Telstra Group Limited (TTRAF) Q2 2023 Earnings Call Transcript

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Telstra Group Limited (OTCPK:TTRAF) Q2 2023 Earnings Conference Call February 15, 2023 7:00 PM ET

Company Participants

Vicki Brady - Chief Executive Officer

Michael Ackland - Chief Financial Officer

Nathan Burley - Head, Investor Relations

David Burns - Group Executive, Enterprise

Nic McKechnie - Group Executive, Communications

Conference Call Participants

Eric Choi - Barrenjoey

Entcho Raykovski - Credit Suisse

Darren Leung - Macquarie

Kane Hannan - Goldman Sachs

Lucy Huang - UBS

Roger Samuel - Jefferies

Brian Han - Morningstar

Harry Saunders - Evans & Partners

Rod Sleath - Rimor

Ian Martin - New Street Research

Simon Dux - CommsDay

Joseph Lam - The Australian

Lucas Baird - The AFR

Eric Johnston - The Australian

Vicki Brady

Good greeting and invited to Telstra’s Results Announcement for nan Half Year Ended 31 December, 2022 and my first results arsenic CEO. I americium joining coming from nan lands of nan Kulin nation. On behalf of Telstra, I would for illustration to admit and salary my respects to nan accepted custodians of state passim Australia and admit their continued relationship to land, waters and culture. We salary our respects to their elders past, coming and emerging. For those of you that are regulars astatine our results presentation, we are taking a somewhat different attack to erstwhile years. I will make immoderate little comments connected our cardinal highlights, Michael will past return you done nan financials successful detail, aft which I will summarize our advancement against T25 and reenforce our FY ‘23 cardinal attraction areas. We will past return questions from analysts, investors and media.

Before I manus to Michael, you will spot that our financials for nan half show beardown and continued maturation pinch affirmative momentum crossed our cardinal indicators. Importantly, we saw maturation successful nan first half successful some our reported and underlying results. This momentum is besides reflected successful nan advancement we person made successful nan first 6 months of transportation against our T25 strategy. I will speak to this successful much item erstwhile I return you done our T2 achievements.

Focusing connected nan cardinal highlights, full income was up 6.4% and EBITDA increased 11.4% driven by momentum from our mobiles business and support from nan acquisition of Digicel Pacific. Excluding Digicel, underlying EBITDA accrued 6.8%. This flowed done to a 25.7% summation successful nett profit after-tax. Reported net per stock accrued 27.1%. It was besides pleasing that our Episode NPS accrued by 4 points. We are a increasing business pinch a batch to beryllium excited astir successful our early and our T25 strategy provides a clear roadmap to get america there.

Our halfway mobiles business continues to beryllium cardinal to this maturation and execute very strongly. Endorsing our strategy to lead nan manufacture connected web acquisition and bold decisions connected planned simplification, I do want to beryllium clear upfront that while our momentum is good, we are conscionable astatine nan commencement of our return to growth. We are besides a multifaceted business and location are circumstantial elements of nan business wherever we cannot beryllium complacent and others that request to spot improvement. Cost-out is an area wherever we stay disciplined, peculiarly considering nan outer economical environment. We are besides very focused connected addressing nan disruption successful our endeavor business, which continues to beryllium challenging. We will talk to these challenges successful a spot much item done nan presentation. Overall, we stay committed to achieving our T25 ambitions, including maturation successful underlying EBITDA and net per share.

On nan backmost of our continued growth, nan Board resolved to salary a afloat franked interim dividend of $0.085 per share, representing a 6.3% summation connected nan anterior corresponding play and successful statement pinch nan 2nd half of past financial year. The interim dividend is accordant pinch our argumentation to maximize nan afloat franked dividend and activity to turn it complete time.

I will now manus complete to Michael to spell done nan numbers successful detail.

Michael Ackland

Thanks, Vicki. It is awesome to beryllium presenting Telstra’s results for nan first time. While our momentum is good, we are conscionable astatine nan commencement of our return to growth. I will measurement you done nan precocious level results earlier getting into immoderate detail.

Starting pinch our income connection connected Slide 6, which intelligibly demonstrates our growth. For first half ‘23, income was up $11.6 cardinal – was $11.6 billion, up 6.4%. EBITDA was $3.9 billion, up 11.4% from ongoing mobile led integrated maturation and M&A including our acquisition of Digicel Pacific. EBIT was $1.6 billion, up 25.4%. Net financing costs accrued 5.9% reflecting higher indebtedness levels pursuing nan acquisition of Digicel Pacific and higher borrowing costs fixed vulnerability to floating rates. Tax accrued 40% connected higher profit earlier taxation and one-off associated pinch M&A successful nan first half of ‘22. We expect nan effective taxation complaint to beryllium astir 30% for financial twelvemonth ‘23. EPS was up 27% to $0.075 reflecting higher earnings, little mean shares connected rumor pursuing our buyback successful FY ‘22, arsenic good arsenic higher number liking pursuing nan 49% waste of Amplitel past financial year.

Looking astatine merchandise capacity connected Slide 7, we saw beardown maturation successful mobile and world partially offset by fixed endeavor decline. Mobile benefited from maturation successful work revenue, partially owed to higher world roaming, while world maturation mostly came from nan Digicel Pacific acquisition.

I will now measurement you done our cardinal products starting pinch mobile connected Slide 8. In mobile, we achieved continued maturation successful revenue, EBITDA and SIOs from nan successful execution of our strategy. On nan apical left, you tin spot mobile work gross up 9.3%. All segments and sub-products including MBB, IoT and wholesale grew. Growth was supported by world roaming lifting by astir $100 cardinal to astir 70% of pre-COVID levels and a one-off – and our $42 cardinal one-off successful prepaid from merchandise migration. Excluding these, work gross grew 5.3% driven by measurement and worth successful statement pinch our mid single-digit CAGR ambition.

In postpaid handheld, we added nett 68,000 SIOs, while prepaid handheld unsocial users accrued 137,000 SIOs. We estimate nan cyber incident astatine Optus besides impacted our first half ‘23 nett adds successful nan bid of affirmative debased to mid tens of thousands divided crossed C&SB enterprise, postpaid and prepaid and wholesale. Port-ins from Optus person now mostly normalized. Postpaid ARPU shown connected nan bottommost near manus floor plan grew 4.5%. This was from higher roaming and astir 3.5 months of use from user and mini business value increases successful statement pinch CPI implemented successful nan half. Partly offsetting this was an endeavor COVID-related messaging use successful nan anterior corresponding period. Prepaid besides achieved exceptional capacity supported by incoming travelers and ARPU maturation done accrued information usage and migration to caller simplified plans.

In fixed C&SB, we delivered connected increasing EBITDA successful statement pinch our commitment. nbn reseller separator was up to 7% from 4% successful nan anterior corresponding period, pinch 3.7% ARPU maturation achieved from value rises. We besides saw continued improvement of scheme operation arsenic customers take nan plans that suit them. We proceed to migrate our customers to our caller integer stack, which is delivering amended customer outcomes.

First half’23 section NPS improved 19 points connected income and activation, pinch caller stack 24 points supra legacy. Proactive responsibility identification, solution and amended supplier devices to resoluteness queries person delivered a PCP betterment of complete 6 points to NPS.

On-net fixed wireless besides continues to scale. While successful SMB and nan mid-market, we person gained traction successful nbn reseller. However, location stay challenges. We are focused connected evolving our customer propositions and our multi-brand strategy to support stabilizing SIOs and longer word sustainable growth. Going forward, we are targeting greater than 8% nbn reseller margins successful FY ‘23 and mid-teens successful FY ‘25. While we proceed to thrust efficiencies achieving these eager targets sustainably will require america to stabilize measurement performance. We are besides focused connected reducing costs and improving on-net losses done nan rationalization of our bequest sound ADSL and transmission networks arsenic good arsenic continuing to optimize section work costs arsenic nan remaining customers numbers decline.

Turning to fixed endeavor connected Slide 10, which is made up of information and connectivity and web applications and services. DAC gross declined 14.4% successful statement pinch nan erstwhile half arsenic it remained impacted by ongoing distribution from exertion alteration and competition. We’ve been repricing our plans and proactively targeting customers astatine consequence of churn resulting successful renewals astatine little rates and ARPU compression. Going forward, we will proceed simplifying products and IT platforms targeting improved customer acquisition and little costs to link and service done automation.

Our attraction is connected retention and we expect further ARPU declines arsenic we proactively target nan guidelines arsenic good arsenic customers who person antecedently churned. We person besides implemented a caller customer attraction attack for precocious consequence mid-market and business customers. This has resulted successful nan betterment successful Telstra Fiber SIO trajectory, including little churn and affirmative nett adds precocious successful nan 2nd quarter. In NAS, gross grew 2%, reflecting maturation from cloud, security, and nan ViaSat statement and acquisitions offset by headwinds successful calling products owed to fixed bequest – owed to fixed bequest and little exits, merchandise exits and little usage. Faster diminution successful bequest calling is nan logic we are beneath our mid single-digit gross and maturation ambition.

With gross nickname linked to milestone timing, nan business remains seasonal. Our attraction is connected continuing to build heavy strategical relationships pinch hyperscalers and extending our manufacture expertise pinch circumstantial partners, applications and package successful our go-to-market strategy. Overall, while our ambition is to turn full home endeavor crossed T25, including mobile, this will beryllium a important situation successful FY ‘23 fixed nan level of first half decline. We are focused connected 5 areas: ongoing momentum successful mobility, beardown 2nd half NAS capacity accordant pinch normal seasonality, limiting nan level of calling decline, retaining fibre SIOs and managing cost.

Turning to world connected Slide 11, pursuing nan acquisition of Digicel Pacific, world now represents astir 10% of our EBITDA. International, excluding Digicel Pacific, grew 9.3% successful Australian dollars aliases 7% successful changeless currency. Pleasingly, Digicel Pacific is performing good pinch halfway mobile and SIO maturation successful each markets. Revenue and EBITDA are up 7% and 9% respectively versus pro forma astatine changeless currency. Note that pursuing nan implementation of our firm restructure from nan 2nd half of ‘23, world reporting will see soul gross pinch group eliminations expanding an balanced amount. The restructure will besides create further soul gross and costs.

Turning to infrastructure connected Slide 12, while reported gross and EBITDA grew 3.6% and 2.7% respectively, halfway excess maturation for ducts, fibre and web sites was supra this level. nbn commercialized useful declined successful statement pinch statement expiry partially offset by an summation successful bequest web disposals. Core entree grew from some soul and nbn recurring gross growth. The second grew 4.8% supported by CPI indexing and a further 7.3% value summation was applied from 1 January 2023. The EBITDA consequence besides reflected incremental investments successful strategical infrastructure projects, powerfulness and attraction cost.\

As we deliberation astir InfraCo Fixed, it’s important to understand location are a scope of plus classes, each pinch different finance models. Ducts, represents astir of nan net and nan value. It is very precocious value debased CapEx pinch difficult to switch assets and semipermanent predictable earnings. Long-haul fibre we are investing successful and we reappraisal it – we position it arsenic a maturation business. Access fibre is astir leveraging nan existing footprint. And finally, fixed web sites supply opportunities, particularly successful ample retro and metro sites. But extracurricular of these areas, we are giving important attraction to really we trim cost. Vicki will talk further astir InfraCo Fixed.

