Telstra 2009 Annual Report Download - page 64

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Telstra Corporation Limited and controlled entities
Directors’ Report
In accordance with a resolution of the Board, the directors
present their report on the consolidated entity (Telstra Group)
consisting of Telstra Corporation Limited and the entities it
controlled at the end of, or during the year ended, 30 June
2009.
Principal activity
Telstra's principal activity during the financial year was to
provide telecommunications and information services for
domestic and international customers. There has been no
significant change in the nature of this activity during the year.
Strategy
We are Australia’s largest telecommunications and
information services company. We offer a full range of
products and services throughout Australia and various
telecommunication services in certain overseas countries. We
have the telecommunications networks, distribution channels
and an integrated portfolio of assets - including BigPond®,
Sensis and FOXTEL† - to deliver world class services to all of our
customers.
We are delivering on our value-based strategy. Our network
and information technology transformations are providing us
with the capability to streamline our processes and provide
integrated telecommunication services that are simple and
valued by our customers. We have also built world class mobile
(Next G™) and fixed (Next IP™) networks. This is differentiating
us from our competitors and providing us with a competitive
advantage.
Our strategy is to provide customers with world-class products
and services to deliver a superior customer experience. This
involves ensuring we understand our respective customers’
unique segment needs, priorities and expectations which is
enabling us to compete on value and personalise the customer
experience across our segments. While this is our strategy, we
acknowledge not all experiences have yet met expectations.
Our team is focused on quickly improving the customer
experience so it becomes an unequivocal point of
differentiation in the market place.
Notwithstanding the customer service challenge, the
investment we have made in transforming the business is
flowing through to our financial performance, as we continue
to grow revenue and remove costs. The migration of customers
from our legacy systems to the new systems continues, and we
must now drive the benefits of the new systems and processes.
However, we acknowledge that the migration to new systems
has presented customer service challenges for some
customers. Over the next 12 months a continued improvement
in customer experience is a key priority for us.
Our major achievements in the past year include:
• the unveiling of another world first for the Next G™
network - the fastest mobile broadband modem in the
world, with device rated speeds of 21 megabits per
second (Mbps) downlink and 5.4Mbps uplink, with a
clear roadmap to peak network downlink speeds of
42Mbps (actual user data speeds are lower). The Next
G™ network is delivering to customers actual usable
speeds that are unsurpassed by any other
commercially available network in the world;
• the extension of our Next G™ network breadth and
depth of coverage, delivering coverage to 99% of
Australia’s population or more than two million
square kilometres;
• the roll-out of a 9,120 kilometre submarine cable from
Sydney to Hawaii named “Telstra Endeavour” to meet
the needs of growing internet traffic between
Australia and the United States. The cable can be
scaled up to 1.28 terabits per second of capacity
between the two countries; and
• the launch of a unified messaging platform
MyConnect™, a business and consumer offering that
allows customers to access emails and other
communications from their address book of either
their PC or mobile.
Other highlights over the last twelve months include:
• mobile revenue exceeded PSTN revenue for the first
time in a fiscal year;
• the number of 3GSM services in operation (SIO)
exceeded 2GSM SIO’s for the first time;
• creation of a new business unit called Telstra Media to
focus on leveraging our unique online and mobile
content assets to drive future growth both in Australia
and internationally; and
• expanding our presence in China with the acquisition
of controlling interests in two of the country’s leading
mobile content and online music businesses; China M
and Sharp Point. The acquisitions put us in a central
position in the mobile data value chain in China,
where we are already holding market leading
positions in three key online business segments: real
estate, automotive and consumer electronics.
Industry dynamics
The Australian telecommunications industry is highly
competitive and continually changing. In addition to the
proposed regulatory changes and National Broadband
Network (NBN) outcomes, 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, 3GSM mobile services and our Next G™ network to
accommodate this.
The broadband sector is in a significant growth phase because
of the benefit it provides in cutting costs, by reducing the need
for travel, saving time and generating new business. In turn
the demand for high speed internet access accelerates.
We aim to be at the forefront of providing leading edge
telecommunications services to meet the demands of our
customers. By the end of December 2009, we expect to have
upgraded our HFC cable broadband network to deliver
100Mbps into the home in the current footprint of Melbourne,
more than triple the current peak speed, with further upgrades
potentially to speeds of up to 200Mbps into the home. Cable,
along with our other fixed-line infrastructure, will be a key
driver of next generation broadband in Australia, as it is around
the world. This cable upgrade will position us to deliver on our
vision of a world-class fixed-line infrastructure that
complements our world-leading Next G™ mobile broadband
network in delivering services that meet our customers’ needs.
Financial performance
Our net profit for the year was $4,076 million (2008: $3,711
million) up 9.8%. This result was after deducting:
• net finance costs of $900 million (2008: $1,086 million);
and