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Telstra Corp. Ld (50IM)

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Monday 25 March, 2002

Telstra Corp. Ld

Half-Year Report

Telstra Corporation Ld
25 March 2002


Message from the Chairman and CEO

Dear fellow shareholders,

It's been a demanding first half of the financial year for Telstra Corporation -
and yet your company has delivered in the important areas.

Telstra performed well in earnings before interest and taxes, market shares and
revenues, cash flow, operating expenses, capital expenditure management, 
customer service and dividends to shareholders. It has achieved a good, solid 
result in a very challenging domestic and international environment.

Growth in both revenues and profits remain subdued, as we predicted. However,
throughout this period of industry slowdown, restructure and reform, Telstra has
lost none of its focus or energy.

Telstra's headline net profit of $2.1 billion is 20 per cent down on the
previous corresponding half. However, if we remove the one-off adjustments from
the prior period (including superannuation write-back and the partial sale of
Computershare) we can see the real performance of the business.

On this basis the underlying earnings before interest and taxes (EBIT) grew 2
per cent to $3.6 billion - a solid performance. Our continued rigour on cost
control and a strong performance from our mobiles business being important
contributions to this result.

Free cash flow growth of 16 per cent is again strong - unlike many other
telecommunications companies. Our balance sheet remains rock solid and we have a
AA- credit rating shared by only a few of our global peers in the industry.


Telstra has a solid balance sheet. 

The first half dividend is 11 cents per share - fully franked. This is a 38 per
cent increase on the previous corresponding half-year's 8 cents per share. 
However you should not assume the full-year dividend will automatically go up as 
well.

First-half activity
Over the six months, we have had success with a number of our competitive
initiatives, including developing and marketing of packages, or bundles of our
products and services, price rebalancing, single bill and churn management.

We've made some excellent gains in key areas - continuing to improve service,
delivering better value to customers and achieving greater organisational
efficiency. All are critical to long-term shareholder value.

We have a simple equation at Telstra: improved service = satisfied customers =
satisfied shareholders.

Our service levels are the best we've ever achieved for installing services and
fixing faults. Figures released by the Australian Communications Authority in
December reveal that for the first time, Telstra nationally reached or exceeded
90 per cent compliance with legislated benchmarks for telephone connection and
repair times for urban, rural and remote customers.

Customer complaints against Telstra are down (even though they're up for the
industry as a whole), reflecting our targeted spending on maintaining and
improving the quality of our network.

Customers, particularly those seeking higher value, are staying with Telstra.

We continued to allocate capital carefully. We improved project management,
control on spending is tighter and we're getting better value from our
suppliers. Going forward, we will maintain our efficiency in this area. We will
continue to spend prudently to improve the quality of our networks and service
performance. This is fundamental to our dealings with our customers, their level
of customer satisfaction and - it follows - to driving shareholder value.

Telstra continues to deliver on cost control as it must - and the rigour will
continue as part of wider productivity improvements.

Our success in this area does more than protect our margins and improve the
bottom line. It gives us more room to invest in key areas. It means our
suppliers must be as disciplined as we are. We are driving out waste and
bureaucracy from our systems. We are focusing on what's important - sound
strategic thinking and customer and shareholder value. In short, we are 
improving our whole way of working.

Our mobiles business has produced an excellent result with services in operation
again growing strongly. The introduction of Mobile Number Portability during the
period was a technical and commercial success. Growth in mobile data revenues, 
particularly from Short Message Service (SMS) was a feature with now over one-
third of our subscribers using this service.

Our broadbanding of Australia via cable, Asymmetric Digital Subscriber Line
(ADSL) and satellite continued at a pace to give all Australians access to very
fast Internet links.

In the pricing area, we rebalanced access with call costs and changed our 
pricing structure for broadband offerings to better reflect our cost structure 
in providing the service.


