Telstra : Investor Day II - transcript

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17 November 2021

The Manager

Market Announcements Office

Australian Securities Exchange

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SYDNEY NSW 2000

ELECTRONIC LODGEMENT

Dear Sir or Madam

T25 - Telstra Investor Day - briefing transcript

Office of the Company Secretary

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MELBOURNE VIC 3000

AUSTRALIA

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I attach a copy of the transcript from the briefing held yesterday in relation to Telstra's Investor Day, for release to the market.

Authorised for lodgement by:

Sue Laver

Company Secretary

Telstra Corporation Limited ACN 051 775 556 ABN 33 051 775 556

Telstra Investor Day, 16 November 2021 - Transcript

Introduction

Nathan Burley:

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Good morning. Thank you for joining us. And welcome to this Telstra Investor Day to discuss further detail of our T25 strategy. I'm Nathan Burley, Head of Investor Relations.

Having broadcast most of our recent events from home, it's great to be able to join you from Telstra's Melbourne offices. These are located on the traditional lands of the Kulin Nation. Before we commence, Telstra would like to acknowledge the rich and diverse stories, cultures and traditions of all First Nations people across Country. After the Acknowledgement to Country video, you will hear from Telstra's CEO, Andy Penn.

[Acknowledgement to Country Video begins]
[Acknowledgement to Country Video ends]
Presentation from Andrew Penn
useAndrew Penn:	Well, thank you very much, Nathan, for hosting today, and I really enjoyed
personal	that warm Welcome to Country. And welcome everybody, and thank you
for joining us.
slots for Q&A, and I've also asked Vicki to join us for those.
	The purpose of today is to deep dive into more aspects of our T25 strategy,
	which of course we announced in September. First you will hear from
	Nikos Katinakis, our Group Executive of Networks and IT, and Kim
	Krogh Andersen, our Group Executive of Product and Technology.
	Between them, they are responsible for the second pillar of our T25
	strategy - leading network and technology solutions that deliver your
	future.
	After we hear from Nikos and Kim, Oliver Camplin-Warner, who is
	joining us from Hong Kong, will take you through our international
	strategy, including the recently announced acquisition of Digicel Pacific.
	Mary Foley and Ben Burge will then take you through our new markets'
	businesses, Telstra Health and Telstra Energy. We've allowed a couple of
For	So that's the running order for today. But before handing over to Nikos
and Kim, let me make a few introductory comments.

T25 is our new strategy to accelerate growth from our core, and to scale our new businesses. It's a strategy to further enhance customer experience, and to respond to the permanent shifts that we are seeing in how people work and live. It's a strategy to capitalise on the establishment of InfraCo, and the changes that we are making to our company to create a more contemporary structure for the future.

T25 is built on the foundation we have created through T22, which is why our immediate priority must be, and is, to finish the job on T22. It's so important for the success of T25, and it includes:

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Telstra Investor Day, 16 November 2021 - Transcript

For personal use only

• Firstly, progressing our digitisation and customer migration to the new technology stack that we have built. This is really now starting to gain momentum, and we have more than three million services in this world. And the NPS from these customers is orders of magnitude greater than those from legacy.
• Secondly, completing the Group restructure to drive value from InfraCo, while preserving Telstra's core network differentiation. This remains on track, and you will have noted the introduction into Parliament of changes to legislation which are consistent with this.
• Thirdly, extending our 5G leadership, and consolidating our position as Australia's largest 5G network. Umlaut's 5G audit conducted earlier this year showed that Telstra had by far the widest availability in each of the nine tested cities, and led on 5G speeds averaged across those cities.
• Fourthly, restoring financial momentum in our Enterprise business, where we are on track to deliver overall growth in revenue and EBITDA this financial year.
• Fifthly, launching the new energy business. We have now received final approvals for licences in Queensland, New South Wales, and South Australia.
• Sixthly, integrating our recent health acquisitions, MedicalDirector and Power Health, to underpin our domestic and international expansion plans.
• Seven; growing services and building deeper relationships with our customers through Telstra Plus, where we have more than 3.8 million customers already signed up. Telstra Plus is an incredibly powerful platform for us to drive value and reward loyalty for our customers.
• And finally, of course, delivering on our net cost productivity target of $2.7 billion by the end of this financial year.

