t1 the company

8/17/2019 t1 the Company

1/16

Telst.ra is A nst.ralia's princip-al teleconnmsin

cations companv, one oJ A ustralio 's larpest

corporations and one f!f the best-known

brands ill the coun rry, Telst.ra o.1{eJ's a broadl'all[lc f!f telecomnninications and iJ!/c)'J'J.lWI :l0 l fl J ' serices and is permitted 1.!1compet ce in a" #

1. eJcWmJll1.l11 ira (:iOIlS 1)]a rket s I b ron H ho u 1.

Australia. Telstra's rinci al aciivi t ie s

include prorid$J$f% telephone e &chan e line s

to homes and bu sines ses, servicinp local

and /OllH!"isl.ance telephone call s in

Austr ati a and intern ation al calls mode

to #ll"JI'0111 Aust rali a, sll$$%& Jl mobi.%(

t.elecomnnmication s s)l'iccs cu d p.r ovid in*

+. comprehensive r01J)1* !,f d at.a , #nt ernet and

on-line seri' ice s an d, throuh it s olf l 1i!Jt es ,

a& t elevision , Id~'ITois also the princip o

provide' f!f "lJ f' +t01, service s in Austral i a.


2/16

lelstra's reachTelstra's fixed telecommunications network

extends across Australia, carrying over

!" of all calls and serving virtually all

Australian #omes and a su$stantial ma%orityof Australian $usinesses. Telstra is also t#e

largest mo$ile telecommunications com&any

in Australia, covering t#e area in w#ic#

1% of t#e Australian &o&ulation lives.

Its customers can also use t#eir digital

mo$ile teleones in over ( countries.

As at ! *une 1+, it #ad an estimated

-" s#are of t#e Australian mo$ile

tele ony mark et, wit# -. million

customers on Telstra's /o$ile0et

services. Telstra is also a leader in mo$iletelecommunications tec#nology.

2or exam&le, it was t#e first mo$ile

telecommunications com&any in t#e world

to off er, on a commercial $asis, 3(/4 $ased

Internet access via mo$ile teleones.

lelstra's marketsT#e markets in w#ic# Telstra o&er ates

#ave undergone significant li$eralisation

in recent years as Australia #as moved to

o&en com&etition. It #as $een su$%ect to

com&etition in t#e national long4distance

and international teleone service markets

since 11 and in t#e mo$ile teleone

service market since 1-.

5n 1 *uly 1+, Australia's telecommuni

cations markets were o&ened to full

com&etition, wit# no limit on t#e num$er

of telecommunications 6arriers t#at may

enter t#e mark et. As t#is o&en4market

environment #as only recently come into

existence, t#ere is uncertainty as to #ow

com&etition will develo& and t#e effect t#at

it will #ave on Telstra. 7#ile t#is c#anging

environment #as &resented, and will

continue to &resent, (ignificant c#allenges

for Telstra, it #as im&lemented a strategy

to addr ess t#is evolving r egulatory and

com&etitive environment. Telstra $elieves

t#at today's o&en4market environment

&rovides new o&&ortunities for it to res&ond

to com&etitive &r essures. 2or exam&le,

Telstra now #as greater freedom to

develo& &roduct &ackages and &ricing

&lans tailored to meet t#e s&ecific needs

of &articular customer segments.

lranslorming TelstraTelstra is transforming its culture from

one ty&ically associated wit# a government

owned mono&oly to t#at of a commercially

oriented enter&rise. It is develo&ing a new

cor&orate cultur e focused on delivering

value to customers, im&roving commercial

disci&line, accounta$ility and &roductivity,

and incr easing workforce flexi$ility and

&roduct innovation. Telstra is in t#e final

stages of a &rogramme to u&grade and

rationalise some of its fixed networks and

to im&rove many of its systems, including

t#ose r elating to $illing, sales and customer

service 80etworks and (ystems

/odernisation 9rogramme). T#is and

ot#er ongoing &rogrammes also include

initiatives to im&rove work &ractices,

streamline &rocesses and eliminate

du&lication of over#ead costs.

