Telstra : 2022 Annual Report (Pages)

Telstra Annual Report 2022

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

And delivering the best tech

On the best network

Because our purpose is to build a connected future so everyone can thrive

Our values

Together with our purpose, our values express what we stand for and guide the way we do things.

They are core to who we are and we align everything we do with them. Here at Telstra, we have four values.

We are changemakers

We are better together

We care

We make it simple

We think big, set ambitious goals and deliver them - for our customers, shareholders and communities. By speaking up, being curious to learn and valuing different perspectives we challenge the status quo and make change.

We're one team and embrace the value each of us bring. Our (super) power lies in working together to deliver for our customers. We're each accountable for our actions and do what we say we're going to do.

We show care in all that we do. We do the right thing for our customers, our communities, the planet, ourselves and each other - even when no one's watching.

What we do is complex, but we always make things simple for our customers and each other. Simple doesn't necessarily mean quick. We keep the simple, simple.

These are the values we stand for - the values by which we measure all of our actions.

Putting these values into action will help us to build a connected future so everyone can thrive.

Front cover image: Jane, Telstra team member, Bathurst Call Centre, NSW

Telstra Corporation Limited

ABN 33 051 775 556

Our 2022 reporting suite

Our FY22 reporting suite includes:

Our 2022 Telstra Annual Report (this report)

which describes our strategy, financial performance and remuneration practices for FY22.

Our 2022 Corporate Governance Statement

which provides you with information about governance at Telstra.

Our 2022 Bigger Picture Sustainability Report

which provides an in-depth look at our approach and performance in relation to our most material social and environmental topics during FY22.

Our 2022 Climate Change Report

which summarises our climate-related governance, strategy, risks, targets and activities aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Our 2022 Human Rights and Modern Slavery Act Statement

which provides an overview of how we identify, manage and mitigate the specific risks of modern slavery in our operations and supply chains.

These reports are all available on our governance website at telstra.com/governance.

The sections of our Annual Report titled Chairman and CEO message, Strategy and performance, Our material risks, Outlook, and Full year results and operations review comprise our operating and financial review (OFR) and form part of the Directors' report. Our OFR, Directors' report and Financial report were released to the ASX on 11 August 2022 in the document titled 'Financial results for the year ended

30 June 2022' which is available at telstra.com/investor.

Contents

Chairman and CEO message	2
• CEO transition	4
• FY22/T22 achievements	5
Strategy and performance	6
• FY22 financial performance	7
Our material risks	14
Outlook	18
Full year results and operations review	20
Board of Directors	30
Senior management team	33
Sustainability	34
Governance at Telstra	35
Directors' Report	37
• Message from the People and Remuneration Committee Chair	42
• Remuneration Report	43
Financial Report	75
• Financial statements	77
• Notes to the financial statements	83
• Directors' declaration	160
Shareholder information	165
Reference tables	169
Glossary	173
Indicative financial calendar	176
Contact details	176

Chairman and CEO message

Dear Shareholders,

Thank you for your continued support and investment in Telstra during the 2022 financial year.

Four years ago, your company embarked on a bold transformation strategy to fundamentally change Telstra for the better and this year, we are delighted to report, those four years of discipline, focus and hard work under our T22 strategy have paid off and your company is now positioned for continued growth.

Our investments in innovation and technology, in digitisation and networks, in improving our customer experiences and ways of working, and our disciplined approach to capital management mean Telstra today is a fundamentally different company with an incredibly bright future.

A summary of our many achievements under T22 is included and more information is available on these and many other key initiatives in the Strategy and Performance section of this report.

Importantly, and even while the business was being transformed, we maintained a disciplined approach to our capital management, and this year our financial performance enabled the Board to resolve to pay a final dividend for FY22 of

8.5 cents per share, returning $1.9 billion to shareholders. An additional $1.35 billion was also returned to shareholders via an on-market share buy-back following the sale of a non-controlling interest in our Amplitel towers business for $2.8 billion.

Work is also well progressed on our proposed restructure. The Corporate Restructure is a legal re-organisation of the Telstra Group. Under the Corporate Restructure, a new structure will be established with New Telstra Corp as the head entity of the Telstra Group. Four key subsidiaries will sit under New Telstra Corp:

• ServeCo - which will own and operate the ServeCo Business;
• InfraCo Fixed - which will own and operate the InfraCo Fixed Business;
• Amplitel - which owns and operates the Amplitel Business. The Telstra Group's 51% interest in Amplitel is held by Amplitel HoldCo; and
• Telstra International - which will own and operate the International Business.

All of these businesses will continue to focus on creating innovative products and services, supporting customers and delivering an exceptional customer experience. Intercompany Agreements (ICAs) have been or will be established between the entities to help ensure they each have the infrastructure access, services and support required to enable them to achieve this.