We'r stable and on track

Outlook 
Predicting the next few months in this ever-changing industry is not easy, but 
looking ahead we do expect to see -

• Telstra's revenues growing faster than expenses. We will continue to deliver 
  on costs. Margins will be maintained, or increase slightly; capital spending 
  will remain disciplined; and strong free cash flow growth from Telstra's core
  businesses will continue

• Continued mobiles growth as we aggressively pursue opportunities in new data
  applications, focusing on improved content and customised offerings

• Accelerated marketing of our broadband services via our delivery mix of ADSL,
  cable and satellite

• Developments in FOXTEL and our directories business Pacific Access

• Growth in corporate data traffic in line with economic recovery

• Further industry consolidation

• On the international front, our careful international expansion strategy will
  continue. Our international interests in Asia and New Zealand are positioned 
  to make important contributions in the years ahead.

Delivering on strategy 
At a time when the industry continues to consolidate, recover from the dot.com 
era fall-out, and grow itself out of the sectoral slowdown, the company is in 
excellent shape financially, strategically and organisationally.

We're strong. We're lean. We're fit. We have the brand, networks, products,
services and the people. We are the nation's full service, fully integrated
telecommunications company with leading positions in mobiles, data and Internet
- leveraged to the return of growth in our industry and committed to delivering
sustainable value to our customers and shareholders. 

Bob Mansfield                                   Ziggy Switkowski
Chairman                                        Chief Executive Officer
                                                and Managing Director



                             financial highlights

              a good, solid result - achieved in a very demanding 
                     domestic and international environment

                                           6 months to    6 months to
                                              Dec 2001       Dec 2000    Change
                                                   A$m            A$m         %

   Total revenue                                10,612         11,311     (6.2)
   Total expenses                                7,519          7,269      3.4
1  Underlying EBIT(a)                            3,583          3,514      2.0
   Profit before income tax expense              3,093          4,042    (23.5)
   Net profit attributable to shareholders       2,098          2,623    (20.0)
   Earnings per share                            16.3c          20.4c    (20.0)
2  Interim dividend per share*                   11.0c           8.0c     37.5
   Number of full-time equivalent staff         47,740         49,603     (3.8)



1  Underlying EBIT(a)
   + 2.0% to $3.6 billion

2  Interim dividend
   + 3.0c to 11.0 cents fully franked


(a) Underlying earnings before interest and taxes (EBIT). This result is
    produced to allow a like for like comparison by removing those items which 
    are either not comparable in nature (eg. owing to structural changes such as
    acquisitions/disposals), significant and non recurring, or not part of the 
    core operations of the business. These adjustments have included the 
    acquisition of our controlled entities Regional Wireless Company (RWC), 
    TelstraClear and Keycorp, asset sales including the sale of our global 
    wholesale business to form our Asian joint venture Reach, redundancy costs, 
    adoption of a new revenue recognition policy (SAB 101), investment write 
    downs and superannuation writeback. 

* The 31 December 2001 interim dividend is scheduled to be paid on 29 April 
  2002, to shareholders who are registered as a shareholder on 22 March 2002, 
  and will be fully franked at an income tax rate of 30 per cent. 


Telecommunications
During the six months to 31 December 2001, Telstra's share price moved from
$5.36 to close at $5.44.  


domestic retain> • voice
                 • data
                 • bundled services
                 • customer service
                 • mobiles

customer intimacy and operational excellence


We are focusing on three key areas in this core part of our business -
operational excellence, customer intimacy and process improvement. We seek to
provide the best quality systems and support for our staff to help them better
understand customers, consult with them and be responsive to their needs and
expectations - thus improving service and value.

Customers
We launched a number of customer experience principles to guide staff in
delivering superior service. Significantly, they're from the customer's
perspective -

• Keep it simple
• Know who I am and recognise me when we contact each other
• Be easy to deal with
• Communicate with me effectively
• Keep your promises
• Deliver real value to me
• Don't ever put my business or interests at risk

In September 2001, we launched a new company-wide 'numbers' advertising campaign
designed to deliver a fresh, vibrant look to our communications with consumer
customers. It is proving to be one of our most successful campaigns, with
research indicating it is striking a positive chord with customers.