Turning to our operating expenses, which you tin spot connected Slide 13, full operating expenses accrued 4.2%. Excluding one-offs, restructuring and M&A transaction costs, underlying costs accrued 6.8%. We person updated nan divided of our underlying costs including much successful fixed costs core. Telstra Health and caller M&A activity, including Digicel Pacific, are included successful fixed costs other. A span from our anterior disclosure is shown successful nan elaborate financials included successful nan presentation.

Our productivity programme is measured arsenic nan absolute simplification successful fixed costs core. Fixed costs halfway accrued $110 cardinal arsenic productivity was offset by costs and non-labor costs ostentation connected nan first half ‘22 costs guidelines of $3.2 billion, astir $70 cardinal summation from insourcing of unit stores and onshoring of interaction centers, $22 cardinal successful higher power costs, which was neutralized astatine EBITDA from powerfulness acquisition agreements, astir $20 cardinal of precocious recreation costs, and $15 cardinal successful overseas speech headwinds and international. The nett summation successful fixed costs halfway was broadly arsenic expected and we proceed to expect humble simplification successful FY ‘23. A simplification successful our Q2 costs compared to Q1 gives america assurance successful achieving this. However, we expect inflationary unit successful nan 2nd half to continue.

We are committed to costs simplification and to our antecedently stated nett simplification ambition of $500 cardinal by FY ‘25. This ambition is importantly bolder than erstwhile we group it. Achieving this ambition is successful portion limited connected nan outer environment, which has changed importantly since it was first announced. I reiterate that we are perfectly committed to achieving our T25 EBITDA and EPS maturation ambitions. I want to beryllium very clear that we will not return our ft disconnected nan pedal connected ensuring transportation of cost-out and operational efficiencies. This includes disconnected nan backmost of B2B and B2C digitization, getting disconnected bequest systems and reducing bequest IT costs, delivering cost-out crossed each customer episodes and worth chains and done decommissioning bequest infrastructure. Beyond fixed costs, were very focused connected ratio successful each different areas of our spend, including income costs, CapEx, leases, including spot and finance costs.

Slide 14 is an update connected nan implications of inflation, including mitigants we person put successful place. Our income costs, particularly successful nan different category, are seeing immoderate inflationary pressure. However, these costs are mostly passed through. Within fixed costs, nan biggest bucket is labor. We person seen absolute costs maturation done insourcing of stores and onshoring pinch costs ostentation successful statement pinch expectations. On energy, costs are expected to beryllium broadly level aft adjusting for powerfulness acquisition agreements successful FY ‘23 and FY ‘24. We proceed to expect gross power costs to summation by astir $50 cardinal successful FY ‘23, which is offset astatine an EBITDA level by powerfulness acquisition agreements and past to beryllium broadly level successful FY ‘24 pinch nan ample mostly of usage contracted.

Service contracts and agreements are areas we are seeing inflationary pressure, including master and firm services, IT, field, substance and transport. We person mitigated costs maturation done existing contracts, putting services retired to tender, moving pinch suppliers to set nan measurement we do business, and reviewing our licensing requirements. Importantly, we besides person gross levers and proceed to make changes to prices crossed our portfolio. For example, successful mobile, astir 65% of postpaid mobile handheld customers are connected C&SB plans pinch an action to reappraisal prices annually against CPI successful July. For immoderate endeavor postpaid mobile handheld customers, prices accrued astir $3 per month, taking effect from December. This almanac year, we person communicated further guidelines guidance successful Belong and mobile broadband. In addition, our nbn recurring revenues of astir $1 cardinal per annum are indexed to CPI.

Turning to free rate travel connected Slide 15. Our first half ‘23 free rate travel was $1 cardinal connected a guidance basis. This is accordant pinch communal first half 2nd half seasonality successful our rate flow. The diminution versus nan anterior corresponding play was principally owed to moving superior movement. Working superior accrued $451 cardinal successful nan first half from accrued inventory connected normal seasonality, nan effect of insourcing our stores and immoderate normalization fixed anterior play proviso constraints and payables activity which was impacted by timing and little accruals. Pleasingly, we proceed to spot year-on-year betterment successful our receivables metrics, including time income outstanding, aged indebtedness and bad debt. The moving superior activity successful nan first half of ‘23 was mostly timing related. And arsenic implied by our guidance, we expect to reverse nan moving superior build up successful nan 2nd half. The CapEx summation successful nan first half of ‘23 was associated pinch Digicel Pacific and strategical CapEx. M&A successful nan play included outflow of Australian dollars $2.4 cardinal for nan Digicel Pacific acquisition and earn-out funded by $1.1 cardinal of non-recourse indebtedness and $9.9 cardinal of equity-like securities issued to nan Export Finance Australia and $0.4 cardinal of Telstra equity.

Turning to our superior position connected Slide 16. In nan first half of ‘23, nett indebtedness accrued by $2.2 cardinal from 30 June 2022 mostly owed to backing nan Digicel Pacific acquisition and normal seasonality of free rate flow. We stay wrong our comfortableness ranges for each in installments metrics pinch indebtedness servicing astatine 1.9x. Underlying ROIC improved to 7.5% to conscionable supra our costs of superior illustrating we stay successful betterment mode.

Now turning to FY ‘23 guidance which tin beryllium seen connected Slide 17, you tin spot nan ranges on pinch nan assumptions and nan conditions connected which we person provided them. There are nary changes isolated from that we now expect to beryllium astatine nan bottommost extremity of income guidance for 2 main reasons. Firstly, mobile hardware revenue, which contempt increasing 12% connected higher volumes and accrued accessories and wearable income was beneath expectations, pinch customers continuing to clasp handsets for longer and much purchasing from outer parties and secondly, fixed gross crossed C&SB and endeavor being beneath expectations.

Finally, to summarize, our business continues to present precocious value mobile-led integrated growth. We are good placed successful nan existent situation and we stay disciplined and focused connected creating value. Finally, I would for illustration to definitive my acknowledgment to nan Telstra squad for their ongoing passion to present worth for customers, nan organization and our shareholders.

I will now manus backmost to Vicki.

Vicki Brady

Thank you, Michael. So arsenic you tin opportunity from that elaborate breakdown, overall, we person affirmative momentum driven by continued maturation successful mobiles pinch immoderate challenges successful fixed. These challenges are particularly important fixed nan existent economical uncertainty, pinch ostentation peculiarly proving challenging for astir businesses. Michael talked you done nan impacts and our responses successful detail. However, I wanted to reenforce nan constituent that while ostentation is impacting cost, we proceed to person costs mitigants and gross levers and stay committed to our FY ‘25 $500 cardinal cost-out, underlying EBITDA, and net per stock ambitions. I besides understand nan existent economical ambiance creates challenges for our customers. The changes we person made successful caller years to region locking contracts and move to a multi-brand strategy mean we tin proceed to supply customers pinch elasticity and options to guarantee they tin take plans they tin afford. This is very overmuch beforehand of mind for me.

Turning now to our T25 strategy, T25 is simply a strategy that leverages nan instauration and capabilities we person built complete nan past fewer years. I americium perfectly assured it is nan correct strategy. But naturally, it possibly basal to make adjustments to it astatine times to present customer acquisition improvements, caller maturation opportunities and fundamentally displacement nan measurement Australians consciousness astir us. It has nan 4 pillars shown connected nan slide: an exceptional customer experience, starring web and exertion solutions, sustained maturation and value, and nan spot you want to work. T25 is astir sustainably – astir increasing sustainably by doing nan correct point by our customers, our people, our shareholders, and by Australia. It’s an eager strategy built astir our customers and recognizes that providing them awesome connectivity is only half nan customer acquisition equation. We person to make doing business pinch america an exceptional acquisition too.

We took awesome steps forwards connected this done T22, including bringing calls backmost to Australia and our stores in-house. And continuing this activity is my number 1 priority. I cognize that if we get nan customer acquisition right, past we will beryllium good connected our measurement to delivering our maturation and estimation measures. A ample portion of this is delivering connected what we opportunity we will present for customers getting it done correct first time. I americium pleased pinch our advancement connected customer title numbers, which person dropped to grounds lows and our section NPS results, which person seen historical highs. In a integer world, it besides intends doing what we tin to thief protect our customers against scams and cybercrime. We person led nan manufacture connected blocking scams and malicious interaction reaching our customers. We person besides taken steps to amended nan measurement we cod and clasp customer data. The occupation present is ne'er done. And my extremity is to guarantee we stay a leader successful cybersecurity, information postulation and retention improvements.

Despite our bully advancement connected customer experience, location is still much we request to do. Our activity to digitize, simplify and upgrade our bequest systems is transforming our customer service, but has been disruptive for our group and customers. So it is captious we decorativeness nan occupation arsenic quickly arsenic possible. We must accelerate nan move distant from our bequest systems arsenic it will thief america present connected our customer acquisition ambitions, on pinch making america a much businesslike business.

When it comes to early areas of growth, connectivity is nan starting point. It’s why starring connected networks and exertion solutions is 1 of our strategical pillars. Our opportunity is to leverage these capabilities alongside our customer relationships and our strategical partnerships pinch world and section players to present exertion solutions successful cardinal manufacture verticals. Our associated task pinch Quantium announced during nan half, will not only thief america supply precocious information and AI services to cardinal verticals, it will besides thief lend to our ain integer ambitions nether T25, to present improved products and experiences to our customers.

We are besides already opening to spot a caller activity of manufacture digitization enabled by connected technologies, peculiarly successful sectors for illustration healthcare and agriculture. Telstra Health is simply a bully example. It continues to turn and is connected way to execute its ambition of being a $500 cardinal gross business by FY ‘25.

Turning now to our early advancement connected T25 by strategical pillar, you tin spot connected nan Slide, nan advancement we person made successful nan first 6 months of T25. And I will telephone retired immoderate of nan cardinal achievements. As I said, we proceed to make bully advancement connected nan customer acquisition pillar. Episode NPS improved 4 points. Customer complaints reduced by much than one-third and Telstra Plus members grew to 4.8 million. Against web leadership, we are connected way to meet each our commitments by FY ‘25. We person nan largest 5G network. Our 5G organization sum has reached complete 81% and is connected way for our FY ‘23 target of 85%. We are presently starring nan mostly of cardinal mobile and fixed web surveys for sum and speed. In nan half, our Australian mobile web was again awarded Best successful Test by umlaut and we again lead connected Ookla’s velocity trial from July to December 2022.

Against nan maturation and worth pillar, successful nan first half, we person delivered maturation successful underlying EBITDA and EPS. With underlying ROIC astatine 7.5%, we are connected way to execute astir 8% successful FY ‘23. Against nan spot you want to activity pillar, our worker engagement people was 79. This consequence ranks america adjacent nan apical companies globally, however, beneath our 90th percentile target. We are focused connected continuing to amended worker engagement. This affirmative advancement is reflected connected our T25 scorecard, which demonstrates we are connected way to present nan mostly of our T25 metrics. Through T22, we held ourselves to relationship connected our location targets and we will proceed to do that done T25. There are a number of metrics we person rated arsenic amber, wherever activity has commenced, but early advancement is beneath wherever we want it to beryllium to execute nan FY ‘25 target. We stay committed to accelerating and delivering connected these targets.

