2008 Australia - Telco Company Profiles - Telstra and Optus

Publication Overview

For those needing detailed overviews and statistics as well as objective analysis on all aspects of Telstra and Optus, this report provides essential reading and gives in-depth information on:

·         Company overviews and structure;

·         Major divisions and subsidiaries;

·         Financial and operating statistics;

·         Marketing and financial analyses and strategic overviews;

·         Network overviews.

In a separate report the following Australian companies are covered: AAPT, Amcom, Austar, Commander, Foxtel, Gotalk, Hutchison, iiNet, Macquarie Telecom, Nextgen Networks, People Telecom, Powertel, Primus, Soul, TransACT, Unwired, and Vodafone.

Researchers:- Phil Harpur, Paul Budde

Current publication date:- September 2008 (14^th Edition)

Next publication date:- September 2009

Executive Summary

Telstra

Telstra is Australia’s largest telecommunications provider, offering a full range of telecom services throughout Australia including basic access services to most homes and businesses, local and long-distance telephone call services, mobile and Internet services. It remains one of the most, if not the most profitable incumbent telcos in the developed market.

This report includes an overview of Telstra’s main areas of operation as well as key operating and financial statistics and analysis in areas such as mobile, broadband, data, local access and pay TV. It also includes a wide range of market analyses covering topics such as corporate strategies, broadband, mobile, and international issues.

A detailed overview of Telstra’s broadband network, Next G network and NGN are also provided.

Sensis, a major subsidiary of Telstra, provides advertising and search solutions through print, online, voice, wireless and satellite navigation networks.

SingTel Optus

The 2nd largest telco in Australia, Optus provides a range of communications services including mobile, national and long-distance services, local and international telephony, business network services, Internet and satellite services and subscription TV. Belatedly, Optus has become more active in infrastructure-based developments in the Australian telecoms market.

This report provides an overview of the main divisions within Optus including Consumer and Multimedia, Mobile, Business and Wholesale. A breakdown of key operating and financial statistics is provided for sectors including Internet, broadband, voice services, mobile and pay TV. Financial and marketing analyses cover topics such as corporate strategies, broadband and mobile.

A detailed overview of the Optus network is also included along with overviews of the company’s major subsidiaries including and Virgin Mobile, a consumer focused MVNO, and Uecomm, a high bandwidth data specialist providing dark fibre services and converged solutions such as VoIP.

Key highlights:

Telstra

·         Overall revenue growth for Telstra was very solid at 4.3%, a rise on the 3.9% delivered in the previous financial year.

·         Broadband access revenue growth was 39%, and BuddeComm predicts further strong revenue growth of 32% in the 2009 financial year.

·         Telstra’s mobile revenue showed a very impressive 12.7% growth, fuelled by very strong mobile data growth from wireless broadband of 44% to $1.5 billion.

·         The changing nature of media is presenting a significant range of new challenges for Sensis, despite its strong recent growth. Social networking sites could offer a factor that Sensis’ options lacked – the ability to personally recommend specific businesses.

·         BuddeComm predicts overall revenue growth for Telstra of 3.8% for 2008/9 and 3.6% for 2009/10. These growth rates could however be about 10-20% below this if there is an unfavourable outcome for Telstra regarding the National Broadband Network tender to be finalised by the government.

Telstra Group total revenue and annual change – 2002 - 2010

(Source: BuddeComm based on company data)

Optus

·         Telstra caught Optus on the back foot in the mobile market. Optus relies for most of its revenue on mobile and with its 3G HSDPA service Telstra has been able to undermine Optus’ position in that market.

·         Of particular concern for Optus was the drop in consumer off-net fixed voice products, which voice fell 34%. While the latter decline can be attributed to the cancellation of a reselling contract with Telstra, the overall consumer fixed voice revenue still showed a big decline.

·         Over the last eighteen months Optus has taken the lead in the industry. This has further confirmed its position in the market and will also assist it in shaping the future of the market and the industry moving into the next generation of telecoms.

