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[Snoopy]

The following questions are relating to financial targets as discussed at the HYR2024 analyst briefing

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Q1/ Eric Choi / "It does matter, I guess, for EPS and DPS coverage. Since you’ve stuck with your T25 targets of mid-single digit Underlying EBITDA growth and high teens EPS, I think you’re still mathematically suggesting an $8.5 billion EBITDA (EBITDA for FY2023 was $7.862b) , and maybe an 18.5 to 19 cents EPS at the bottom end? Michael, if you could confirm that, that would be fantastic."

A1a/ Vicki Brady (CEO) / "We’ve got our T25 ambitions out there, which you referred to. And we remain confident in achieving those growth rates on Underlying EBITDA, and Underlying Earnings Per Share."

A1b / "Eric, we’re committed to those mid-single digit EBITDA and high teens EPS growth outcomes, and we think they’re ambitious growth objectives. And we’re absolutely committed to those into FY25."





Q2/ Entcho Raykovski / "The market has dividends per share growing to 19 cents per share in FY25. I know you’re not going to give us guidance, but can you comment on what needs to go right for you to be able to deliver that number, given you’re now at the bottom half of the prior EBITDA guidance for 2024? Is it mainly mobile growth that’s the key driver or is it other factors?"

A2/ Vicki Brady/ "What needs to go right in terms of driving that growth in dividend per share? Obviously it is continuing to execute well across the key parts of our business, with a real focus now on making sure we’ve also got our Enterprise business set up for success (Snoopy note: Enterprise delivers services to governments and large enterprise and business customers. It includes DAC, Data & Comnnectivity and NAS, Network Applications and Services). As we talked about, some structural change going on in Enterprise that we’ve seen for a little while now in DAC and calling. And we’ve got a cyclical effect at the moment in NAS. And so making sure we’ve absolutely got that business performing well is also important as we look. And really as management our focus is on driving underlying earnings growth, because we know ultimately that’s the thing that’s going to count to get the outcomes for our shareholders."




Q3/ Darren Leung / "On DAC (Data and Connectivity). I recalled the last result we were talking about pricing, practically pricing customers lower to defend market share. Can you remind me how progressed we are on that, please, just in the context of the ARPU (Average Revenue Per User) that’s stayed pretty resilient?"

A3/ Michael Ackland/ "On DAC we have seen that ARPU compression and revenue compression continue to slow. So we declined 16% in FY23. Revenue decline for the first half was around 10%. We’re doing a good job at retaining our fibre SIOs (Services in Operation) and we’re seeing growth in nbn EE (Enterprise Ethernet, nbn's flagship fibre access product) as well, which is helpful. We would expect by the end of FY25 to have migrated the vast majority of our DAC customers onto in market plans. So we’re well through it. We expect to see that rate of decline continue to reduce as we go through FY24 and FY25."




Q4/ Lucy Huang / "I just noticed with InfraCo margins a slight dip in this half. But just wondering what further efficiencies can drive in InfraCo Fixed in the near term?"

A4/ Brendon Riley (CEO Telstra InfraCo) "We’ve got an awful lot on the go in relation to the operating efficiency side of things. Firstly, in terms of really most of the work we do in the asset life cycle and maintenance space. We’ve got a major tender underway, out to market to that to go and have a look at what we can do to drive further efficiencies there. We stood up a network operations centre and that helps us better coordinate not only across all of our assets, but activity with Telstra and other customers. That’s a really, really important driver of operating efficiency just in terms of scheduling work and maintenance activities."

"We’ve introduced a lot more automation, particularly into the facilities. As Michael has indicated, a lot is happening on energy. So lighting, HVAC and battery replacement programs, which drive energy efficiencies. We’ve got our copper recovery program underway where we extracted over 9,000 tons in the first half. And we’ve got our asset divestment program underway, and we’ve probably got more happening in the second half there. And obviously that not only drives one-off material gains in terms of EBITDA proceeds, but it also helps a lot with operating efficiency. We just have a lot less sites that we need to look after. So there’s an awful lot happening in that space and that’ll continue to be a major priority for me and the team."





Q5/ Kane Hannan/ "The free cashflow guidance. You pulled down EBITDA a little bit at the midpoint, but no changes to free cashflow. Is
there some positive offsets coming through we should be thinking about?"

A5/ Vicki Brady / " As is often the case our free cashflow can be a little bit second half-weighted, and obviously in free cashflow versus Underlying EBITDA there’s more timing and things going on in there. So yes, no change in free cashflow guidance. We remain confident in that guidance. So no change there despite tightening the Underlying EBITDA guidance range."




Q6/ Kane Hannan/ "Gain on InfraCo Fixed. I think you were calling that improved growth in the second half back at the Investor Day, but the nbn revenue growth is going to slow. So is this all the efficiency that you were just talking to, Brendon, or is it asset sales and some of the lumpiness there really what’s driving that improved second half?"

A6/ Brendon Riley / "The second half, definitely a stronger half from an asset sale perspective. Copper recovery also, we’re expecting another good half there. We’re seeing definitely a pickup in some of our commercial works projects and some new orders coming through from satellite providers. And the last would be dark fibre. So dark fibre tends to be a lot of smaller sales until we get the intercity fibre project up and going, but very, very happy with how they are ticking over. So all of those things added together puts us on track to have a good second half."




Q7/ Kane Hannan / "The 'other earnings'. It was a big drag this half despite that one-off gain coming through. So if you just help us understand how we think about that going forward. Is that corporate re-segmentation going to continue to impact that line for the rest of the year and beyond, or is it all one-off noise coming through?"

A7a/ Vicki Brady / "There is a bunch of stuff as you call out in the Other category. There’s always plusses and minuses in there.
Things like revaluing employee entitlements with bond rate moving and various other things."

A7b/ Michael Ackland / "Think Vicki probably covered it on the Other earnings, some corporate restructuring and things. There was also some movements on the valuation of our employee liabilities with bond rate movements just late in the half, and the gain on the towers. So I don’t think there’s anything particularly unusual in there, but I’d probably just leave it at that."





Q8/ Brain Han / "In the cashflow, the 'other' line in the cashflow, Michael, can you talk a little about the decline from [$]189 [million] to [$]61 [million] in the half, and whether you’re expecting any asset sales in the second half to boost that line.

A8/ Michael Ackland / "You will note in the 'other' on free cashflow, the PCP was [$]189 [million], and in this period it was $61 million, which is a big change. That was largely due to some term deposit payments and financing payments that occurred in the prior period. So, we’re still comfortable with our second half outlook and reaffirming guidance on free cashflow. "




Q9/ Joseph Lam / "About earnings per share. So, earnings per share was 8.4 cents but the dividend was 9 cents per share. How are you paying for that, and is this a trend we can expect to continue? "

A9/ Vicki Brady / "Yes, our earnings per share was at 8.4 cents and as you call out, we paid a dividend of – we will pay a dividend at 9 cents per share. The important thing is, as the Board made its decision on the 9 cent dividend, we have a very strong balance sheet, we have strong free cashflow able to support that dividend. And under our capital management framework, we have a policy that is to maximise our fully franked dividend and seek to grow it over time. And so, really those factors come into account and the strength of the balance sheet and free cashflow puts us in a position to be able to support that 9 cent interim dividend to our shareholder."


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SNOOPY