Telstra 2007 Annual Report Download - page 27

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Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2007
Narrowband revenue decreased by 34.5% to $144 million for fiscal 2007. Home subscribers have declined by
37.4% to 549 thousand and business subscribers by 30.2% to 105 thousand. The decline in narrowband
revenue highlights the growing impact of dial-up to broadband migration. We expect this trend to continue
with further decline in usage likely to occur as broadband continues to appeal to customers.
Retail broadband revenue increased by 66.2% to $1,213 million for fiscal 2007, mainly due to strong increases
in SIOs, while ARPU has been maintained. ADSL, wireless and cable have been key drivers of the SIO growth,
with ADSL subscribers increasing by 37.2% to 1.5 million and cable subscribers increasing by 18.6% to 336
thousand. Wireless growth has been strong after HSDPA on the Next G™ network was launched in October
2006. These products contributed 436 thousand to the increase in our subscribers over the last 12 months.
BigPond also marked its tenth anniversary in November with the launch of a new national high speed
broadband network. The network delivers significantly increased speeds from exchanges offering ADSL 2+
services. The introduction of a number of key price and value campaigns has also stimulated broadband
take up including high-speed cable plans, value offers which included a combination of discounted access
and installation offers, various sales channel and marketing initiatives and competitive differentiation such
as appealing and popular content offers.
As our customers migrate from narrowband to broadband our overall blended ARPU has increased from June
2006 to June 2007. This result is mainly due to broadband subscribers having a substantially higher ARPU
than narrowband and the proportional mix of customers has changed as existing broadband customers are
migrating to higher speed plans.
Wholesale broadband revenue increased by 21.1% to $568 million for fiscal 2007, driven by a continuing
strong market demand for high bandwidth services stimulated by retail competition. Wholesale DSL
internet grade has grown by 21.2% to $508 million driven by SIO growth of 16.6% to 1.4 million, combined
with delayed ULL build activity and a stable average revenue per user. Spectrum sharing services has also
contributed to revenue growth as more wholesale customers have moved towards this product as opposed
to ULL build. Strong spectrum sharing service SIO growth from 152 thousand to 304 thousand has
contributed to the revenue increase offset partially by the reduced prices after a number of ACCC
determinations relating to this product.
Other revenue, which is made up of media content and BigPond® webhosting services, increased by 11.1%
over the year. BigPond® webhosting services primarily relates to the hosting of fully functional personal or
business websites for customers. Media content includes revenue from movies, games and music and whilst
this business is still small in dollar terms it is starting to show positive growth trends. Movies revenue in
particular increased by 38.7% for fiscal 2007 due to growth in SIOs assisted by increased marketing support
and major changes to websites and processes. Games revenue grew significantly by 212.9% due to the
launch of Gameshop in June 2006 where customers can purchase and download games online.