Telstra Group Limited · ASX:TLS
Telstra — H1 FY2010 Earnings Presentation
18 slides from Telstra's earnings presentation, Feb 11, 2010
Slide 1: 2010 Half Year Financial Results
2010 Half Year Financial Results David Thodey, CEO 11 February 2010 Disclaimer • These presentations include certain forward-looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties. Actual results, performance or achievements
Slide 2: Financial Results; Challenging market conditions
Financial Results Reported Adjusted* $ Billions 1H09 1H10 % % Sales Revenue 12.64 12.32 -2.5 -0.7 Free Cash Total Revenue 12.71 12.34 -2.9 -1.1 Flow Operating Expenses 7.43 7.07 -4.8 -2.1 +37.0% EBITDA 5.33 5.32 -0.3 +0.2 EBITDA Margin (%) 42.2 43.1 +0.9pp EBIT 3.08 3.13 +1.7 +2.0 Adjusted PAT PAT (
Slide 3: Key segment results – sales revenue; PSTN headwinds have increased
Key segment results – sales revenue 2H09 1H10 2H10 • Promotion of new bundles and Consumer +3.2% - 0.2% pricing Business +2.2% - 0.4% • Whole of Business propositions Enterprise & Govt^ +5.1% -1.6% • Building on contract wins • Continued growth in ULL, LSS and Wholesale -6.1% -3.3% exchange access S
Slide 4: Fixed broadband market maturing; The path back to growth
Fixed broadband market maturing Fixed broadband SIO net additions (‘000) Mobile-only households 600 9% 400 7% 200 0 5% 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10 Dec 07 Dec 08 Dec 09 -200 Telstra Fixed Retail Broadband Telstra ULL & LSS Source: Roy Morgan Telstra Wholesale Broadband Tota
Slide 5: Driving mobile growth; Guidance for Fiscal Year 2010
Driving mobile growth New Offerings WBB Product Differentiation Smartphones ARPU • ARPU premium Enterprise • Strong data growth differentiation WBB Core WBB BigPond® Wireless Telstra products Mobile Gateway Broadband • Fixed BB substitute volume • Leverages Next G™ capabilities BigPond WBB BigPond L
Slide 6: National Broadband Network; Telstra strategy – your connection to the future
National Broadband Network Terms of Engagement agreed Negotiations continue 11 Telstra strategy – your connection to the future Telstra “Create a world of solutions that are simple, easy and valued by our customers” Unmatched Extraordinary portfolio of Clear scale Deep engineering Sources of custome
Slide 7: Financial Results - Reported (CFO)
2010 Half Year Financial Results John Stanhope, CFO 11 February 2010 Financial Results - Reported $ Billions 1H09 1H10 % Sales Revenue 12.64 12.32 -2.5 Free Cash Flow Total Revenue 12.71 12.34 -2.9 Operating Expenses 7.43 7.07 -4.8 +37% EBITDA 5.33 5.32 -0.3 EBITDA Margin (%) 42.2 43.1 0.9 pp EBIT 3
Slide 8: Financial Results - Adjusted; Key products to drive growth in H2
Financial Results - Adjusted Adjustments (H1 2010 impact compared to H1 2009) YoY change Sale of KAZ • Revenue -$132m Sales Revenue -0.7% • EBIT +$3m Total Revenue -1.1% FX Changes Operating Expenses -2.1% • Revenue -$98m • EBIT -$13m EBITDA +0.2% EBIT +2.0% Fair Value adjustments • 1H09 +$248m PAT
Slide 9: Telstra Consumer; Telstra Business
Telstra Consumer Sales Revenue (-0.2%) Refresh of GTM strategy • Innovative communication & entertainment packages $5.2b $5.1b $5.2b • New FBB & WBB bundles driving sales • Enhanced bundles to follow with Telstra T-Box™ and +19% +11% +1% Telstra T-Hub™ +9% +9% +6% ARPUs growing • Postpaid mobile (ex