On our intercity fibre project, building has commenced and we are seeing beardown liking from hyperscalers different operators, outer providers and nationalist enterprises. You whitethorn recall, we announced a alteration to nan original scope of nan task past twelvemonth to shape our rollout to attraction connected nan highest privilege routes, which explains its standing connected nan scorecard. This nation-building task will supply a captious injection of capacity into cardinal intercity routes and is nan only nationalist task of its type that is funded and wherever building has commenced.

Turning now to our cardinal attraction areas for FY ‘23, my number 1 strategical privilege is improving nan customer experience. This is paramount and a cardinal enabler of our maturation ambitions. The accelerated move distant from our bequest systems I mentioned earlier will support america achieving this goal. I besides wanted to reenforce nan circumstantial areas we spot arsenic cardinal to maintaining our financial momentum and delivering sustainable maturation for shareholders. As I do, I will besides remark concisely connected applicable manufacture matters.

Our first attraction area is mobile and delivering continued profitable growth. First half mobiles capacity was beardown and we are focused connected continued sustainable gross growth, underpinned by our multi-brand strategy, web activity and delivering caller web experiences to our customers. Part of this is besides looking astatine innovative ways to amended nan experiences we supply our customers, responding to nan ever-increasing request for information and managing our spectrum assets efficiently. To that end, nan determination by nan ACCC not to assistance authorization for our landmark MOCN statement pinch TPG Telecom was disappointing. The statement would supply an innovative solution delivering amended connectivity for our customers arsenic good arsenic greater sum for TPG, things I cognize location customers really value. The entreaty process is underway pinch a consequence expected to beryllium handed down successful June this year.

The 2nd attraction area is improving wide fixed C&SB performance. This includes further increases successful off-net margins and improving nan acquisition for our C&SB copper customers. We person spoken astir our attraction connected costs and obviously, nbn wholesale prices, is simply a ample portion of this successful C&SB. The precocious submitted nbn SAU makes immoderate steps successful nan correct direction. However, if it was to beryllium accepted successful its existent form, it would time off america pinch small prime but to return contiguous steps successful response. In statement pinch our erstwhile commentary, this could mean value increases connected our astir celebrated plans. We will proceed to advocator for amended work standards and sustainable wholesale pricing connected behalf of our customers done nan ACCC process.

The 3rd attraction area is improving fixed endeavor capacity and profitability. This includes delivering scaled propositions to meet endeavor customer needs and winning successful fiber, whilst driving further maturation successful NAS. Michael outlined wherever nan challenges and opportunities dishonesty for america successful fixed enterprise, truthful I won’t repetition that.

Lastly, earlier I conclude, fto maine update you connected wherever we are astatine pinch InfraCo. Following shareholder support for our restructure successful October, we completed nan separation and transportation of assets into subsidiary groups connected 1 January. This is an important milestone and allows america to attraction our attraction connected nan commercialized and operating aspects of ensuring we are maximizing semipermanent worth successful nan InfraCo business for Telstra’s shareholders. I person spoken earlier astir nan benefits and opportunities that are being identified crossed InfraCo done operating it arsenic a standalone business. In nan short-term, our attraction is connected expanding utilization and ratio of nan InfraCo plus suite, ensuring that nan ongoing commercialized arrangements betwixt InfraCo and Telstra support maturation crossed some businesses; and seeking areas to turn done finance and partnership. Our Viasat and Intercity Fiber projects are caller examples of this. While we judge location are imaginable worth realization options, we will beryllium measured and deliberate arsenic we see them done 2023 and guarantee that successful immoderate early decisions we whitethorn make we seizure and clasp semipermanent worth for shareholders from these unsocial and valuable assets.

With that, fto maine adjacent retired my first results position arsenic nan CEO of Telstra. I americium excited to beryllium starring this highly tin squad and proud that successful nan half, we achieved beardown growth, successfully transitioned to our T25 strategy, made bully early advancement connected that strategy, and finalized our ineligible restructure. Our outlook for 2023 is strong. This twelvemonth we will summation maturation momentum and proceed to assistance our customer acquisition done T25. I would for illustration to adjacent by acknowledging nan advancement we person made is owed to nan mixed efforts of nan galore dedicated Telstra employees. Thank you for each that you do and each you will do this twelvemonth to service our customers and each other. Together, we will create an moreover amended Telstra for our people, for our customers, for our shareholders and for our communities.

I will now manus complete to Nathan Burley, Head of Investor Relations to return america done Q&A.

Question-and-Answer Session

A - Nathan Burley

Thank you, Vicki. So we will now commencement pinch immoderate questions and answers first from investors and analysts, aft which we will person a clip for media to inquire questions. Our first mobility coming comes from Eric Choi from Barrenjoey. Go ahead, Eric.

Eric Choi

Thanks, Nathan and congrats Vicki and Michael connected your first results arsenic CEO and CFO. I person sewage a few. My first 1 would beryllium you person reconfirmed nan $500 cardinal semipermanent cost-out target, which is beautiful admirable fixed FX and ostentation pressures. My mobility is, if you were to execute that $500 cardinal agelong target, are we really successful a amended spot to execute T25 than before, conscionable fixed obviously, this July, you are going to beryllium putting up prices by CPI and those nbn payments are going to beryllium going up by CPI. And obviously, CPI is astatine 7 now versus nan 3 erstwhile you first group those T25 targets?

Vicki Brady

Thanks. Yes, that would beryllium awesome Eric. Why do not you springiness america each your questions and past we tin spell done nan each of them?

Eric Choi

Got it. Thanks, Vicki. Well, nan 2nd 1 is conscionable connected mobile nett adds, I conjecture still a beautiful bully nett adhd consequence from you this half, but we didn’t spot it accelerate, contempt evidently tailwinds from nan Optus information breach. And I reckon you tin astir apt surmise from nan manufacture commentary that TPG and Optus nett adds won’t accelerate this half either. So I americium conscionable wondering if you person sewage a position connected what’s benignant of driving that marketplace plateauing aliases slowdown successful nett adds and if we tin return thing from nan U.S., because arsenic you would know, arsenic they put up prices, you person benignant of seen user nett adds slow arsenic well. So I wonderment if those value increases are starting to person an effect connected nan market? And past conscionable nan 3rd one, sewage to inquire 1 connected InfraCo. And I deliberation previously, we person sent it retired questions to you astir whether you would do a transaction and when? This time, I wanted to ask, really much? And my reasoning is, astir of us, I guess, worth InfraCo Fixed, astir apt $15 cardinal plus. And if you guys benignant of benignant let’s opportunity a small spot little than half from that, you would get $7 cardinal to $8 cardinal aliases much of prices. And I americium conscionable wondering, too buybacks, are location capable benignant of options to deploy that capital? And if not, does that benignant of power really large of a transaction you would want to do? Thanks a lot.

Vicki Brady

Okay. Thanks, Eric and bully to person you connected first pinch your 3 questions. I cognize you dial successful early to get successful first. So let’s – I mightiness make comments connected each of them and past I’ll spell to Michael, because I’m judge he will besides want to adhd immoderate perspective. So, why don’t I commencement astatine nan top? So yes, we person retained our ambition connected nan $500 cardinal nett cost-out target nether T25. We are very overmuch alert that, arsenic Michael said to, erstwhile we first group that target, ostentation was astatine a very different level. So it is simply a overmuch bolder target now. But I will beryllium perfectly honest. We did not deliberation successful this situation that taking nan ft disconnected costs retired was nan correct move. So, we are perfectly focused connected that ambition. And I deliberation Michael covered successful a spot of item those areas that are going to beryllium captious to america achieving that cost-out. And I cognize arsenic you said, location is simply a bunch of assumptions that are different from erstwhile we started T25. And to beryllium honest, location is tons of forecasts. I cognize you will beryllium adjacent to them. I support reference them arsenic good successful what will play retired complete ‘24 and ‘25. So location are a batch of things moving successful nan outer situation correct now.

And truthful our attraction is perfectly connected delivering and executing our strategy, putting ourselves successful nan champion imaginable spot and of course, been successful a position to make judge we tin navigate done that outer situation successful nan champion imaginable way. So look, arsenic I said, committed to nan costs out. I cognize it’s bolder and we will attraction connected those areas that we person spoken retired complete galore times before. So, nan acceleration of bequest is captious truthful we tin get those bequest IT costs retired getting past that ratio crossed our customer episodes is captious and that automation which improves experience, but besides makes america much efficient. And besides our bequest fixed infrastructure activity underway and getting really stuck successful to making judge we are getting nan costs improvements there.

The 2nd point astir mobile nett adds. Look, I won’t make comments connected broader marketplace astatine nan moment. We haven’t seen each of nan results yet. But I tin surely remark connected what we’ve seen successful nan half. So there’s nary doubt, successful this half, we did put nan value summation done successful our mobile postpaid business for our user and mini business customers. And arsenic we would expect, arsenic we put value increases done yes, you do spot that person immoderate effect for customers. Some customers will take to move to different brands. They whitethorn take to move to prepaid. It was each wrong what we expected. But absolutely, that is portion of what played out, peculiarly successful nan first 4th of our first half of nan year. So arsenic I said, I won’t remark connected nan market, but that’s surely what we’re seeing arsenic those value increases travel through.

On InfraCo, again, conscionable to reinforce, we perfectly person not made immoderate decisions connected monetization of InfraCo Fixed. Through nan people of this year, 2023, we are going to beryllium very measured and deliberate arsenic we see each nan imaginable options. And arsenic you’ve spoken to, this is simply a important business. And portion of that consideration, of course, will beryllium what delivers nan champion long-run outcomes for Telstra shareholders. What we would do pinch those proceeds. Obviously, nan magnitude of those proceeds will beryllium an important consideration, but arsenic we person demonstrated successful nan past, erstwhile we’re reasoning astir returning proceeds to our shareholders, we will beryllium very disciplined. We’ll use our superior guidance framework. And arsenic you’ve seen successful nan past, for example, nether nan Amplitel transaction, location was evidently a important portion of those proceeds that were utilized arsenic a stock buyback. So location are tons of things to consider, Eric, successful position of considering those options done nan people of 2023. Michael, I mightiness conscionable spell to you and spot if you want to adhd immoderate further commentary.

Michael Ackland

Thanks, Vicki and thanks, Eric. I deliberation Vicki covered it very well. I mean I deliberation connected nan costs side. I would reiterate, it’s a importantly bolder ambition than erstwhile we group it. We are focused connected each of those areas Vicki talked astir arsenic good arsenic bequest infrastructure decommissioning is progressively important crossed nan business. But it remains our ambition. We stay committed to it, and we do deliberation it’s incredibly important that we stay focused connected costs fixed everything successful nan outer situation and what we request to deliver. On nan mobile markets and what’s going connected pinch postpaid subs. There was not – location was a activity successful that play besides betwixt postpaid handheld subs and MBB subs successful enterprise, which depressed our nett adds a small bit. But I deliberation overall, location was immoderate further churn successful nan first 4th but good wrong what we had expected and planned for. And I deliberation we’re reasonably happy wherever things are. And there’s nary uncertainty location was a spot of tailwind from Optus successful that play during nan 2nd 4th arsenic well. But that’s now mostly normalized.

Nathan Burley

Thanks, Michael. I should person mentioned earlier that David Burns, Group Executive from Enterprise is besides connected nan telephone this morning. We’ll spell to our adjacent question, which is from Entcho Raykovski from Credit Suisse.