Since we launched T25 in September, we've also made several major announcements that I wanted to touch on briefly. Firstly, of course, Digicel Pacific. We are progressing well in our partnership with the Australian Government in completing the purchase of Digicel Pacific. You will hear more about the acquisition today from Oliver. But we're on track to complete the transaction following regulatory approvals in the first quarter of 2022.

We've also recently announced a major deal with the Australian Department of Defence to deliver critical network and telecommunications services. It's a five year $1 billion plus contract. And yesterday, you will have seen our announcement to partner with Quantium to apply their groundbreaking data science and AI capabilities to Telstra's unique

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Telstra Investor Day, 16 November 2021 - Transcript

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customer, product and network data assets, as well as offering AI services to our Enterprise customers.

With that, though, let me now turn to T25.

While T22 was a strategy of necessity, T25 is a strategy for growth. Like T22, T25 is built around four key strategic pillars.

Firstly, to provide an exceptional customer experience that you can count on. Nothing is more important and this sits at the very heart of our T25 strategy, by leveraging the capabilities that we have built through T22.

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. And you're going to hear from Kim and Nikos about how we're going to continue to be so.

The third pillar is to create sustained growth in value for our shareholders. As we move forward from a period of the transition to the NBN, and out from underneath that economic headwind, the significant interventions that we have made in turning around our business and taking out cost, are now starting to flow through to our bottom line.

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 doing business responsibly as a leader.

T25 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. And as I said in September, we will deliver T25 through our five key businesses; Consumer and Small Business, Enterprise, New Markets, International, and Infrastructure. And of course, each of these has its own ambition reflecting the place it is at, and the opportunities that lie ahead.

We of course covered Consumer and Small Business, Enterprise and Infrastructure in detail in September. So today we will focus on New Markets and International. And for our New Markets, our ambition is very simple. It is to grow our Health and Energy businesses profitably to scale.

We're very excited by the opportunities for these businesses, and their strategic direction. But we also know we need to increase their economic significance to the value of Telstra. And you're going to hear from Ben and Mary, who are two very experienced leaders in these respective fields, on this today.

For International, our ambition is to deliver profitable growth and value, by leveraging the growing strategic significance of our international

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Telstra Investor Day, 16 November 2021 - Transcript

For personal use only

network. There is no doubt, with rapid digital adoption the importance of our international assets has taken on a whole new complexion.

Before I hand over to Nikos and Kim, though, I just want to make a couple of comments on digital leadership. Because as we become more of a technology-led company, and as we build new capabilities in new areas, such as software development, data analytics, and artificial intelligence, we need to increase our attractiveness as the place to work for this talent.

There are four key elements to our approach to digital leadership. Firstly, we will lead with a digital first and data driven mindset. By 2025 we will have 100% of our key business processes enhanced by AI. We already have more than 100 data scientists at Telstra, and we have built a major data sharing platform in partnership with Microsoft, the Telstra Data Hub. Yesterday's announcement with Quantium is another great example of the sort of initiatives we are implementing to drive this change.

Secondly, is our approach to digital infrastructure, which will be cloud- based, with a decoupled architecture, using APIs. APIs, or application programming interfaces, are essentially software interfaces that allow two applications to speak to each other. By architecting your technology with APIs, it adds value to the core technology platform, because it widens the base of developers that can add services on top of it. It also increases speed to market with new products and services, and improves efficiency. We expect to have 100% of key business applications using API first architecture, and 90% of applications on public cloud infrastructure by 2025.

Thirdly, we will embed digital ways of working such as expanding our use of BizDevOps, and continue to build our digital skills in software and data. In conjunction with what we're doing with our approach to architecture and APIs, this increases the velocity with which we can deliver new technology.

And finally, by delivering an outstanding developer experience and through digital partnerships, you can make it easier and more attractive for developers to enhance your core services, with their own value add-ons.

These principles of digital leadership are already implicit in the way in which we approach technology today. However, through T25, we are making them explicit, and setting targets to accelerate our journey to become a truly technology-led company.

I hope that helps set the scene for today's discussion, and gives you a sense of our immediate priorities, as well as our longer term ambitions. We are looking forward to the future with a great sense of confidence in our ability to deliver our strategic ambitions, and importantly, return Telstra to growth. And as with T22, how we do things will be as important as what we do, which is why our approach to digital leadership is so important.

Thank you. And with that, and before you hear from Nikos, we have a

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