Telstra 2012 Annual Report Download - page 70

Telstra Corporation Limited and controlled entities
40
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 2012.
Financial comparisons used in this report are of results for the
year ended 30 June 2012 compared with the year ended 30
June 2011.
The historical financial information included in this Directors'
Report that has been extracted from the Annual Report
accompanying this Directors' Report has been subject to review
by our Auditors.
Principal activity
Our 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 Update
Telstra continues to implement its strategy to improve customer
satisfaction, increase our customer base, simplify the business
and invest in new growth businesses. The strategic initiatives
commenced almost two years ago continue to deliver financial
benefits with growth in revenue, earnings before interest, tax,
depreciation and amortisation (EBITDA), net profit and strong
growth in the number of customers.
Customer satisfaction
TIO level 1 complaints relating to Telstra reduced by 26% and
consumer call volumes by 21%. Customer service
improvements introduced over the last year include a new
consumer bill format, making it simpler and clearer for
customers to understand charges, the introduction of an
application which enables customers to access their account via
an Apple iPad^ and Facebook and many other operational
improvements.
Growth in number of customers
Telstra's product offers and network investments continued to
attract new customers during the year, adding:
• 1.6 million domestic mobile customers, to a total of 13.8
million;
• 203,000 retail fixed broadband customers, to a total of 2.6
million;
• 336,000 customers on bundled plans, to a total of 1.4 million;
• 475,000 Hong Kong mobile customers, to a total of 3.5
million.
Telstra's 4G network build accelerated during the year and now
covers approximately 40% of Australia's population. Customers
have activated more than 375,000 4G devices since launch.
Telstra's domestic mobile business generated more than one
third of revenue. Telstra has added more than three million new
mobile customers over the past two years. Mobile revenue
growth of 8.5% was achieved while margins increased by three
percentage points to 36%.
Growth in retail broadband partly offset declines in wholesale
revenues, which included the impact of regulatory access
determinations. Fixed line revenue decline was steady at 6.1%.
Simplification
Telstra's business improvement programme remained on track
and delivered benefits in fiscal 2012 of $1.1 billion, enabling
reinvestment in customer service initiatives. These benefits
included improvements in labour productivity, reduced customer
call volumes and growth in online customer interactions.
Growth opportunities
Network Application and Services (NAS) revenue grew by
10.5% to $1,263 million, with several significant contracts
signed providing a strong foundation for 2013. Major customers
signed within the NAS portfolio included the Department of
Human Services, Australia Post and NAB.
Across the Media portfolio, Foxtel's acquisition of Austar was an
important milestone. Sensis revenue declined by 17.7% as the
move to online accelerated. Customer response to Sensis'
digital offers improved in recent months across metro and non-
metro regions. Excluding Sensis and advertising, digital media
product revenue increased 4.7% over the year.
In the Telstra International Group, which incorporates Telstra's
investments in Asia, revenue grew by 7% driven by growth in the
Hong Kong mobile services (CSL) business and global
connectivity and international NAS products (Telstra Global), as
the company benefited from integrating assets acquired from
Reach.
National Broadband Network (NBN)
In March 2012, Telstra finalised the NBN agreements with the
Commonwealth and NBN Co, including ACCC acceptance of
Telstra's Structural Separation Undertaking, and commenced
providing long term infrastructure access under the
Infrastructure Services Agreement (ISA). Telstra recently
handed over stage one of the transit network (dark fibre and
exchange rack spaces) to NBN Co. The company continues to
work collaboratively with NBN Co on the building of its access
network. Telstra has also launched retail and wholesale
services over the NBN following successful trials in the early
release sites.
Review and results of operations
Information on the operations, financial position and outlook for
the Telstra Group is set out on pages 3 to 22 of the Financial
Highlights accompanying this Directors' Report.