Entcho Raykovski

Thanks, Michael. Hi, Vicki. Hi, Michael. Hi, David. I’ve sewage conscionable a follow-up connected mobile astir CPI-based value increases, which you person now immoderate broadly built into plans. What does – are you – that expertise what you’re seeing successful nan marketplace astatine nan moment? Does it springiness you assurance that you tin put done CPI type value increases mediate of nan year? I mean is location thing which benignant of concerns you behaviour astir that operators, is that supportive? If you tin remark connected that, that would beryllium rather helpful, peculiarly fixed wherever CPI is running, presumably, that would beryllium a bigger value summation than nan 1 you put done past year. Secondly, I’ve besides sewage a mobility successful for InfraCo Fixed. I cognize it was rather willing that Michael said to each nan different ranges to nan scope of plus classes. So fixed that benignant of item that you provided, are you considering splitting these retired successful immoderate monetization action aliases would your preferred action to monetize arsenic one? It conscionable seems for illustration you’re rather pointed successful detailing each 1 of those plus classes. And past last question, successful DAC, you’ve evidently been reaching retired to customers trying to minimize churn. How acold are you done that process, reaching retired to nan customer base? And are you uncovering that immoderate customers that antecedently location are really coming back. So are you winning customers that measurement aliases is that proving difficult task?

Vicki Brady

Thanks, Entcho. So fto maine – I’ll make immoderate little comments, and past I’ll manus to Michael, and I’ll get David to jump successful arsenic well, peculiarly connected nan questions astir DAC. So conscionable connected nan first 1 successful position of CPI-based increases, yes, we’ve built that into our plans. And conscionable to beryllium really clear for everyone connected nan call, we will return a very transparent and nan aforesaid attack that we took past year. So travel April, May, we will measurement up and look astatine wherever CPI is at. We’ve been very clear that we will usage nan 12-month CPI astatine nan extremity of March arsenic nan ground to consider. Obviously, successful amongst that, location are galore considerations that we will activity through. And our absolute committedness is to beryllium transparent and clear and springiness our customers bully announcement of what changes, if any, we make. In position of broadly what’s happening successful nan market, again, obviously, I tin remark connected our strategy. We are very focused, arsenic we person spoken astir our returns are still connected a way to recovery. So it headed towards our target this twelvemonth of astir 8% ROIC. My observations would be, we’re seeing a batch of operators crossed nan marketplace looking astatine that and making judge we tin make nan investments we request to present nan value of acquisition arsenic customers expect and present successful Australia. With world recreation back, it surely reminds you that our mobile networks successful present successful Australia are precocious value from a very competitory market.

So it is important we get those balances correct truthful we tin present nan correct level of web and exertion to customers and evidently past get nan correct level of returns to beryllium capable to supply dividends to our shareholders. So I deliberation nan marketplace astatine nan moment, we’re still seeing – certainly, we’re focused connected that betterment and making judge that we get returns up to nan levels that are required – and I would – my study would beryllium we’re seeing beautiful accordant position of that crossed nan industry. In position of InfraCo Fixed, yes, Michael did talk a spot coming astir those plus classes. And that’s really accordant pinch wherever we started erstwhile we started our T22 journey, portion of operating InfraCo arsenic a standalone business.

We said astir that transparency because these were assets and businesses that sat wrong Telstra that weren’t good understood. And arsenic Michael said to, those plus classes person immoderate different dynamics and characteristics. And truthful we deliberation it’s important to proceed to beryllium very transparent astir what sits wrong InfraCo and wherever those different parts of nan business are at. Look, arsenic I said, successful position of 2023, we will see a scope of options. As I said, nary decisions person been made. As you tin imagine, location are tons of variations that we tin deliberation done and we’ll surely beryllium weighing up arsenic we look astatine nan InfraCo business and what we deliberation is successful nan champion semipermanent liking of our shareholders.

On DAC, I mightiness manus complete to Michael, truthful if he wants to make immoderate comments. Look, DAC, yes, we are proactively going to our customers, Michael and David tin talk much astir that. But it is perfectly our extremity to make judge we clasp our information and connectivity customers. It’s a cardinal instauration successful our endeavor business. It’s important besides into our NAS business. So that narration connected connectivity is important. So we person a very beardown attraction correct now connected making judge we’re retaining our information and connectivity customers and seeing immoderate bully signs and momentum successful that retention. But why don’t I manus to Michael and past crossed to David.

Michael Ackland

Yes. Thanks, Vicki, and acknowledgment Entcho. And I won’t spell further into nan mobile pricing discussion. I deliberation Vicki handled that well. I deliberation connected InfraCo, I deliberation what we’re doing arsenic a business is we’re focusing connected really we run those businesses amended and thrust worth and maturation done nan cognition of those businesses, enhancing our go-to-market, improving information and accusation astir nan assets to maximize value, building retired our Intercity Fiber and driving maturation there, betterment of copper and different assets and being leaders successful information attraction to amended nan value of those assets and evidently getting some our costs base, right? So it’s important for america to make judge and we wanted to supply that transparency that we are operating those different areas of nan business and going aft wherever nan marketplace is pinch those businesses and what we request to do to thrust value. So I deliberation that’s really important. From a indebtedness perspective, I deliberation David would beryllium awesome to get him to talk astir what is going connected pinch customers and really acold done we are. But we are seeing those signs and we are very focused connected retention, peculiarly astir – connected our T-Fiber guidelines and retaining those relationships pinch customers is critical. And truthful while you’ll spot successful our reported results, you’ll still spot that SIO decline. A batch of that is driven by nan bequest SIOs and David and his squad and their attraction connected retention of fibre and besides successful nbn reselling, I think, is really critical. So maybe, David, if you wanted to touch connected that and we are up to.

David Burns

Thanks, Michael. Thanks, Entcho. So arsenic Michael and Vicki person pointed out, retention of nan customers, peculiarly connected nan T-Fiber is our number 1 focus. We do admit that our plans complete history and those customers who person been connected those plans for a while are supra what is simply a reasonable marketplace rate. And truthful we are actively bringing those customers onto in-market plans. A fewer comments of progression arsenic an endeavor organization, which is very applicable to DAC. You would person heard and seen successful different events specified arsenic Vantage astir really we’ve aligned ourselves by industries and segments. That’s incredibly important because it now allows america to put products and offerings and routes to marketplace successful a very different measurement to those segments. That’s a existent measurement guardant for us. And successful those segments, they’re rather different, Entcho. So if you deliberation of our ample authorities customers, they are a spot for illustration nan Sydney Harbor Bridge, they’re connected a regular rhythm of 2 to 3 years, and we repetition those. So whilst – astir of those are – nan immense mostly of those are connected in-market plans, and you tin spot immoderate of that successful nan first half impacts, They will travel up again. Even if we renegotiated them 1.5 years agone aliases a twelvemonth ago, they will travel up again successful nan adjacent 12 months rather often. It’s successful that mid-market and business segment, nan thousands and thousands of customers of ours wherever we’ve taken a very proactive attack to spell to those customers arsenic opposed to waiting for those customers to travel to us. And we’ve put together immoderate offerings pinch bundles to those segments. And truthful successful those ample measurement segments, we’re a spot nether halfway through. So we’ve still sewage a adjacent measurement to spell of that.

And Michael alluded that location is astir apt 3 halves of ARPU compression still to travel successful this business, and that’s what we would spot going forward. And truthful our actions are showing nan outcomes we’re looking for. Michael again highlighted that if you look connected a sequential basis, nan SIOs successful nan T-Fiber abstraction diminution is slowing. And successful fact, I cognize we don’t people connected a monthly basis. So I’ll conscionable benignant of make immoderate comments. But if you look from July to December, that’s rather a very patient and a very affirmative turnaround from antagonistic nett adds to affirmative nett adds. And truthful we tin spot nan very encouraging signs and returns from those customers, nan progressive plays and offerings that we person successful marketplace and nan responses to those successful market, but it is hand-to-hand combat. This is simply a very, very competitory marketplace conception pinch immoderate very competitory offers. And again, arsenic Vicki highlighted, it’s an important foundation, peculiarly to our NAS aliases Telstra Purple business arsenic we marque it to our customers. It’s an unthinkable instauration – incredibly important instauration for our business. So retaining those SIOs is important. So little than halfway through, we deliberation we’ve sewage 3 halves still person activity to do to get those customers onto a Telstra extremity marketplace plan, which will beryllium astatine a mini premium to market, but we’ve sewage to look into that ARPU compression complete that play of time. Thanks, Entcho, and I’ll manus it backmost to Nathan.

Nathan Burley

Thanks, David. Our adjacent mobility is from Darren Leung from Macquarie.

Darren Leung

Good morning, guys. Thanks for nan opportunity. I person 3 arsenic well, please. I mightiness commencement pinch conscionable connected nan group level FY ‘23 guidance. Obviously, we’re going down to nan debased extremity of gross guidance. Can you springiness america a position arsenic to what are nan clear knowns and why you’ve retained precocious extremity of nan $25 cardinal guidance? And I suppose what tin spell correct to get towards nan $25 billion, please? Should I inquire you each my questions altogether or?

Nathan Burley


Vicki Brady

Yes, that would beryllium great.

Darren Leung

Yes. Second mobility was conscionable connected nan moving superior piece, astir a spot of a resistance successful nan first half. And I admit there’s a spot of seasonality successful here, but I tin conscionable to break retired that $700 cardinal alteration betwixt payables and inventory and nan receivables fees. And past I thin to understand really receivables are strong, conscionable fixed nan authorities of nan user astatine nan moment. And past nan 3rd one, I mightiness person different spell pinch nan mobile piece. So obviously, location has been a batch of questions astir nan churn side, but immoderate colour you tin supply for america successful position of nan divided betwixt customers connected nan backmost of nan Optus churn gait versus immoderate losses connected nan backmost of nan value increases, please?

Vicki Brady

And Darren, sorry, I missed conscionable successful your first mobility astir guidance. I heard a spot astir income astatine nan debased end. Was location a 2nd portion to that? Sorry, I whitethorn person missed it.

Darren Leung

Yes. I’m conscionable keen to understand nan drivers arsenic to really we get towards nan precocious end, please?

Vicki Brady

Got it. Okay. Thank you for that. So I’m going to decidedly time off – Michael tin return you done nan moving superior movements successful – and talk much to that. Just successful position of guidance. So yes, we’re reaffirming guidance. The only change, conscionable to clarify, is we’re conscionable saying debased extremity of income guidance, truthful still wrong our guidance ranges. And arsenic Michael said to that’s driven by – we person seen mobile hardware volumes increase, PCP, however, not astatine nan levels we anticipated. And past obviously, we’ve seen our fixed business crossed C&SB and information and connectivity, not rather astatine nan levels we would person anticipated. So those things person contributed to that little extremity of guidance. Look, successful position of nan guidance ranges, peculiarly if I look astatine underlying EBITDA, it’s a beautiful tight range. And arsenic you know, our business has a batch of different parts to it, truthful there’ll ever beryllium pluses and minuses. And you tin astir apt conjecture we get a small spot amended connected immoderate of those areas, past that tin move nan range. But we’re not tightening nan scope astatine each coming but perfectly reaffirming that we’ll beryllium wrong our guidance ranges.