·         There are good indications that Optus’ parent SingTel is prepared to invest further in Australia once the conditions are right.

Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents

• 1. Telstra Corporation
  • 1.1 Company overview and operating statistics
    • 1.1.1 Company overview
    • 1.1.2 Sensis
    • 1.1.3 Telstra operating statistics – 2008
    • 1.1.4 Controlled and associated entities
    • 1.1.5 Business units
  • 1.2 Corporate strategies analysis
    • 1.2.1 Telstra remains the winner
    • 1.2.2 Analysis of Telstra’s 2008 financial results
    • 1.2.3 Which way will Telstra jump?
    • 1.2.4 Is Telstra changing?
  • 1.3 Financial statistics
    • 1.3.1 Results for year ending June 2008
    • 1.3.2 Results for half year ending December 2007
    • 1.3.3 Results for year ending June 2007
  • 1.4 Sensis Pty Ltd
    • 1.4.1 Company information
    • 1.4.2 Local major activities
    • 1.4.3 Overseas activities
    • 1.4.4 Market and usage statistics
    • 1.4.5 Company analysis
    • 1.4.6 Financial results – 2008
    • 1.4.7 Products and services
    • 1.4.8 Company history
  • 1.5 Broadband network
    • 1.5.1 Overview
    • 1.5.2 Wholesale ADSL2+ services
    • 1.5.3 Analysis
  • 1.6 3G mobile network
    • 1.6.1 Overview
    • 1.6.2 Next G – 3G/WCDMA 850MHz network
    • 1.6.3 HSPA+ trials and preparation for LTE
  • 1.7 Next gen network
    • 1.7.1 Network overview
    • 1.7.2 IT transformation programs update – Release 1 and Release 2
    • 1.7.3 Key NGN milestones – mid-2007
    • 1.7.4 Key NGN milestones – end of 2007 – Phase 1 of project complete
    • 1.7.5 Key statistics on improvement in operating performance
    • 1.7.6 Project delays as IBM is dropped as systems integrator
    • 1.7.7 Deadline for TR1 passes – June 2008
    • 1.7.8 PSTN transformation timeline
    • 1.7.9 Strategic partners/suppliers
    • 1.7.10 NGN test beds
• 2. Optus
  • 2.1 Company overview and operating statistics
    • 2.1.1 Introduction
    • 2.1.2 Consumer and Multimedia Division
    • 2.1.3 Internet and broadband services
    • 2.1.4 Pay TV services
    • 2.1.5 Mobile services division
    • 2.1.6 Business and wholesale
    • 2.1.7 Resellers
  • 2.2 The network
    • 2.2.1 Infrastructure overview
    • 2.2.2 Consumer Customer Access Network, the HFC network
    • 2.2.3 Fixed networks
    • 2.2.4 Core network
    • 2.2.5 Mobile network
    • 2.2.6 Fibre access network
    • 2.2.7 Wireless networks
    • 2.2.8 Business and IT and transformation program
    • 2.2.9 ADSL, ADSL2+ DSLAM network
    • 2.2.10 VoIP network
    • 2.2.11 Satellite networks
  • 2.3 Financial statistics and analysis
    • 2.3.1 Market analysis – 2008
    • 2.3.2 Financial results for 2008
    • 2.3.3 Financial results for 2007
  • 2.4 Virgin Mobile Australia
    • 2.4.1 Company information
    • 2.4.2 Company re-alignments
    • 2.4.3 Operating statistics
    • 2.4.4 Company analysis
    • 2.4.5 Financial results – historical
    • 2.4.6 Products and services
    • 2.4.7 Company history
  • 2.5 Uecomm Limited
    • 2.5.1 Company information
    • 2.5.2 Major contracts
    • 2.5.3 Network
    • 2.5.4 Products and services
    • 2.5.5 Company history
• 3. Glossary of Abbreviations