T#ese initiatives are en#ancing 'Ielstra's

a$ility to introduce new &roducts, &rice

&roducts more effectively and &rovide

:uality customer service. T#ese initiatives

are also &roducing (ignificant o&erating

efficiencies $y controlling maintenance

and ot#er costs and sim&lifying &rocesses,

t#ere$y also aI*owing reductions in Telstra's

workforce. 7#ile it #as invested significant

ca&ital and ot#er r esources in t#e

develo&ment and modernisation of its

networks and systems, ra&id c#anges in

telecommunications and information

tec#nology may re:uire Telstra to ad%ust its

&lanned ca&ita; ex&enditures in res&onse to

suc# develo&ments.

In order to roll out a network to su&&ort

&ay television and on4line services 8t#e


3/16

Telstra: the Company continued

1 .)

Telstra increased staff num$ers in t#e t =

and 1 financial years. T#e com&letion of

t#ese &ro%ects and t#e im&lementation of

management's initiatives to transform

Telstra's culture are &lanned to lead to areduction in Telstra's workforce $y

a&&roximately -=,=!! full4time staff over a

four4year &eriod w#ic# $egan in t#e 1+

financial year. >uring t#e 1+ financial

year, Telstra ac#ieved reductions of

a&&roximately 11,!! full4time staff 8of

w#ic# a&&roximately -!" resulted from

t#e outsourcing of activities $y t#e sale of

certain $usinesses and t#e contracting out

of some o&erations). T#e reductions in t#e

1+ financial year, #owever, were offsetin &art $y t#e addition of 1,=!! full4time

staff relating to t#e consolidation of

? Telstra's directory services su$sidiary, 9acific

Access, as of -! *une 1+, resulting in

full4time staff at ! *une 1+ of

a&&roximately , t55.

International initiativesT#e increasing glo$alisation of commerce

creates o&&ortunities for Telstra to ex&and

t#e sco&e of its international o&erations.

Telstra #as esta$lis#ed sales and service

offices in Asian countries, t#e @nited

(tates and t#e @nited ingdom to offer

a single source of telecommunications

services to its multinational cor&orate

and ex&orter customers. Telstra #as also

esta$lis#ed telecommunications o&erations

in t#e @nited ingdom and 0ew Bealand.

In 1, Telstra %oined7orld9artners

Association, an international

telecommunications alliance, as a

non4e:uity associate in order to en#ance

its a$ility to &rovide seamless delivery of

&roducts and services to internationally

oriented cor&orations. Telstra is now in

t#e early stages of negotiating wit# t#e

owners of 7orld 9artners 6om&any, a

&artners#i& among certain mem$ers of

7orld9artners Association, for t#e &urc#ase

of an e:uity interest in t#at &artners#i&.

T


4/16

Telstra: the Company continued a

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in targeted regional telecommunications

markets. T#is effort

is focused on areasC Dietnam, 6am$odia

and EaosF (out# Asia 8&articularly India

and (ri Eanka)F IndonesiaF and,

&ros&ectively, 6#ina. 2or exam&le,

Telstra &ioneered t#e develo&ment of

#ig#er ca&acity

international networks in Dietnam and

&artici&ates in a %oint venture to ex&and

significantly t#e existing fixed teleone

network in central *ava, Indonesia.

Alt#oug# t#e investments made to date

are small relative to Telstra's asset $ase,

Telstra $elieves t#at its esta$lis#ed

&resence in

t#e Asia49acific region creates a $ase

for future investments.

Strategy"~'"~-'-"'----""--"""----'-----'-~

Telstra's vision is to enhance its

position as the leadino

telecommunications and

information services company in

Australia and

to become a leadino provider

of such services in the Asia-

Pacijic

.reoion. To realise this vision,

increase shareholder value and

prepare

for competition, Telstra has adopted

a four-part orowth strateRY

which has been in place since

1991. his strateRY entails!

o&timising returns from traditional

telecommunications &roducts and

services in AustraliaF

• develo&ing and delivering

value4added

telecommunications, on4line

and content servicesF

transforming cor&orate culture

and im&roving &roductivityF and

extending glo$alsco&e.