We further rebalanced pricing to bring the line rental charge closer to what it
actually costs Telstra to provide access to our networks. At the same time new
calling charges were introduced on 1 September 2001 to provide improved value to
customers. These included a number of free standard local calls per month,
pensioner concessions and specials on STD and international calls.

We're pleased to report that our market share continued to be stable over the
half-year. As with our service performance improvement, we've worked very hard 
in this area, with value, service, pricing, bundling and single bill all being
contributing factors.


Performance indicators (approximate) Half-year ended December
                                             2001              2000     % change

Local calls (number of calls)       5,511,000,000     5,675,000,000      (2.9)
National long distance minutes      6,299,000,000     6,065,000,000       3.9
International outgoing minutes        419,000,000       374,000,000      12.0
Calling number display customers          855,000           676,000      26.5
Fixed line MessageBank(R) customers     1,440,000         1,334,000       7.9


During the half-year we saw the establishment of Telstra's Global Business Sales
division, which has offshore offices focused on providing global account
management for its multinational customers and seeking global opportunities with
companies having a presence in Australia.

Mobiles
The mobiles phenomenon is now into its next exciting stage - much higher speed
data racing over a range of wireless handheld devices. At Telstra, we have 
always been optimistic about the opportunities for wireless products and 
services in Australia and Asia. Our confidence remains undiminished.

MNP
MNP - Mobile Number Portability - which allows customers to keep the same mobile
phone number if they decide to move between phone carriers - was introduced on
25 September 2001. So far, it's a win for Telstra. Customer inflows and outflows
have cancelled each other out, while the customers we are attracting are tending
to be higher value.

GPRS
We launched a range of new General Packet Radio Service (GPRS) handsets to give
customers much faster wireless data services (up to three times the data
transmission speed of a normal handset) over the GSM mobile network. 

Currently customers can synchronise their PDAs (Personal Digital Assistants - 
hand held electronic organisers) with their GPRS handset to achieve wireless 
Internet connectivity. PDA's with GPRS cards that act like a wireless modem are 
expected to be available this year.

In 2002 there will be a number of corporate applications for wireless access to
corporate intranets and productivity tools for remote access to email over GPRS.

We are trialling a technology called 1xRTT which will increase data speeds on
CDMA mobile phones.

Wireless data
People are taking the first step on the wireless data journey - Short Message
Service (SMS) - in astonishing numbers. In December 2001 our customers sent 81
million SMS messages. There were 5.8 million messages on Christmas Day and 5.5
million on New Year's Day. The take-up rate for SMS is around 8-9 per cent per
month.

Handset subsidies
We removed mobile handset subsidies, significantly reduced the number of pricing
plans and offered loyalty incentives. It's all about focusing on value - for
customers and for shareholders. There's still plenty of growth left in the
mobiles market - we expect the current 60 per cent mobiles penetration (which
the handset subsidies played a large part in achieving) to reach more than 80
per cent in a couple of years.


81 million SMS messages were sent during December 2001

Performance indicators (approximate) Half-year ended December
                                             2001              2000     % change

Mobile telephone minutes            2,911,000,000     2,712,000,000       7.3
Mobile telephone customers
Digital - GSM                           5,113,000         4,333,000      18.0
Digital - CDMA                            523,000           395,000      32.4
Total mobile customers                  5,636,000         4,728,000      19.2


applications and content> • internet
                          • broadband
                          • pay TV
                          • directories
broadbanding Australia


Broadbanding Australia remains a key priority and growth opportunity for
Telstra.

Our three broadband delivery platforms - ADSL (delivered over existing copper
lines), cable (which also supplies FOXTEL pay TV) and satellite (available
everywhere and ideal for rural and remote areas) - now combine to enable access
across the whole of Australia.

We now have over one million Telstra BigPond(TM) customers either using
broadband or dial up access. We reconfirm our target of attracting over one
million customers to Telstra Broadband services by the middle of this decade.