• Table 1 – Statistical overview (calls/subscribers/networks), year ending June – 2004 - 2008
• Table 2 – Statistical overview (calls/subscribers/networks) and annual change – 2005 - 2008
• Table 3 – Telstra Group total revenue and annual change – 1994 - 2010
• Table 4 – Telstra Group sales revenue, EBITDA, EBIT and net profit – 2002 - 2008
• Table 5 – Telstra Group sales revenue, EBITDA, EBIT and net profit by annual change – 2003 - 2008
• Table 6 – Telstra Group revenue by segment and annual change – 2007 - 2008
• Table 7 – Telstra Group EBIT by segment and annual change – 2007 - 2008
• Table 8 – Telstra Group revenue by service and annual change – 2007 - 2008
• Table 9 – Telstra fixed telephony revenue and annual change – 2007 - 2008
• Table 10 – Telstra PSTN products revenue and annual change – 2007 - 2008
• Table 11 – Telstra ISDN revenue and annual change – 2007 - 2008
• Table 12 – Telstra mobile revenue and annual change – 2007 - 2008
• Table 13 – Telstra mobile prepaid and postpaid revenue – 2007 - 2008
• Table 14 – Telstra mobile retail and wholesale revenue – 2007 - 2008
• Table 15 – Telstra Internet revenue and annual change – 2007 - 2008
• Table 16 – Telstra IP and data access revenue and annual change – 2007 - 2008
• Table 17 – Telstra business services and applications revenue and annual change – 2007 - 2008
• Table 18 – Telstra offshore controlled entities revenue and annual change – 2007 - 2008
• Table 19 – TelstraClear revenue, expenses, EBITDA, EBIT, CAPEX & annual change – 2007 - 2008
• Table 20 – Sensis revenue and annual change – 1998 - 2008
• Table 21 – Sensis revenue by operating division and annual change – 2007 - 2008
• Table 22 – Telstra operating capital expenditure by technology – 2007 - 2008
• Table 23 – Telstra overall financial results, six months to December – 2006 - 2007
• Table 24 – Telstra segment revenue, six months to December – 2006 - 2007
• Table 25 – Telstra operating revenues, six months to December – 2006 - 2007
• Table 26 – Telstra operating revenue, fixed telephony, six months to December – 2006 - 2007
• Table 27 – Telstra operating revenue, mobiles, six months to December – 2006 - 2007
• Table 28 – Telstra operating revenue, Internet, six months to December – 2006 - 2007
• Table 29 – Telstra operating revenue, IP & data access, six months to December – 2006 - 2007
• Table 30 – Telstra operating revenue, other, six months to December – 2006 - 2007
• Table 31 – Telstra (Foxtel) pay TV bundling revenue, subscribers, six months to December – 2006 - 2007
• Table 32 – Sensis financial summary, six months to December – 2006 - 2007
• Table 33 – Sensis revenue by operating division, six months to December – 2006 - 2007
• Table 34 – Telstra Group sales revenue, EBITDA, EBIT and net profit, annual change – 2002 - 2007
• Table 35 – Telstra Group revenue by segment and annual change – 2006 - 2007
• Table 36 – Telstra Group EBIT by segment and annual change – 2006 - 2007
• Table 37 – Telstra Group revenue by service and annual change – 2006 - 2007
• Table 38 – Telstra fixed telephony revenue and annual change – 2006 - 2007
• Table 39 – Telstra PSTN products revenue and annual change – 2006 - 2007
• Table 40 – Telstra mobile revenue and annual change – 2006 - 2007
• Table 41 – Telstra Internet & IP solutions revenue and annual change – 2006 - 2007
• Table 42 – Telstra specialised data revenue and annual change – 2006 - 2007
• Table 43 – Telstra ISDN revenue and annual change – 2006 - 2007
• Table 44 – Telstra business services and applications revenue and annual change – 2006 - 2007