5/16

::r

_ ,!;I,

Organisation

In order to #ave a strong customer focus,

Telstra is organised into = strategic $usiness

units and cor&orate centre functions.)ommercial &.)onsumer and /usiness

0.lnternational are res&onsi$le for direct

sales and services to Telstra's customers.

Telstra reinforces its customer focus wit#

com&any4wide &roduct management from

etail 2roducts 0.3arketin. T#is grou& works

actively wit# t#e direct sales divisions and

wit# 4etwork &.Technolo'5 to identify

customer segment needs,.introduce new

&roducts and services, develo& &ricing and

&ackaging &lans, im&lement distri$utionstrategies, manage &roduct life cycles and

reduce &roduct unit costs. Telstra 3ultimedia

manages t#e 6om&any's &ay television

interests, many of t#e 6om&any's Internet

services, on4line and content services and

t#e


6/16


Products and services

Telstra offers a $road range of

telecommunications and information

services allowing it to satisfy virtually all

t#e telecommunications needs of its diverse

customer $ase. Telstra is unrestricted in

t#e ty&es of telecommunications &roducts

and services it is &ermitted to offer,

alt#oug# t#ere are certain regulatory

constraints dealing wit# &ricing and

com&etitive $e#aviour.

Telstra continually strives to $ring new

value4added &roducts and services to its

customers. Gxam&les include call waiting,

conference call, voicemail &roducts, I(>0

and designated facsimile services. >emand

for many of t#ese new value4added &roducts

and services is re&lacing or en#ancing

demand for t#e 6om&any's traditional

&roducts and services. Telstra seeks to

differentiate itself in retail markets $ased on

its range of &roducts and services and its

a$ility to offer flexi$le &roduct &ackages

and &ricing &lans. Additional com&etition is

reducing demand for some of Telstra's retail

&roducts and increasing demand for some

of its &roducts sold on a w#olesale $asis,

&articularly data and text services and t#e

6om&any's intercarrier services.

T#e following ta$le s#ows Telstra's o&erating

revenue $y ma%or &roduct and service

category for t#e last t#ree financial years

and ex&ressed as a &ercentage of total

o&erating revenue.

ata and text services

es9..... 'J:;:9.':

1-

1-

>irectory services 5

6ustomer &remises e:ui&ment 4

Intercarrier services

9u$lic &ayones 2

5t#er sales and services

(ales revenue +

5t#er revenue 1)

5&erating revenue 1

!1


7/16

Basic access and local callsTelstra currently &rovides $asic access and

local call services to virtually all #omes and

most $usinesses in Australia. (ome of its

$asic access and local call services are also &rovided to Jesellers.

Telstra's $asic access service consists of

t#e installation, rental and maintenance of

connections $etween a customer's &remises

and t#e fixed network for t#e &rovision

of $asic voice, facsimile and Internet

services. Telstra c#arges customers a

mont#ly line rental fee and fees for

connecting new lines or reconnecting

existing lines. emand for $asic access and local call

services is driven $y general economic

conditions and growt# in $asic access lines

in service and #as $een &ositively affected $y

Telstra's efforts to increase call com&letions

$y offering customers voicemail, call

waiting and call forwarding >emand for

second $asic access lines re&resents a growt#

o&&ortunity for Telstra. Kowever, revenue

from $asic access and local call services is

ex&ected to $e adversely affected $y t#e

introduction of o&en com&etition, t#eintroduction of num$er &orta$ility, new

local call &ricing regulation and customer

migration to en#anced access services,

suc# as I(>0.

