Telstra 2008 Annual Report Download - page 61

58
Telstra Corporation Limited and controlled entities
Directors’ Report
National Broadband Network
We are currently constructively participating in the Government’s process to invest in a National Broadband Network in
accordance with our shareholder based principles.
Industry dynamics
The Australian telecommunications industry is continually changing. We have seen the number of mobile handsets in the
Australian market continue to grow, as well as the use of mobile services. Most households continue to maintain a basic access
line, however PSTN calling products are increasingly being substituted by wireless or broadband products.
Advances in technology are transforming the telecommunications industry. In recent years, we have seen various new product
offerings released to the market, including the provision of high-speed wireless services, 3G mobile services and our Next GTM
network to accommodate this.
We aim to be at the forefront of providing leading edge telecommunication services to meet the demands of our customers.
During fiscal 2008, we extended the coverage of our Next GTM and ADSL2+ high speed broadband networks. In addition to current
services on existing networks, we believe future 3G customers will enjoy many enhanced features, such as integrated application
and service offerings and faster broadband access speeds, in addition to better coverage and scalability.
The broadband sector is in a significant growth phase as the demand for high speed internet access accelerates. We have recently
seen large increases in broadband customers and broadband average revenue per user (“ARPU”) despite a steady fall in prices as
providers compete for market share. We expect the broadband sector to continue its expansion through the provision of new
innovative products and we expect to be at the forefront of this market dynamic with our ability to integrate services over our
fixed and wireless platforms. We believe our growth in broadband market share and broadband ARPU is a unique double amongst
the world’s leading incumbent operators.
Results of operations
Telstra’s net profit for the year was $3,711 million (2007: $3,275 million). This result was after deducting:
• net finance costs of $1,086 million (2007: $1,087 million); and
• income tax expense of $1,429 million (2007: $1,417 million).
Earnings before interest and income tax expense was $6,226 million, representing an increase of $447 million or 7.7% on the prior
year’s result of $5,779 million.
This increase was due to revenue growth in mobile goods and services and in internet and IP solutions, offset by higher labour
costs and an increase in other expenses mainly due to transformational activities.
Review of operations
Financial performance
Our total income (excluding finance income) increased by $1,042 million or 4.3% to $25,002 million (2007: $23,960 million)
reflecting a rise in total revenue (excluding finance income) of $1,119 million or 4.7% offset by a decrease in other income by $77
million or 30.7%.
Total income (excluding finance income) growth was mainly attributable to:
• total mobile revenue (including wireless broadband) - increased by $719 million, up 12.7%;
• internet revenue (including wireless broadband) - increased by $547 million, up 28.2%;
• IP and data access revenue - increased by $115 million, up 7.1%; and
• Sensis income - increased by $157 million, up 8.0%.
Mobile goods and services revenue increased owing to the continued growth in the number of mobile customers as we increase
our market penetration, particularly for 3GSM services and wireless data services on the Next GTM network. In addition we also
saw increased usage across a range of voice and data services, driving up average revenue per customer.
Internet revenue recorded strong growth during the year as we continued to increase our market share in the expanding retail and
wireless broadband markets. High speed plan customers grew significantly during the year, with growth in our customer base
also due to the continuing migration from narrowband products and an increased demand for applications and content.
Consistent with the prior year, we have included the results of wireless broadband in both the mobile and internet categories. In
fiscal 2008, wireless broadband and low-end browse pack revenues were $565 million, up $310 million or 121.6%.