We have restructured both narrowband and broadband pricing. One example of this
is our new broadband pricing. It is now based on the volume of data a user
downloads rather than on hours of access time. The move puts pricing in line
with our cost structure and benefits home users who spend time on the Internet,
but have no need to download large volumes of data.

Our 50% owned pay TV business FOXTEL continues to go from strength to strength.
At the end of December 2001 it had 774,000 customers - three times more than
five years ago.


wholesale
access to our networks


The economic slowdown and industry rationalisation has meant slower growth in
our wholesale business. However it remains a key part of our strategy for 
growth.

Telstra Wholesale sells access to our networks, as well as specially designed
products (particularly in the broadband area), to other communications
companies, who then provide telecommunications and/or Internet services to their
own customers.

There are more than 800 Internet and telecommunications service providers in
Australia. About 100 are Telstra Wholesale customers. 

we conduct around 10,750 field visits every day wholesale 

Performance indicators (approximate) Half-year ended December
                                             2001              2000     % change

Broadband Internet subscribers            122,000            67,000       82.1
Narrowband Internet subscribers         1,280,000           796,000       60.8
Total BigPond(TM) subscribers           1,402,000           863,000       62.5
PayTV services in operation (FOXTEL)      774,000           700,000       10.6


infrastructure
services> • technical excellence
          • networks
          • customer service
showing our technical excellence

Telstra really showed its technical excellence in a number of infrastructure
projects undertaken during the six months.

MNP
The introduction of Mobile Number Portability (MNP) was a critical project for
us. On behalf of the mobiles industry, we built a system that enabled other
carriers' mobile systems to 'talk' to one another. We also made major changes in
all network-based products, systems and processes that had previously relied on
number analysis for routing and billing - a highly challenging task. Telstra
achieved a best in class performance. The overseas experience had been that it
took one to two days, and even longer, to move customers between mobile
carriers. The Telstra-built system does it in less than three hours!

SMS
Telstra improved Short Message Service (SMS) by initiating a technically complex
project with other carriers to deliver an SMS interconnect system. The system
allows messages to be sent and received between the GSM and CDMA networks of
different carriers, within an MNP environment.We subsequently introduced
additional features allowing the customers of other CDMA carriers to send and
receive SMS messages when roaming on Telstra's CDMA network.

Upgrade of intercapital fibre 
Telstra completed a detailed technical and economic study of its existing 
intercapital transmission network, in order to determine the lowest cost option 
to meet its future capacity requirements. The study found that the most economic 
option is to increase capacity on our existing intercapital optical fibre 
network by upgrading the speed - thus confirming our ability to effectively 
leverage our existing network to deliver cost benefits to customers. 

Telstra reached 90 per cent or above compliance for connections and repairs in 
all demographic categories covered by the Customer Service Guarantees (CSGs). 
Telstra fixed 92 per cent of faults and met 94 per cent of appointments within 
CSG timeframes, the best results on record. 


and install around 8,550 services per day

Performance indicators (approximate) Half-year ended December
                                             2001              2000     % change

Basic access lines in service
Residential                             6,280,000         6,200,000       1.3
Business                                2,400,000         2,400,000       0.0
Domestic wholesale                      1,320,000         1,470,000     (10.2)
Total                                  10,000,000        10,070,000      (0.7)
ISDN access line (equivalents)          1,320,400         1,175,200      12.4



international
position for the years ahead

We have strengthened our position in the New Zealand market, our Asian
businesses are performing well and we are looking at opportunities in China. Our
offshore assets are positioned to make important contributions in the years
ahead. Further opportunity remains for sensible additions and acquisitions
throughout Asia.

New Zealand
In December 2001, TelstraSaturn acquired CLEAR Communications (a 100 per cent
British Telecom subsidiary) - funding the transaction by a combination of debt
and equity provided by Telstra. TelstraSaturn changed its name to
TelstraClear, creating the second largest full service telecommunications
operator in New Zealand. Telstra's shareholding increased to 58.4 per cent. 
TelstraClear will serve more than 300,000 business and residential customers in 
major cities and more than 30 regional centres throughout New Zealand. The 
company now provides voice, data, Internet, mobile, managed services and cable 
TV to 11 per cent of the New Zealand market.

