16 Sep 2021

Telstra Investor Day 2021

Telstra Corporation Limited ACN 051 775 556 ABN 33 051 775 556 16 September 2021 The Manager Market Announcements Office Australian Securities Exchange 4 th Floor, 20 Bridge Street SYDNEY NSW 2000 Office of the Company Secretary Level 41 242 Exhibition Street MELBOURNE VIC 3000 AUSTRALIA General Enquiries 03 8647 4838 Facsimile 03 9650 0989 companysecretary@team.telstra.com Investor Relations Tel: 1800 880 679 investor.relations@team.telstra.com ELECTRONIC LODGEMENT Dear Sir or Madam Telstra Investor Day 2021 In accordance with the Listing Rules, I attach the presentation, including speeches, to be delivered by the CEO and members of senior management, at Telstra’s Investor Day today, for release to the market. The briefing will be held virtually and webcast live from 9:10am (AEST), which is available at https://www.telstra.com.au/aboutus/investors/financial-information/investor-presentations A transcript of the event will be lodged with the ASX when available. Authorised for lodgement by: Sue Laver Company Secretary 1 1 2 2 3 4 3 5 6 4 • • • • • • • 7 8 5 9 10 6 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • 11 12 7 13 14 8 15 16 9 17 18 10 • • • • • • • 19 20 11 21 22 12 23 24 13 • • • • • • • • • • • • • • • • • • • • • • • • 25 26 14 ? ? ? ? ? ? ? ? ? 27 28 15 ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? • • 29 30 16 ? ? ? ? ? ? ? ? ? ? ? ? ? 31 32 17 33 34 18 • • • • • • • • • • • • • • • • • • • • • • • • 35 36 19 37 38 20 • • • • • • • • • • • • • • • • • • • • 39 40 21 • • • • • • • • • • • 41 42 22 • • • • • • • • • • • • • • • • • • • • • • • • 43 44 23 45 46 24 • • • • • • • 47 48 25 • • • • • • 49 50 26 • • • • • • • • • 51 52 27 53 54 28 • • • • • • • • • • • • 55 56 29 57 58 30 59 CHECK AGAINST DELIVERY Page 1 SPEECH NOTES TELSTRA INEVSTOR DAY 16 SEPTEMBER 2021 ANDREW PENN – CEO Slide 3: Introduction & Strategy Thank you, Nathan. Welcome everyone and thank you for joining us today. I hope everybody is continuing to stay safe and strong during these difficult times and I am disappointed this is another event we have had to hold virtually. We miss the opportunity to catch up with you face to face, particularly on key strategic topics such as today’s announcements. Nonetheless, this is a very exciting day for Telstra as we announce what comes after T22. T22 has been a defining strategy for us. It has been ubiquitously in our narrative for the last few years. It has guided every strategic decision we have made, so it’s quite the moment today to be sharing with you what will be succeeding it. We launched T22 just over three years ago to fundamentally transform and radically simplify Telstra. It was at a time when we absolutely needed to change. It built on foundational investments we announced in 2016 to digitise our business and build the networks of the future. Through T22 we have transformed Telstra and today, three years into what has been one of the largest, fastest and most ambitious transformations of a telco globally, we are a vastly different company. Through T22 we have set up Telstra to play a leading role in the accelerating digital economy, in a more connected world, a world where everybody and every business is spending much more time online. Today I am very excited to announce what comes next, what comes after T22. And the answer to that question is T25 – a new Strategy to accelerate growth from our core and to scale our new businesses; a new strategy to further enhance customer experience and to respond to the permanent shifts we are seeing in how people work and live; a new strategy to capitalise on the establishment of infraco and the changes to our company to create a more contemporary structure for the future. If T22 was a strategy of necessity, T25 is a strategy for growth. And in its implementation, we will be using exactly the same disciplines and governance that we used for T22 – the metrics and the milestones, the roadmaps and the scorecard. And this is why I am confident it will be a success – why change a winning formula when you don’t need to. And when we have delivered it, we will be a vastly different company again. So let me share the details with you now. Slide 4: Our strategy: T25 We believe it’s people who give purpose to our technology. So we’re committed to staying close to our customers and providing them the best experience. CHECK AGAINST DELIVERY Page 2 And delivering the best technology. On the best network. Because our purpose is to build a connected future so everyone can thrive. It’s a purpose underpinned by our values which guide everything we do and how we approach the decisions we make. They will be the underlying principles for how we will deliver T25. We make it simple. We care. We are better together. And we are the changemakers. T22 was very much about being changemakers as we knew we needed to take a radical and ambitious approach to achieve the transformation we have. T25 will take this to the next level. Like T22, T25 is built around key strategic pillars, there are four: Firstly, to provide an exceptional customer experience you can count on. If T22 and the last several years has taught us anything, particularly as we have navigated the migration to the NBN and responded to the consequences of COVID, it’s that providing a better customer experience is our number one objective. Nothing is more important than continuing to improve customer experience and this sits at the heart of our T25 strategy leveraging the capabilities we have built. The second pillar is to provide the leading network and technology solutions that deliver your future. Telstra has always been at the forefront of telecommunications technology, not just in Australia but globally. Never has this been more important than today in a world of rapid digital adoption. As new technologies