National long-distance calls and

international telephone servicesTelstra is currently t#e leading &rovider of

national long4distance and international

teleone services in Australia. 0ationallong4distance, including fixed4to4mo$ile

calls, and international outgoing calls are

generally c#arged $ased on duration,

destination, time of day and day of week.

Telstra offers its customers international

teleone service to over -! countries and

territories. In addition to &roviding t#ese

national and international services to its

residential and $usiness customers, Telstra

also &rovides t#ese services to Jesellers.

>emand for national long4distance andinternational outgoing calls is &rinci&ally

driven $y t#e state of t#e economy and,

&articularly for residential customers, $y

&rice. 9rices #ave fallen significantly over

t#e last decade, driven &rinci&ally $y

tec#nology im&rovements and, more

recently, com&etition. 6ustomers #ave

res&onded wit# increased calling activity,

leading to overall market growt#. Telstra

#as, #owever, lost significant market

s#are over recent years as a result of

com&etition and ex&ects com&etitive

&ressures to continue to affect &rices

and its market s#are.

Moile telecommunicationsservicesTelstra owns and o&erates $ot# an analogue

A/9( mo$ile telecommunications

network and a digital 3(/ mo$ile

telecommunications network, eac# of

w#ic# &rovides coverage in t#e area in

w#ic# 1 % of t#e Australian &o&ulationlives. Telstra is continuing to ex&and digital

coverage into regional centres and along

#ig#ways linking regional centres, and

is also focused on im&roving t#e de&t#

of coverage, &articularly in4$uilding

coverage in ma%or cities. Telstra's mo$ile

telecommunications services also

include sales of mo$ile #andsets and

&aging services. 1+

'4


8/16


Telstra o&erates t#e only &ermitted analogue

A/9( mo$ile telecommunications network

in Australia. As re:uired $y regulation,

#owever, Telstra sells ca&acity on its

analogue A/9( network to 5&tus, @nder current legislation, installing or o&erating an

analogue A/9( mo$ile telecommunications

network will not $e &ermitted after

1 *anuary -!!!, at w#ic# time Telstra's

analogue A/9( network is sc#eduled to

$e closed 8t#is closure may $e su$%ect to

exce &tions in regional and rural ar eas

s&ecified in a determination to $e made

$y t#e 6ommunications /inister).

6onse:uently, Telstra #as $een investing

considera$le resources to migrate its

analogue customers to its digital service.

Telstra offers digital mo$ile teleony

services t#at allow customers to send and

receive voice and data calls. 5t#er digital

mo$ile services include facsimile, o&erator

assisted &aging, o&erator t#roug#4connect,

financial and s&orts information services and

international roaming in over = countries.

T#e num$er of Telstra's digital mo$ile

customers #as increased ra&idly since it

introduced digital services in 1. Telstraattri$utes t#is growt# to t#e increasing

recognition of t#e value of mo$ile services

$y $ot# $usiness and &rivate users, t#e

coverage and en#anced features of its digital

services and Telstra's strong distri$ution

ca&a$ilities, &articularly in r etail stores. T#e

growt# in digital customers #as recently also

$een &ositively affected $y Telstra's efforts

to migrate its analogue customers to its

digital services.

In t#e 1+ financial year, Telstra's mo$ileteleone services ex&erienced a c#urn rate

of a&&roximately --" of its average

customer $ase for t#e year, down from

a&&roximately !" in eac# of t#e 1=

and 1 financial years.

Telstra is currently evaluating its future

s&ectrum re:uirements to accommodate

furt#er growt# in t#e num$er of its digital

1

customers and antici&ates t#at it will

&artici&ate in t#e fort#coming &u$lic

auctions of radio s&ectrum, alt#oug# its

&artici&ation will $e r estricted.

