Telstra 2009 Annual Report Download - page 37

22
Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2009
were paid to Telstra Super up to 30 June 2009. The average VBI
for the June quarter was 82%. It should be noted that the cash
contributions paid have no profit and loss impact and only
impact the asset or liability recognised in the statement of
financial position and the company’s free cash flow. The
contribution rate for the defined benefit fund in Telstra Super is
currently at 27%.
In fiscal 2009, we recognised $229 million of pension costs in
our labour expenses compared to $198 million in fiscal 2008.
This expense is due to our requirement to recognise the
actuarially defined movement in our defined benefit pension
plans in our operating results. The current year movement has
been driven by an increase in curtailment costs of $11 million
which represent the difference between actual vested benefits
paid to defined benefit members and the Defined Benefit
Obligation (DBO). Contributions in fiscal 2010 will depend on
market conditions on a quarter-by-quarter basis, however we
expect this to be around $500 million in fiscal 2010.
Goods and services purchased
• Retail domestic subscriber acquisition and recontracting costs (SARC) decreased by 15.3% due to lower volumes and a lower
proportion of handsets being subsidised
• Network payments increased mainly due to foreign exchange movements and higher offshore traffic and volumes
• Service fees increased by 13.8% driven by an increase of 31k FOXTEL pay TV bundled services
(i) Domestic subscriber acquisition and recontract costs include $511 million of domestic handset subsidy costs (June 2008: $610 million) and other go to market costs
included within cost of goods sold-other and other goods and services purchased.
Goods and services purchased saw a modest rise of 2.5% in
costs this fiscal year impacted by significant foreign exchange
impacts influencing our international network payments,
partly offset by lower retail SARC.
Network payments was the major contributor to our increased
costs rising by 10.3% to $1,982 million. However, excluding the
impacts of foreign exchange, network payments only rose by
5.6%. The growth in fiscal 2009 was mostly due to:
• our network payments to REACH rose by $94 million this
year of which $53 million related to foreign exchange
impacts. Underlying volume costs have risen by $41
million to meet strong demand for voice traffic and
increased data bandwidth in our Global Linx products
which are used by our domestic customers to terminate
their international voice and data traffic that originates
in Australia;
• offshore outpayments rose by $44 million predominately
in our CSLNW subsidiary mainly due to foreign exchange
impacts of $45 million as well as $17 million higher
underlying network costs for increased backhaul charges
during the second half of fiscal 2009. This was offset by
$14 million lower costs in TelstraClear primarily driven by
foreign exchange impacts; and
• our domestic network payments grew by $35 million
with the increase almost solely due to rising SMS offnet
volumes which grew by 24.2% or $34 million this fiscal
year. This reflects the changing trend in customer usage
where we have seen our revenue from data messaging
also increase due to 28.3% more SMS messages being sent
by our customers this year.
Service fees increased broadly in line with higher FOXTEL
bundling customers and revenue this year. FOXTEL services
bundled through Telstra have risen by 31k generated by
increased marketing campaigns and the introduction of IQ HD
products. Other service fee increases resulted from growth in
our BigPond® content revenues sold via our Next G™ and 3GSM
mobiles such as FOXTEL by mobile, music, games, sport and
news. Our business, as well as enterprise and government
Goods and services purchased
Year ended 30 June
2009 2008 Change Change
$m $m $m %
Cost of goods sold - handset subsidies (postpaid) . . . . . . . . . . . . . . . . . . . . . . . . . 559 653 (94) (14.4%)
Cost of goods sold - other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,337 1,351 (14) (1.0%)
Usage commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 307 283 24 8.5%
Network payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,982 1,797 185 10.3%
Service fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 510 448 62 13.8%
Managed services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 190 210 (20) (9.5%)
Dealer performance commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 122 (20) (16.4%)
Paper purchases and printing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134 126 8 6.3%
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192 191 1 0.5%
Total goods and services purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,313 5,181 132 2.5%
Retail domestic subscriber acquisition and recontracting costs (SARC) (i) . . . . . . . . . . . 630 744 (114) (15.3%)