Key Telstra financial highlights for the six months ending December 2007 were as follows:
· Sales revenue grew by 5.3% or $622 million to $12,252 million.
· Total income (excluding finance income) grew by 5.8% or $682 million to $12,479 million.
· Operating expenses (before depreciation and amortisation) grew by 6.2% or $427 million to $7,307 million.
· EBIT grew by 6.2% or $182 million to $3,120 million.
· EBIT grew by 1.5% to $2,983 million excluding a $100 million distribution from Foxtel and $37 million gain on sale of our investment in eBusiness.
· Profit for the period grew by 13.4% or $230 million to $1,942 million.
· Accrued capital expenditure of $2,320 million, up 17.5%.
· Mobiles revenue grew by 14.5% or $404 million to $3,186 million.
· Retail Broadband revenue grew 65.2% or $333 million to $844 million.
· Sensis sales revenue grew by 7.8% or $69 million to $954 million.
· PSTN revenue declined by 2.1% or $72 million to $3,391 million.
The result was underpinned by strong sales across all retail business units and key product segments, including broadband, mobiles, PSTN and Sensis.
For fiscal 2008, the company by February 2008 expected reported outcomes of:
· Total revenue growth of 3-4% (up from guidance of 2-3% growth).
· EBITDA growth of 4-5% (up from guidance of 3-4% growth).
· EBIT growth of 6-8% (up from guidance of 5-7% growth).
Telstra’s retail business units generated strong revenue growth and gained market share. Retail sales revenue grew 7.6% for the half, with sales revenue growing 8.5% in Telstra Consumer and Channels, 9.3% in Telstra Business and 4.5% in Telstra Enterprise and Government.
Total expenses increased by 5.6% to $9.4 billion, linked to transformation related activity, including higher redundancy costs, with CDMA migration and strong mobile and broadband volumes leading to increased cost of goods sold.
Operating expenses are expected to increase in 2008 as the costs of the IT component of Telstra’s transformation peak, before starting to decline as it turn off its legacy systems and network platforms. The second stage of the IT transformation – TR2 – was on schedule to be in production by the end of 2008.
Total workforce decreased 1,768 for the half and has reduced by 7,875 since 1 July 2005 (excluding acquisition and divestment activity). Telstra believes that it is well placed to meet the top end of its previously announced headcount reduction targets of 6,000-8,000 by the end of fiscal 2008 and 12,000 by the end of fiscal 2010.
Table 37 – Telstra overall financial results, six months to December – 2006 – 2007
|
Financial results
|
2006
|
2007
|
Change
|
|
$ million
|
|
Sales revenue
|
11,630
|
12,252
|
5.3%
|
|
Total income (excl. finance income)
|
11,797
|
12,479
|
5.8%
|
|
EBITDA
|
4,916
|
5,172
|
5.2%
|
|
EBIT
|
2,938
|
3,120
|
6.2%
|
|
Profit for the period
|
1,712
|
1,942
|
13.4%
|
(Source: Telstra annual reports)
Table 38 – Telstra segment revenue, six months to December – 2006 – 2007
|
Segment revenue
|
2006
|
2007
|
Change
|
|
$ million
|
|
Telstra Consumer, Marketing & Channels
|
4,707
|
5,054
|
7.4%
|
|
Telstra Business
|
1,658
|
1,815
|
9.5%
|
|
Telstra Enterprise & Government
|
2,194
|
2,291
|
4.4%
|
|
Telstra Wholesale
|
1,330
|
1,263
|
-5.0%
|
|
Telstra Operations
|
130
|
135
|
3.8%
|
|
Sensis
|
886
|
953
|
7.6%
|
|
CSL New World
|
519
|
485
|
-6.6%
|
|
TelstraClear
|
287
|
287
|
0.0%
|
|
Other
|
34
|
58
|
70.6%
|
|
Total
|
11,745
|
12,341
|
5.1%
|
(Source: Telstra annual reports)
Mobile data revenue increased 46.1% to $716 million with non-SMS data (including datacards, streaming TV, music downloads, video calls and other data-intensive services) now generating more than half of mobile data revenue.
