largest pay TV operator in Australia, White Pages® On-Line with approximately 650,000 subscribers Select.net • Broadband cable available to 2.5 million homes WhereIs™, FOXTEL (50 per cent ownership) (1) KAHooTZ™
Interconnect • Other telecommunications companies Resale who purchase our products and services 22 Managed network services or connect with our networks Tailored products • Multinational corporations International transit traffic Global points of presence Selected international investments in mobiles, data, internet and content-based business
(1) KAHooTZ is a trade mark of Telstra Corporation Limited, Australian Children’s Television Foundation and Hewlett Packard Australia Limited. 4 TEL0011 Text 14/9/00 2:55 PM Page 5
from our Chairman and CEO
Once again it has been a year of change and challenge. But what sets 2000 apart is that it has been a year of enormous achievement. There have been a number of hard won successes requiring significant financial and strategic investment. We have implemented a number of strategic initiatives – a new organisational structure, new networks, new products, new businesses, new partnerships and alliances, new customers and new ways to serve them.
open for detailed information about < Telstra
Return on average shareholder equity Profit after tax (before abnormals) (before abnormals)
%1997 20.1 $millions 1997 2,568 1998 28.7 1998 3,004 1999 29.9 1999 3,486 2000 37.0 2000 4,043
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RESULTS Telstra’s profit for the year was a record $4,043 million > 1999: $3,486 million
Financial Results. Before turning to our strategic competition is increasingly fierce and there is initiatives, it’s important to touch on the a very sharp spotlight on rural and regional company’s financials.Your company has produced communications. another record profit in a year best described as increasingly competitive in a difficult regulatory Our business is still very much underpinned environment. Operating profit after tax and by traditional services, particularly voice. before abnormals attributable to Telstra However, for the first time at the half year shareholders was a record $4,043 million (last result we announced that revenues from year $3,486 million). In terms of earnings per non-traditional services, such as data, text, share this is equivalent to 31.4 cents per share. mobiles and internet had exceeded traditional Revenue totalled $19,840 million representing revenues, which include basic access and local an increase of 8.9 per cent. Earnings per share and distance calls. for the year was 28.6 cents.This year’s result has enabled your directors to declare a fully franked Positioning the company for growth. Against dividend of 10 cents per share taking the total this background we have set ourselves rigorous dividend for the year to 18 cents per share. growth objectives which we intend to achieve in two ways, through new businesses – chiefly Mobiles, data and our wholesale services mobiles, data and internet – and by extending were the key performers in the result, with our footprint internationally, particularly in the international calling revenues declining again Asia-Pacific region. We have also realigned the as the service becomes commoditised after company’s management structure to support strong competition. speed to market of products and services and at the same time eliminated duplicated Current Business Environment. It is activities in business units. abundantly clear that the old days of Telstra being the incumbent and only provider of Broadbanding Australia for Data and Internet telecommunications are well and truly over. Growth. Broadband is the next exciting wave Competition has produced changing behaviour of technological innovation and it’s all about in our customers as they exercise more choice superfast internet access. In practical terms this in an increasing array of product and service means fantastic telecommuting, business data offerings. Changing regulation has opened up services,networked games and video on demand. much of Telstra’s infrastructure for use by our And the potential doesn’t end there. competitors, some of whom are going further and building their own networks; price
Change in revenue (in $millions)1 Revenue drivers +165 -77 -80 -116 +321 -69 +355 +44 -32 +202 +32 +52 +241 6 TEL0011 Text 14/9/00 2:55 PM Page 7
Telstra can currently provide broadband service to all Australians
Telstra can currently provide broadband internet Mobiles Growth. Mobiles will soon overtake services to all Australians no matter where they fixed line phones in Australia to become the live through either of the following ways: most widely available voice and data capable • Cable – State-of-the-art hybrid fibre coax device. Telstra has the leading position in cable, which currently passes 2.5 million this market. Our two national digital mobile homes, or about 40 per cent of Australian networks (GSM and CDMA), with 95 per cent households. It is this cable that carries our population coverage, have attracted more pay TV service; than four million customers. • ADSL – Asymmetric Digital Subscriber Line, which provides high-speed internet services Wireless Application Protocol (WAP)-enabled over the copper phone network through a phones or ‘internet mobile phones’are continuing new technology employed by Telstra; and to be supported by improved services.Already • Satellite – Our satellite technology can be there are more than 27 services such as e-mail, used across the country, but is perfect for news, sports, share prices etc. that can be regional and remote areas or where cable accessed using a WAP phone, and we will and ADSL are not present. soon be rolling out a high speed service to give customers instant access to the internet over a One of the key things we seek to achieve with mobile phone. This will be the first step towards broadband is, whatever the delivery technology the ultimate goal of ‘online all the time’. – ADSL, cable or satellite – that the service will be transparent to customers. Once people are There are other data applications utilising the connected, there will be little emphasis on mobile network that will have some importance the access technology and more on the in the future. Already we have mobile EFTPOS services provided. Telstra is an early mover in in taxis. Not too far down the track we will the broadband area – we have been providing have even more impressive services, such as: commercial cable modem services for more • ‘Micro payments’ where you can purchase than two years. Our plan is to become the goods via your phone from a locally located major broadband supplier in Australia. We vending machine; have targeted more than 150,000 broadband • Secure Transaction Services where you connections over the next 12-18 months and can similarly make larger payments for 1 million within five years. products/services via your banking service on your phone; • Corporate intranet and e-mail access; and • Wireless Palm Synchronisation devices with corporate networks.
Revenue %1 Basic Access $2,020m 8.9. Local Calls $2,650m (2.8) STD Calls $1,406m (5.4) International Calls $987m (10.5) Mobiles $2,859m 12.6. Fixed to Mobile $1,220m (5.3) Data,text and internet $2,838m 14.3. Directories $1,122m 4.1. Customer Premises & Equipment $336m (8.7) Intercarrier $819m 32.7. Inbound calling $432m 8.0. Facilities Management $235m 28.4. Other Sales $1,685m 16.7. 1 Revenue change compared to prior corresponding period (i.e. 30/6/99) 7 TEL0011 Text 14/9/00 2:55 PM Page 8
ACCESS SERVICE 150,000 broadband connections over 12-18 months > 1,000,000 in 5 years
International/Pan-Asian Growth. We also see Our combined backbone assets will make real opportunities to leverage our strengths us a large and dominant player in the region, and expand into global markets, particularly extremely well placed to tap into the massive the Asia Pacific region and primarily in mobiles/ growth in data traffic into and out of the region. wireless and internet/data/e-commerce. We aim The wireless company places the under-utilised to establish a portfolio of investments in the and highly attractive Cable & Wireless Hong Kong- region and link them all together with our Telecom mobile business in a vehicle that will regional backbone network. Through this allow it, and like investments, to flourish. process we aim to be the partner of choice for the South East Asia region for any individual, We believe the PCCW alliance will create company or other telco wishing to do business a set of huge businesses for Telstra. Also in in this part of the world. For example, we the international arena, in Singapore we have believe we can become a major regional cellular joined forces with Keppel, the intention being operator. This will allow us to work with other to provide corporate and consumer customers carriers in the Americas and Europe to provide with end-to-end voice, data and Internet our combined customers with seamless global Protocol based services.We also announced services while driving down operational costs. the pooling of our New Zealand assets with Saturn to create Telstra Saturn, which will be The Pacific Century CyberWorks (PCCW) a formidable competitor in that market. We alliance, which was announced recently, will will be rolling out a state-of-the-art broadband provide us with the capability to achieve many network in New Zealand and are well placed of these objectives. This deal combines the to leverage both the products and relationships expertise and resources of two of the largest we already have in Australia. communications and convergence businesses in Asia to create leading pan-Asian businesses Telstra and KPN have finalised an agreement in wireless communications and data/Internet to form a joint venture company by merging Protocol (IP) carriage. It will give us scale their respective mobile satellite communications efficiencies to assist in achieving clear market businesses. The joint venture company is leadership. It will give us an immediate trading worldwide as ‘Station 12’, and enjoys customer base in a growing region, something a combined start-up global market share of that would be very slow and expensive to grow some 24 per cent, making it a major, and organically and, importantly, it gives us a arguably the leading, player in the global forward thinking partner in PCCW. satellite communications industry.
