Telstra 2011 Annual Report Download - page 23

8
Telstra Corporation Limited and controlled entities
Full year results and operations review - June 2011
Our Consumer and Country Wide segment increased its
mobile customer base by more than 1.1 million during
the year driven by growth across all customer types -
postpaid handheld, prepaid handheld and mobile
broadband. Fixed broadband services in operation
(SIOs) increased by more than 159 thousand, a
significant improvement compared to the SIO decline in
the 2010 fiscal year. The success of our bundling
strategy, the popularity of our new T-Box® and T-Hub®
devices and increased value across our consumer
mobile and fixed product plans contributed to the
improved customer momentum. PSTN SIOs declined by
171 thousand, an improved result compared to a decline
of 253 thousand in the 2010 fiscal year.
Mobile revenue increased by 12.9% and mobile services
revenue increased by 6.2%. PSTN revenue declined by
8.4% driven by lower calling volumes and customer
numbers. Pay TV bundling revenue grew by 14.9% and
remains an important product as customers reduce their
propensity to churn when adding pay TV to a bundle of
other services.
EBIT contribution fell by 5.2% due to increased cost of
goods sold and subscriber acquisition and retention
costs to support the strategic imperative to grow and
retain the customer base.
Telstra Business
Telstra Business (TB) is a business partner and one-stop
shop providing communications solutions to small and
medium enterprises (SMEs). Income in this segment
increased by 1.8% to $4,508 million while EBIT
contribution was flat at $3,221 million.
Mobile services revenue growth was 7.7% driven by
continued strong growth from mobile broadband
revenue which grew by 15.4%. Mobile broadband SIOs
increased by 39.0% while in the important postpaid
handheld category SIOs grew by 6.8% and ARPUs
remained resilient, declining by only 1.1%.
The revenue growth rates for IP and data access and
network applications and services accelerated this year
with the combined revenue from these portfolios now
exceeding $300 million per annum.
The decline in PSTN revenue accelerated to 7.9% driven
by SIO loss and usage decline while fixed retail
broadband revenue was flat.
Expenses grew by 6.2% due to increased cost of goods
sold and subscriber acquisition and retention costs to
support the strategic imperative to grow and retain the
customer base.
Telstra Enterprise and Government
Telstra Enterprise and Government (TE&G) is the
leading provider of network based solutions and
services to enterprise and government organisations in
Australia and New Zealand. Income in this segment
grew by 1.7% to $4,239 million while EBIT contribution
increased by 0.4% to $3,266 million.
TE&G has delivered another strong mobile revenue
result with mobile services revenue growth accelerating
to 11.8% with the mobile portfolio generating more
than $1 billion of revenue for the first time. Postpaid
handheld ARPU declined slightly by 0.8% while postpaid
handheld SIO growth accelerated by 9.1%. Mobile
broadband revenue grew by 16.8%.
Fixed products revenue, which includes PSTN and ISDN
revenue, decreased by 4.0%. This rate of decline has
slowed driven by increased internet direct and premium
calling product revenue growth.
IP and data access revenue grew slightly by 0.4% to
$1,103 million and NAS revenue growth was 1.9%.
Expenses grew by 6.0% due to increased subscriber
cost of goods sold and acquisition and retention costs to
support the strategic imperative to grow and retain the
customer base.
Telstra Wholesale
Income generated from our wholesale business declined
3.8%, or $86 million to $2,194 million as the ULL build
out continued to detrimentally impact the wholesale
business. Growth in ULL continues as 170 thousand ULL
SIOs were added during the year. LSS SIOs declined
1.4% as carriers migrated LSS services to ULL.
Wholesale PSTN revenue declined 7.1% driven by
reduction of 41 thousand wholesale PSTN SIOs and
continuing reductions in usage. Wholesale fixed
internet revenue also fell 10.6%, led by 13.3%, or 134
thousand decline in wholesale ADSL SIOs.
External expenses declined by 7.2% led by reductions in
network payments and labour costs resulting in
Wholesale's EBIT contribution falling by 3.5%.
Telstra Operations
Telstra Operations is primarily a cost centre supporting
the revenue generating activities of our other segments.
This year the negative EBIT contribution from this area
improved to 1.8% due to the continued focus on
productivity and efficiency initiatives and tight control
over discretionary spending.
Sensis and TelstraClear
Refer to more detailed discussion in the major
subsidiaries section beginning on page 29.
Telstra International
Telstra International is our new business unit and
encompasses our international assets outside Australia
and New Zealand. It includes CSL New World (CSLNW)
which provides mobile services to the Hong Kong
market, our mainland China business providing online
advertising services in auto, IT and consumer
electronics, and mobile value added service segments,
and management of our global networks (including the
Reach network assets from acquisition) and managed
services business that has more than 1,300 points of
presence throughout Australia, Asia Pacific, Europe and
the US.
The majority of Telstra International’s revenue and EBIT
is contributed by CSL New World. CSL New World
mobile customers increased by 352 thousand to 2,993
thousand for the year. For financial information about
CSL New World please refer to the more detailed