Table 39 – Telstra operating revenues, six months to December – 2006 – 2007
|
Total for division
|
2006
|
2007
|
Change
|
|
$ million
|
|
PSTN products
|
3,463
|
3,391
|
-2.1%
|
|
Fixed telephony
|
4,599
|
4,536
|
-1.4%
|
|
Mobile
|
2,782
|
3,186
|
14.5%
|
|
Internet
|
878
|
1,190
|
35.5%
|
|
IP & data access
|
791
|
857
|
8.3%
|
|
Total sales revenue
|
11,797
|
12,479
|
5.8%
|
(Source: Telstra annual reports)
PSTN revenue declined to $3.4 billion, a 2.1% slowdown compared with 5.8% and 7.8% declines in the first halves of fiscal 2007 and 2006 respectively. Retail PSTN revenue increased 0.3% and retail lines grew by 48,000. However, wholesale line losses to ULL services led to a total SIO decline of 203,000 in the half to 9.55 million. PSTN ARPU also increased.
Table 40 – Telstra operating revenue, fixed telephony, six months to December – 2006 – 2007
|
Fixed telephony
|
2006
|
2007
|
Change
|
|
$ million
|
|
Basic access
|
1,663
|
1,657
|
-0.4%
|
|
Local calls
|
432
|
388
|
-10.2%
|
|
PSTN value-added services
|
125
|
134
|
7.2%
|
|
National long-distance calls
|
408
|
385
|
-5.6%
|
|
Fixed-to-mobile
|
608
|
615
|
1.2%
|
|
International direct
|
94
|
92
|
-2.1%
|
|
Fixed interconnection
|
133
|
120
|
-9.8%
|
|
Total PSTN products
|
3,463
|
3,391
|
-2.1%
|
|
Total fixed telephony
|
4,599
|
4,536
|
-1.4%
|
(Source: Telstra annual reports)
ARPUs strengthened. The ARPU premium of postpaid 3G customers over their 2G counterparts has been sustained above $20. 3G revenues overtook 2G revenues for the first time in the December quarter of 2007.
Table 41 – Telstra operating revenue, mobiles, six months to December – 2006 – 2007
|
Mobiles
|
2006
|
2007
|
Change
|
|
$ million
|
|
Mobile services, retail & interconnection
|
2,399
|
2,701
|
12.6%
|
|
Mobile services, wholesale
|
26
|
26
|
0.0%
|
|
Mobile handsets
|
357
|
459
|
28.6%
|
|
Total mobiles
|
2,782
|
3,186
|
14.5%
|
(Source: Telstra annual reports)
ARPU increased 6.8%, driven by the growing proportion of customers on high value Liberty plans.
Additional revenue generated from retail broadband now exceeded the revenue decline in the PSTN business. Retail broadband customer numbers grew strongly to 2.6 million, with 439,000 added in the half of 2007. Telstra’s retail broadband market share increased by 1% in the half to 48%, with Telstra adding customers at three times the rate of its nearest competitor.