continue to evolve including 5 and 6G, satellite, cloud and edge compute, the traditional worlds of telecommunications and compute technology are blurring. This is creating exciting opportunities and solutions that we will continue to lead in bringing to customers and of course, as always, bringing them to customers on Australia’s best and biggest network. The third pillar is to create sustained growth and value for our shareholders. As we move forward from the period of the transition to the NBN and out from under that economic headwind, the significant interventions we have made in turning our business around and taking out cost are now starting to flow through to our bottom-line. This will enable us to increase underlying EBITDA, ROIC and EPS. With strong cash flow generation and opportunities ahead to monetise assets, we will focus on maximising our franked dividend and seeking to grow it over time, investing for growth and returning excess cash flow to shareholders. The fourth and final pillar is to be the place you want to work. Competing for the best talent in the future is going to rely on more than just the basics. In the new post COVID world we need to excel at flexible and hybrid ways of working, we need to accelerate our digital leadership and we need to be a leader in doing business responsibly. These are the four pillars that set the direction for Telstra under our T25 strategy. It is a strategy created to deliver the things that we know will sharpen our competitive edge because they respond to the trends that are shaping our market and the evolving needs of our customers. CHECK AGAINST DELIVERY Page 3 It is a strategy focussed firmly on taking customer experience to a whole new level and a strategy that is focussed on growth. Ultimately it is a strategy to leverage the capabilities we have built under T22 and in the same way T22 would not have been possible without the foundational investments we announced in 2016, T25 would not be possible without all that we have accomplished in T22. We will deliver T25 through our five key businesses – Consumer and Small Business, Enterprise, New Markets – which comprises Energy and Health, International and Infrastructure. Slide 5: Our businesses will deliver profitable growth by… The four pillars of T25 will guide the strategy for each of our businesses and each also has its own ambition reflecting the place it is at and the opportunities ahead. For Consumer and Small business our ambition is to leverage our new simplified, digitised and insourced platform to create brilliant experiences that enable our customers to work, learn and play. You will hear from Michael Ackland today more about how we will achieve that. For our Enterprise business our ambition is to deliver profitable growth and value by connecting our customers with Australia’s most trusted and secure technologies and services. This builds on our ambition to deliver overall revenue and EBITDA growth across mobile, fixed and International this financial year and today David Burns will take you through this in more detail. For our New Markets our ambition is very simple – it is to grow our Health and Energy businesses profitably to scale. We are very excited by these opportunities and their strategic direction, but we also know we need increase their economic significance to the value of Telstra. For International our ambition is to deliver profitable growth and value by leveraging the growing strategic significance of our international network. There is no doubt with rapid digital adoption and the changing geopolitical landscape, the importance of our international assets has taken on a whole new complexion. We plan to hold a second investor day on 16 November at which we will cover Health, Energy and International as well as give you a deep dive into what we are doing in Product, Technology and Networks and the place you want to work pillar. Finally, our infrastructure business where our ambition is to improve access and utilisation for our infrastructure and wholesale customers and to deliver growth and value and enhance monetisation opportunities. You will hear further from Brendon on InfraCo today. With that let me now describe each of the T25 strategic pillars in more detail. Slide 6: An exceptional customer experience you can count on Firstly, our strategy to provide an exceptional customer experience you can count on. We have already much-improved episode NPS, strategic NPS, and significantly reduced calls coming into our contact centres. However, we have yet to fully experience all the benefits that flow from the changes we have made, and this is going to give us positive tail winds in customer experience as we move into T25. Notwithstanding this we still have some migration initiatives to get through and I know we do not always get it right, so we need to take customer experience to a whole new level. So, what does that mean? It means making it even easier for our customers to engage with us and getting to a point where for over 90% of customer service requirements they only need to engage with us once and it’s done – no more interactions – just once and done! CHECK AGAINST DELIVERY Page 4 It means a fully integrated channel experience so customers can engage with us and meet their service needs in the channel of their choice. Whatever their service requirement, we can meet it online, in our stores or through our contact centres – whichever way the customer chooses. It means using technology, AI, and analytics to provide customers with more personalised experiences in products and services and to be more predictive of issues and resolve these before customers even know they are happening. Customers will be able to call us and speak to an Australian contact centre service rep or visit a local expert in our Telstra owned store network because our customer