Telstra 2010 Annual Report Download - page 23

8
Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2010
thousand or 4.7% during the year. Some of these
factors also impacted fixed internet with revenues
declining by 1.0% to $1,261 million.
Mobile services revenue growth was steady at 5.3% as
consumer take up of wireless broadband continued to
surge with revenue jumping 43.9% despite the
intensely competitive market. Continued growth in
wireless broadband highlights the popularity of using a
wireless broadband card on our Next G™ network.
Customers benefit from the superior speeds and
breadth of coverage offered.
Pay TV bundling revenue grew by 9.8% to just under
half a billion dollars. This is important as customers
reduce their propensity to churn when adding pay TV to
a bundle of other services.
EBIT contribution fell by 4.0% due to increases in
handset subsidies, additional costs incurred in raising
customer service levels and in bad debts. These
outweigh savings from staff reductions from the
marketing simplification in the prior year.
Telstra Business
Revenue in the business segment grew by 1.0% for the
year with growth in the second half jumping to 2.4%
from a decline of 0.4% in the first half. EBIT
contribution marginally declined by 0.6%.
The decline in PSTN continued to accelerate with PSTN
revenue down 6.8% to $1,257 million as customers
substitute fixed access and calling to other products.
The decline in PSTN was more than offset by revenue
growth in other products, with mobiles services up by
6.9%, fixed internet up by 5.7% and IP and data access
up by 5.5%.
The new "Mobile Plus" pricing plans incorporating voice
and data were launched at the start of the second half,
achieving strong take up with increased smartphone
penetration and higher data ARPUs. Wireless
broadband revenue grew by 23.3% and SIOs increased
by 52.0% for the year, with momentum increasing after
new pricing plans were launched at the start of the
second half. However, wireless broadband ARPU
declined by 18.6% as the mix of plans and customers
changed. Mobile data revenue now accounts for 32.4%
of mobile services revenue and grew by 25.7%.
In the fixed broadband space, the decline in ADSL
connections continued with a 6.9% reduction in ADSL
services as the migration to the business grade product
continued. Whilst penetration of business grade
broadband is still relatively low, revenue increased by
28.6%.
Expenses grew by 5.1% as goods and services
purchased increased by 7.9% and other expenses rose
by 5.1%. These increases were partly offset by a 5.4%
decline in labour and labour substitution expenses from
productivity improvements. The increase in goods and
services purchased was partly driven by a 16.9%
increase in subsidy expenses as we competed more
aggressively in the market, together with an increase in
the penetration of smartphones and subsidies on
wireless broadband. Usage commissions also increased
by 21.0% mainly due to higher fixed line commissions
to dealers and licensed shops as volumes increased in
the second half of the year.
Telstra Enterprise and Government (excluding
KAZ)
On an underlying basis, revenue grew by 1.6% and
EBIT contribution grew by 0.6%.
The largest revenue generating products in the
enterprise and government segment continued to
perform strongly with IP and data access revenue up by
1.7% to $1,176 million and total mobiles revenue
growing by 10.4% to $934 million.
In the IP and data access category, the migration of
customers from legacy products to premium IP
solutions utilising the Next IP™ network continued with
IP access revenue growing by 23.8% to $733 million.
In mobiles, services revenue rose by 8.4% to $855
million and hardware revenue increased by 38.4%.
Mobile data revenue continued to drive growth with data
messaging revenue up by 13.8%, non-messaging
(handheld) data revenue up by 5.5% and wireless
broadband revenue increasing by 22.0%. Mobile data
accounted for 45.7% of mobile services revenue for the
year.
Business services and applications revenues increased
by 4.6% to $882 million for the year.
The decline in PSTN services and usage continued while
a significant fall in ISDN ARPU also contributed to a
6.5% decrease in fixed products revenue to $1,231
million.
External expenses in this segment increased by 5.1% to
$955 million with a significant increase in cost of goods
sold mainly as a direct result of increased business
services and applications revenue. Labour and labour
substitution costs declined by 1.8% during the year.
Telstra Wholesale
Wholesale revenue declined by 2.6% as the ULL and
LSS build out continued detrimentally impacting the
wholesale business. The migration from on-net resale
services to ULL/LSS was reflected in wholesale PSTN
lines declining by 32 thousand and DSL lines declining
by 106 thousand during the year. ULL SIOs increased
by 133 thousand and LSS SIOs increased by 155
thousand.
As a result of declining services and further reductions
in usage, PSTN revenue declined by 11.8% and fixed
internet revenue fell by 1.8%. Intercarrier access
services revenue (which includes ULL revenue)
increased by 12.7%.
External expenses for the wholesale business increased
by 7.8% driven by a 20.7% increase in network
payments expenses due to a commercial deal with a
mobile operator in the prior year which resulted in lower
rates and expenses in fiscal 2009. EBIT contribution fell
by 3.4%.
Telstra Operations
Telstra Operations is primarily a cost centre supporting
the revenue generating activities of our other segments.