Table 42 – Telstra operating revenue, Internet, six months to December – 2006 – 2007
|
Internet
|
2006
|
2007
|
Change
|
|
$ million
|
|
Narrowband
|
79
|
52
|
-34.2%
|
|
Retail broadband
|
511
|
844
|
65.2%
|
|
Wholesale broadband
|
278
|
278
|
0.0%
|
|
Other
|
10
|
16
|
60.0%
|
|
Total Internet
|
878
|
1,190
|
35.5%
|
(Source: Telstra annual reports)
Table 43 – Telstra operating revenue, IP & data access, six months to December – 2006 – 2007
|
IP & data access
|
2006
|
2007
|
Change
|
|
$ million
|
|
Internet direct
|
62
|
73
|
17.7%
|
|
Specialised data
|
377
|
350
|
-7.2%
|
|
Global products
|
45
|
45
|
0.0%
|
|
IP access
|
180
|
252
|
40.0%
|
|
Wholesale Internet & data
|
127
|
137
|
7.9%
|
|
Total IP & data access
|
791
|
857
|
8.3%
|
(Source: Telstra annual reports)
Table 44 – Telstra operating revenue, other, six months to December – 2006 – 2007
|
Other operating revenue
|
2006
|
2007
|
Change
|
|
$ million
|
|
Business services and applications
|
499
|
501
|
0.4%
|
|
Advertising & directories
|
879
|
948
|
7.8%
|
|
CSL New World
|
519
|
485
|
-6.6%
|
|
TelstraClear
|
286
|
287
|
0.3%
|
|
Offshore services revenue
|
173
|
174
|
0.6%
|
|
Pay TV bundling
|
164
|
204
|
24.4%
|
|
Other minor items
|
135
|
133
|
-1.5%
|
|
Elimination for wireless broadband
|
-75)
|
-249
|
232.0%
|
(Source: Telstra annual reports)
Table 45 – Telstra (Foxtel) pay TV bundling revenue, subscribers, six months to December – 2006 – 2007
|
Pay TV bundling
|
2006
|
2007
|
Change
|
|
Subscribers (’000)
|
|
Pay TV bundling revenue (million)
|
$164
|
$204
|
24.4%
|
|
Foxtel pay TV bundling subscribers
|
309
|
394
|
27.5%
|
|
Austar pay TV bundling subscribers
|
38
|
32
|
-15.8%
|
|
Total pay TV bundling subscribers
|
347
|
426
|
22.8%
|
(Source: Telstra annual reports)
Note: Statistical data represents management’s best estimates.
Sensis grew its sales revenue by 7.8% to $954 million with the Yellow and White directories and emerging businesses delivering strong results.
Yellow revenue increased 3.2% to $543 million print revenues growing 0.2% and online revenue up 21.5%, while White Pages revenue grew 10.3% to $161 million.
Emerging businesses, such as Whereis and MediaSmart, grew 27%. SouFun posted revenue growth of 68% and EBITDA growth of 97%.
Classifieds revenue declined by 13.8% to $56 million, largely as a result of competitive factors in the print market, which are causing declines in both circulation and the number of advertisers. Growth in online classifieds products has not offset the decline in print products.
Table 46 – Sensis financial summary, six months to December – 2006 – 2007
|
Sector
|
2006
|
2007
|
Change
|
|
$ million
|
|
Total income
|
889
|
953
|
7.2%
|
|
Total expenses
|
496
|
563
|
13.5%
|
|
EBITDA
|
448
|
461
|
2.9%
|
|
EBIT
|
393
|
390
|
-0.8%
|
|
CAPEX
|
68
|
97
|
42.6%
|
|
EBITDA margin
|
50.4%
|
48.4%
|
-2.0%
|
(Source: Telstra Financial Results)
Note: Amounts included for Sensis represent the contribution included in Telstra’s consolidated result.
Table 47 – Sensis revenue by operating division, six months to December – 2006 – 2007
|
Sector
|
2006
|
2007
|
Change
|
|
$ million
|
|
Yellow revenue
|
526
|
543
|
3.2%
|
|
White Pages revenue
|
146
|
161
|
10.3%
|
|
Classified revenue
|
65
|
56
|
-13.8%
|
|
Emerging business
|
63
|
80
|
27.0%
|
|
SouFun revenue
|
24
|
43
|
79.2%
|
|
Voice
|
55
|
65
|
18.2%
|
|
Total advertising & directories
|
879
|
948
|
7.8%
|
|
Other
|
6
|
6
|
0.0%
|
|
Total Sensis sales revenue
|
885
|
954
|
7.8%
|
(Source: Telstra Financial Results)
Note: Amounts included for Sensis represent the contribution included in Telstra’s consolidated result.
Results for year ending June 2007
Overall results
Highlights for Telstra’s financial results for the 12 months to June 2007, compared with the corresponding 12 months were:
· Sales revenue grew by 4.2% or $961 million to $23,673 million.