I mightiness conscionable jump to your 3rd 1 quickly. So successful position of mobile and what’s going connected successful churn, arsenic we said about, if we look astatine nan half successful nan first quarter, we perfectly had nan pricing changes flowing done those churn impacts were arsenic we anticipated. They are wrong nan guardrails we expected for churn and past successful nan 2nd half arsenic – successful nan 2nd portion of nan half, nan 2nd 4th arsenic Michael said to, we saw nan impacts from nan Optus breach, and that was – we estimate successful nan scope of benignant of debased to mid-tens of thousands, and that was correct crossed our mobile business. And truthful they are nan dynamics that are going connected successful nan half, but arsenic you tin see, still affirmative nett postpaid handheld wide maturation successful nan half for us, which we’re pleased to see, peculiarly pinch beardown mobile work gross maturation arsenic well. So Michael, I mightiness manus to you for immoderate different comments, but peculiarly nan moving superior piece.

Michael Ackland

Yes, thanks. So, connected moving capital, arsenic we’ve evidently seen summation versus anterior play connected mobile handset sales, which has meant customer deferred debt. We’ve seen a buildup successful receivables but besides successful inventory. So inventory has vanished nan half astatine astir apt higher than we would person expected a small spot because of nan in-sourcing of nan stores has led to a buildup successful inventory. We clasp much inventory now that we ain nan stores arsenic good arsenic little income. So we expect each of that to activity done successful nan 2nd half and merchandise that moving capital. In position of nan value of nan receivables, we don’t person immoderate concerns location successful position of each of nan metrics connected bad indebtedness connected those income outstanding. We’re each – actually, we’re seeing a batch of those metrics improve, and we’re seeing betterment successful nan value of those receivables. So, nary existent concerns there, but yes, a buildup, a precocious level of inventory than we would person different expected, which will unwind complete nan 2nd half.

Nathan Burley

Our adjacent mobility is from Kane Hannan from Goldman Sachs. Go ahead, Kane.

Kane Hannan

Good morning, guys location arsenic well. Just net guidance, fixed nan momentum successful that business, mobiles, you person higher pricing for a afloat play successful those endeavor changes. NAS is evidently sequentially stronger successful nan 2nd half and those betterment successful nan costs performance, is location immoderate logic why we wouldn’t beryllium reasoning you are search towards nan apical extremity of your net guidance fixed that’s 2nd half skew? Secondly, connected nan free rate travel guidance, I mean are we still reasoning astir nan midpoint of that arsenic your champion guess. I would person thought you had immoderate use coming done from nan little mobile hardware income that you are acknowledging successful nan gross guidance? And past lastly, conscionable successful position of nan InfraCo separation, should we beryllium reasoning astir that $300 cardinal stamp work costs coming done this almanac twelvemonth aliases did you guys extremity up pinch buying for stamp work relief?

Vicki Brady

Thanks, Kane. So fto maine – I’ll talk to each of them, and past I’m judge Michael will want to adhd comments arsenic well. So successful position of wide guidance, arsenic I said, our underlying EBITDA scope is beautiful tight astatine $200 million. We did trim it again this year. And we’re not giving immoderate further indication. We’re assured we’ll beryllium successful that range. And arsenic I said to before, Kane, location are a batch of elements of this business. As we’ve seen successful nan half, mobile performed strongly. We weren’t rather wherever we expected to beryllium successful information and connectivity and nan C&SB fixed businesses. So there’s ever going to beryllium ups and downs. And truthful if everything evidently goes successful our favor, past that will put america successful a amended position. But overall, nary alteration to our guidance scope connected underlying EBITDA.

In position of free rate flow, again, we’ve sewage that scope retired there. We’re not narrowing nan scope today. And arsenic Michael has spoken to, moving superior tin move and we’ve seen that. It was successful – beautiful overmuch successful statement pinch expectations. And truthful nary alteration successful position of that scope connected free rate travel for nan 2nd half. And past connected InfraCo to reply your mobility very directly, yes, successful statement pinch nan strategy booklet, we did use for stamp work relief, nan firm reconstruction relief. That exertion has been submitted. And arsenic we activity done 2023, Kane, I’m sure, arsenic you tin appreciate, location are galore different options and different structures we will deliberation astir arsenic portion of that. But yes, we perfectly successful accordance pinch nan strategy booklet we person applied for firm reconstruction alleviation connected nan stamp duty. So I mightiness manus complete to Michael for immoderate different comments.

Michael Ackland

Yes. Thanks, Vicki. And it’s versus scheme we are perfectly seeing, erstwhile mobile hardware comes successful a spot lower, it does trim what we would person expected to build up for customer deferred debt, but location are pluses and minuses crossed our rate travel forecast and location tin beryllium reasonable size swings based connected timing of payments. So we’re holding pinch our guidance, but you’re correct to telephone retired mobile hardware income being little does trim that buildup of customer deferred indebtedness versus what we would person different expected, but we still judge we are wrong guidance.

Kane Hannan

But possibly connected nan NAS for nan 2nd half, I mean, are location statement milestones that mightiness – we should beryllium reasoning astir arsenic you person typically seen aliases is location immoderate logic why nan NAS business wouldn’t person a beardown 2nd half separator that we should beryllium reasoning about?

Michael Ackland

Well, we perfectly expect NAS to person a beardown 2nd half emblematic pinch seasonality. You are perfectly right, it’s milestone driven. We person a very beardown pipeline and we expect a really beardown betterment successful NAS successful nan 2nd half versus nan first half, which is what we typically see. So I deliberation you should beryllium reasoning astir that. I don’t cognize whether David, do you want to adhd immoderate much colour connected nan pipeline for NAS for nan 2nd half?

David Burns

Look, Michael, I deliberation you person genuinely covered it. I’m expecting nan headwinds of calling up still to maintain. But to your point, cardinal contracts, which arsenic you admit can’t sanction them, do present and person milestones successful nan 2nd half and nan pipeline of nan 2nd half and nan pipeline of larger deals which won’t make a immense effect to 2nd half but will thief america connected our semipermanent ‘24/25 objectives successful our NAS business is arsenic beardown arsenic it’s ever been. So I think, Kane, what your– what history has shown is reasonably fair.

Kane Hannan

Thanks, guys.

Nathan Burley

Our adjacent mobility is from Lucy Huang from UBS. Go ahead, Lucy.

Lucy Huang

Thanks, Nathan and bully greeting Vicki, Michael and David. I’ve sewage 3 questions arsenic well. So conscionable firstly, connected nan mobile business, conscionable wondering if you tin springiness america immoderate colour into early trading successful January and February, peculiarly really is mobile subscriber momentum tracking? Are we starting to spot immoderate benefits coming done from nan world migration aliases benignant of further stock gains successful nan market? And past conscionable secondly, connected benignant of prepaid ARPUs, I deliberation you guys flagged a $42 cardinal one-off gross benefit. Just wondering what did this subordinate to and should this proceed into nan 2nd half? And past conscionable my past mobility astir nbn reseller margins, I americium still aiming for benignant of mid-teens by 2025. I conjecture what do you deliberation will beryllium nan superior lever fixed nan nbn SAU I deliberation we are not getting nan result yet connected costs reductions there. So is it going to beryllium chiefly done value increases aliases do you deliberation location is really a batch much scope to propulsion connected costs to thrust that separator improvement? Thanks.

Vicki Brady

Thanks, Lucy, for that. And truthful fto maine make a fewer comments and past manus complete to Michael. So conscionable successful position of early trade, I don’t deliberation location is immoderate existent updates to make connected that for January and February, Michael mightiness want to make immoderate comments, but it’s been pleasing to spot borders reopen and obviously, inbound visitors to nan state and group are capable to migrate in. So, it’s bully to person those trends return. In position of prepaid, yes, we did person a one-off successful nan period. It was nan $42 cardinal you mentioned and that was related to, arsenic we migrated plans for customers into our caller environment. So that was a one-off. Michael tin speak much to his anticipation connected it, but I would very overmuch spot that arsenic a one-off successful nan half, which is why we did telephone that out. But moreover taking that retired of nan picture, really pleased pinch our prepaid performance, nan business continues to beryllium performing powerfully pinch bully UU maturation and besides bully ARPU maturation moreover allowing for nan one-off. So, pleased pinch nan prepaid performance.

And past connected nbn reseller margins, erstwhile we group that ambition to get to nan mid-teens by FY ‘25, we ever said it was based connected wherever we anticipated nbn pricing to head. So our attraction is very overmuch connected what are nan things we tin do connected nan gross side. So things for illustration scheme mix, we still beryllium pinch astir 10% of our nbn customers connected 100 meg positive plans. And truthful location is still opportunity for customers who are looking for those higher speeds to amended mix. We proceed to attraction connected different add-ons to our customers that are valuable to them. So nan WiFi guarantee things of that nature, they are important connected nan gross side. And yes, absolutely, there’s much to do connected nan costs side. And that’s critically important, again, successful that migration of customers of our bequest systems into our caller integer environment. As Michael referenced, arsenic he spoke, we are seeing immoderate really bully improvements some successful nan experience, and that besides is flowing done to amended costs successful position of being capable to service those customers successful a little costs situation arsenic well. So those things will each play a part. But Michael, I mightiness spot if you wanted to make immoderate further comments.

Michael Ackland

Yes. Why don’t I prime up connected prepaid ARPU and prepaid ARPU has been really pleasing. If I just, for a moment, disregard nan $42 cardinal one-off, we’ve seen ongoing increases successful information usage successful ARPU, which is really nan underlying – information usage successful prepaid, which is really nan underlying driver of that ARPU, which I deliberation is very affirmative arsenic group are utilizing nan merchandise more. In position of nan $42 million, it is simply a one-off. It is – we’re coming very adjacent to nan extremity of our completing nan migration of our customers from a full scope of aged prepaid products onto nan caller simplified plans and besides onto nan caller system. And this is simply a merchandise of unearned gross arsenic we spell done that process. There will beryllium immoderate more, but this was nan – I’d see this a one-off and not build it into ongoing forecast. On nbn, I work together pinch Vicki. I mean I deliberation nan 1 constituent to note, our assistance arsenic we look from first half ‘22 to first half ‘23 was driven by ARPU lift. And historically, we’ve seen further operation changes. We didn’t spot those operation changes effect ARPU arsenic overmuch this time. But we do expect erstwhile we look astatine wherever we are successful nan market, we still way rather a measurement down nan marketplace successful position of nan operation of plans connected nan 100 velocity and above. So we spot sizeable further upside location to thrust separator successful that product.

Nathan Burley

Great. Thank you, Lucy. Our adjacent mobility is from Roger Samuel from Jefferies. Go ahead, Roger.

Roger Samuel

Hi, thanks. I person sewage 3 questions arsenic well. Firstly, conscionable connected postpaid mobile, Optus aliases Singtel conscionable reported showing that they mislaid astir 65,000 customers successful postpaid successful nan past 4th because of cyber attack. So, 65,000 customers that they mislaid versus nan 68,000 that you added during nan half, it looks for illustration nan use that you get from them is beautiful muted. I americium conscionable wondering if that’s chiefly because of nan value increases that you mentioned earlier and nan effect connected customer churn aliases is location thing else? Second mobility is connected NBN. So, you person migrated nan customers to a caller exertion stack, but nan SIO still declined successful nan half. And I americium conscionable wondering why that is nan case? Was it because of aggravated title and you put up prices? So, what’s happening there? And thirdly, connected InfraCo Fixed, I deliberation you incurred astir $126 cardinal successful one-off costs to abstracted nan businesses. What does it look connected nan accounts, is it connected nan InfraCo Fixed EBITDA, aliases is it successful a one-off cost? Thank you.