/o$ile telecommunications services

revenue is driven &rinci&ally $y overall

market growt#, usage and com&etitive

activity. 7#ile &er minute c#arges remained

relatively sta$le over t#e last few years,

&rices are ex&ected to trend downwards

in future years, &articularly as more

com&etitors enter t#is market. Alt#oug#

t#e mo$ile telecommunications market #as

grown su$stantially over t#e &ast few years,

t#e rate of growt# #as slowed and t#is rate

is ex&ected to continue to decline as' t#emarket $ecomes increasingly saturated

and take4u& extends to lower volume users.

!ata and te"t services>ata and text services consist &rinci&ally of

data transmission services, dedicated leased

lines, I(>0 and facsimile &roducts suc# as

2ax(tream services. Telstra offers I(>0

access services for residential and $usiness

customers w#ic# re:uire greater $andwidt#

t#an t#at &rovided $y traditional $asic access

service. I(>0 ena$les customers to make

tele one calls, send #ig# s&eed data or

#old video conf erences, se&arately or

simultaneously, over a (ingle service. Telstra

&rovides a range of networking and data

&roducts and services w#ic# ena$le

customers to connect com&uter systems

and to $uild com&uter networks. 2or

exam&le, t#ese &roducts and services are

used for automatic teller mac#ine networks,

retail G2T95( networks and connection of

local area networks $etween $uildings.Telstra also &rovides customers wit#

&roducts and services ena$ling t#em to

$uild voice and data networks $ot#

domestically and glo$ally, and &rovides

design, construction and management

services for customer networks.

>emand for data and text services is driven.

$y data traffic volumes, &rincl&ally relating


9/16

to strong growt# in com&uter networking

and t#e &o&ularity of t#e Internet, &artly

offset $y com&etition and falling &rices. It

is also $eing driven $y migration from $asic

access and associated calling &roducts to

data and text services, in &articular I(>0and 2ax(tream services.

!irectory servicesTelstra is t#e &rinci&al &rovider of directory

services in Australia, offering &rinted

7#ite 9agesL directories andeliow 9ages

directories, voice directory services,

electronic and multimedia services and a

&ortfolio of s&ecialist &roducts and services.

It continues to develo& its directories

$usiness t#roug# t#e introduction of new

value4added information &roducts and

services t#roug# multi&le media sources.

Internationally, Telstra #as &ursued a

num$er of o&&ortunities, including t#e

develo&ment of a directories $usiness in

Eaos and t#e &urc#ase of a dir ectories

$usiness in Dietnam and a s&ecialist

directories &roducts $usiness in t#e

@nited (tates. Telstra intends to grow its

ma%ority4owned directories $usiness into a

ma%or directories and information services

com&any in t#e Asia49acific region, w#ile

remaining t#e &u$lis#er and owner of t#e

key assets of t#e $usiness.

Telstra's &rinted directory &ortfolio

includes metro&olitan, regional and

1= community ellow 9agesdirectories

and 7#ite 9ages™ directories, a national

$usiness directory, a directory for t#e

#earing im&aired and a cor&orate directory.

In addition to &rinted &roducts, t#e ellow

9ages directories &ortfolio also includes

various voice &roducts, including recorded

information and facsimile res&onse services,

and multimedia services, including

&u$lication of t#e ellow 9agesdirectories

on t#e Internet and various Internet

advertising o&tions. T#e 7#ite 9ages™

directories &ortfolio also includes various

multimedia &roducts, including Internet

and 6>4J5/ &roducts.