· Total income (excluding finance income) grew by 3.9% or $898 million to $23,960 million.
· Operating expenses (before depreciation and amortisation) grew by 4.4% or $600 million to $14,092 million.
· EBIT grew by 5.1% or $282 million to $5,779 million.
· EBIT excluding the impairment of the Trading Post mastheads grew by 7.1% to $5,889 million.
· Profit for the year grew by 2.9% or $92 million to $3,275 million.
· Cash operating capital expenditure (excluding investments) of $5,652 million, up 32.8%.
· Free cashflow declined by 36.7% or $1,680 million to $2,899 million.
· Mobile revenue grew by 13.9% or $695 million to $5,701 million.
· Retail Broadband revenue grew 66.2% or $483 million to $1,213 million.
· Sensis external income grew by 8.0% or $147 million to $1,974 million.
· PSTN revenue declined by 4.1% or $309 million to $7,190 million.
Table 48 – Telstra Group sales revenue, EBITDA, EBIT and net profit – 2002 – 2007
|
Year ends Jun
|
Sales revenue
|
EBITDA
|
EBIT
|
Net profit
|
|
2002
|
|
|
|
|
|
2003
|
1.5%
|
-3.2%
|
-8.1%
|
8.8%
|
|
2004
|
1.2%
|
10.7%
|
15.1%
|
21.2%
|
|
2005
|
6.9%
|
2.8%
|
20.9%
|
4.4%
|
|
2006
|
2.7%
|
-8.4%
|
-20.8%
|
-26.0%
|
|
2007
|
4.2%
|
3.0%
|
5.1%
|
2.9%
|
(Source: BuddeComm based on company data)
Table 49 – Telstra Group revenue by segment – 2006 – 2007
|
Segment (year ends June)
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Telstra Consumer, Marketing & Channels
|
8,879
|
9,509
|
7.1%
|
|
Telstra Business
|
3,163
|
3,241
|
2.5%
|
|
Telstra Enterprise & Government
|
4,531
|
4,529
|
0.0%
|
|
Telstra Wholesale
|
2,902
|
2,957
|
1.9%
|
|
Sensis
|
1,835
|
1,968
|
7.2%
|
|
Telstra International
|
1,481
|
1,606
|
8.4%
|
|
Telstra Operations
|
307
|
243
|
-20.8%
|
|
Other
|
116
|
108
|
-6.9%
|
|
Eliminations
|
-480
|
-452
|
5.8%
|
|
Total Telstra
|
22,734
|
23,709
|
4.3%
|
(Source: Telstra annual reports)
Table 50 – Telstra Group EBIT by segment – 2006 – 2007
|
Segment (year ends June)
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Telstra Consumer, Marketing & Channels
|
5,634
|
5,593
|
-0.7%
|
|
Telstra Business
|
2,541
|
2,592
|
2.0%
|
|
Telstra Enterprise & Government
|
2,636
|
2,609
|
-1.0%
|
|
Telstra Wholesale
|
2,694
|
2,867
|
6.4%
|
|
Sensis
|
863
|
752
|
-12.9%
|
|
Telstra International
|
156
|
61
|
-60.9%
|
|
Telstra Operations
|
-4,173
|
-3,593
|
6.2%
|
|
Other
|
-4,883
|
-4,827
|
1.1%
|
|
Eliminations
|
29
|
45
|
55.2%
|
|
Total Telstra
|
5,497
|
5,779
|
5.1%
|
(Source: Telstra annual reports)
Table 51 – Telstra Group revenue by service – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Total fixed telephony
|
9,567
|
9,260
|
-3.2%
|
|
Total mobiles
|
5,006
|
5,701
|
13.9%
|
|
Total Internet
|
1,437
|
1,945
|
35.4%
|
|
Total IP & data access
|
1,584
|
1,627
|
2.7%
|
|
Business services and applications
|
1,055
|
1,053
|
-0.2%
|
|
Specialised data
|
884
|
796
|
-10.0%
|
|
Advertising & directories
|
1,711
|
1,835
|
7.2%
|
|
CSL New World
|
830
|
1,000
|
20.5%
|
|
TelstraClear
|
620
|
573
|
-7.6%
|
|
Offshore services revenue
|
295
|
348
|
18.0%
|
|
Pay TV bundling
|
320
|
344
|
7.5%
|
|
Other minor items
|
360
|
271
|
-24.7%
|
|
Elimination from wireless broadband
|
-73
|
-284
|
289.0%
|
|
Sales revenue
|
22,712
|
23,673
|
4.2%
|
|
Other revenue
|
22
|
36
|
63.6%
|
|
Total revenue
|
22,734
|
23,709
|
4.3%
|
|
Other income
|
328
|
251