experience is going to become even more localised. It means scaling our Telstra Plus program which already has 3.5 million customers and expanding it into a full sales and marketing channel to rival the best rewards programs in Australia. We will do this by leveraging our many relationships with Australia’s large enterprises and by partnering with small businesses to create greater reach into local markets and more rewards for our customers. It is a huge opportunity, and we are targeting 6 million Telstra Plus members by FY25 making it one of the largest rewards programs in the country. For our Enterprise customers it means delivering business outcomes with telco products, edge compute, security and AI delivered and managed as an integrated service through Telstra Purple. The pervasiveness of technology in businesses today and its ability transform them, no longer means one size, or one solution, fits all. Enterprise customers want tailored technology solutions to solve their most pressing operational business problems and opportunities. To meet this need we have structured our Enterprise business to have greater industry alignment with technology experts in specific industries, providing scalable industry-specific solutions. For our enterprise customers it means getting the level of support and engagement just right more than 90% of the time as their needs change. And for our infrastructure and wholesale customers it means improved access to our assets and an improved and more digitised service experience. With all these improvements we intend to maintain the discipline we introduced in T22 in ensuring our products and services remain simple and easy to use and we intend to more than halve the number of customer complaints. Slide 7: Leading network and technology solutions that deliver your future Pillar 2 of our T25 strategy is focussed on leading network and technology solutions that deliver your future. There is no doubt we are continuing to see rapid technology adoption and innovation. This is manifesting as a convergence between core telecommunications technology and software-based technology solutions. What this means is that Telstra not only needs to continue to lead in telecommunications technology with the best networks, but also increasingly lead in the role that software plays in orchestrating and managing the network and integrating applications and services for customer solutions. Under T25 we will continue to invest in our network leadership in 5G with 95% population coverage and 80% of all mobile network traffic being on 5G by FY25. We also plan to double the number of metro sites leveraging small cell technologies to further densify and add capacity to the network and we will add at least another 100,000 square kilometres of mobile coverage to our national footprint to support regional and remote customers. CHECK AGAINST DELIVERY Page 5 By FY24 we will have extended our 4G coverage to 100% of our network enabling us to continue to lead in composite coverage, speed and performance for 4G and 5G as we close 3G. This will set us up well for the early planning on 6G which will clearly be on the agenda by the end of our T25 program. We will also continue to lead and differentiate in fixed. The NBN may be fully rolled out however, not all NBN fixed services are the same. How we connect and assure customers will be differentiated and their in-home experience will be significantly enhanced as we leverage capabilities such as the Telstra Smart Modem, Telstra TV, the WiFi Doctor and other capabilities we have in the pipeline. We will also leverage these for our energy customers and with smart meters we will be providing a holistic in-home solution. Increasingly however, it’s not just the physical network where we can differentiate. Historically the key aspects of functionality in networks have been relatively static but with software we can increasingly dynamically manage these. Automation and AI also enables us to deploy predictive and self-managing functionality to the network orchestration layer and increasingly manage the network in a way that becomes agnostic to the access type. Now I know there is a lot of tech speak in all of this, but these are incredibly important capabilities we have been investing in and building. To net it all out, what it means at a practical level is we will increasingly be able to dynamically manage the key aspects of network experience which are capacity, speed and latency, security and resiliency. Historically, these have been typically set up front for a service, technology, or a customer and thereafter have been hard to change. We can also empower our customers to do this and therefore manage their workloads themselves. In being able to dynamically manage them we can differentiate and tailor services around customers, products and industries which is key to increasing our ability to monetise and you will hear more about that from Michael and David. Finally, by using a more distributed architecture and moving workloads to the edge with cloud, in conjunction with the dynamic approach to network management, we will enhance resilience for customers by creating smaller “blast zones” in the event of an issue. To put it simply, if one part of the network goes down, the network automatically reconfigures to ensure the smallest possible number of customers and services are affected. Slide 8: Sustained growth and value for our shareholders Our third pillar is to build sustained growth and value for our shareholders. At our recent FY21 full year results announcement we were able to demonstrate how we have reached a turning point in our financial trajectory. Through the many initiatives under our T22 program and as we come out from under the shadow of the NBN headwind, we demonstrated how our underlying EBITDA grew in the second half of