Telstra 2007 Annual Report Download - page 24

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Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2007
During fiscal 2007, our mobile services revenue (including interconnection) has increased by 9.5% to $4,932
million driven by 8.0% growth in our total subscriber base and 3.4% growth in our blended ARPU figures.
Excluding interconnection our current year mobile services revenue has grown by 11.8%. This represents a
significant increase from the prior year on a growing SIO base as growth rates for fiscal 2006 were 4.7%
(including interconnection) and 3.3% excluding interconnection.
During the year, demand was particularly strong for 3GSM services, which reached the 2 million subscriber
mark during June, inclusive of wireless broadband (EVDO and HSDPA). Increased voice usage saw minutes
of use continue to grow, however this was offset by ongoing pressure on prices. We experienced strong
growth in data products including SMS, Blackberry‡, and wireless broadband (EVDO and HSDPA) along with
increased content including mobile broadband data packs ($5 to $179), browser packs and Foxtel by Mobile†
which have contributed to our ARPU uplift. Mobile revenues have also been impacted by the growth in
capped price plans and heightened campaign activity particularly around Next G™ services.
Subscriber growth was driven by an increase in postpaid SIOs of 11.8% or 583 thousand SIOs driven primarily
by 3GSM with a 1.67 million or 525% increase. This was offset by postpaid CDMA which decreased by 380
thousand or 36.6% in SIOs due to heavy campaigning for migration to the Next G™ network. The CDMA
network is scheduled to close in January 2008. 2GSM also declined by 701 thousand or 19.6% due to
migration of customers after increased emphasis on 3GSM with the launch of Next G™ in October and the
availability of new 3GSM handsets.
Prepaid services have grown in 3GSM and 2GSM with SIOs increasing by 200 thousand offset by a decrease
in CDMA by 100 thousand. Prepaid SIOs have improved based on a greater range of new offers available to
the market including the launch of our Next G™ prepaid offering at the end of May 2007. In addition to these
movements and as part of our CDMA migration strategy, we have a further 136 thousand prepaid CDMA SIOs
which are effectively permanently suspended from operation but have not yet been exited from our base
due to system limitations. There are also a further 117 thousand 2GSM SIOs unrelated to the migration work
but have completed their recharge only period and have not exited due to the same system limitation.
Taking into account these additional movements, our prepaid SIO base would have declined by 153
thousand SIOs or 4.2%.
The growth of mobile data content over the Next G™ network has increased usage of wireless broadband
HSDPA cards and data packs ($5 to $179) with SIOs growing by 419 thousand for the year ended 30 June 2007.
EVDO SIOs increased by 17 thousand but is declining on a monthly basis due to the closure of the CDMA
network and migration to Next G™.
Access fee and call charge revenue has marginally declined by 0.1% to $2,682 million year on year reflecting
a decrease in CDMA and 2GSM which has been offset by the growth in the Next G™ network. Results have
been impacted during the year by the growth in capped price plans which have directly impacted revenue
per minute. We have moved from 7.4% of our mobile postpaid customers on capped plans in June 2006 to
12.1% in June 2007. Call minutes generally increased for each technology, but these benefits did not
outweigh the reduced price due to capped plans. CDMA prepaid and postpaid revenue per minute was
impacted by recent campaigns to migrate customers off the CDMA network and on to the Next G™ network.
Revenue from international roaming grew by 22.9% to $327 million in the year ended 30 June 2007. The rise
was due to an increase in both outbound and inbound. Outbound roaming minutes and revenue per call
have increased after we established a preferred supplier relationship with key international partners. The
increase in inbound roaming revenue is in line with world wide mobile growth trends and the increase of
travellers to Australia using their own mobile phones.
Revenue from MessageBank® increased by 16.7% to $231 million primarily due to growth in minutes
resulting from higher mobile usage particularly on the Next G™ Network.
SMS and Multimedia Messaging Services (MMS) revenues increased by 29.8% to $641 million after a 62.4%
increase in the number of messages sent. This has been stimulated by a 1 cent text offer and other rewards
and bonus options offered during fiscal 2007. The majority of non SMS data growth was experienced
through the BigPond® and mobile wireless broadband products and data packs ($5 to $179) on HSDPA and