|
-23.5%
|
|
Total income
|
23,062
|
23,960
|
3.9%
|
(Source: Telstra annual reports)
PSTN revenue
Table 52 – Telstra fixed telephony revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
PSTN products
|
7,499
|
7,190
|
-4.1%
|
|
ISDN products
|
806
|
749
|
-7.1%
|
|
Inbound calling products
|
414
|
413
|
-0.2%
|
|
Payphones
|
104
|
92
|
-11.5%
|
|
Customer premises equipment
|
274
|
318
|
16.1%
|
|
Intercarrier access services
|
152
|
181
|
19.1%
|
|
Other fixed telephony
|
318
|
317
|
-0.3%
|
|
Total fixed telephony
|
9,567
|
9,260
|
-3.2%
|
(Source: Telstra annual reports)
Table 53 – Telstra PSTN products revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Basic access revenue:
|
|
|
|
|
· Retail
|
2,591
|
2,587
|
-0.2%
|
|
· Domestic wholesale
|
726
|
746
|
2.8%
|
|
Total basic access revenue
|
3,317
|
3,333
|
0.5%
|
|
Local call revenue
|
1,023
|
845
|
-17.4%
|
|
PSTN value-added services
|
246
|
257
|
4.5%
|
|
National long-distance call revenue
|
319
|
808
|
-11.5%
|
|
Fixed-to-mobile revenue
|
1,490
|
1,487
|
0.2%
|
|
International direct revenue
|
201
|
184
|
-8.5%
|
|
Fixed interconnection
|
309
|
276
|
-10.7%
|
|
Total PSTN revenue
|
7,499
|
7,190
|
-4.1%
|
(Source: Telstra annual reports)
Total PSTN products revenue declined by 4.1% to $7,190 million during fiscal 2007; this decline has slowed when compared with the 6.8% decline in fiscal 2006. In particular, total retail access lines in service stopped declining and held steady for the first time since 2001.
The decline in fixed to mobile revenue was contained at 0.2%, compared with a decline of 4.9% during the prior corresponding period. PSTN retail churn has also turned positive in fiscal 2007.
Volumes reduced across local calls, national long distance calls, international direct calls and fixed interconnection. Yields also declined in local calls, national long-distance calls, fixed to mobile calls and international direct calls due to competitive pricing pressure, higher demand for alternative products, as well as impact of newly introduced subscription pricing plans on certain categories.
Local call revenue decreased by 17.4% to $845 million, with both retail and wholesale revenues being negatively impacted by ongoing product substitution from fixed calling to mobile voice calls and SMS. This was accelerated by the take up of capped mobile plans that had been heavily promoted by competitors.
Substitution of data local calls continued to occur due to the migration of dial-up Internet customers to broadband. Generally, call volumes continued to fall with a reduction in calls made by 12.2%, reflecting the impact of customers migrating to other products and a reduction of average number of calls per customer.
Prices also fell due to ongoing discounting and the impact of some subscription based pricing plans which offer free local calls as part of the package.
The introduction of capped plans in the mobile market impacted the volume of fixed to mobile activity as customers continue to slowly move their usage from PSTN products to mobiles.
International direct revenue declined by 8.5% to $184 million primarily as a result of continued competitive pressure on price and lower volumes. Factors include the competitive pressures from calling cards, increased use of emails, fixed to mobile substitution and the growth of Voice over IP.