Sales revenue Group assets
$millions 1997 15,430 $millions 1997 25,858 1998 16,703 1998 26,470 1999 17,571 1999 27,682 2000 18,609 2000 30,339
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Productivity > 30 per cent fall in lost time injury frequency rate
Controlling our costs and structuring our Closing remarks. Throughout the year, but business. Growth means nothing without particularly at the end of the financial year, a corresponding management of costs. shareholders judge the performance of the Developments in technology, better work Board and management. We value the support practices and a more streamlined organisation of our shareholders and believe that your have allowed us to undertake various cost company is in tremendous shape. Our new efficiency initiatives – competition has economy initiatives, particularly broadbanding, compelled us to. and data over mobile devices, are strongly supported by our work on achieving a best This time of change in the organisation practice cost structure. Your company is a is difficult for all staff and we are greatly leaner, hungrier company, experienced with encouraged by their understanding of the competition and strategically well placed to reasons for our actions and their continued unlock enormous value from the new age professional commitment to the job at hand. economy in Australia and throughout the To meet the change head on we have Asia Pacific Region. developed The Data Skills Academy to re-skill technical staff. At the same time a focus on The potential is there to make a very good staff safety has produced a 30 per cent fall company a great one. in lost time injury frequency rate; this means that 452 fewer people were injured this year than last year as a result of better health and safety practices.
As part of our commitment to continued Robert Mansfield improvements in service, speed to market Chairman and cost reduction, we intend to sell our wholly owned construction subsidiary, Network Design and Construction Limited.
Ziggy Switkowski Chief Executive Officer and Managing Director
Our Vision
To enhance our positioning as the leading full-service telecommunications and information services company in Australia and to expand our presence internationally.
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Group Managing Directors
We’ve made it easier for you to understand how your company works by presenting information in a way customers think about our services in voice, wireless, data/internet and networks.
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Ted Pretty BA LLB (Hons) Dick Simpson Doug Campbell BEng Gerry Moriarty BEng (Hons) Telstra Retail Telstra OnAir Telstra Country Wide Infrastructure Services & Wholesale Prior to joining Telstra, Before joining Telstra, Mr Campbell was formerly Mr Pretty was a director Mr Simpson served as Chief Group Managing Director, Mr Moriarty has of Optus Communications Operating Officer at NRMA. Wholesale & International 30 years experience in the and an adviser to BellSouth He was previously the Director, and Group Managing Director, telecommunications and Corporation.Mr Pretty was Residential Division at Cable & Network and Technology broadcasting industries in previously a partner of one Wireless Optus and prior to of Telstra.He has also been business leadership, strategic of Australia’s leading telecom- that the Managing Director the Deputy Managing Director business development, munications,regulatory and for Unisys Australia and New of Telecom and President content venture management, media law firms.Mr Pretty Zealand,having started his of Canadian National major project management, was initially appointed to the career at IBM.The OnAir Division Communications.He is a Fellow engineering management position of Managing Director was initially responsible for the of the Australian Institute of and technical operations of the International Division of mobile and wireless operations, Company Directors and of the with Telstra, the ABC, TVNZ, Telstra,responsible for Telstra’s but has now been expanded Institute of Engineers,Australia. Broadcast Communications investments and operations to include most of the Ltd and NZBC. worldwide and then Group international operations. Managing Director, 10 Convergent Business. TEL0011 Text 14/9/00 1:58 PM Page 11
Telstra Retail is responsible Telstra OnAir is responsible for more than 8.8 million for our mobile and wireless Australian customers. networks and associated This covers all residential, systems within Australia,as business and government well as most of our offshore customers including the investments.This will customers of Telstra Country include the responsibility for voice, Wide,who receive our the proposed alliance with services other than: PCCW.It is also responsible • wholesale services – for all mobile retail sales which are provided by and after sales support, Infrastructure Services customer service,product wireless, and Wholesale and development and pricing. • mobile services – which are provided by Telstra OnAir. Telstra Country Wide operates specifically to address the This business unit’s primary telecommunications needs data/internet, activities are sales and of around three million billing.Telstra Retail also consumers and businesses manages our information, that reside and operate connection and payphone outside the mainland state services,as well as our capital cities and in Tasmania and networks. directories business.In and the Northern Territory. addition,it sells and provides Its aim is to accelerate customer services for a improvements in service and comprehensive range of sales performance outside products,services and major metropolitan areas. customer-driven solutions, Through 29 regionally located ranging from basic telephony managers supported by small services to complex voice and staffing levels,the sales, data networks. marketing,customer service, installation and repair Infrastructure Services & requirements of rural Wholesale is responsible for and remote customers are planning,design,construction addressed at the local level. and operation of our international and domestic Corporate Centre Functions fixed telecommunications Finance & Administration networks and associated is responsible for strategic systems to deliver planning and investment technology solutions, our opportunities,and provides products, services and corporate policy and support customer support.It also has functions,including finance, responsibility for customer risk management and audit, service installation and shared services for processing repairs and provides wholesale functions,treasury,investor products and services to relations, corporate other carriers,and carriage secretarial functions and service providers. other corporate services. Employee Relations Legal & Regulatory provides manages personnel, legal services,and has organisation effectiveness, responsibility for regulatory health and safety, positioning and negotiation, remuneration, training and including assessment of leadership development regulatory decisions and programs. preparation of submissions to industry regulators.