Customer premises e#uipmentT#e largest com&onent of customer

&remises e:ui&ment revenue is t#e rental

of teleones in accordance wit# Telstra's

@niversal (ervice 5$ligation. 6ustomer

&remises e:ui&ment revenue also includes

rental and sales of small $usiness systems,

maintenance fees for 9


10/16


~~~. andaccess-

.UPCllldtdolioloc

91n"m

Other sales and servicesT#e &rinci&al com&onents of Telstra's ot#er

sales and services are intelligent network

&roducts and services 8including local rate

services, suc# as 5ne T/, and 2reecall

1!! L services), revenue of various

controlled entities 8including fees &aid $y

25MTGE for use of t#e uring t#e 1+ financial year,

Telstra invested N1- million and incurr ed

start4u& losses of N1! million as its s#are

of 25MTGE.

Telstra, 0ews 6or&oration and Australis

#ave executed agreements for Australis to

ac:uire 25MTGE in exc#ange for Australisr.lltf l Bta POlld$$$$ngs V' nwe: : The Comp!r "ilCompoolI ".twoltt. m.nyn .... lnformation. plodo%&$noyour oomputtriind

• ~~!t~$ntem't%O$a tOI your PClicle tw. to find ot mOl

( )m'*+tlr,u-.ri/0.. Art you oni#t &l.nt#ll I

Ohtdc yor U#$O. on-lin.

services is designed to meet t#e needs of

residential and $usiness customers, wit#

offerings ranging from $asic dial4u& access

to soisticated intranet solutions for

multinational cor&orate customers. Telstra

offer s a range of &ricing and access &lans

to #ome users and small $usinesses. Telstra

#as also $egun to off er #ig# s&eed ca$le

Internet service to r esidential customers

over t#e


11/16

a&&roximately N! million and #as agreed

to a reduction in t#e revenue s#are t#at it

receives from 25MTGE for &roviding

$road$and transmission services for t#e

next = years 8or + years if t#e ac:uisition

of 25MTGE $y Australis is not com&leted).

T#e net &resent value of t#e contractual

o$ligation for agreed fixed4dollar amount

reductions in revenue s#are is a&&roximately

N !! million. If t#ere is a s#ortfall in

t#ese revenue amounts, Telstra will fund

t#e difference.

Net1ork and in&ormation

technology alliances

In *uly 1+, Telstra entered into an

alliance wit# I.>.

r .

"!'")$)'%1),1

:::l

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-1

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12/16


Capital e"pendituresand investments

Telstra is currently $udgeting ca&ital

ex&enditures and investments of

a&&roximately N. $illion in t#e

1 financial year and &lanning to s&end

moderately less in t#e 1 and -!!!

financial years. Telstra ex&ects to incur t#ese

ca&ital ex&enditures in areas includingC

develo&ment of infrastructure and new

&roducts and services to meet t#e

evolving needs of customersF

antici&ated ac:uisition of additional

s&ectrum &rimarily for use

in connection wit# mo$ile

telecommunications servicesF

continuation of t#e 0etworks and

(ystems /odernisation 9rogrammeF

continuation of t#e digital mo$ile

telecommunications networkF

fulfilment of t#e ecem$er 1+F

antici&ated investment in international

ca$les to cater for t#e ex&ansion ofoverseas telecommunications trafficF

furt#er investment in &ay television

and on4line services content

and develo&mentF

investment in offs#ore venturesF and

&rovision of en#anced telecommunications

services to remote customers t#roug#

its Jemote Area Telecommunications

Gn#ancement 9rogramme.

Telstra may &eriodically make investments

in, or ac:uire, com&lementary $usinesses.

Telstra ex&ects t#at its cas# flow from

o&erating activities will $e sufficient to

meet antici&ated ca&ital ex&enditures and

investments in eac# of t#e 1, 1 and

-!!! financial years. To t#e extent t#at

unforeseen ca&ital ex&enditures and

investments arise or Telstra's estimates

of its ca&ital re:uirements &rove to $e

understated and cause ca&ital re:uirements

to exceed net cas# &rovided $y o&erating

activities, Telstra may need to fund suc#

ca&ital ex&enditures and investments wit#

de$t or ot#er financing.