Telstra has been the main beneficiary of Optus’ decision to stop reselling Telstra telephony services outside of the Optus DSLAM footprint.
Mobile revenue
Table 54 – Telstra mobile revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Access fees and call charges1
|
2,684
|
2,682
|
-0.1%
|
|
International roaming
|
266
|
327
|
22.9%
|
|
Mobile messagebank
|
198
|
231
|
16.7%
|
|
Mobile data
|
|
|
|
|
· Short Message Service (SMS) 2
|
494
|
641
|
29.8%
|
|
· Other mobile data1, 3
|
238
|
458
|
92.4%
|
|
Total mobile data1
|
732
|
1,099
|
50.1%
|
|
Total mobile services revenue – retail
|
3,880
|
4,339
|
11.8%
|
|
Mobile services revenue – mobiles interconnection
|
4,503
|
4,932
|
9.5%
|
|
Mobile services revenue – wholesale
|
51
|
36
|
41.7%
|
|
Total mobile services revenue
|
4,539
|
4,983
|
9.8%
|
|
Mobile handset sales
|
467
|
718
|
53.7%
|
|
Total mobile revenue*
|
5,006
|
5,701
|
13.9%
|
(Source: Telstra annual reports)
Notes:
1Telstra’s comparatives for June 06 have been restated to reflect a reallocation of data revenues incorrectly classified as access and charges in the prior year.
2Includes SMS and multimedia messaging services (MMS).
3Includes $284 million of revenue (June 2006: $91 million) relating to wireless broadband services (EV-DO & HSDPA) and data packs ($5 to $179).
Strong growth was experienced in data products including SMS, Blackberry, and wireless broadband (EV-DO and HSDPA) along with increased content including mobile broadband data packs, browser packs and Foxtel by Mobile. Mobile revenues also been impacted by the growth in capped price plans.
Mobile data rose to 22.3% of mobile ARPU due to the increased data content offerings, including FOXTEL by mobile, BigPond music downloads, videos and games. Wireless email also contributed to the increase in non SMS data revenues primarily driven by an increase in BlackBerry SIOs and usage.
Revenue from handset sales increased by 53.7% to $718 million primarily due to growth in the number of 3GSM mobile handsets sold.
Internet and IP solutions revenue
Table 55 – Telstra Internet & IP solutions revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Narrowband
|
220
|
144
|
34.5%
|
|
Retail broadband1
|
730
|
1,213
|
66.2%
|
|
Wholesale broadband
|
469
|
568
|
21.1%
|
|
Other
|
18
|
20
|
11.1%
|
|
Total Internet revenue
|
1,437
|
1,945
|
35.4%
|
(Source: Telstra annual reports)
Note: 1Prior year figures have been restated to include the gross up of mobile broadband revenues relating to EV-DO/HSDPA and data pack usage.
Wholesale broadband revenue increased by 21.1% to $568 million for fiscal 2007, driven by a continuing strong market demand for high bandwidth services stimulated by retail competition. Wholesale DSL Internet grade has grew by 21.2% to $508 million driven by SIO growth of 16.6% to 1.4 million, combined with delayed ULL build activity and a stable average revenue per user. Spectrum sharing services also contributed to revenue growth as more wholesale customers moved towards this product as opposed to ULL build.
Other revenue, which is made up of media content and BigPond web hosting services, increased by 11.1% over the year.
BigPond web hosting services primarily relates to the hosting of fully functional personal or business websites for customers.
Media content includes revenue from movies, games and music and whilst this business was still small in dollar terms it started to show positive growth trends. Movies revenue in particular increased by 38.7% for fiscal 2007 due to growth in SIOs assisted by increased marketing support and major changes to websites and processes.
Games revenue grew significantly by 213% due to the launch of Gameshop in June 2006 where customers can purchase and download games online.