Robert Cartwright BA (Hons), Paul Rizzo BCom, MBA Bruce Akhurst MBA, FAIM Corporate Centre Functions BEc (Hons) LLB Employee Relations Finance & Administration Barrister & Solicitor Legal & Regulatory Mr Cartwright worked in the Before joining Telstra, CRA Group of Companies for Mr Rizzo was Chief General Mr Akhurst joined Telstra over 15 years, predominantly Manager, Retail Banking, of in 1996 as General Counsel. in manufacturing with a the Commonwealth Bank of Prior to joining Telstra he special focus on change Australia.He was previously was a partner and managing management, operations, CEO of the State Bank of partner of a leading finance and strategy.He was Victoria, and prior to that, Australian law firm. formerly President, An Mau a member of the Executive Steel, Taiwan and Managing Committee of Australia and Director, Comalco Rolled New Zealand Banking Group Products.Mr Cartwright is Limited where he held a a director of the Australian number of senior positions Graduate School of over a period of about 25 years. Management.
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Highlights of operations during the year
>> Opening Australia’s ‘Little Growth is driven by Black Book’– it’s as easy as 12 452.Easy Info is a new new services and broad contact information service (launched February 2000), customer demand providing cost-effective and comprehensive information. voice It includes street addresses, fixed phone numbers, more than 1 postcodes,time zones,area codes and country codes.In addition,fax numbers,mobile telephone numbers and email addresses will be provided, where available.Internet addresses will be added to the service in the near future.Up to five pieces of information can be requested for a flat fee of $2.50* per call.
>> Local calls.Telstra is Value-added services. National Long Distance and communic8™ Pre-paid Home
>> >> participating in an Our residential customers Fixed Telephone to Mobile In May 2000,Telstra increasingly competitive are enjoying increasingly capped rate offers have launched a new pre-paid market, not just for long sophisticated telephone become increasingly popular home telephone service – distance calls, but also services in their homes, as customers enjoy the an Australian first in the local calls.During the year, with significant up-take confidence of talking for up fixed phone market.The Telstra decreased the price of such products, including to five hours at night, but service replaces a standard of its local call to 22 cents* EasyCall® Call Waiting with the certainty of a fixed home telephone service and introduced its 16.5 cent* and Call Forwarding, cost. Capped STD® and and eliminates the need Neighbourhood Call™ for MessageBank® (now more fixed to mobile call rates for household phone bills, calls made within a local than 1 million customers) were extended from five providing the user with their exchange area.The excellent and Calling Number Display days per week to seven days own phone number,own value afforded by Telstra’s (now more than 503,000 per week and were also added MessageBank®and own untimed Local and customers). to EasySaver®Plus. account number and PIN,so Neighbourhood Call™ prices they have full control over has contributed to the high >> Packaging activities. >> By simplifying and reducing their telecommunications take-up rates for internet EasySaver®Plus is a total a range of STD® per minute spend. usage in Australia.Increased calling package which rates Telstra delivered use of the internet has rewards loyal Telstra $52 million in savings for generated positive results residential customers with customers in December 1999. for local call revenue. lower local call rates,our This was on top of reductions (Ten per cent of residential great Neighbourhood Call™ in STD® per minute charges customers now have two rate,capped STD® and fixed of 45 per cent since June or more lines – driven by to mobile calling between 1992.Increased competition internet growth). 7pm and midnight any night in the international calling of the week,all over Australia. market has meant more For $17.60* monthly access, attractive prices for this total package provides customers.The 0018 excellent value for money Easy1/2Hours® to all and is the reason more international destinations 12 than one million residential served by Telstra has also customers are using been very popular. *Includes GST EasySaver®Plus. TEL0011 Text 14/9/00 2:04 PM Page 13 ce n 11 billion local calls
Growth indicators (approximate): 2000 1999 % change
Local Calls (number of calls) 11,346,000,000 11,190,000,000 1.4
National Long Distance Minutes 12,513,000,000 12,329,000,000 1.5
International Outgoing Minutes 893,000,000 725,000,000 23.2
International Incoming Minutes 1,033,000,000 787,000,000 31.3 13
Easycall Call Waiting (per cent penetration) 56% 56% – TEL0011 Text 14/9/00 2:52 PM Page 14
Telstra’s position in this fast evolving market is large and growing. It is an exciting future wirele more than 4 million
5.6MILLION phone short messages weekly
The new Code Division >> By October this year, CDMA Pre-paid mobile phone The Telstra Shop® Network Multiple Access (CDMA) Freedom® will easily be the products experienced improved its customer mobile phone network has largest single land-based substantial growth in service rating from 55 per been rolled out in record cellular network in Australia the past year, with about cent to 80 per cent. This time, with 1,827 of the 2,100 and quite possibly the 500,000 services now in network comprises almost base stations in operation world. We estimate that operation. This reflects the 100 stores, including 27 and 280,000 customers, more than 95 per cent of the success of our new youth ‘New Format’ Stores opened just eight months after its Australian population will focus, with pre-paid in the 1999/2000 financial launch. Telstra now has two be covered with CDMA, and activations now contributing year. A change in store digital networks (the other the network will cover over more than 35 per cent of the design meant a 40 per cent being GSM). 78 per cent more area than GSM growth and 16 per cent reduction in shop fitting the analogue network at of CDMA. costs. The new Licensed >> In December alone we its peak. This means more Store Program, launched in achieved our best monthly than 500,000 Australians December 1999,which allows result ever,with a total of who previously did not independent operators to 280,000 new mobile have analogue coverage leverage off the successful connections across both our can now access a mobile Telstra Shop® Network,now CDMA and GSM networks. phone service. has 14 Telstra licensed stores.