CSL
The Hong Kong economy has slowed - yet CSL has continued to outperform its
competitors in terms of average revenue per user, network quality and retaining
customers. CSL has around 20 per cent of the market and about 30 per cent of the
total market revenue, with many premium customers. It's making money, has a
strong balance sheet and is debt free.

Reach
Reach's performance has been satisfactory given the highly competitive market
and it has continued to position itself well for the future. In December 2001,
Reach successfully acquired the Asian business and assets of Level 3 on very
favourable terms. The Level 3 deal gives Reach low cost bandwidth in the Asia
Pacific region, putting Reach in a good position to compete and accelerating its
entry into the key markets of Japan, South Korea and Taiwan. Ongoing market
consolidation in the region should benefit Reach.

China
Subsequent to the initial co-operation agreement with China Unicom in March
2001, Telstra and China Unicom signed an extended Memorandum of Understanding in
November 2001 to jointly explore business partnerships and opportunities in
China.

This is a milestone for Telstra in realising our business aspirations in China,
following our involvement in several technical consultancy projects in relation
to the rollout of CDMA networks by China Unicom. We'll be working in the coming
months to identify and evaluate various business opportunities in China. 


Reach has interests in more than 50 submarine cable and satellite systems
worldwide

regional and
rural Australia
TCW's regional commitment

Telstra Country Wide(TM) (TCW) continued its solid performance since it was
established as a separate business entity to service our regional customers in
June 2000. Highlights over the six months include improved communications for
remote customers, new local service and sales support channels, further
development of the CDMA mobile network and Internet price and accessibility
advances.

Local presence
The local on-the-ground presence of TCW's 28 Area General Managers and their
teams located in 32 area offices across Australia remains the key to its
success. They are able to make decisions based on local circumstances, which
means quicker responses and the most relevant, effective solutions for
customers.

TCW began implementing a number of projects to further improve the access of
rural and regional customers to Telstra services. This included the opening of
five Telstra Country Shops in Queensland, NSW, and Victoria as part of a new
retail concept to give country people more face-to-face sales and service
options. A further 20 shops are planned by June 2003.

As well, in very small communities where there is no direct Telstra presence, we
have established a network of authorised agents in locations such as milk bars,
newsagencies and pharmacies to be the Local Face of Telstra.

Untimed local call
On 31 July 2001, Telstra switched on untimed local calls for some 28,000
customers in Extended Zones in rural and remote areas, having won a $150 million
Commonwealth Government contract to upgrade the telephone network in these
areas.

Mobiles
Telstra extended the CDMA digital mobile phone network, understanding that
mobile phone coverage is one of the biggest issues for rural and regional
customers. CDMA is the largest network in the country, covering more than one
million square kilometres. We are undertaking trials in some areas, notably King
Island in Bass Strait and Toowoomba in Queensland, to use the CDMA mobile
network to operate a fixed phone network delivering telephony services, where
for technical or economic reasons it is not feasible to run a fixed network.

Telstra has upgraded regional exchanges so many rural and remote customers can
access calling features such as Homeline(TM) that other customers take for
granted.

Internet
We are delivering on our commitment to provide high-speed Telstra BigPond(TM)
Internet access to regional and rural Australia using both ADSL and satellite
technologies. Some 122 regional exchanges had ADSL capability up to 31 December
2001 as part of an ongoing rollout. In the same month Telstra's BigPond(TM)
broadband satellite two-way service, which allows customers in rural and remote
areas to both send and receive information over the Internet at high speed,
became commercially available to all customers throughout Australia.