IP, data access and ISDN revenue
Table 56 – Telstra specialised data revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Internet direct
|
143
|
157
|
9.8%
|
|
Specialised data:
|
|
|
|
|
· Frame Relay
|
302
|
258
|
-14.6%
|
|
· ATM
|
90
|
74
|
-17.8%
|
|
· Digital Data Services
|
198
|
163
|
-17.7%
|
|
· Leased lines
|
229
|
234
|
2.2%
|
|
· International private lines
|
30
|
29
|
-3.3%
|
|
· Other specialised data
|
35
|
38
|
8.6%
|
|
Total specialised data
|
884
|
796
|
-10.0%
|
|
IP access
|
342
|
443
|
29.5%
|
|
Wholesale Internet & data
|
231
|
215
|
7.4%
|
|
Total IP & data access revenue
|
1,584
|
1,627
|
2.7%
|
(Source: Telstra annual reports)
For the 12 months to June 2007, Telstra’s IP and data access revenue increased by 2.7% to $1,627 million driven mainly by IP access, Internet direct and wholesale Internet and data.
IP access revenue increased by 29.5% to $443 million; this revenue consists of hyperconnect, symmetrical HDSL, IP WAN, IPMAN/Ethernet, IP remote and global IP.
IP access grew due to newer technology attracting a migration of small business and enterprise customers from mature products in specialised data. Greater bandwidth requirements of health customers and the mining industry in regional locations also contributed.
IPMAN/Ethernet increased revenue in the IP access category increased by $46 million while IP WAN has increased by $29 million. IPMAN/Ethernet products experienced an increase in SIOs by 42.4% underpinned by the government sector’s demand for wideband Internet protocol.
IP WAN growth can be attributed to increased SIOs due to the migration from ATM and frame relay as the demand for broader bandwidth to support IP based services such as VoIP and video continues to grow. Symmetrical HDSL increased by 55.5% or $29 million due to greater availability of this product and higher average bandwidth purchased.
Internet direct increased by 9.8% to $157 million due mainly to Telstra Virtual ISP where a commercial deal signed increased data usage.
Specialised data declined by 10.0% to $796 million in revenue due to the maturing nature of the products in this category with most customers moving to IP access products which provide better business solutions.
Digital Data Services (DDS) declined by 17.7% to $163 million due to it being a maturing product with the majority of customers now opting for symmetrical HDSL and other solutions. Digital data access also declined as wholesale customers were leaving this product and building their own networks.
Wholesale Internet and data increased by 7.4% to $231 million mainly due to wholesale leased transmission increasing by $20 million. This is driven by an increase in end user bandwidth demand driven by corporate networks, Internet usage, ISPs growing DSL network coverage and mobile providers requiring additional backhaul to support bandwidth requirements for their 3GSM networks.
Table 57 – Telstra ISDN revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Access
|
417
|
419
|
0.5%
|
|
Data calls
|
118
|
90
|
-23.7%
|
|
Voice calls
|
271
|
240
|
-11.4%
|
|
Total calls
|
389
|
330
|
-15.2%
|
|
Total ISDN revenue
|
806
|
749
|
-7.1%
|
(Source: Telstra annual reports)
ISDN data calls revenue decreased by 23.7% to $90 million as local and national long-distance calls decreased by $20 million and $8 million respectively. This result was due to lower minutes of use as a result of customer migration to alternative products such as ADSL, BDSL and symmetrical HDSL, which offer higher bandwidths at reduced prices.
ISDN voice calls comprising local voice, national voice and international voice calls made on the ISDN network, declined by 11.4% to $240 million, mainly due to a decline in local and national calls by $20 million and $10 million respectively.
Telstra business services and applications revenue
Table 58 – Telstra business services and applications revenue – 2006 – 2007
|
Service
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Managed network services
|
316
|
265
|
16.1%
|
|
IT services
|
624
|
585
|
-6.3%
|
|
Business applications
|
112
|
135
|
20.5%
|
|
Other
|
3
|
68
|
n/m
|
|
Total business service & applications revenue
|
1,055
|
1,053
|
-0.2%
|
(Source: Telstra annual reports)
For fiscal 2007, business services and applications revenue declined by 0.2% to $1,053 million mainly due to lower managed network services and IT services revenue, offset by business applications and other revenues.