Growth indicators (approximate): 2000 1999 % change
Mobile telephone minutes 4,464,000,000 3,221,000,000 38.6
Mobile telephone customers Digital 4,046,000 2,762,000 46.5 Analogue 80,000 673,000 (88.1) Total 4,126,000 3,435,000 20.1 14 Mobile MessageBank® (% penetration) 77% 62% TEL0011 Text 14/9/00 2:52 PM Page 15 ss services in operation
>> Our SMS (Short Message Service) service enjoyed huge growth, with approximately 5.6 million digital GSM mobile originating messages sent weekly by MobileNet® customers. >> We exceeded our goal of Internet access using 4 million Services In Operation WebMode (WAP enabled (SIOs), maintaining almost mobile phones) was launched half the country’s 8.5 million in December and provides mobile phone customers,and access to a wide range of easily surpassing our target information services and of 3 million MessageBank® personal applications. There services, which equates to a are currently more than 27 penetration rate of 77 per cent applications with the top five of our digital customer base. Telstra sites, including e-mail, Inspirit, TV guide, Blackjack >> An important measure of and the Surf n’ Ski report. success is our mobile phone Telstra was first to market churn (disconnection) rate, with wishlist.com, Surf n’ Ski which is currently the lowest reports, wireless games, WAP in the industry at less than banking, and online share 1.3 per cent per month, trading. New applications and reflecting our customers’ content are continually being appreciation of MobileNet’s developed. For example, superior network coverage a Mobile EFTPOS pilot was and service. completed in July and will be commercially launched >> Our ‘Far and Away Australia’s later this year. Best™’ advertising campaign, with Australian personalities John Farnham and Glenn Wheatley, was extremely effective, increasing customer acquisitions during the campaign. Their popularity and likeability, Australian- ness, trustworthiness and sense of humour appealed to the consumer. 15 TEL0011 Text 14/9/00 2:55 PM Page 16
Rapid growth in data and internet is transforming communications. Telstra is shaping the future of
this high potential market data
Dial Telstra’s new ISP Help Line or click on the Net. 1,000,000 Telstra has established a one-stop sales and service help line and a web site for ONLINE Australian Internet Service Providers (ISPs).The Telstra SUBSCRIBERS ISP Sales and Services Centre is staffed by a national team of specialised sales and Consistently collecting Having 1 million online >> Telstra achieved its goal technical staff who more than $1 million worth relationships opens up great of reaching 1 million online understand the specific of bill payments via online potential for e-commerce users by the end of fiscal issues and challenges of ISPs. channel per week. The total solutions. It also provides 2000. The total consists of Telstra’s ISP Help Line is number of billing transactions a major step on the way to more than 650,000 Telstra FREECALL 1800 624 512.* that have occurred online allowing Telstra to reduce Big Pond® customers with has tripled in the period costs by using services such a significant contribution >> A Small Business Speaker January 2000 to June 2000, as online bill payment. from telstra.com™ and series has been introduced from 100,000 per week to While Telstra is the largest Telstra Easymail™. called ‘Networked’.These 300,000, reflecting internet online service provider,it is This confirmed Telstra’s free seminars are broadcast growth rates and customers’ also consistently rated as place as Australia’s leading on telstra.com™ and provide receptiveness to the new the best Internet Service online service provider. help on a range of topics, functionality being offered. Provider (ISP) by computer Telstra has more than including the effective magazines with its Telstra doubled the number of use of new technology, Big Pond® internet service. online users and Telstra Big understanding the impact Pond® customers during of the GST and even the last financial year. This surviving the Olympic makes it four successive Games. Along similar lines, years in which Telstra has Your Business magazine has doubled the customer base. been introduced and is mailed regularly to more than 200,000 Small and Medium Enterprise customers. The magazine provides information and new ideas more than 650,000 Big Pond®customers to help growing companies. *A free call unless from a mobile phone, which will be charged at the applicable mobile rate.
Growth indicators (approximate): 2000 1999 % change
FaxStream® services access lines 426,800 407,100 4.8
16 Internet subscribers 1,079,000 >400,000 169.8
Pay TV services in operation 637,000 496,100 28.4 TEL0011 Text 14/9/00 2:56 PM Page 17 & internet you’re connected
telstra.com™ was introduced in December 1999. telstra.com™ has quickly become one of Australia’s leading portals since its official launch in March 2000. It is rapidly moving to fulfil its objective of becoming an online communications hub for individuals, who can personalise the site to become ‘your dot com™’. >> Some exciting new developments include WebNotes™ where, from your computer, you can send a short message service to any Telstra MobileNet® mobile phone; faster download of the home page; better personalisation options and improved content.
17 TEL0011 Text 14/9/00 3:14 PM Page 18
To speed growth we have taken important steps to expand on network net capabilities >> Telstra’s Domestic >> Data Mode of Operation Wholesale group has (DMO) – Work on making played a big part in Telstra’s networks ‘internet working with the industry ready’ continues (see to build Australia’s Broadband feature on communications future. page 20). In addition to the Discrete wholesale billing extensive copper network arrangements, discrete that services most of urban wholesale products and and rural Australia, Telstra innovative resale offerings has 3.1 million kilometres and a track record of of optic fibre. The very delivering to our wholesale high carrying capacity customers has helped of this fibre lends itself to create a thriving interconnecting the capital communications sector. cities and servicing around 14,500 commercial buildings around Australia. approx. >> During the year we continued installing ‘Points of Presence’ or PoPs, where we interconnect with other LICENSED50 OPERATORS countries’ networks and Wholesale – Australia conduct wholesale and retail business activities. Telstra’s PoPs network now includes UK, Germany, MobileNet’s network There are now nearly Japan, Hong Kong, South capacity for Olympic 50 licensed operators in Korea and the USA. In total, venues was at least tripled Australia. Those operators Telstra has business during the Games. Capacity can access Telstra’s network operations in 19 countries was also increased to facilities and as customers in Asia, North America improve coverage for the of Telstra Wholesale are and Europe. expected 600,000 people in contributing to Telstra’s the Sydney area. Projects revenue growth and >> In preparation for the prepared for the Sydney shareholder value. To expected high number Olympic Games include further assist the growth of international phone Webmode sports services of the industry, Telstra has calls,faxes and emails at for WAP phones,PocketNews introduced Local Number Christmas,Telstra negotiated sports services for Short Portability, special on-line 8,960 temporary circuits Message Service (SMS) billing capabilities and which,together with its phones,SMS welcome products tailored specifically permanent circuits,resulted messages for International for the wholesale industry. in more than 33,600 circuits Roamers connecting to the being ready for service over MobileNet® network and free the Christmas peak period. PocketNews sports results. These circuits supported Fax and data capabilities more than 1.4 million were made available on international calls made to the CDMA (Code Division and from Telstra customers Multiple Access) network on Christmas Day,producing in January. CDMA’s first 14 million conversation international roaming minutes – a big increase service was also made on the previous year. available in time for the Olympic Games. 18 TEL0011 Text 14/9/00 3:16 PM Page 19
workswith a presence in 19 countries
Growth indicators (approximate): 2000 1999 % change
Basic access lines Residential 6,510,000 6,930,000 (6.1) Business 2,360,000 2,440,000 (3.3) Total retail customers 8,870,000 9,370,000 (5.3) Domestic wholesale 1,170,000 390,000 200.0 Total basic access lines in service 10,040,000 9,760,000 2.9
ISDN access lines (equivalents) 1,049,000 722,000 45.3 19 TEL0011 Text 14/9/00 3:19 PM Page 20
Speed…it’s just faster. E-mails arrive in real time, games really kick and you can still use the phone!§ broad
‘Broadband’is one of the But this simple description class leader in broadband hottest buzzwords associated belies what broadband really with its cable and satellite with the internet. is…broadband is the key to internet services.Now Telstra unlocking the potential that makes it easier for even But what does it really mean? the internet and the world of more Australians across the communications has to offer. country to enjoy the benefits Put simply, broadband is a All of the things we’ve dreamt of broadband,with its latest term to describe superfast, about become reality. technology,ADSL (Asymmetric ‘always on’ internet access Digital Subscriber Line). to the majority of Australians. Just imagine downloading This leading-edge ADSL CD quality music, playing technology is not just fast, games in real time and it’s superfast,giving access downloading and transferring to the internet up to 50 times large files or multi-media faster than regular dial-up in the blink of an eye. Or internet services through imagine soon being able normal phone lines, whilst to have interactive video still being able to use a or even video-on-demand phone or fax. without even needing to leave your home! Telstra is delivering the benefits of ADSL technology For many young rural with its award-winning Australians, distance internet service Telstra learning will be like being in BigPond™.Both residential the classroom,with the ability and business customers ADSL indicative urban and major rural centres, including HFC areas to see and be seen by their can now get Telstra Big Pond® teachers and classmates. ADSL for a superfast,‘always HFC existing cable modem service 2 million homes on’internet connection.For For businesses,the more information or to apply Satellite elsewhere permanent connection and for any of Telstra BigPond’s high speed of broadband broadband internet services, Broadband internet with ADSL More and more customers
