Telstra 2007 Annual Report Download - page 29

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Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2007
frame relay as the demand for broader bandwidth to support IP based services such as Voice over IP and
video continues to grow. Symmetrical HDSL has increased by 55.5% or $29 million due to greater availability
of this product and higher average bandwidth purchased.
Wholesale internet and data has increased by 7.4% to $231 million mainly due to wholesale leased
transmission increasing by $20 million. This is driven by an increase in end user bandwidth demand driven
by corporate networks, internet usage, ISPs growing DSL network coverage and mobile providers requiring
additional backhaul to support bandwidth requirements for their 3GSM networks. The SIOs for transmission
have increased by 4 thousand or 26.0%. Wholesale virtual private networks also grew by $4 million as
wholesale customers found an attractive alternative to deliver better internet solutions, offset by our
wholesale internet products which have declined by $12 million due to competitive pressures in the market
place.
Business services and applications
Our operating revenue from business services and applications is derived from managing all or part of a
customer's communications and IT solutions and services covering:
• managed network services which is network based voice and data products, including CPE
management, radio networks and new wireless based technologies;
• IT services which is managed customer infrastructure (e.g. desktop and end user devices), hosting and
application development. In addition, IT services also includes professional consulting and deployment
services;
• business applications including IP telephony, end to end conferencing solutions and products that
support transaction services; and
• our eBusiness and global data centre.
For fiscal 2007, business services and applications revenue declined by 0.2% to $1,053 million mainly due to
lower managed network services and IT services revenue, offset by business applications and other
revenues.
The decrease in managed network services revenue of 16.1% to $265 million was driven by reductions in
managed voice and managed radio. Managed voice revenue was lower mainly due to reduced contract
scope in relation to a major customer. Both managed voice and managed radio revenue were affected by
reduced activity resulting after the 2006 Commonwealth Games. Partially offsetting these declines was
growth in managed WAN revenue, which was driven by increased router and CPE management sales.
IT services revenue declined by 6.3% to $585 million for fiscal 2007 mainly due to the sale of Australian
Administration Services (AAS) in August 2006, resulting in lower revenue of $92 million. Fiscal 2006 includes
a full 12 months of revenue compared to only 2 months in the current year. This decline was partially offset
by revenue earned from a number of recent government contracts signed and higher commercial project
volumes.
Business applications revenue has grown by 20.5% to $135 million for fiscal 2007 due to contact solutions
and IP telephony. Within contact solutions, new revenues relating to web contact centres and Telstra
locator® contributed to growth. Web contact centres are fully integrated contact centres combining in and
outbound voice, email, web chat, and fax delivered via the internet and Telstra locator® is a network hosted
Business services and applications
Year ended 30 June
2007 2006 Change 2007/2006
$m $m $m (% change)
Managed network services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 316 (51) (16.1%)
IT services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 624 (39) (6.3%)
Business applications. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 112 23 20.5%
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 365n/m
Total business services and applications revenue . . . . . . . . . . . . . . . . . . . . . . . . 1,053 1,055 (2) (0.2%)