Business applications revenue grew by 20.5% to $135 million for fiscal 2007 due to contact solutions and IP telephony. Within contact solutions, new revenues relating to web contact centres and Telstra locator contributed to growth.
IP telephony revenue grew due to the newly launched IP telephony call manager solution and customers transitioning from traditional systems to converged voice and data platforms.
International operations
Key results for Telstra’s offshore international operations for the 12 months to June 2007, compared with the corresponding 12 months:
Table 59 – Telstra offshore controlled entities revenue – 2006 – 2007
|
Entity
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
CSL New World
|
830
|
1,000
|
20.5%
|
|
TelstraClear
|
620
|
573
|
-7.6%
|
|
Other offshore controlled entities
|
295
|
348
|
18.0%
|
|
Total offshore
|
1,745
|
1,921
|
10.1%
|
(Source: Telstra annual reports)
Sensis
Key results for the Telstra’s Sensis division for the 12 months to June 2007, compared with the corresponding 12 months:
· Yellow revenue grew by 2.6% to $1,203 million, driven by strong online usage and new initiatives such as Home@Yellow. The Yellow print result was impacted industry by economic weakness in the Sydney metropolitan market.
· White Pages revenue grew by 9.6% to $331 million. This was driven by continued strong advertiser support in both metro and non metro directories due to new product initiatives such as coloured listings.
· Classifieds revenue declined by 12.0% to $125 million, largely as a result of competitive factors in the print market, which are causing declines in both circulation and the number of advertisers.
· Strong growth in online classifieds products did not offset the decline in print products.
· Voice revenue increased by 14.4% to $119 million due to increased call volumes within its 1234 service. New initiatives launched during 2007 regarding 12455 and 12456 services contributed to this increase in revenue.
Table 60 – Sensis financial summary – 2006 – 2007
|
Sector
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Total income
|
1,827
|
1,974
|
8.0%
|
|
Total expenses
|
917
|
1,161
|
26.6%
|
|
EBITDA
|
1,001
|
943
|
-5.8%
|
|
EBIT
|
910
|
813
|
-10.7%
|
|
CAPEX
|
100
|
226
|
126.0%
|
|
EBITDA margin
|
54.8%
|
47.9%
|
-6.9%
|
(Source: Telstra Financial Results, year ended 30 June 2006)
Note: Amounts included for Sensis represent the contribution included in Telstra’s consolidated result.
Table 61 – Sensis revenue by operating division – 2006 – 2007
|
Sector
|
2006
|
2007
|
Annual change
|
|
$ million
|
|
Yellow revenue
|
1,172
|
1,203
|
2.6%
|
|
White Pages revenue
|
302
|
331
|
9.6%
|
|
Classified revenue
|
142
|
125
|
-12.0%
|
|
Emerging business
|
95
|
127
|
33.7%
|
|
SouFun revenue
|
-
|
49
|
n/m
|
|
Total advertising & directories
|
1,711
|
1,835
|
7.2%
|
|
Voice
|
104
|
119
|
14.4%
|
|
Other
|
11
|
14
|
27.3%
|
|
Other income
|
1
|
6
|
500.0%
|
|
Total Sensis external income
|
1,827
|
1,974
|
8.0%
|
(Source: Telstra Financial Results, year ended 30 June 2006)
Note: Amounts included for Sensis represent the contribution included in Telstra’s consolidated result
For more information on Sensis, see separate report: Telstra – Sensis Pty Ltd.
Capital expenditure
Cash capital expenditure (including investments) for the year ended 30 June 2007 increased by 39.0% to $5,982 million.
Cash operating capital expenditure (excluding investments) increased by 32.8% to $5,652 million.
Higher capital expenditure was driven primarily by the IP enablement of its network, IT transformation, as well as the roll out of the Telstra Next IP and Next G networks.
Operating capital expenditure for the year to June 2008 is expected to be in the range of $4.6 billion to $4.9 billion.
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