FY21 compared to the first half and how we expect it to continue to grow. T25 will build on this and Vicki will take you through our financial strategy a bit later, but in summary our focus is to: - • Firstly, build financial momentum across the portfolio to deliver growth, particularly through growing mobile services revenue, improving fixed profitability, turning around Enterprise and building profitable scale in the businesses in our new markets. • Secondly, to deliver a further $500m of cost reductions from FY23 to FY25 on top of the $2.7bn already committed for T22 while at the same time investing for growth. • Thirdly, by focussing on cash conversion and generation ahead of net profit. • Fourthly, through continued active portfolio management to unlock value and manage the balance sheet. This will include exploring future monetisation opportunities for InfraCo Fixed; and CHECK AGAINST DELIVERY Page 6 • Finally, by creating value for shareholders through our capital management framework which we have updated and simplified. Before I talk to our financial ambitions let me comment briefly on the progress of the restructure which is obviously a necessary precursor to monetisation. The restructure of Telstra with a new holding company and four key subsidiaries – Infra Co Fixed, Amplitel or Infra Co Towers, Telstra Ltd or ServeCo and Telstra International – is the key final step in our T22 commitment to establish a standalone Infrastructure business to drive performance and set up optionality post the roll out of the NBN. We are seeking to implement the restructure through a shareholder and Court approved scheme of arrangement. All steps in the restructure process are progressing well and we are optimistic of finalising the restructure before the end of T22 with the scheme meeting now likely to be early next year. This will position us well to consider monetisation opportunities as part of our T25 strategy announced today. We also know the Government is considering amendments to relevant Commonwealth legislation, so it appropriately reflects our new structure once it is implemented. In making these changes the Government is applying a principle of regulatory equivalence – that is the regulatory obligations that currently apply to Telstra would also apply to entities in the new corporate group in effectively the same way. So, with these initiatives our financial ambitions are to: Deliver underlying EBITDA of $7.5–8b in FY23 on top of the guidance this year of $7.0-7.3bn and to continue to grow underlying EBITDA out to FY25 achieving a mid-single digit EBITDA CAGR for the whole period of T25. To get underlying ROIC to around 8% by FY23, and to grow it beyond. To deliver a high-teens EPS CAGR from FY21 to FY25 to support our ambition to maximise a fully franked dividend and seek to grow it over time And finally, to deploy excess cashflow beyond the fully franked dividend into future growth opportunities and returning excess cash to shareholders. As I mentioned a moment ago Vicki will take you through our financial strategy and ambitions a bit later, but as you can see they are transparent, they are bold and they will deliver significant value for shareholders. So, with that let me now turn to the fourth pillar of our T25 strategy, which is about building the place you want to work. Slide 9: The place you want to work - excelling at new ways of working There is no doubt that the experience over the last 18 months with COVID has completely turned work on its head. In such a short space of time it has transformed how we think about the way we work and about where we work. It has even caused us to think about why we work and who we work for, what values do they hold, what role do they play in society and what opportunities do they offer me to make an impact. I believe the companies that will be successful in the future – and the companies that will attract, retain, motivate and inspire the best talent - will be those that can embrace the change around us and use it as a catalyst to create the place people want to work. CHECK AGAINST DELIVERY Page 7 There are essentially three ways we will bring this to life at Telstra through T25 - by excelling in new ways of working, by accelerating our digital leadership and by doing business responsibly. So firstly, excelling at new ways of working. Through T22 we have moved almost 17,000 people to now be working in agile and we now have the largest at scale agile workforce in the country. With T25 we will further evolve our Agile at scale approach targeting more than 70% of our agile teams to be at level 4 maturity by 2025. We will also enhance our approach to talent acquisition, mobility and career management as we embrace the flexibility enabled by new hybrid ways of working. There is no going back to the way it was pre-covid and we have already implemented a number of initiatives to further enhance flexibility at Telstra such as location agnostic contracts and the flexibility for the overwhelming majority of our people to work virtually. Through these initiatives we plan to take our already high employee engagement scores to a whole new level targeting top decile by FY25. Slide 10: The place you want to work - accelerating digital leadership The second aspect of the “place you want to work” is digital leadership. I have already spoken to our strategy for leading network and technology solutions that deliver your future. That is about the underlying technology – what I am talking about here is the digital mindset we need to bring to that technology and our ways of working. As we become more of a technology led company and our requirement to continue to build new capabilities in new areas such as software development, data analytics and artificial intelligence increases, we also need to increase our attractiveness as the place to work for