The Corporate Restructure is a key component of the T25 strategy Telstra announced last year. It is an important next step in Telstra's drive to increase focus on its customer and infrastructure businesses, increase transparency of the assets in these businesses, and create greater flexibility and optionality to realise value from the Telstra Group's fixed infrastructure assets over time.

The Corporate Restructure is an internal legal re-organisation and will not, in itself, result in any immediate change to the underlying assets and business activity of the Telstra Group as a whole.

At the same time we have also continued to build on our work as a leading responsible business. Telstra is a key contributor to the economy, a major employer and a significant user of resources, so we have a responsibility to make contributions to the betterment of society.

That means the obligations we have to our customers are not just defined by the small print of our contracts but by our purpose and values as an organisation.

It also means continuing to take a leading position and acting on key issues including climate change, diversity, digital inclusion and human rights. It also means working to rebuild trust with First Nations communities and we were pleased to have launched our new Reconciliation Action Plan recently which sets outs our commitments and actions we will take. We encourage you to learn more about our response to these key issues, and our broader approach to responsible business in our Bigger Picture 2022 Sustainability Report, which will be available from

26 August 2022.

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Chairman and CEO message | Telstra Annual Report 2022

From T22 to T25 - our new strategy for growth

In FY23 we move from T22 to T25. The move to T25 marks an exciting new era in Telstra's history, one that will see us accelerate growth from our core as well as continuing to scale our successful Health and International businesses while we invest in new businesses like Telstra Energy, where we see opportunities in the future.

We will build on the simpler world we have created for customers and give them an exceptional experience with even greater personalisation, more consistency across our channels, and the products and services they need to connect as individuals and grow as businesses.

We will take advantage of the many great strides made in our 5G rollout and boost capacity, speed and population coverage of our mobile network. We will also expand our regional network by an extra 100,000 square kilometres so we can continue to deliver leading mobile coverage and build on our network leadership.

We will continue to improve our reputation as a responsible business, further reducing our carbon emissions, supporting our most vulnerable customers and continuing to build fairness, inclusion and accessibility into all that we do. We know we are changing the business for the better, but we also know we need to continue to work hard to convince customers of the benefits of the changes so they want to do business with us.

We will continue to evolve how we work so that we build on what we have created by using Agile which has completely changed the way we do business, making us faster to market, more efficient and more customer focussed. Hybrid ways of working are also enhancing the flexibility in our workplaces and we continue to ensure our teams have all the learning opportunities and tools they need to grow so that we truly become the best place to work.

And, we will finally leave behind the nbn headwinds that have impacted our financials and make the most of the productivity gains we have made across the business to deliver sustained growth and more value for our shareholders.

We were successful with T22 because we were bold. We set ourselves some big, ambitious goals and executed with discipline and transparency. We will take this same disciplined approach with T25.

COVID-19 has turbo-charged the digitisation of businesses, under-scored the critical importance of connectivity and transformed education and healthcare. Norms around how - and where - we work socialise and educate ourselves have also been turned on their head. At the same time geopolitics is about as volatile and uncertain as most of us have seen in our lifetimes, and that has changed the threat landscape and the demands on our cyber defences and strategic supply chains. Inflation and cost of living pressures also continue to challenge. And all the while the climate continues to change, with a corresponding increase in the frequency and severity of natural disasters.

All of these things will shape our country and our planet over the next decade, and they will shape Telstra. But with the transformative changes we have made through T22, and the changes we will continue to make through T25, we are in the best possible shape to deal with them, and to help our customers do the same.

Our new era of growth will also be led by a new-look leadership team with Vicki Brady and Michael Ackland taking on the CEO and CFO roles respectively from

1 September. A new Group Executive of our Consumer

• Small Business unit will also be appointed to drive our customer focus.

Thank you

The Telstra Board and senior management team would like to sincerely thank our millions of customers for their ongoing support during the year, because ultimately without them, there would be no Telstra. Thank you also to every Telstra employee for the great job you have done, often in trying circumstances, and for your constant willingness to step up and do what is needed.

The Board would also like to acknowledge and thank retiring directors Margie Seale and Peter Hearl for their outstanding contribution over many years.

And most importantly thank you, our shareholders, for your continued support of Telstra.

John P Mullen

Chairman

Thriving in a challenging environment

Of course, Telstra doesn't exist in a vacuum and just as we have transformed over the past four years,

so too has the world around us. Technology innovation continues to accelerate, with the metaverse rapidly taking shape, 5G and 4G near-pervasive, and IoT and AI reaching real scale.

Andrew R Penn

Chief Executive Officer and Managing Director

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