Vicki Brady

Thanks Roger for that. So, yes, we haven’t seen nan Singtel numbers because we person been successful present this greeting preparing for results. So obviously, we will person a look astatine that later connected today. But again, I would conscionable opportunity yet, arsenic we said to successful nan first portion of nan half, we did person nan value increases flowing through, and arsenic I said, we did person immoderate churn wrong what we anticipated, but that decidedly played retired successful nan first quarter. And arsenic we said to, our estimate, it’s ever – it is an estimate of what we deliberation we nett gained retired of nan Optus cyber breach and that’s at, arsenic Michael said to benignant of successful that debased to mid-tens of thousands. So overall, we are pleased pinch our wide postpaid handheld nett adhd capacity successful nan half. So, location are a number of dynamics astatine play there. In position of NBN and wherever we are sitting successful position of SIOs, again, arsenic Michael reinforced erstwhile he said to nan numbers, it is important that we do stabilize SIOs. And yes, absolutely, successful this half, we person besides been very focused connected ensuring we tin present successful a sustainable way, and that has meant immoderate value increases flowing through. It’s adjacent to opportunity that it is simply a competitory market, and location are immoderate newer players successful nan marketplace that are – they are competing hard, and they are winning immoderate stock successful market. And truthful our attraction is perfectly connected continuing to present nan correct margins successful our NBN resale business, truthful we tin present astatine nan level of value that our customers expect from us, but besides stabilizing that SIO nonaccomplishment arsenic well. On InfraCo, I mightiness fto Michael tin grip that mobility successful position of wherever nan $126 cardinal shows up, truthful Michael, complete to you.

Michael Ackland

Yes, sure. I mean that one, I will screen off. It is successful one-off costs, some this play and successful anterior periods arsenic well. It’s not successful nan InfraCo Fixed costs base. On nan NBN SIO decline, nan 1 that I would telephone retired is we did make immoderate pricing changes crossed some nan Belong guidelines and besides Belong successful marketplace plans, which did lead to a spot of a reversal successful momentum connected Belong side. But arsenic Vicki said, we stay focused connected ensuring that we are delivering and moving towards our NBN reseller margin. So, it was some our value changes arsenic good arsenic Vicki mentioned, nan aggravated competition.

Nathan Burley

Excellent. Thank you. Our adjacent mobility is from Brian Han from Morningstar. Brian?

Brian Han

Thanks Nathan. I will conscionable inquire 2 questions since you guys must beryllium getting tired of us. Firstly, conscionable looking astatine F ‘23, fixed nan $110 cardinal summation successful fixed costs halfway successful nan first half. Can you elaborate connected really Telstra tin trim that full costs statement for nan afloat year? And 2nd mobility is Vicki, you mentioned that location whitethorn beryllium immoderate refinements aliases adjustments to nan T25 strategy. Can you please springiness immoderate wide indications arsenic to what those whitethorn beryllium and immoderate implications connected work aliases costs levels? Thanks.

Vicki Brady

Absolutely. Thanks Brian for that. I will return your 2nd question, and past I will manus crossed it to Michael, who tin talk successful much item astir fixed costs core. So yes, erstwhile I said to our T25 strategy, I americium perfectly assured it is nan correct strategy for america to execute our ambitions. But arsenic you would expect, it’s a move situation and things do change. And truthful astatine times, I whitethorn make immoderate of those decisions to make judge we person sewage our priorities correct successful bid to present connected that ambition and that strategy. And conscionable 1 example, I said a small spot astir really important it is that we get disconnected bequest and get our customers afloat into our caller integer environment, truthful making judge we are accelerating that work. It’s a bully illustration wherever I americium assured that’s going to present amended customer outcomes, and it’s going to beryllium an important lever successful delivering connected our costs ambitions arsenic well. So, I americium not flagging immoderate awesome strategical changes, Brian, but it is important. It’s a move environment. T25, absolutely, nan correct strategy. And arsenic I said, location whitethorn beryllium astatine points, immoderate of that prioritization, nan levers we take to propulsion connected harder aliases wherever we mightiness refocus, that’s what I was referring to erstwhile I said astir that. So, why don’t I manus complete to Michael to talk astir fixed costs core?

Michael Ackland

Yes, absolutely. So, if you deliberation astir nan measurement what drove our summation – nan $110 cardinal summation successful fixed costs halfway versus anterior corresponding period, arsenic we talked about, obviously, location is labour and non-labor ostentation flowing through. But location is specifically nan in-sourcing of nan stores and nan on-shoring of nan telephone centers flowing done arsenic good arsenic a small spot of travel. Sequentially, that’s – we started connected nan in-sourcing of nan stores and onshore of telephone centers done nan 2nd half of FY ‘22. So, arsenic we spell to nan 2nd half, that is simply a small spot of an easier comp. We besides are seeing successful position of our tally complaint done Q2. Our tally complaint done Q2 is now astatine nan level – was astatine nan level we needed it to beryllium successful nan 2nd half to execute that simplification connected afloat year. So, it is really a small spot of location was – we person managed to get to that tally complaint now arsenic we tally into nan 2nd half. So, we are emotion reasonably assured we will present that wide simplification because nan assistance – nan mostly of nan assistance successful nan first half was astir those very deliberate decisions. As good as, arsenic I talked astir nan assistance successful power costs, which will proceed into nan 2nd half and that bounce backmost of recreation versus nan first half FY ‘22.

Nathan Burley

Thank you. Our adjacent mobility is from Harry Saunders from Evans & Partners. Harry?

Harry Saunders

Hi Vicki and Michael. Thanks for taking my questions. Firstly, conscionable connected nan ACCC decision, nan MOCN, I americium conscionable wondering, would you see an replacement driving style statement pinch TPG, if nan MOCN entreaty result is unfavorable. And secondly, conscionable wondering if you springiness a spot of colour connected that location wireless, truthful you mentioned immoderate gross growth, possibly earlier you commencement to supply sub numbers there? And past conscionable thirdly, could you remark connected nan tally complaint presently benignant of successful mobile nett adds successful nan past period aliases truthful fixed nan Optus effect now benignant of mostly over? And conscionable possibly checking if nan one-off prepaid effect is being reflected successful nan prepaid ARPU fig that you provided?

Vicki Brady

Thanks Harry for that. So, conscionable connected nan ACCC, MOCN decision, it’s evidently going done nan entreaty process astatine nan moment, and we expect a determination astir June this year. Look, I deliberation it’s excessively early to talk astir alternatives. We are appealing it. So, we will hold and spot wherever that determination lands successful June, but we are perfectly committed. We deliberation location are innovative ways. It is going to beryllium important to get nan outcomes for location Australia and besides to get nan correct level of returns to prolong investment, I deliberation innovative sharing arrangements arsenic we person demonstrated nether nan MOCN deal, I deliberation will beryllium important successful nan early of delivering awesome mobile services into nan country. So excessively early, I deliberation to estimate connected what we mightiness aliases mightiness not do. Let’s spot nan result of that entreaty process. In position of location wireless, I mightiness get Michael to talk a small spot much astir that. As we said, conscionable successful position of things normalizing station nan Optus cyber breach, yes, we person seen things mostly normalize there. And past finally, yes, successful our prepaid ARPU, I will get Michael to 100% confirm. But yes, nan $42 cardinal one-off does travel through. And truthful I deliberation we person called that retired beautiful intelligibly successful nan elaborate numbers. But Michael, why don’t you jump successful and comment?

Michael Ackland

Yes. Thanks, Vicki. The $42 cardinal is perfectly successful nan prepaid ARPU, truthful arsenic you look forward, you request to set that retired for an underlying fig arsenic you forecast guardant for prepaid. On location wireless, we proceed to build momentum, but our strategy remains nan same, which is that we are focused connected location wireless wherever it makes sense, wherever it’s a amended result for customers, and that’s really our strategy will continue.

Nathan Burley

Excellent. Our adjacent mobility is from Rod Sleath from Rimor. Go ahead, Rod.

Rod Sleath

Hi guys. Thanks very overmuch for taking my questions. So galore person evidently already been asked and I americium going to apologize, because I americium going to travel backmost to a mates of points that person been spoken astir somewhat. Firstly, I conscionable wanted to travel backmost to nan mobility connected alternatives pinch respect to TPG. But I conscionable want to inquire nan mobility successful a somewhat different way, because obviously, nan sticking point, which makes it thing that has to beryllium approved by nan ACCC aliases via appeal, is nan entree to nan spectrum. Is location capacity, an rumor for you successful nan discourse of taking connected benignant of further wholesale income to NBNOs? Do you request further spectrum to beryllium capable to do what you want to do successful nan regions? That’s nan first question. And nan 2nd mobility is besides coming backmost to thing you person already spoken about. And that is nan SIOs successful predominantly NBN was conscionable reasonably consistently now, you person been losing SIOs. And successful this half, it’s been some successful Belong and successful nan Telstra brand. And I deliberation you made nan remark earlier, a fewer times that you request to get measurement stabilization. But astatine nan aforesaid time, you besides request to beryllium moving ARPU upwards. And it’s conscionable seems for illustration nan grounds astatine nan infinitesimal is suggesting that successful nan existent competitory situation that is really unbelievably difficult to do nan prices spell up and you suffer SIO. So, I was conscionable wondering are you having to deliberation astir possibly changing nan offerings that you person successful NBN, possibly offering little inclusions successful a somewhat little price, etcetera? And past nan 3rd mobility was really conscionable connected nan different division, which I benignant of look at, and consciousness that successful nan future, nan eventual nan semipermanent earnings, they are predominantly going to beryllium from Telstra healthcare. Given that’s adjacent to a breakeven EBITDA, that business is presumably still successful finance phase, is it reasonable to expect that we should beryllium seeing reasonable rate and EBITDA returns coming from nan different area successful nan medium-term?

Vicki Brady

Thanks Rob for those questions. So, fto maine – I will get Michael to woody pinch nan SIO mobility connected NBN. So, fto maine talk a small spot astir your first and your 3rd questions. So, conscionable connected nan first question, look, you are correct and important portion of nan woody that we projected pinch TPG was spectrum. We deliberation nan businesslike usage of spectrum is incredibly important. And truthful TPG nether that woody would person spectrum that wouldn’t beryllium used. And truthful it gave america a measurement to usage that spectrum efficiently and bring customers onto our web successful that sharing area successful a very businesslike way, and present amended wide customer outcomes. Now, obviously, if nan woody does not get approved done nan entreaty process, we person been location delivering for location Australia for a very agelong time. And we are an usability that does put and is location supporting location Australia. Our web coming covers astir a cardinal quadrate kilometers much than our nearest competitor. And truthful nan spectrum would beryllium a awesome summation done nan projected deal. But obviously, if it doesn’t get approved, we person been location delivering for location Australia for a agelong time, and we will proceed to do that. In position of other, and talking astir Telstra Health, Telstra Health is an incredibly breathtaking business. And so, yes, we person sewage a clear ambition to get it to beryllium a $500 cardinal gross business by FY ‘25. And you are right, it is successful that precocious maturation shape astatine nan moment. We did make a mates of important acquisitions past twelvemonth to adhd to that business. The integrated business is growing. We person sewage those caller acquisitions that are besides performing well. So, arsenic we look retired medium-term, perfectly we would spot it arsenic different driver successful our business to beryllium delivering gross and EBITDA benefits to our longer tally and medium-term maturation ambitions. So, I deliberation nan measurement you are reasoning astir that is spot on. Why don’t I spell to you Michael connected NBN size?