Service
We continued to improve service performance, in particular the time taken to
connect and repair services and meet additional demand. However, we recognise we
still need to make further improvements in this area and have introduced
initiatives to address this.


statement of financial
performance

                                           6 months to    6 months to
                                              Dec 2001       Dec 2000    Change
                                                   A$m            A$m         %

   Sales revenue                                10,266          9,758      5.2
1  Total revenue                                10,612         11,311     (6.2)
2  Total expenses                                7,519          7,269      3.4
3  Underlying EBIT(a)                            3,583          3,514      2.0
   Profit before income tax expense              3,093          4,042    (23.5)
   Income tax expense                              992          1,420    (30.1)
   Net profit                                    2,101          2,622    (19.9)
   Minority interests                               (3)             1   (400.0)
   Net profit attributable to shareholders       2,098          2,623    (20.0)
   Dividend declared*                            1,415          1,029     37.5
4  Interim dividend per share (cents)*            11.0            8.0     37.5
   Basic earnings per share (cents)               16.3           20.4    (20.0)
   Dividend franking percentage at 30% tax rate   100%           100%
   (2000: 34%)


(a) Underlying earnings before interest and taxes (EBIT). This result is
    produced to allow a like for like comparison by removing those items which 
    are either not comparable in nature (eg. owing to structural changes such as
    acquisitions/disposals), significant and non recurring, or not part of the 
    core operations of the business. These adjustments have included the 
    acquisition of our controlled entities Regional Wireless Company (RWC), 
    TelstraClear and Keycorp, asset sales including the sale of our global 
    wholesale business to form our Asian joint venture Reach, redundancy costs, 
    adoption of a new revenue recognition policy (SAB 101), investment write 
    downs and superannuation writeback.

* The 31 December 2001 interim dividend is scheduled to be paid on 29 April
  2002, to shareholders who are registered as a shareholder on 22 March 2002, 
  and will be fully franked at an income tax rate of 30 per cent. Under current
  legislation, it is expected that Telstra will be able to fully frank declared
  ordinary dividends out of fiscal 2002 earnings.


discussion and analysis

1  Total revenue -6.2%

Total revenue decreased by $699m to $10,612m primarily due to the inclusion of a
number of favourable one-off items in the prior corresponding period. These
included the partial sale of our interest in Computershare Limited for $386m and
the release of our obligations under the Telstra Additional Contributions
agreement to the superannuation fund of $725m. Offsetting this decline in other
revenue has been an increase in sales revenue of $508m to $10,266m due to:

• continued strong growth in mobile services, intercarrier and fixed to mobile
  due to increased call volumes and higher mobile customer numbers. Partially
  offsetting this growth is the decline in data and Internet services revenue 
  due to general economic downturn particularly in the IT industry;

• ongoing implementation of our rebalancing initiatives resulting in increased
  basic access revenue and decreases in local call and national long distance
  revenues; and

• the inclusion of $577m in revenues from our 60 per cent owned Asian controlled
  entity,known as the RWC (parent company of CSL). This is partly offset by a
  reduction in sales revenue from our global wholesale business of $407m 
  following its sale to our 50 per cent owned Asian joint venture Reach Ltd in 
  February 2001.


2  Total expenses +3.4%

Total expenses grew $250m to $7,519m due to:

• direct cost of sales increased due to higher volumes of outgoing calls
  terminating on other carriers'networks and an increase in mobile handset 
  sales;

• depreciation and amortisation increased due to continued capital expenditure
  on our communications plant asset base and ongoing software development, 
  together with $142m of depreciation and amortisation relating to our Asian
  controlled entity RWC;

• labour expenses decreased due to reduced staff numbers, partly offset by
  higher costs resulting from outsourcing arrangements and employee 
  redundancies;

• discretionary spending declined due to strong cost management;

• borrowing costs increased $66m to $417m due to a higher level of net debt
  following investment in our Asian ventures; and

• our share of net losses of associates and joint venture entities has decreased
  $73m to $93m.This is after taking into account our share of profits from our
  Asian joint venture Reach Ltd ($20m) and our share of losses, including
  restructuring provisions and asset write offs recognised on gaining control, 
  of TelstraClear Limited ($75m).



3  Underlying EBIT(a) +2.0%

Underlying EBIT has increased by $69m to $3,583m due to modest underlying
revenue growth and a strong focus on costs.