internet provides greater including cable, satellite technology is provided over your will progressively have access to standard telephone line. Currently, high speed service via ADSL from efficiency and cost and ADSL, simply visit a standard phone line can receive 21 August 2000. Commencing with effectiveness. Efficient http://www.bigpond.com up to 56 kilobits of information per all capital cities, Toowoomba, telecommuting will become or call 131 282. second, but with ADSL you can Launceston and Bunbury, Telstra a reality, with employees subscribe to a service with data has embarked on an ambitious download speed of up to 1.5 megabits 2 year program to deploy ADSL being able to access the ADSL technology also per second.ADSL means all 857 pages capability to about 1300 exchanges company’s network from underpins Telstra Hyper- of the classic novel Moby Dick could across Australia bringing high home, without sacrificing Connect™,a new remote be downloaded in just a few seconds speed services to about 90 per cent security or speed. connectivity option for – at current phone line speeds you’d of homes and businesses.Telstra’s Collaborative computing corporations who wish only get 3 pages in the same time!ºº exchange rollout progress can be tracked by visiting will provide the ability for to provide teleworking Telstra’s rollout of ADSL started in http://www.telstra.com.au/adsl a work team to create a capability to staff and late August 2000. Interest in ADSL or by calling 1800 151 454. is running hot with more than project in unison, whatever branch offices access to the 2.3 million hits or requests for §Refers to ADSL connection with their location. Telstra’s corporate network.For more information captured at telstra.com™ Telstra Big Pond®.ººThese times are broadband technology will information or to apply for on http://www.telstra.com.au/adsl for indicative purposes only. Depending make all this a reality…and Telstra HyperConnect™, visit in a twelve week period from May on internet network routing and ISP transmission overheads, which are to July.We aim to make broadband this reality starts right now! http://www.telstra.com.au/adsl dynamic variables and cannot be Telstra is already a world- or call 1800 150 506. 20 available to all Australians,as shown predicted; the actual length of time in the map above. may be slightly longer. TEL0011 Text 14/9/00 3:22 PM Page 21 bandingAustralia
Broadband is not justthe future of the internet, it’s the future of all communications. Telstra is committed to bringing broadband technology
within reach of all Australians. 21 TEL0011 Text 14/9/00 3:18 PM Page 22
Complementary businesses, a shared vision and access to high growth markets are what Telstra’s alliance with Pacific Century CyberWorks is all about Pan-Asian
Telstra PoP HKT PoP (PoP: point of presence) >> Telstra’s alliance with Hong The alliance will create three >>>Telstra is in good company, > The new global wholesale Kong-based Pacific Century new joint venture companies partnering with one of the company (IP Backbone Co) CyberWorks (PCCW) will put in the areas of international Asia-Pacific’s most dynamic to be formed under Telstra’s Telstra firmly on the map global wholesale mobiles/ organisations. PCCW has alliance with PCCW will in Asia and will establish a wireless, internet and data grown to become Asia’s from day one be the number powerful new force in Asian, centres. Once operational, biggest internet group one carrier of voice and and global communications. the combined strength of outside Japan through data/internet traffic in Asia the partners will make the investments in more than outside Japan and will be Because Asia offers such global wholesale company 40 content, technology among the top global substantial opportunities – (IP Backbone Co) the number and e-commerce providers. wholesale carriers in the rapidly growing markets one operator in voice, data PCCW has completed its world. It will tap into the and a hunger for new and internet traffic in the acquisition of Cable & strong global demand for generation products like Asia/Pacific outside Japan, Wireless Hong Kong bandwidth, driven largely wireless and internet – this and in the top echelon in Telecom,one of Asia’s most by the internet, and will alliance with PCCW which the world. successful and respected fill a gap in Asia which is recently purchased Hong communications companies. currently under-served Kong Telecom (C&W HKT), >> Importantly, this initiative with capacity. is a major step for the allows Telstra to aggressively In addition to its impressive company’s future and a pursue the offshore growth track record,PCCW also shares The partners bring to the pivotal advance in the it needs outside its traditional Telstra’s vision for long- joint venture substantial execution of Telstra’s Australian markets whilst term growth in Asia and, complementary assets, international growth maintaining the scope of importantly, already has including submarine cable strategy. the domestic business. significant links to the high investments;satellite,gateway potential markets in China. and network infrastructure PoPs (points of presence); and solid IP/bandwidth and traffic volumes.
Pan-Asian Business Structure 2000
Telstra 50/50 IP Backbone Company number one in Asia outside Japan three joint 40/60 Wireless Company creating a Pan-Asian presence 22 ventures PCCW/C&W HKT 50/50 Internet Data Centre Company substantial business opportunities TEL0011 Text 14/9/00 3:19 PM Page 23
growth
>> The new mobiles/wireless joint venture aims to establish a pan-Asian presence to capitalise on one of the region’s fastest growing technologies.
In the first instance, however, the partners will concentrate on cementing their relationship in Hong Kong Telecom’s mobiles business of which Telstra will be a major shareholder. Telstra has a wealth of skills and experience to offer this venture gained through operating Australia’s leading mobiles network. >> The third component of Telstra’s new alliance with PCCW – an internet data centres greenfields joint venture – will establish and operate a network of centres throughout the Asia/Pacific to provide internet and e-enabled service offerings, initially focusing on hosting services.
Telstra is confident that this bold initiative with PCCW will brighten the company’s future and deliver substantial benefits,not only to employees and shareholders, but also to the nation generally. 23 As a company, Telstra reaches into the lives of most Australians every day com
Indigenous artist Long Telstra is proud of the part Telstra’s commitment to Telstra is a major sponsor of Tom Tjapanangka’s image it has played in supporting regional and rural Australia the Olympic Landcare project of Ulampuwarra (Haasts The Australian Ballet as is absolute. This year the and the Telstra Landcare Local Bluff Mountain) won the Principal Sponsor for the company formed the Telstra Government Award.Landcare National Aboriginal & Torres past fifteen years. We believe Country Wide business unit. Australia is a non-profit entity Strait Islander Art Awards the arts should be available In addition to this structural formed in 1989 to raise (NATSIAA). Since 1992, Telstra to all Australians, just as support,Telstra has developed community awareness about has been the principal we believe the benefits of rural traineeships to encourage land care and preserve and sponsor of this premier art technology are. Telstra is young people to join the protect our unique Australian event that celebrates the committed to focusing on industry,and live and work landscape.Telstra has been a sponsor of Landcare Australia extraordinary talent of our its customers and putting in their local community. since 1990,when the first contemporary indigenous them first. Our association Trainees are currently National Landcare Awards artists. Each piece created has continued to grow with employed in Alice Springs, were held.This year’s winner by this year’s entrants is an Telstra’s principal sponsorship Katherine, Tennant Creek and of the Telstra Landcare Local expression of their individual this year of The Dancer’s Nhulunbuy. Telstra supports Government Award was cultural and regional identity. Company 21st anniversary the ‘Pass the Hat’ concerts in Yugul Mangi Council from Telstra’s sponsorship includes tour, performing throughout regional Australia,which raise the Northern Territory.Telstra acquisition of works for the regional Australia from Darwin money for five different also sponsors Clean Up Telstra collection owned by to Warragul via Albury. communities each year. Australia Day and The Banksia the Museum and Art Gallery The tour highlighted Telstra’s Environmental Foundation. of the Northern Territory. commitment to the Australian Telstra maintains an (The artist is represented community, particularly to environmental management by the Ikuntji Arts Centre at those who live in regional system across the company Haasts Bluff, one of the 39 Australia. In charting our to continually improve its Desart member art centres destiny, we believe The own environmental in Central Australia.) Australian Ballet eloquently performance and move demonstrates that innovation towards sustainability. and integrity are true companions. (The above photo of Kirsty Martin of The Australian Ballet was taken by Branco Gaica).