this talent. There are four elements to our approach to digital leadership. Firstly, we will lead with a digital first and data driven mindset and by 2025 we will have 100 per cent of our key business processes enhanced by AI. Secondly, we will embed digital ways of working such as expanding our use of Biz Dev Ops and build our digital skills in software and data. Thirdly, we will focus on delivering an outstanding developer experience and digital partnerships; and Finally, our approach to digital infrastructure will be cloud based with a decoupled architecture using APIs to increase speed to market and improve efficiency. We expect to have 100% of key business applications using API first architecture and 90% of applications on public cloud infrastructure by 2025. At our next investor presentation, we will describe some specific FY22 outcomes around the first wave of API first products and experiences as we progress towards the API first architecture. Slide 11 – The place you want to work - doing business responsibly The third and final aspect of ‘the place you want to work’ is the stance we take on doing business responsibly. There is no doubt that community expectations of what this means have changed and big business, including Telstra have some way to go in building and maintaining trust with the communities in which we operate. Also, key talent wants to work for companies that have a strong focus on sustainability and this is only going to increase over the period of our T25 strategy. For Telstra, while there are many aspects of this, there are three that are key. CHECK AGAINST DELIVERY Page 8 First and foremost, it’s about having trusted operations. This goes to every aspect of our business; from making sure our sales practices are appropriate to ensuring our supply chains are ethically based; from making sure our products, services and contracts are fair and inclusive to ensuring we support vulnerable customers; from being there for communities through natural disasters to providing support for customers and communities during the impact of COVID as we have done; and from ensuring our suppliers do not exploit their workers to ensuring our workplace and remuneration systems for our own people are fair and supportive. The second is the actions we take in relation to the environment. In many ways, as the provider of the largest platform for the digital economy in Australia, we are already making a positive impact by enabling many businesses to move to doing things digitally that previously had to be done physically. The flip side of this however, is it drives extra traffic onto our network and that in turn increases our power consumption and puts pressure on our environmental footprint. We have therefore set ourselves clear and ambitious climate goals – to reduce our absolute emissions by 50% by 2030, to enable renewable energy generation equivalent to 100 per cent of our consumption by 2025, and to be carbon neutral. We have already made good progress reducing our absolute emissions by 16%, enabling three major renewable projects in solar and wind farms that get us 50% of the way towards our target and by being the largest certified carbon neutral company in Australia. The final aspect of doing business responsibly is the role we play in supporting digital inclusion. Down through history it has been the case that at every significant technological leap forward, those that can least afford to be left behind are those that are left behind. And so too has this been the case with the digital economy and that has only been exacerbated by the increased digital adoption necessary in response to COVID. While the government has provided many support initiatives to help people during COVID, access to those benefits is hampered if you are not digitally included. Also, if you were alone and feeling isolated before COVID, the restrictions now in place mean your situation has only worsened, particularly if you are digitally excluded. It is beholden on us to ensure everyone is included, to ensure everyone can enjoy the benefits of being connected. Our Digital Inclusion Index tells us that too many Australians are still facing real barriers to online participation, barriers that include access, affordability and digital literacy. This is particularly the case for regional and remote Australians. Clearly there is more important work to do here and we are committed to playing an active role through a range of programs including the significant investments we are making in regional Australia, launching a satellite service in FY23, connecting one million customers in vulnerable circumstances and building digital skills for 500,000 Australians. So, these are the four pillars that set our overall ambition and strategic direction under T25. • to provide an exceptional customer experience you can count on, • to provide the leading network and technology solutions that deliver your future, • to create sustained growth and value for our shareholders, and • to be the place you want to work. And just as we did through T22, we have also established a scorecard that lays out the key milestones and metrics that underpin these pillars. Slide 12: T25 scorecard CHECK AGAINST DELIVERY Page 9 It shows how we plan to keep track of our progress and how we will hold ourselves to account. It’s ambitious in its breadth and depth and like T22 we may not hit every measure 100% but I would rather be bold and clear about the aspirations we have. I won’t go through this in detail now because when you hear from Michael, David, and Brendon shortly, you will see at the end of each of their presentations how they plan to deliver the key metrics on this scorecard. What I will say though is that we are committed to holding ourselves to account and delivering T25 and we are going to be transparent with you about the