Michael Ackland

Yes, sure. And I deliberation it’s a adjacent remark connected wherever we person been connected NBN SIOs and peculiarly arsenic you mentioned, we made immoderate changes to prices successful Belong. And truthful that that was portion of nan logic we had a antagonistic nett adhd position there. We stay – I deliberation we stay committed that delivering a value and location acquisition is incredibly important. And we person invested, arsenic we said successful our inclusions, and peculiarly nan inclusion of nan modem. But location is nary uncertainty we look important challenges. And we person had now a number of hubs, arsenic you pointed out, wherever we person not been capable to reverse that broadside a customer and truthful we are looking astatine what we tin do to proceed to germinate nan proposition proceed to amended nan acquisition arsenic we are doing pinch our migration to nan caller integer stack. But yet we request to beryllium delivering a merchandise that tin present reasonable returns and our benignant of nonsubjective connected reasonable is mid-teens by 2025. So, we are balancing each of those things up. But absolutely, nary doubt, we are continuing to reappraisal nan proposition, continuing to perceive to what customers are saying they need, and that they want and that they value. And we will proceed to germinate our propositions to meet those needs.

Nathan Burley

Excellent, and will truthful move to a type of media Q&A. So, I will conscionable induce immoderate media connected nan telephone to registry your questions. And pinch that, we will spell to nan past investor and analysts mobility from Ian Martin from New Street Research. Ian?

Ian Martin

Thanks for that. Yes. Just wondering if you tin remark connected immoderate of nan caller announcements we person seen successful backstage LTE networks. AWS announcing nan section area successful Perth and I deliberation Adelaide is coming up, looks for illustration they are targeting nan mining sector, which Telstra has traditionally been ascendant in. And past a week aliases truthful ago, we had Vocus buying Challenge Networks. So, it looks for illustration location is simply a rather a caller incursion successful infrastructure title successful that marketplace that Telstra is traditionally dominated. Can you springiness america your thoughts connected that?

Vicki Brady

Yes. Thanks Ian and bully to person you connected a full different taxable from nan ones we person been connected today, truthful acknowledgment for that. So, location is simply a batch going on. I deliberation this is an incredibly breathtaking area. And they are each spaces that we are progressive in, wherever we person made immoderate acquisitions arsenic good complete nan past small while. And I will get David to jump in, successful conscionable a second, because this is correct successful nan saccharine spot of wherever David is focused and wherever he is taking nan endeavor business, peculiarly pinch that attraction astir manufacture verticals. And mining, mining is simply a awesome illustration of that. And I would constituent retired yes, I mean AWS has made immoderate announcements recently. They are an important partner of ours. We collaborated very intimately pinch them. And truthful I deliberation location is simply a batch happening successful this space. And it really demonstrates really important infrastructure finance is to underpin nan expertise for these industries to really reap nan benefits of digitization. And obviously, we are a large investor successful infrastructure into metropolis fiber. Investment is simply a cardinal foundational finance that’s going to inject much capacity into nan country. And truthful we are excited. Yes, it’s a accelerated moving situation and location is tons of group successful it. But I deliberation that really demonstrates that this is an breathtaking area wherever location is much worth to beryllium created. But David, why don’t I get you to jump successful and talk a small spot much connected what’s going connected successful your world successful enterprise?

David Burns

Thanks Vicki and acknowledgment Ian. So yes, arsenic you mentioned, AWS person announced 2 of their section zones, Perth, Brisbane, and perchance to beryllium Adelaide, I americium not judge that I person heard that confirm, but you mightiness person Michael – Ian sorry. But again, we would beryllium affirmative astir that. Telstra is – and done our spell to marketplace brand, which we telephone Telstra Purple, that tech services business proviso of hyperscaler solutions, and Azure and AWS are our 2 largest partners and providers. And successful fact, we person our ain practices astir that and we have, successful truth much group skilled successful those areas than galore aliases astir successful nan country. And putting that together pinch our web offerings is really cardinal to our strategy. And aligning that to our industries is besides key. I mentioned earlier industries of really we put propositions together is incredibly important. The mining industry, nan building industry, nan power manufacture are 3 of ours that we put together successful 1 group really and very focused astir that. And its wherever we are driving nan worth up nan stack if you like. And we do that successful operation of immoderate acquisitions we person made, truthful we person made 2 acquisitions astir IoT and successful fact, business automation, successful peculiar astir IoT, Aqura and Alliance. And a 3rd acquisition we precocious made astir Epicon, who tin bring each that to information guidance together into determination making forums, and determination making processes faster, better, cheaper for our customers has been incredibly important. So, erstwhile we put nan hyperscaler solutions, nan investments that they are making, which we wholly invited successful places for illustration Perth, Brisbane, and to beryllium Adelaide, and we put them together pinch our investments that we person made acquisitions into these master organizations that let america to penetrate into those industries and up their worth stacks greater than we person ever been before. So, we are doing much successful h2o companies. We are doing much successful power companies. And we are doing much successful mining companies than we person ever done before. And successful fact, I americium very excited astir nan pipeline and placement of those opportunities. And I deliberation location is overmuch much for america to talk about, possibly astatine nan extremity of nan half successful those areas. And truthful it’s a affirmative point from an endeavor position and I deliberation from a Telstra perspective.

Nathan Burley

Great. Thank you, David. Thank you, Ian. We will soon move to media Q&A. But earlier I do that, I will conscionable manus complete to Vicki to adjacent nan investor and expert mobility time.

Vicki Brady

Thanks Nathan. I conscionable wanted to opportunity a large convey you to each nan investors and analysts that person joined america this morning. It’s been our awesome pleasance to stock our results for nan first half. And arsenic I said, it’s awesome to spot our business continuing to present that beardown maturation and look guardant to engaging complete nan coming weeks arsenic you digest our results. And acknowledgment again for joining america today.

Nathan Burley

Thank you. We spell down to your destination.

[Video Presentation]

Nic McKechnie

Well, bully greeting everyone. I americium Nic McKechnie, Communications Executive astatine Telstra and invited to nan media information of today’s half twelvemonth results. I person a fewer questions. And but don’t forget, if you do want to register, please do truthful now for nan Q&A for media. First mobility comes from Dave Swann. Dave, bully morning.

Unidentified Analyst

Thanks for having maine for nan clip and congrats connected nan connected nan results arsenic well. A mates of benignant of caller questions, I cognize Mike and Vicki, you talked astir Optus, thousands of customers joining Telstra pursuing their information breach. And you person launched an advertisement arsenic good highlighting your ain cyber capabilities. Wanted to inquire what did Telstra do successful nan aftermath of nan Optus breach, making judge your ain systems to safeguarded, for example, immoderate other reviews of your defenses aliases thing for illustration that. And wanted to inquire you, Vicki, it’s your first results, obviously, arsenic CEO, what’s been nan biggest situation aliases astonishment for you since taking connected this job?

Vicki Brady

Thanks Dave and awesome to person you connected nan line. So, firstly, yes, I mean immoderate breach, truthful conscionable to beryllium clear, if we spot awesome breaches successful Australia aliases astir nan world from a cyber constituent of view, and nan Optus breach was nary different. We are ever looking for learnings, because I deliberation erstwhile it comes to cybersecurity, it is 24/7. And it’s a occupation that’s ne'er done. So, we return nan learnings retired of immoderate breach of that benignant of magnitude that’s happening astir nan world, nan things we are focused on, people our cyber defenses. We do person very heavy capabilities wrong Telstra. But arsenic I said, we tin ne'er beryllium complacent because this world is moving truthful fast. So, yes, done immoderate of those learnings, we will ever beryllium making judge that our defenses are beardown successful position of defending and protecting our network, our customers and our customer information and information. In nan aftermath of nan Optus breach, 1 of nan areas we person focused connected is perfectly nan information we cod and retain. And we person already taken immoderate steps location to make judge that we are absolute we sewage to comply pinch each of our obligations and laws astir retention of data. But making judge wherever we tin make changes that make consciousness that are successful nan champion interests of our customers. We person done that, for example, nan holding of nan ID scans that we return erstwhile a customer joins america erstwhile we person sewage to verify their ID, we person reduced nan clip we clasp those scans from 2 years down to six months now. So, that’s nan benignant of activity that we are really immoderate of nan learnings we person taken retired of nan Optus cyber breach. But arsenic I said, it’s an area you tin ne'er beryllium complacent in. In position of stepping into my caller role, yes, almost six months now successful nan chair of CEO, and I person sewage to opportunity it has been an unthinkable six months. It’s been exciting. It’s been intense. Yes, it’s challenging. I deliberation pinch immoderate caller job. When you measurement into it, I would opportunity it’s doing things nan first clip successful nan caller role. And if I return coming arsenic an example, yes, I person done results earlier sitting successful nan CFO chair. But this is nan first clip I person delivered results sitting successful nan CEO chair. And Dave, if I americium honest, preparing for investor and expert questions, we usually person a bully idea, but obviously, this is simply a spot of a caller world for me, truthful engaging and getting to person a broader conversation. So, location are immoderate of nan breathtaking and caller things that travel pinch this role.

Unidentified Analyst


Nic McKechnie

Thanks Dave. Okay, adjacent mobility from Zoe Samios [ph] from Fairfax. Hi, Zoe.

Unidentified Analyst

Good greeting and convey you very overmuch for speaking pinch me. I conscionable sewage conscionable a mates of questions for maine to Vicki. I apologize, by nan way, this was connected nan call, I americium juggling a fewer results this morning. But are you capable to talk to whether you deliberation mobile and broadband prices tin enactment wherever they are astatine nan moment, aliases if you deliberation they are apt to spell up? And secondly, conscionable connected nan deal, that’s nether entreaty betwixt Telstra and TPG? Obviously, location is simply a fewer formalities there. But is location thing you are capable to opportunity astir your assurance successful getting that passed, aliases being successful successful that appeal?

Vicki Brady

Thanks Zoe and nary problem. I cognize you are juggling, tons of group reporting today. So, conscionable successful position of mobile and broadband prices, truthful we person been very clear, we evidently brought into nan marketplace past twelvemonth to a number of our plans to beryllium really transparent and clear pinch customers that we would do an yearly value review. And truthful successful nan first portion of nan half results that we person conscionable reported, we did spot those value changes flowing through. And truthful we will return nan aforesaid very transparent approach. And nan measurement we will attack that travel April, May, we will undertake our pricing review, we do return into relationship wherever CPI is astatine for nan 12 months to nan extremity of March, that will beryllium successful nan consideration. And arsenic I said, it’s not a determination we person made yet, that will beryllium thing that we consider. We are very conscious, and it is beforehand of mind for maine that our customers are emotion nan costs of surviving pressures. And truthful it’s truthful important that changes we made successful caller years, to get free of locking contracts, to really leverage our multi marque strategies truthful that our customers person choices, they tin take nan plans and nan brands that springiness them perfectly nan expertise to lucifer what they tin afford. So, those things are going to beryllium incredibly important. So, nary decisions made yet. And that will beryllium really we activity done that travel April-May timeframe. And again, our committedness is perfectly to beryllium very transparent and upfront and clear connected immoderate of those decisions that we make. In position of our projected woody pinch TPG, our web sharing woody that is nether entreaty astatine nan moment, we are expecting a determination astir June this year. Obviously, wherever that lands, that’s going to beryllium up to nan tribunal to decide. But we deliberation it is an innovative woody that importantly, would amended experiences successful location Australia for our customers. And we would besides evidently springiness TPG overmuch greater scope into location Australia. So, we deliberation it’s an innovative deal. That is simply a really commercialized measurement to beryllium capable to stock web infrastructure into location Australia. And truthful yes, we will hold and spot wherever nan entreaty determination lands.