24 TEL0011 Text 14/9/00 3:21 PM Page 25 munity
This year the company Sport is more than a business initiated an office waste investment for Telstra.A great management and recycling believer in teamwork, the program to divert recyclable company sponsors three of wastes produced in offices, our most successful national such as paper, toner cartridges teams: the Telstra Dolphins and milk cartons,from landfill. swim squad, Telstra This program is an integral Hockeyroos women’s hockey part of Telstra’s national waste players and Telstra Titans management system. An weightlifters. Swimming is energy management program the highest participation is also underway to maximise the efficiency of energy use sport in Australia and the and minimise greenhouse gas most watched event during emissions, enabling Telstra Olympic and Commonwealth to actively contribute to Games.More than 40 per cent Australia’s targets to reduce of Olympic medals won by greenhouse gas emissions. Australians have been for Telstra’s telecommunication swimming, and Telstra’s products also provide contribution ranges from opportunities to improve providing children with the environmental performance opportunity to be coached by replacing paper-based in swim clinics by Olympic information transfer services stars, such as Susie O’Neill, with electronic voice, video to the sponsorship of the and data links. Australian swim team as a whole.
25 TEL0011 Text 14/9/00 3:22 PM Page 26
Board of Directors
Robert C MANSFIELD Zygmunt E SWITKOWSKI John T RALPH AC, FCPA, FTSE, Donald G McGAUCHIE John W STOCKER AO, MB, Elizabeth A NOSWORTHY AO, BCom, FASA, CPA BSc (Hons), PhD FAICD, FAIM, FAusIMM, Hon LLD Age: 50 BS, BMedSc, PhD, FRACP,FTSE BA, LLB, LLM Chairman Chief Executive Officer (Melbourne and Queensland) Age: 55 Age: 54 Age: 49 Age: 52 Deputy Chairman Director since September Age: 67 1998. Senior Partner, C&E Director since October Director since December Director since November 1999 Director and Chief Executive McGauchie – Terrick West; 1996. Chairman, Grape 1991. Chairman, Port of Chairman since January 2000. Officer since March 1999. Director and Deputy Chairman, WoolStock and Wine Research and Brisbane Corporation; Chairman, CDS Technologies Dr Switkowski has been Chairman since October Australia Ltd; Director, Development Corporation Director,David Jones Ltd, Pty Ltd and Starlight Chief Executive Officer of 1996. Chairman, Australian Wool Testing and Sigma Company Ltd. GPT Management Ltd, Children’s Foundation Optus Communications Ltd Commonwealth Bank Authority Ltd, Farm Plan Director, Cambridge RP Data Ltd, Brisbane Australia; Director,McDonald’s and Chairman and Managing of Australia and Pacific Pty Ltd, Ridley Corporation Antibody Technology Airport Corporation Ltd, Australia Ltd, Datacraft Asia Director of Kodak (Australasia) Dunlop Ltd; Director, BHP Ltd, Australian Centre for Group plc, Circadian Queensland Treasury Ltd and Dimensions Data Pty Ltd. He is a Member of Ltd; Chairman, Australian International Agricultural Technologies Ltd and Corporation, City of Holdings plc; formerly the Australian Information Foundation for Science; Research, Vicgrain Ltd, Nufarm Ltd; Principal, Brisbane Arts and Chief Executive Officer of Economy Advisory Council Deputy National Chairman, Victorian Grain Services Foursight Associates Environment Ltd and McDonald’s Australia Ltd, and the Business Council Foundation for Young Ltd; Member, Foreign Pty Ltd; former Chief Foundation for Devel- Wormald International Ltd, of Australia. Australians; Member, Affairs Council, Trade Scientist,Commonwealth opment Cooperation Optus Communications Ltd Board of Melbourne Policy Advisory Council, of Australia. Ltd; Councillor,National and John Fairfax Holdings. Business School, Board International Policy Competition Council; of Advisers of the Council Agriculture Food Member, Australian Constitutional Centenary and Trade; Immediate Greenhouse Office Foundation, Advisory Past President National Experts Group on Council of the Global Farmers Federation. Emissions Trading. Foundation and Global Corporate Governance Advisory Board Egon Zehnder International. e
26 23
Front row (left to right): Robert MANSFIELD, John RALPH, Ziggy SWITKOWSKI. Back row (left to right): Donald McGAUCHIE, John STOCKER, TEL0011 Text 14/9/00 3:23 PM Page 27
Anthony J CLARK N Ross ADLER Stephen W VIZARD Cecilia A MOAR Dip T Christopher I ROBERTS Malcolm G IRVING AM, FCA, FCPA, FAICD AO, BCom., MBA AM, LLB, BA, FAICD Age: 41 BCom AM, BCom, Hon DLit Age: 61 Age: 55 Age: 44 Age: 55 Age: 70
Director since October Director since October 1996. Director since October Director since September Director since December Director since July 1997. 1996. Chartered Chief Executive Officer 1996. Chairman, Granada 1998. Partner, cereal 1991. Chairman, Email Ltd; Chairman,Caltex Accountant; formerly and Managing Director, Media Australia, Council grower near Swan Hill in Director and Chairman Australia Ltd, ADI Ltd and Managing Partner Santos Ltd (due to retire of Trustees of the National Victoria; Member, Mallee Elect, Amcor Ltd; Director, Willis Australia Ltd Group; KPMG NSW 1992-1998; 30 September 2000); Gallery of Victoria,Oakton Catchment Management Petaluma Ltd,Transparency Director, Cabonne Ltd. Chairman, Maritime Chairman of the Board of Computing Ltd and Red Authority Board and International Australia, Industry Finance Company the Art Gallery of South Heart Productions; Telstra Country Wide Griffin Theatre Company Ltd; Deputy Chairman, Australia; Director, Santos Director, MultiEmedia.com Advisory Board; Graduate and Juvenile Diabetes Australian Tourist Group Companies, Ltd; Board Member, of the Australian Rural Foundation Inc; Member of Commission; Director, Commonwealth Bank Australian Commercial Leadership Program. the Board of Governors, Amalgamated Holdings of Australia and QCT Television Fund; Member Winifred West Schools Ltd Group,Ramsay Health Resources Ltd; Member, of the Committee, Limited (Frensham). Care Ltd and Carlton Business Council of Melbourne Cricket Club; Investments Ltd. Australia; Council Member, Governor,Sony Foundation. The University of Adelaide.