progress we are making and we will update the scorecard at every results presentation. But first we must finish the job on T22 because without it, many of the initiatives I have outlined will just not be possible. Slide 13: FY22 Priorities – finish the job When we launched T22 in June 2018 we knew we had to act more boldly It is clear in my mind that initially we did not respond quickly or significantly enough to the reality of the impact of the nbn on Telstra. Before T22 we were not focussed enough on transforming and improving the core business to mitigate this, we were too dependent on investments outside of the core. We have addressed this and our T22 program has been a clear success. • we have radically simplified our business reducing the number of Consumer & Small Business in market plans from 1800 to 20; • we have reduced the number of calls to our call centres by more than two thirds and we are well progressed in our strategy to bring these back on shore and our licensee stores back in house; • we have cut our workforce by one third reducing our direct and indirect headcount by more than 25,000. • we have removed on average more than four layers of management; • we have delivered cost reductions of $2.3 billion and are on track to deliver our T22 productivity target of $2.7 billion. • we have repositioned our investments in Foxtel and Telstra Ventures and we have improved the performance of our health business which is now strategically very well positioned for the future; • we have successfully established InfraCo and we are progressing our corporate restructure. • we have monetised over $2 billion of assets, further strengthened our balance sheet and we have completed the $2.8bn towers deal from which we have announced an on market share buy-back of up to $1.35bn; • we have taken a leadership position on climate change and the environment; and • importantly, through all of this change, we have seen positive movements in the way our customers and employees view us. • So finishing the job on T22 over the next nine months means: • Progressing our digitisation and customer migration to the new technology stack. • Completing the group restructure to drive value from InfraCo while preserving Telstra’s core differentiation. • Extending our leadership in 5G and consolidating our position as Australia’s largest 5G network provider. • Delivering overall Enterprise revenue and EBITDA growth and restoring financial momentum. • Launching a new energy business. • Growing services and building deeper relationships with our customers through Telstra Plus. • And delivering on our net cost productivity target of $2.7b. CHECK AGAINST DELIVERY Page 10 Slide 14: Our T25 strategy to deliver growth So, let me close. This is an important day, an incredibly exciting day for Telstra as we announce our plans to transition from transformation to growth – from T22 to T25 – from a strategy we had to do, to a strategy we want to do. It is a strategy that builds on the strong foundations we have built over the last three years and remains focussed on what matters most – our customers, our people, our shareholders and on supporting the creation of a vibrant digital economy in Australia. It’s an exciting strategy to meet an exciting future. As I said in my opening, Telstra is a vastly different company to what it was four years ago. With T25 Telstra will be a vastly different company, again. It will be a vastly different company for our customers who will have access to ultra-convenient, personalised, right first-time experiences that are 100% digitally enabled. We will be a vastly different company because our diversified portfolio will be delivering growth in revenue, EBITDA and EPS as we seek to grow dividends. We will be a vastly different company because the seeds of our investment in energy and health will see these new businesses growing profitably at scale. We will be a vastly different company because of the world class returns and value we are driving from our infrastructure business. We will be a vastly different company because of our network leadership with 95% 5G population coverage, a densified small cell network and expanded regional coverage. We will be a vastly different company because of our leading network and technology solutions delivering for our customers’ futures. We will be a vastly different company because our focus on cost will see a further $500m of cost out and industry leading cost metrics. And finally, we will be a vastly different company because we will be the place you want to work with Australia's largest agile at scale workforce, flexible, location-agnostic future ways of working, a workforce defined by its culture of digital leadership and doing business responsibly. I will now hand over to Michael Ackland who will take you on a deep dive into our Consumer and Small Business strategy. Thank you very much. MICHAEL ACKLAND – GROUP EXECUTIVE, C&SB Slide 16 – Consumer & Small Business Thanks Andy It’s a pleasure to announce the next stage of our strategy for consumer and small business customers. CHECK AGAINST DELIVERY Page 11 There’s no doubt the past 18 months have seen a fundamental change in technology use and connectivity has never been more important in how we work, learn and play. Our ambition is to deliver profitable growth and value by creating brilliant experiences. Experiences that keep us connected with the ones we love, enable us to be entertained, be educated, be employed, run businesses, and access the goods and services we need. T22 has set the foundation for what we will deliver in T25. We think about our next ambition through the lens of six building blocks. I will take you through each of them in more detail, but at a high level: • We will transform how we engage by deepening our local expertise, building deeper relationships and trust with