• Table 45 – Telstra offshore controlled entities revenue and annual change – 2006 - 2007
• Table 46 – Sensis financial summary and annual change – 2006 - 2007
• Table 47 – Sensis revenue by operating division – 2006 - 2007
• Table 48 – Sensis revenue and annual change – 1998 - 2009
• Table 49 – Sensis financial summary and annual change – 2007 - 2008
• Table 50 – Sensis revenue by operating division and annual change – 2007 - 2008
• Table 51 – Telstra IT transformation – cash capital expenditure – 12 months to June 2007
• Table 52 – Optus Consumer telephony statistics – 2007 - 2008
• Table 53 – Optus on-net ARPU – 2007 - 2008
• Table 54 – Optus Consumer & SMB fixed key statistics – half year to 30 September – 2006 - 2007
• Table 55 – Optus consumer Internet statistics and annual change – 2007 - 2008
• Table 56 – Internet subscribers (broadband & dial-up) and annual change – 1996 - 2008
• Table 57 – Optus pay TV subscribers – 1995 - 2009
• Table 58 – Optus Mobile subscribers, annual change, market share & prepaid ratio – 1998 - 2008
• Table 59 – Optus Mobile key operating statistics – 2007 - 2008
• Table 60 – Optus Mobile key statistics – half year to 30 September – 2006 - 2007
• Table 61 – Optus overall operating revenue summary – 1994 - 2010
• Table 62 – Optus revenue by major service division and annual change – 2007 - 2008
• Table 63 – Optus revenue by major and minor service category – 2007 - 2008
• Table 64 – Operating revenue by operating division & annual change – 2007 - 2008
• Table 65 – Operational EBITDA by operating division and annual change – 2007 - 2008
• Table 66 – Mobile revenue by division and annual change – 2007 - 2008
• Table 67 – Business and Wholesale fixed revenue by service and annual change – 2007 - 2008
• Table 68 – Consumer and SMB fixed revenue by service and annual change – 2007 - 2008
• Table 69 – SingTel Optus sequential quarterly financial data – 2007
• Table 70 – Optus financial data by division – half year to September – 2006 - 2007
• Table 71 – Optus Mobile division revenue – half year to September – 2006 - 2007
• Table 72 – Optus Business & Wholesale fixed financial data – half year to September – 2006 - 2007
• Table 73 – Optus Consumer and SMB fixed financial data – half year to September – 2006 - 2007
• Table 74 – Optus revenue by major service division & annual change – 2006 - 2007
• Table 75 – Optus revenue by major and minor service category & annual change – 2006 - 2007
• Table 76 – Operating revenue by operating division & annual change – 2006 - 2007
• Table 77 – Operational EBITDA by operating division & annual change – 2006 - 2007
• Table 78 – Mobile revenue & annual change – 2006 - 2007
• Table 79 – Business and Wholesale fixed revenue by service & annual change – 2006 - 2007
• Table 80 – Consumer and SMB fixed revenue by service & annual change – 2006 - 2007
• Table 81 – Virgin Mobile Australia subscribers and annual change – 2000 - 20081
• Table 82 – Virgin mobile revenue and annual change – 2003 - 2005*
• Table 83 – Operating revenue and annual change – 1999 - 2005

• Exhibit 1 – Telstra Corporation Ltd at a glance
• Exhibit 2 – Telstra-controlled entities (Australia)
• Exhibit 3 – Telstra-controlled entities (offshore)
• Exhibit 4 – Sensis Pty Ltd at a glance
• Exhibit 5 – Key products and services
• Exhibit 6 – Telstra’s NGN planned implementation time-line
• Exhibit 7 – Key suppliers to the Telstra systems and infrastructure overhaul
• Exhibit 8 – Optus Television services at a glance
• Exhibit 9 – The SingTel Optus network
• Exhibit 10 – HFC network status
• Exhibit 11 – Virgin Mobile Australia at a glance
• Exhibit 12 – Uecomm Ltd at a glance