27
Elizabeth NOSWORTHY, Anthony CLARK, Ross ADLER, Stephen VIZARD, Cecilia MOAR, Christopher ROBERTS, Malcolm IRVING. %(6735$&7,&(
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ext 14/9/00 3:47 PM Page 54 DIVIDENDS Final fully franked dividend of 10 cents per share Investor Information Annual General Meeting • any profit resulting from the release from Telstra’s 2000 Annual General Meeting will our obligations under the Telstra Additional be held at 1.30pm (Melbourne time) on Friday, Contributions agreement. 17 November 2000 at the Melbourne Exhibition However, for dividends declared from earnings and Convention Centre. The meeting will be in fiscal 2002 and future years, it is our current transmitted live to information meetings at other intention that the dividends per share will not venues around Australia, details of which will be reduce on a year on year basis as a result of mailed directly to shareholders during October. the alliance with PCCW, subject to continuing commercial considerations. Dividend Payment A final fully franked dividend of 10 cents Foreign ownership restrictions per share will be paid on 27 October 2000 to The Telstra Corporation Act restricts foreign securityholders registered on the Telstra Share ownership. Foreign persons collectively and IR Register on 22 September 2000. For cannot control more than 35 per cent of the Australian tax purposes, the dividend will non-Commonwealth owned Telstra shares, and be fully franked at the 34 per cent company individual foreign persons cannot control more tax rate. than 5 per cent of them. Telstra will divest shares if an unacceptable foreign ownership situation Dividend Policy arises. Telstra will also keep relevant stock It is our current policy to declare ordinary exchanges advised of foreign ownership levels. dividends of at least 60 per cent of operating profit attributable to shareholders, subject to Shareholding information and change taking into consideration a number of commercial of address factors, including the interests of shareholders, Questions relating to your shareholding, cash requirements for future capital expenditures including share transfer, dividends or changing and investments, as well as relevant industry your mailing address, should be directed to practice. However, in determining the dividends the Telstra Share Registrar on FREECALL™ declared from earnings for the year ending 1800 06 06 08* or visit their website at 30 June 2001, we will exclude the ‘once off’ www.registrars.aprl.com.au book profits that will arise from: • any profit recorded in the proposed sale Removal from the Annual Report of our global wholesale assets to the IP and Annual Review Mailing Lists Backbone joint venture company to be Shareholders who no longer want to receive established with PCCW; and the Annual Report or the Annual Review should advise the Share Registrar in writing or visit www.registrars.perpetual.com.au/scripts/iws.dll *A free call unless from a mobile phone, which will be charged at the applicable mobile rate. How does tax reform When Shares Acquired Tax Treatment affect my shares? Shares acquired before 21 September 1999 You have a choice of being taxed under either the old CGT rules The introduction of the and held for at least 12 months (with increase in cost base for inflation being frozen as at 30 September 1999) or the new CGT rules where only 50 per cent (or two thirds for super new tax system may funds) of the gain will be taxable at marginal tax rates change the capital gain tax (CGT) treatment of Shares acquired on or after 21 September 1999 50 per cent (or two thirds for super funds) of the gain will be taxable at and held for at least 12 months marginal tax rates (without allowance for inflation) your shares if they are disposed of on or after Shares disposed of within 12 months The full gain will be taxable at marginal tax rates 21 September 1999. of acquisition (regardless of when they were acquired) From 1 July 2000, a refund for excess franking credits is available to Australian individual shareholders and complying superannuation funds. 54 It is important that you seek professional tax advice in relation to your shares to take into account your particular circumstances. TEL0011 Text 14/9/00 3:47 PM Page 55 For more information about products > contact customer service on 132 000 Shareholders choosing not to receive these • If you are entitled to the loyalty discount, reports will continue to receive all other the final payment is A$2.90 on each shareholder information, including notice of the Instalment Receipt; Annual General Meeting. It should be noted that • For all other Instalment Receipts, the final these reports are also available on our payment is A$3.05 per Instalment Receipt. website at www.telstra.com.au/investor/ as downloadable files. What happens if I do not pay the final T2 instalment on time?✝ Products mentioned in the report If the Trustee does not receive the total amount For more information about any of the products due by 2 November 2000, it can sell some or all mentioned in this report, contact our customer of the underlying Telstra shares to recover the service centre on 132 000. total amount you owe. You will lose your entitlement to any loyalty discount. You will When do I have to make the final payment also have to pay administrative fees of A$55 on my T2 Instalment Receipts?✝ (including GST) for each notice, share sale fees The Telstra Instalment Receipts Trustee of A$50 (including GST), brokerage and interest. (The Trustee) will have to receive your payment You could also have to pay any outstanding by 5.00 pm on Thursday, 2 November 2000. amount if there is not enough to cover the total amount after selling your shares. A Notice of Final Instalment Payment would have been sent to all Instalment Receipt holders When I make the final instalment, what actually in September. happens to my holding of Instalment Receipts?✝ If you pay the final instalment as shown on To ensure that your payment is processed in time: the Notice on time, the Trustee will transfer • follow the directions for paying on the your shares to you on 18 November 2000 and Notice of Final Instalment Payment; and mail you a statement of your shareholding • pay your final instalment as soon as possible. on 20 November 2000. The Trustee will not be issuing any receipts or I have some more questions about my acknowledgements,but will post you a statement Instalment Receipts.✝ of your shareholding on 20 November 2000. In the first instance, please refer to your prospectus or, if necessary, call the Telstra 2 How much do I have to pay on my Share Offer – Final Payment Inquiry Line on T2 Instalment Receipts?✝ FREECALL™ 1800 18 18 18.