local communities across the country; • We will help Australians get the most out of their connectivity by continuing to lead with our world-class network, and leading the market on how customers can access it; • We will be a trusted partner in the home and business, bringing together everything our customers need and giving businesses the tools to grow in the digital economy; • We will leverage Telstra Plus to bring a new ecosystem of value for our members; • We will establish Telstra as a full service tech retailer, the destination for all of your technology needs; and • Finally, we will expand our multi-brand reach through partnerships, being in more places for more customers. Slide 17 – We are building on the foundations of T22… Before we get into the detail of the new strategy, I wanted to briefly reflect on the achievements delivered through T22: • We radically simplified our core consumer connectivity products…from 1800 to 20 in- market plans, with more than 8.5 million services now on those new plans; • Our new technology stack is at scale, with over 50 per cent of sales and 100 per cent of our front-line teams active on the new platform; • We launched and grew Telstra Plus to more than 3.5 million members; • We have transformed how we serve our customers. Seventy per cent of service interactions are now delivered digitally, up from 40 per cent. We’ve reduced our inbound calls by two thirds. This enables us to answer 100 per cent of these calls in Australia; • We’re well progressed on bringing our retail store network in house; and • Lastly, we have continued to invest in leading network experiences with over 1.6 million 5G devices and 2.3 million smart modems connected to the network. Slide 18 – … and are ready to transition to sustainable growth on multiple dimensions Our ambition is to deliver growth and value, and our T22 foundations have put us in a position to do just that: • Our mobile business has been radically transformed, we now have a simple portfolio, with no back book. The headwinds of excess data removal and device subsidies have gone. And we have a clear path for value growth across all our brands; • For home and business internet. NBN headwinds are now also largely behind us, and we have a pathway for margin growth as a lean NBN reseller. We see growth in Fixed wireless, in-home services and scaling our energy retailing business; • T22 was the investment phase for Telstra Plus as we grew members and points balances. Through T25 we will move strongly to value realisation as the program matures and we expand the eco-system; • Our strategy is to grow hardware margin, now that subsidies and unbundling are gone. We’ll capture more of the value through the hardware lifecycle, enabled, in part, by insourcing our stores; CHECK AGAINST DELIVERY Page 12 • And finally, our focus on simplification, digitisation and operational discipline will remain critical, to not only delivering cost outcomes, but importantly customer outcomes. Slide 19 – Transforming how we engage by deepening our local expertise Now returning to the first of the building blocks which we believe will deliver our ambition. The first is to create more personalised experiences for our customers, as well as more local interactions. Whether you are in the city, a regional town or live more remotely, connection and local community is more important than ever. There is nothing like locals helping locals. We’ve achieved a lot in T22 to improve the customer experience: • Transactions on our new technology stack are simpler and faster; • We’re well progressed in the migration of consumer mobile customers to the new digital stack; • By mid next year, all voice calls will be answered in Australia; • Insourcing our stores will provide an integrated experience across the retail network; • And we’ll continue our focus on responsible business by doing the best for customers no matter where they live. • But, we know that we have more work to do. We’re accelerating the shift to more personalised and locally delivered experiences: • Whatever the need, customers will get the same, seamless service in store, on the phone or online; • We’re rolling out diagnostics to solve customer problems before they know they have one; • With stores insourced, and our agent@home program, we will be creating integrated experiences across our stores and contact centres; • agent@home will also allow us to leverage talent pools across rural and regional Australia, and make our service more resilient; • We’ll provide more industry expertise for all Australian small businesses and a larger support presence – but more on that later; • Critical to deepening our local expertise, will be transforming our frontline culture and capability, leveraging our FutureReady program, and deepening our relationships with key community stakeholders. • We know connectivity plays an essential role in social inclusion, and as Andy said we have committed to building digital literacy skills for an additional 500,000 Australians by 2025. • Lastly, we will be integrating more customer insights and data to deliver real-time next best experiences to optimise how we support our customers across all our channels. • There will be three ways we will measure our success: • Achieve “Once and Done” more than 90 per cent of the time by 2025 – right first time, and second time perfect. We want to make sure you only need to ask once, and we will get what needs to be done, done. • Lift our strategic NPS by at least 25 points; and • Halve complaints by 2025. Slide 20 – Help Australians get the most out of their connectivity Secondly, Helping Australians get the most out of their connectivity… whether at home, at work, or on the go. This starts with us having the best connectivity experiences available: • We have the best mobile network. We have the largest 4G and 5G