Telstra 2016 Annual Report Download - page 86

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Notes to the financial statements (continued)
Section 2. Our performance (continued)
84 | Telstra Corporation Limited and controlled entities
2.1 Segment information (continued)
2.1.1 Operating segments (continued)
Consistent with information presented for internal management
reporting purposes, the result of each segment is measured based
on its EBITDA contribution from continuing operations. EBITDA
contribution excludes the effects of all inter-segment balances and
transactions, with the exception of transactions referred to under
Table A in note 2.1.2. As such, only transactions external to the
Telstra Group are reported.
Certain items of income and expense are recorded by our corporate
areas rather than being allocated to each segment. These items
include:
• the adjustment to defer our basic access installation and
connection fee revenues and costs in accordance with our
accounting policy (our reportable segments record these amounts
upfront)
• the majority of redundancy expenses for the Telstra Entity.
In addition, the following points further explain how some items are
allocated and managed and, as a result, how they are reflected in our
segment results:
• revenue associated with mobile handsets sold via dealers for the
GES segment is allocated to the TR segment along with the
associated costs of goods sold, as the TR segment manages our
supplier, delivery and dealership arrangements. Ongoing pre-paid
and post-paid mobile revenues derived from our mobile usage
services are recorded in the TR and GES segments depending on
the type of customer serviced
• call centre costs associated with the GES segment are included in
the TR segment
• NAS costs associated with revenue from small to medium
business customers, included in the TR segment, are reported in
the GES segment
• the TOps segment result includes network service delivery costs
for TR, GES and TW customers
• the TOps segment recognises certain expenses in relation to the
installation and maintenance of Hybrid Fibre Coaxial (HFC) cable
network, while the running costs of the HFC cable network is
managed by Media & Marketing operating segment (included in
the ‘All Other’ category)
• domestic promotion and advertising expenses for the Telstra
Entity are recorded centrally in the Media & Marketing operating
segment (included in the ‘All Other’ category)
• the TW segment result includes rental revenue and income from
the transfer of Telstra assets under the revised NBN Definitive
Agreements, while the associated costs are reported in the TOps
segment and in the ‘All Other’ category, respectively
• the ‘All Other’ category includes income from NBN disconnection
fees, while the associated costs are reported in the TOps segment.
Segment Operation
Telstra Wholesale (TW) • provider of a wide range of telecommunication products and services delivered over Telstra networks
and associated support systems to other carriers, carriage service providers and internet service
providers
• provider of certain network assets and services to nbn co under the revised NBN Definitive Agreements