* You must pay the total amount shown on the ✝Applicable to Australian retail instalment receipt holders. Notice of Final Instalment Payment. The amount Refer to the prospectus for detailed conditions. is calculated as follows: *A free call unless from a mobile phone, which will be charged at the applicable mobile rate. Telstra All Ords 113 Note: Telstra’s share price 100 and the All Ordinaries Index have been indexed at 100 as 78 from 30 June 1999 to allow a meaningful comparison. J J A SONDJ FMAMJ 1999 2000 2000 55 TEL0011 Text 14/9/00 3:47 PM Page 56 INTERNET Telstra is the largest online service provider in Australia > 1 million online relationships Investor Information Harnessing the power of the Go online for all your shareholder information. As a valued shareholder, we are committed to improving the way we communicate with you. We view the use of the internet as a key driver for Telstra to provide relevant information, efficiently and economically. Going online cuts costs AND improves communication. Each year Telstra publishes a range of printed material to keep its shareholders well informed about the company’s performance. The cost of printing and distributing this material is significant. By going online, shareholders will not only help Telstra manage costs, they will also gain access to more information, more often. The Interactive Annual Review, share prices, media releases and shareholder details direct from the share registry are available online 24 hours a day. Become an online shareholder now, it’s easy. Just follow the 2 simple steps set out below. 2 easy steps to joining online: Step 1: Go to http://www.registrars.perpetual.com.au/scripts/iws.dll to access the registration area allocated to register your request to no longer receive the Annual Review and Half-year Report in hard copy. Step 2: Go to Telstra Investor Relations at www.telstra.com.au/investor/ to access the Interactive Annual Review and other documents. If you wish to speak to one of our helpful staff regarding 56 your internet connection please call 131 282. TEL0011 Text 14/9/00 3:47 PM Page 57 telstra.com objective > to become an online communications hub for individuals internet click to Telstra’s online Annual Review < Contents symbols indicate main sections in Review. Click on these to navigate. Growth indicators. Click to reveal interactive graphs with historical comparative figures. Zoom symbol enlarges the Includes full view of all text contextual help and charts and other interactive tools. Print symbol for outputting Text and images Text is hotlinked throughout hard copies from your are activated to telstra.com™ products and printer. Selecting the quit by selecting a services. symbol will take you back heading. to telstra.com™ Features of the Interactive Telstra Annual Review 2000 • easy navigation – a help tool has been developed providing instructions to help you through the site • key facts – detailed information about Telstra’s performance • more financial information – the interactive review allows us to provide you not only the latest results, but the opportunity to compare historical figures • connect to product information sites • print copies – all information can be printed if you require a hard copy. 57 TEL0011 Text 14/9/00 3:47 PM Page 58 FINANCIALS Operating revenue totalled $19,840 million > an increase of 8.9% Investor Information cont. Five year financial summary: 2000 1999 1998 1997 1996 A$m A$m A$m A$m A$m Sales revenue 18,609 17,571 16,703 15,430 14,716 Operating revenue 19,840 18,218 17,302 15,983 15,239 EBITDA(1) – before abnormals 9,135 8,351 7,375 6,597 6,021 – after abnormals 8,563 8,351 7,375 4,793 6,226 EBIT(2) – before abnormals 6,489 5,849 5,053 4,244 3,670 – after abnormals 5,917 5,849 5,053 2,406 3,875 Profit before tax – before abnormals 5,921 5,320 4,468 3,805 3,242 – after abnormals 5,349 5,320 4,468 2,073 3,447 Profit after tax and minorities – before abnormals 4,043 3,486 3,004 2,568 2,174 – after abnormals 3,677 3,486 3,004 1,617 2,305 Dividend 2,316 4,247 1,802 4,146 1,368 Total Assets 30,339 27,682 26,470 25,858 24,362 Gross Debt 9,821 7,211 7,722 7,981 5,143 Net Debt 8,531 5,769 6,458 7,036 3,739 Shareholders’ equity 11,602 10,294 11,079 9,938 12,668 Operating cashflow 6,547 6,574 5,635 5,254 4,478 Cash used in investing (4,896) (4,064)(3,609) (4,171)(3,870) Cash used in financing (1,881) (2,484)(1,808) (1,572)(1,659) Net movement (230) 26 218 (489)(1,051) Capital expenditure and investments 5,428 4,478 3,973 4,504 4,071 Financial Ratios % %% %% Return on average assets – before abnormals 23.2 22.7 20.1 17.7 16.6 – after abnormals 21.2 22.7 20.1 10.1 17.5 Return on average equity(3) – before abnormals 37.0 29.9 28.7 20.1 17.9 – after abnormals 33.7 29.9 28.7 12.7 18.9 Interest cover (times)– before 9.4 9.4abnormals 7.6 9.7 8.6 – after abnormals 8.5 9.4 7.6 5.5 9.0 Gross debt to capitalisation(3) (4) 45.8 36.9 41.1 44.5 28.9 Net debt to capitalisation(3) (5) 42.4 31.8 36.8 41.5 22.8 (1)Operating profit before interest received/receivable,interest expense (borrowing costs),depreciation and amortisationcome tax and expense. in EBITDA before abnormals is used as a measure of financial performance by excluding certain variables that affect operating profit but,which may not directly relate to all financial aspects of the operations of the company.EBITDA before abnormals is not a measure of operating income, operating performance or liquidity under Australian GAAP. (2)EBIT before abnormals less depreciation and amortisation. (3)Excludes the effect of the special dividend of A$2,059 million provided for in the financial statements as at 30 June 1999. (4)Based on gross debt (total current and non-current borrowings) as a percentage of gross debt plus the shareholders’ equity. 58 (5)Based on net debt (gross debt less interest bearing assets and loans to employees) as a percentage ders’of equity.net debt plus sharehol TEL0011 Cover 14/9/00 4:04 PM Page 3 Financial Calendar 2001 Half-year result announced Wednesday 7 March Ex-dividend share trading starts Monday 19 March Record date for interim dividend Friday 23 March Interim dividend paid Friday 27 April Annual result announced Wednesday 29 August Ex-dividend share trading starts Monday 17 September Record date for final dividend Friday 21 September Final dividend paid Friday 26 October Annual General Meeting Friday 16 November Note: Timing of events can be subject to change Designed Designed and by produced The Ball Group, Melbourne and Sydney TEL0011 September 2000 Contact details Telstra Corporation Limited Principal Australian Offices Annual Report Hotline Incorporated in the Australian 242 Exhibition Street To receive further copies of the Annual Review Capital Territory Melbourne Victoria 3000 Australia or copies of the detailed Annual Report, please call FREECALL™ 1800 06 06 08* Telstra is listed on Stock Exchanges in 231 Elizabeth Street Sydney Australia, New Zealand (Wellington), New South Wales 2000 Australia Website and USA (New York) This review and the Annual Report Investor Relations Unit may also be found via Telstra’s Investor Registered Office Level 36,242 Exhibition Street Relations home page at: Level 41, 242 Exhibition Street Melbourne Victoria 3000 Australia http://www.telstra.com.au/investor/ Melbourne Victoria 3000 Australia Wayne Treeby Depositary for American Depositary Receipts Michael Montalto General Manager and Interim American Depositary Receipts Company Secretary The Telstra Share Registrar The Bank of New York Ph: (03) 9634 6400 ASX Perpetual Registrars Limited Level 22, W PO Box 14300 MELBOURNE CITY MC Victoria 8001 101 Barclay Street Australia: FREECALL™ 1800 06 06 08* New York, New York 10286 All other: (613) 9615 9999 Ph: (212) 815 5838 Facsimile: (613) 9615 9911 Facsimile: (212) 571 3050 *A free call unless from a mobile phone, which will be charged at the applicable mobile rate. TEL0011 Cover 14/9/00 4:04 PM Page 4 Everyone, everywhere, needs to communicate, everyday.™ Making life easierª © Telstra Corporation Limited (ABN 33 051 775 556) 2000. ™Trade mark of Telstra Corporation Limited. ®Registered trade mark of Telstra Corporation Limited.