4  Interim dividend +3.0c
                     to 11.0 cents

Interim dividend per share was up 37.5 per cent to 11 cents demonstrating the
directors' confidence in the future performance of the company.



statement of financial
position

                                               As at Dec 2001    As at June 2001
                                                          A$m                A$m

   Cash                                                   652              1,077
   Other current assets                                 4,882              5,176
1  Total current assets                                 5,534              6,253
   Property, plant and equipment                       23,699             22,803
   Other non-current assets                             8,412              8,417
2  Total non-current assets                            32,111             31,220
   Total assets                                        37,645             37,473
   Current borrowings                                   3,509              2,604
   Other current liabilities                            5,770              6,675
   Non-current borrowings                              10,495             11,386
   Other non-current liabilities                        3,344              3,086
3  Total liabilities                                   23,118             23,751
   Shareholders' equity                                14,527             13,722


 
   statement of cash flows

                                                  6 months to        6 months to
                                                     Dec 2001           Dec 2000    
                                                          A$m                A$m         

   Net cash provided by operating activities           2,856              2,665
   Net cash used in investing activities              (1,483)            (1,480)
4  Free cash flow                                      1,373              1,185
5  Net cash used in financing activities              (1,829)              (999)
   Net increase/(decrease) in cash                      (456)               186


discussion and analysis

1  Total current assets -11.5%

Total current assets decreased by $719m to $5,534m due to:

• cash decreased by $425m mainly as a result of a loan provided to TelstraClear
  to facilitate the purchase of the Clear Communications Limited group;

• receivables decreased by $367m substantially due to the maturity of bank
  bills in October 2001 and the use of the those bills to pay the June 2001
  final dividend; and

• offset slightly by increases across prepayments of $19m, deferred mobile
  handset subsidies of $53m, and other deferred expenditures of $35m.


2  Total non-current assets +2.9%

Total non-current assets increased by $891m to $32,111m primarily due to the
acquisition of a controlling interest in TelstraClear. As a result of this
transaction, we have recognised $794m of property, plant and equipment in our
non-current assets as of 1 December 2001. Our non-current assets have also
increased due to normal capital expenditure and capitalised software additions
(net of depreciation and amortisation) during the period. These increases have
been partially offset by the net reduction in the book value of investments of
$207m. 


3   Total liabilities -2.7%

Total liabilities decreased by $633m to $23,118m. The net decrease in total
liabilities was mainly due to:

• current payables decreased by $341m due to lower levels of capital
  expenditure; 

• income tax payable decreased by $181m;

• provisions decreased by $114m partially due to redundancy payments made 
  against the provision relating to 1,166 employees;

• current revenue received in advance decreased by $269m due the timing of
  revenue collections relating to Yellow Pages(R) and White Pages(TM) 
  directories;

• total borrowings have remained relatively stagnant after re-financing
  activities, the funding of our working capital requirements, and the
  inclusion of loan balances relating to TelstraClear;

• deferred income tax increased by $307m due in part to the differences in 
  timing of depreciation recognition for tax and accounting; and

• offset by an increase of $636m on initial consolidation of TelstraClear.


4  Free cash flow +15.9%

Free cash flow increased by $188m to $1,373m driven primarily by a reduction in 
operational capital expenditure of $317m to $1,662m due to tight control of our 
capital program. Offsetting this reduced capital spend were increases in income 
taxes and borrowing costs paid.



5  Net cash used in financing activities +83.1%

Net cash used in financing activities increased by $830m to $1,829m mainly due 
to a comparable increase of $128m in the final dividend paid and the funding 
provided to undertake our acquisition of a controlling interest in TelstraClear.


investor information


Shareholding Information
Questions relating to your shareholding, including share transfers, dividends or
changing your mailing address should be directed to the Telstra Share Registrar
on FREECALL(TM) 1800 06 06 08*.

You can also log in to the website at www.registrars.aprl.com.au where you can
also obtain share registry forms to transfer your shareholdings, notify a change
of address, notify a deceased estate, provide dividend instructions and provide
your TFN/ABN.