coverage, bringing faster speeds to more customers across metro, regional and rural Australia. We are committed to maintaining this lead, and in fact right now, our gap to competitors has been widening in the last few months. CHECK AGAINST DELIVERY Page 13 • By 2025 we expect to have 80% of mobile traffic on our 5G network. • A network that delivers better experiences in entertainment, working and learning. We lead the ACCC ranking for average NBN download speeds (excluding underperforming and impaired services). We are in the #1 spot in the Netflix speed index. • Supported by world leading network management, self-healing, proactive fault detection and experience optimisation, enabled by real-time AI. • A network you can feel safe using, secured from the core all the way to your end device. This will deliver leading reliability and resilience when it matters. • This means that our customers get the best performance, at home, at work and on the go. We will also change the way our customers buy and access these connectivity experiences: • Historically we have monetised through excess data and data inclusions. In fixed we have seen monetisation of speeds, and in mobile we have included 5G only in our top three plan tiers. David will talk more about how we are already monetising 5G through Adaptive Mobility. • Through our leadership in network we will continue to deliver value and growth by creating experiences rooted in how customers use connectivity. Plan tiers optimised for work from home, gaming, or streaming and prioritisation to ensure performance when it matters. • We will move toward a more technology agnostic approach – talking less about complex industry jargon... FTTN, HFC, Mid Band, mmWave... and focus on using the best technology available for customers to deliver the experience they want, whether that is the NBN or fixed wireless, 4G or 5G. • And finally, there is an increasing array of connected devices beyond handsets and tablets, to wearables, AR, VR, and appliances... all of which create opportunity for a unique and optimised connection. Ultimately, this will create value – both from service revenue growth in mobile, and from a growing and profitable home and business internet proposition. Slide 21 – A trusted partner in the home & business Now to being a trusted partner in the home and for businesses. Our homes are becoming more mixed-use and multi-generational. Increasingly our home is where we learn, our children learn, we go to work, or run a business. It’s not just about an internet connection, it’s about an increasing number of devices requiring connectivity, and a range of different services, and how they all work together... seamlessly. Getting the basics right is critical. Our ambition is to make products and services that are more plug and play, and simpler… products that just work. • We already have a strong presence in the home through existing assets like the Smart Modem, powering reliable Wi-Fi, and enabling smart diagnostics through Wi-Fi Doctor… in fact our NPS for smart modem customers is 18 points higher than those without one. • And Telstra TV is aggregating all your favourite streaming services, be it Netflix, ABC iView or Binge, delivering universal search and the best streaming experience on your own big screen. Our partnership with Foxtel complements this well, and we have been instrumental in lifting Foxtel streaming subscriber numbers - with almost 1.1 million on Kayo, and over 800,000 on Binge since it launched in May 2020. • The need for support across the home eco-system remains even for tech savvy customers and we want to be there to set up, optimise and manage all the tech in your home. • Delivering this help, through local presence, and enhanced personalised support is the key to unlocking the power of technology for more Australians. • Energy, and smart energy management, will form part of this integrated proposition. We believe this will help us be a top five energy retailer in Australia. CHECK AGAINST DELIVERY Page 14 • With these connected experiences – across entertainment, energy, tech support, and security – we expect to see an increase in services per household. For our small business customers, the ability to compete in the digital economy was important, but it is now urgent. Whether you’re a hardware store owner, a barista in a coffee shop, or a farmer, being successful in the digital world is essential. We want to be there for Small Businesses and be the trusted partner in “making it all work” together. • Therefore, we continue to expand our offering. We’re standing up an integrated suite of services with leading partners, which we bring to market through our “Go Digital” professional consult process. This includes: – ICT services, like standardised IT support – Cyber security, including Harmony by Checkpoint – Digital customer engagement, for example digital marketing offers – Accounting and collaboration tools, like MYOB – … as well as professional and managed services. • We’re investing in our people capabilities to support this, from our Telstra Business Technology Centres, to the thousands of accredited experts trained across our retail network. And dedicated connection managers to support customers as they transition their fixed connectivity. • But critical to delivering more for these customers is completing digitisation for small business, resolving the issues getting in the way of customers becoming digitally active. • Our ambition is for at least 50 per cent of SMB customers to be fully digitally active by 2025... which will be critical to unlocking our target to double our small business apps and service revenue by 2025. And before we go onto the next section, we’ll play a short video about Telstra Plus – an important element of our future ambition. 

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