Slide 10: Telstra Enterprise & Government; Sensis
Telstra Enterprise & Government Sales Revenue (-1.6%)* $2.3b $2.3b $2.2b Growth in key products • Mobiles: Revenue +8.1% ,3G SIOs +43%, • IP Access Revenue +21% to $346m -2% +11% +3% +20% +5% New strategic partnerships +7% • Catholic Education, NSW Education Department, Visy +9% +7% +2% and Bank of
Slide 11: CSL New World; Drivers of operating expenses decline
CSL New World Tough operating conditions 1H10 % Change HK$ A$ • Intense price competition • Weak handset upgrade demand Sales Revenue -15.5% -24% Operating Expenses (ex D&A) -19.4% -28% Tight expense control EBITDA contribution -4.8% -12.5% • Strong cost management:HK$ Opex -19% • Productivity enhan
Slide 12: Operating expenses - selected adjusted KPIs; Capital expenditure and D&A
Operating expenses - selected adjusted KPIs Labour Productivity SARC Control maintained Tight control of Expenses $192 $177 Adjusted $156 $160 $152 Discretionary Labour costs $142 costs $135 -4% -21% 1H07 2H07 1H08 2H08 1H09 2H09 1H10 Blended average SARC rate Double digit % declines in key Labour &
Slide 13: Interest & Financial Parameters; Free cashflow - growth trajectory continues
Interest & Financial Parameters Interest Financial Parameters Actual Actual 1H09 1H10 Change ($) Change (%) Target (includes IFRS) (adjusted for IFRS & other) Borrowing Costs $664m $508m -$156m -23.5% Debt 1.7 – 2.1x 1.43x 1.49x Servicing Other (incl IFRS -$261m $12m $273m adj) Gearing 55% to 75% 54
Slide 14: APPENDIX; Guidance for Fiscal Year 2010
Guidance for Fiscal Year 2010 Measure Guidance Sales revenue Low single digit decline EBITDA growth Low single digit growth EBITDA Margin (on sales revenue) Maintained D&A ~$4.5b EBIT growth Low single digit growth Accrued Capex to sales revenue Around 14% FCF* $6 billion * includes pension funding
Slide 15: Domestic retail performance; Offshore performance
Domestic retail performance 1H09 2H09 1H10 Sales Revenue Growth 4.3% 3.4% -0.6% • Mobile services 11.3% 8.3% 4.8% • Fixed (excluding Internet) -1.4% -3.5% -5.8% • Fixed Internet 16.8% 10.1% 0.7% • Data & IP 11.1% 8.1% 3.1% Operating Contribution Growth 5.4% 2.8% -1.9% Operating Contribution Margin (
Slide 16: Telstra Consumer; Telstra Business
Telstra Consumer 1H09 2H09 1H10 Sales Revenue Growth 3.0% 3.2% -0.2% • Mobile services 8.5% 8.9% 5.5% • Fixed (excluding Internet) -2.6% -3.0% -6.2% • Fixed Internet 18.8% 10.8% 0.6% • Data & IP 22.3% 43.3% -7.9% Operating Contribution Growth 5.0% 1.8% -2.4% Operating Contribution Margin (%) 61.8% 6
Slide 17: Telstra Enterprise & Government; Market share
Telstra Enterprise & Government 1H09* 2H09 1H10 Sales Revenue Growth 4.9% 5.1% -1.6% • Mobile services 19.9% 6.9% 5.0% • Fixed (excluding Internet) -0.7% -4.5% -6.9% • Fixed Internet 1.5% -5.9% -14.8% • Data & IP 9.5% 6.6% +2.4% Operating Contribution Growth 4.6% 3.8% -1.5% Operating Contribution Ma
Slide 18: Superannuation contributions; Current Credit Ratings
Superannuation contributions Statement of Financial Position 30 June 09 31 Dec 09 Defined Benefit Asset $8m $9m Defined Benefit Liability $414m $259m Movement -$156m 2H09 1H10 Superannuation Contributions* $217m $230m * Excludes payroll tax 35 Current Credit Ratings* Long Term Short Term Outlook Sta