Is it possible to put the money from Telstra dividends back into a 'reinvestment
plan' with Telstra? 
Currently, a Telstra dividend reinvestment plan (DRP) is not possible as the
Telstra Corporation Act precludes any reduction in the Commonwealth's voting
rights below a 50.1 per cent interest in Telstra. We cannot, therefore, easily
introduce a DRP or raise new equity without Commonwealth participation and there
is no assurance that the Commonwealth would be willing to subscribe for
additional shares in Telstra. 

Telstra's Shareholder Email Service Telstra has introduced a new alert service
via email for shareholders who don't wish to receive reports in the mail.
Shareholders can now elect to do away with the hard copy documents altogether
and instead we will notify you by email as soon as the reports are available on-
line at Telstra's web site www.telstra.com.au/investor. Shareholders wishing to
join this service can log in to the Telstra Share Registry website at
www.registrars.aprl.com.au to provide their email address. 

Is it possible to merge two Telstra shareholdings into one? 
A merger of two Telstra shareholdings is possible where the registration details
of both holdings are identical. For assistance with your merger query contact 
the Telstra Share Registry on 1800 06 06 08*. The Telstra Share Registry can 
also advise you if you wish to transfer shareholdings between two separate
shareholders. You can also download a Share Transfer form from the Telstra Share
Registrar's website at www.registrars.aprl.com.au 

*A free call from fixed phones. 


Australian shareholder split as at December 2001(1)

Retail shareholders by state

                                                      Number of        Number of
State                                              Shareholders           Shares
                                                                     
1  Australian Capital Territory                          42,806       65,929,351
2  News South Wales                                     584,867    1,006,129,985
3  Northern Territory                                     9,494       12,566,378
4  Queensland                                           273,056      438,987,552
5  South Australia                                      141,999      225,690,558
6  Tasmania                                              26,930       39,140,389
7  Victoria                                             595,169    1,000,214,305
8  Western Australia                                    192,505      308,580,408
                                      
   Total Australia                                    1,866,826    3,097,238,926


(1) As at 31 December 2001 includes Australian domiciled shareholders holding
    less than 100,000 shares. Shareholdings of greater than 100,000 are
    considered institutional shareholders and hence not included in this table.

financial calendar 2002

                                 Jun     Jul     Aug     Sep     Oct     Nov
Full-year end                    30
Annual result announced                          28
Ex-dividend share trading starts                         16
Record date for final dividend                           20
Final dividend paid                                              28
Annual General Meeting                                                   15

Note: Timing of events can be subject to change 


contact details

Telstra Corporation Limited
Incorporated in the
Commonwealth of Australia

Telstra is listed on Stock
Exchanges in Australia,
New Zealand (Wellington)
and USA (New York)

Registered Office
Level 41, 242 Exhibition Street
Melbourne Victoria 3000
Australia

Douglas Gration
Company Secretary
Ph: (03) 9634 6400

Principal Australian Offices
242 Exhibition Street
Melbourne Victoria 3000 Australia

231 Elizabeth Street Sydney
New South Wales 2000 Australia

Investor Relations Unit
Level 36, 242 Exhibition Street
Melbourne Victoria 3000
Australia

Wayne Treeby
General Manager
Ph: (03) 9634 8632

The Telstra Share Registrar
ASX Perpetual Registrars Limited
PO Box 14300 Melbourne City MC
Victoria 8001

Shareholder Enquiries
Australia:FREECALL(TM) 1800 06 06 08*
All other: (613) 9615 9999
email: [email protected]
website:www.registrars.aprl.com.au
Facsimile: (613) 9615 9911

Website
The Half-year Report can also
be found via Telstra's Investor
Relations home page at:
http://www.telstra.com.au/investor

*A free call from fixed phones.


This release contains graphics - Full announcement can be viewed at 
www.telstra.com.au/investor/asx.htm'






                      This information is provided by RNS
            The company news service from the London Stock Exchange
                                                                                                                                    

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