Unidentified Analyst

Okay. Thank you.

Nic McKechnie

Thanks Zoe. Thanks. Next up we person sewage Simon Dux from CommsDay. Hi, Simon.

Simon Dux

Hi there. Good greeting Vicki and very beardown group of results arsenic well. I person sewage a mates of questions arsenic well. The first 1 arsenic you guys are nan biggest RSP successful nan land. I want to get your thoughts connected nbn fibre link product, we are seeing reasonably slow return up astatine nan moment. Obviously, successful your plans, you person only sewage 10% astatine nan infinitesimal connected 100 meg and location is an aspiration to footwear that 1 up. You are looking to amended your margins arsenic well. So, I would for illustration to get your thoughts connected wherever you spot fibre link fitting into Telstra and really progressive you are going to beryllium connected pushing that retired this year. Second question, nbn, yesterday successful their results, accrued business revenues rather powerfully up 11%. I would for illustration to get your thoughts connected really overmuch that’s impacting DAC business successful Telstra? And last mobility is around, fundamentally today’s results, really overmuch of nan results do you deliberation are a vindication of elements you group up successful T22?

Vicki Brady

Thanks Simon for that. So, conscionable starting pinch your first mobility astir fibre link from nbn. So yes, I mean it’s breathtaking to spot that finance and building retired much fiber. Absolutely for us, we will make judge we person sewage a really clear and soft acquisition for our customers. So obviously, being capable to support that to make judge our IT systems are group up. And we person sewage our channels to market, capable to make that a really soft acquisition for those customers that take it. Remembering astatine nan moment, evidently consumers are experiencing costs of surviving challenges, we cognize location will beryllium segments of customers, and we are excited by that being capable to supply them wherever they take to return that option. And arsenic you rightly constituent out, we beryllium pinch astir 10% of our nbn customers connected 100 meg positive plans that is little than wherever nan wide mean is, truthful perfectly for a conception of customers, that’s going to beryllium important. And truthful yes, we look guardant to being capable to support that soft modulation for customers who do want to return advantage of fibre connect. In position of nbn’s results, I person only had a very speedy publication of them. As you tin ideate my attraction past nighttime and coming has been perfectly preparing for our results. I did opportunity arsenic you mentioned, they had beardown business gross growth. And arsenic we person talked astir today, our information and connectivity business, yes, it’s perfectly still emotion nan effects of title successful that space. We are besides however, nbn, resale is an important portion of our endeavor business, truthful we person nan action of our Telstra fiber, and besides reselling nbn fibre arsenic well. So, yes, we are still seeing nan effects of that. And we besides spot opportunity successful being capable to resell nbn fibre also. And past today’s results, yes, your past mobility was around, perfectly I deliberation today’s results perfectly show and show that nan alteration that was delivered nether T22 was perfectly nan correct areas to attraction on. And we are seeing nan benefits of that flowing done into our first half results.

Nic McKechnie

Okay. Thanks Simon. Next mobility from Joseph Lam from The Australian. Good morning, Joseph.

Joseph Lam

Good day, Vicki. So, a mates of questions astir mobile. So, nan results opportunity that income is expected to beryllium astatine nan bottommost extremity of guidance owed to mobile hardware and fixed merchandise revenues being little than expected. Can you stock what nan expected gross for mobile hardware was and really Telstra would activity to amended that for nan remainder of nan financial year? Another question, truthful Michael Ackland, successful his reside said customers are holding connected to handsets for longer, arsenic good arsenic purchasing from outer parties. Do you cognize really agelong astir Telstra customers are holding connected to their handsets for is nan logic they purchased from outer parties to do pinch pricing and conscionable Telstra person a scheme to get group to beryllium capable acquisition handsets from it alternatively of outer parties? Thank you.

Vicki Brady

Thanks Joseph for that. So, yes, conscionable successful position of we are still wrong our guidance ranges. So, we person reaffirmed that arsenic portion of our half twelvemonth results, we did bespeak connected income, we would expect to beryllium astatine nan little extremity of that guidance scope and you are spot connected nan 2 components, they were mobile hardware and fixed business, conscionable successful position of mobile hardware. So, we person seen maturation successful mobile hardware erstwhile we comparison to nan anterior corresponding periods. So, it’s up astir 12%. We had anticipated much maturation than that. And that’s because we person customers coming disconnected their instrumentality repayment plans for some 24-month plans and 36-month plans astatine nan moment. So, we had anticipated that to beryllium a small spot higher. As Michael did speak to yes, we are perfectly seeing customers take to clasp connected to devices a small spot longer. I deliberation broadly astatine nan moment, evidently averages, I deliberation we are sitting astatine astir 3 years is benignant of that mean renewal cycle. It evidently varies, location are immoderate customers that are very eager to renew and others that clasp connected to devices overmuch longer. But I deliberation connected average, we are seeing astir 3 years astatine nan moment. In position of wherever group bargain their devices from, look, we springiness customers nan prime to bargain devices done us, and they tin take to repay for that unit value of nan instrumentality complete a deferred repayment. Yes, we spot customers choosing to bargain and tons of different retailers. And we deliberation that prime is important. And truthful we are pleased pinch wherever we are search successful position of nan number of customers choosing to bargain devices done us. And that’s been a inclination we person seen complete nan past fewer years successful position of group choosing to bargain from different retailers arsenic well. So, nary concerns from america connected that.

Joseph Lam

Great. Thank you very much.

Nic McKechnie

Thanks Joseph. Next mobility from Lucas Baird from The AFR. Hi, Lucas.

Lucas Baird

Hi guys. Thanks for taking nan questions. The first 1 connected InfraCo Fixed, should we conscionable presume that’s not going to hap this twelvemonth and has move connected for 2024. And past connected nbn, I mean, what specifically worries you astir nan SAU? And tin you conscionable bespeak connected Stephen Rue’s comments yesterday that they don’t want to move immoderate further connected providing immoderate much wholesale costs relief. And past nan 3rd 1 was just, is Telstra considering immoderate much cost-cutting measures going guardant connected apical of nan $500 cardinal successful T25? Or tin we offset astir inflationary pressures by passing connected nan accrued costs to customers?

Vicki Brady

Thanks Lucas for that. So, conscionable don’t InfraCo Fixed, I cognize it’s 1 we get a batch of questions on. And to beryllium really clear, we person made nary decisions connected InfraCo Fixed successful position of immoderate benignant of transaction there. What we person been very clear connected is these are really unsocial and valuable assets. And truthful nan people – done nan people of 2023, we will beryllium very deliberate and measured arsenic we activity done imaginable options. And what will guideline america is what’s successful nan champion semipermanent liking for Telstra shareholders, truthful that’s precisely wherever we are at. So, we will activity done that – done nan people of 2023. In position of nbn, and nan existent nbn SAU, truthful nan first point I would opportunity is location are immoderate steps successful nan correct direction. And I perfectly admit that nbn and Stephen, they person sewage guardrails, they person sewage to run wrong and deliver. What we person been powerfully advocating for connected behalf of customers is, firstly, work standards. We haven’t seen improvements successful work standards nether nan presently submitted SAU. They are beautiful accordant pinch wherever they were 2 years ago. And we cognize for our customers, they trust heavy connected their nbn service. And truthful lifting those work standards is thing we will proceed to advocator for. And nan 2nd point that we person been advocating for is not to spot nan value summation connected that 50-20 plan. We person astir half our customers connected those plans, and peculiarly successful nan existent situation wherever group are emotion nan pressures from costs of surviving increases. We are advocating that we would propose that location should not beryllium a value summation connected that 50-20 plan. Again, I admit nbn has sewage to run and fig retired really they run wrong their guardrails. But that’s what we are advocating from a customer standpoint. In position of our $500 cardinal cost-out ambition nether T25. There is nary alteration to that ambition. That’s an ambition that we are still aiming to achieve. Obviously, it’s a bolder ambition today, erstwhile we group that ambition, ostentation was not moving wherever it is correct now. But we cognize successful this existent environment, we person sewage to support driving ratio successful our business and truthful accelerating that move of our bequest IT systems into our caller integer situation is perfectly critical. So, we stay committed to that $500 cardinal cost-out ambition.

Lucas Baird

Cool. If I if I could conscionable follow-up connected InfraCo. Just a second, considering passim 2023, do you expect to travel to a last determination connected what to do pinch it successful this almanac year, aliases do you deliberation that’s a spot much acold out?

Vicki Brady

Well, arsenic I person said, this is simply a really important one. It’s 1 we don’t want to unreserved on, we request to really deliberation done what’s successful nan champion semipermanent interests of Telstra shareholders. So, arsenic I said, we will see done nan twelvemonth and we will supply updates arsenic we make advancement and we will travel backmost to it astatine that point, Lucas.

Lucas Baird

Right. Thanks guys.

Nic McKechnie

Great. Thanks Lucas. Next mobility from Eric Johnston from The Australian. Hi, Eric.

Eric Johnston

Yes. Thanks for taking my question. Just again, connected nan benignant of nan ostentation issue, I americium trying to get a consciousness of what you spot astatine Telstra, wherever are nan pressures coming from successful position of pricing increases successful your business? Is it nan proviso concatenation issues benignant of moving their measurement through? Are they much home issues, power and truthful on? Just immoderate colour astir that?

Vicki Brady

Yes. Thanks Eric. Look, I deliberation for illustration astir businesses, wherever we are seeing unit from ostentation crossed a wide scope of parts of our business, nary uncertainty power is 1 portion of that. We said to today, we would expect that other power aliases powerfulness costs this twelvemonth to beryllium successful nan bid of $50 cardinal connected nan costs line. We do nevertheless person powerfulness acquisition agreements successful spot that thief offset that mostly astatine EBITDA. We are surely seeing astir suppliers to our business, whether home aliases international, of people they are emotion costs pressures. So, we are seeing that arsenic well. And we person spoken to coming we do person costs mitigates. We will request to see obviously, wherever we look to walk connected those prices. For example, if I look astatine mobile hardware, wherever we spot prices lifting there, they walk done successful position of nan recommended unit value that we connection to customers. So yes, we are seeing ostentation play its part. Right astatine this stage, we do person immoderate mitigates. And we are very focused connected making judge we are pulling nan levers we person sewage to beryllium capable to navigate this play and present nan correct outcomes for our customers and for our shareholders.

Eric Johnston

Okay. Thanks.

Nic McKechnie

Thanks Eric. I deliberation that is nan past mobility we person from nan media today. So, we mightiness wrap there. Thanks, everyone for joining. Appreciate your time, and we will spot you adjacent time. Cheers.

Editor: Naga

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