.>2

?2


13/16

!irectors. senior management and employees

!irectors

%avid ! &oare e&uty 6#airman,

6ommonwealt# irector, 9ioneer International Etd and T#e

6onstitutional 6entenary 2oundationF 9r esident, Australia4*a&an irectorsF /em$er of F 8=)

6#artered AccountantF /anaging 9artner of 9/3 0ew (out# 7ales and /em$er of

9/3 0ational e&uty 6#airman of Australian Tourist 6ommission.

&

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)Q6II)

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23

Q44


14/16


!ichael & Codd A6, irector, Hantas Airways Eimited, /E6 Etd,

/E6 Eifetime Etd, Eend Eease 6or&orate (ervices Etd, Australian Gagle Eife Etd,

/E6 Investments Etd, /E6 Insurance Etd, Australian 0uclear (cience and Tec#nology

5rganisation and /enRies 2oundation and Toogoolawa 6onsulting 9ty EtdF /em$er,

Advisory


15/16

Senior management

(enior managers of Telstra w#o arc not directors areC

()*r *++$"nt), ()*r *++$"nt),

-*.) /$0"t"$n t$ +$0"t"$n t$ )l0tr*

>oug 6am&$ell irector, 6ommercial & 6onsumer

of Telstra. Ke #as also $een t#e >e&uty /anaging >irector of Telecom and 9resident of 6anadian 0ational

6ommunications. Ke is a 2ellow of t#e Australian Institute of 6om&any >irectors and of t#e Institution of

Gngineers, Australia.

Jo$ert 6artwrig#t irector of Amcor Eimited and 6#airman of t#e Australian Huality 6ouncil.

3raeme 7ard


16/16


2mployees

7it# a&&roximately , I !! full4time em&loyees as at ! *une 1+, Tclstra is one of

Australia's largest em&loyers. It #as a&&roximately ,!!! work sites in Australia and

+11 ex&atriate and local em&loyees located in &arts of Asia, t#e @nited (tates of America

and Guro&e.

/any current management systems and work &ractices still reflect Telstra's &u$lic service

#istory. Telstra is transforming its culture from one ty&ically associated wit# a government

owned mono&oly to t#at of a commercially oriented enter&rise. It is develo&ing a new

cor&orate culture focused on delivering value to customers, im&roving commercial

disci&line, accounta$ility and &roductivity, and increasing workforce flexi$ility and

&roduct innovation.

'Ielstra's Gm&loyee (#are 5wners#i& 9lan is intended to $e an incentive to em&loyees to

&artici&ate in t#is transformation. @nder t#e 9lan, eac# eligi$le em&loyee will $e offered

an interest4free loan from Telstra to ac:uire u& to -,!!! Telstra s#ares under a s&ecial

offer w#ere, for every s#ares $oug#t, t#ey receive I extra s#are free u& to a maximum of

=!! extra s#ares.

Gligi$le em&loyees will also $e offered I loyalty s#are, at no additional cost, for every

1! additional s#ares a&&lied for and allocated under t#e &u$lic offer w#ic# t#ey #old

continuously for 1- mont#s 8u& to a maximum of -!! loyalty s#ares).

T#e com&letion of a num$er of ca&ital ex&enditure &ro%ects and t#e im&lementation of

management's initiatives to transform Telstra's culture arc &lanned to lead to a reduction in

Telstra's full4time staff $y a&&roximately -=,=!! em&loyees over a 4year &eriod t#at $egan

in t#e 1+ financial year. >uring t#e 1+ financial year, Telstra ac#ieved reductions of

a&&roximately 11,!! full4time staff, of w#ic# a&&roximately -!" resulted from t#e

outsourcing of activities $y t#e sale of certain $usinesses and t#e contracting out of some

o&erations. T#ese reductions were offset in &art $y t#e addition of 1,=!! full4time staff

relating to t#e consolidation of 9acific Access as of -! *une 1+, resulting in full4time staff

at ! *une 1+ of a&&roximately ,1!!. 7#ere &ossi$le, t#e 6om&any is rede&loying staff

and assisting em&loyees to find alternative em&loyment elsew#ere. Telstra is also &ursuing

c#anges to its retrenc#ment and redundancy arrangements to allow it to retain its most

skilled em&loyees. (ee 'Investment risks 4 Industrial relations and &otential industrial action'

on &age 1.

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t1 the company

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