Shareholder Meetings

Annual General Meeting

The AGM of Telstra Group Limited was held on Tuesday 17 October 2023 in the Sovereign Room (Level 1), Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf, Victoria 3006 and online using the platform provided by our share registry, Link Market Services. A recording of the meeting will be available soon.

2023 AGM recording

Video content description

Recording of the 2023 AGM held on Tuesday 17 October 2023 in the Sovereign Room (Level 1), Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf, Victoria 3006.

Nathan Burley:

Good morning shareholders. I am Nathan Burley; Head of Investor Relations and it is my pleasure to be your MC today for our 2023 Annual General Meeting.

Before we start official proceedings, I'd like to begin by acknowledging the traditional owners of the land on which we meet, the Wurundjeri people of the Kulin Nation. I pay my respects to their Elders past and present. I'd also like to acknowledge the traditional owners of country throughout Australia and recognise their continued connection to land, waters and culture. I would also like to extend that welcome to all Aboriginal and Torres Strait Islander people who are here today.

Welcome to everyone here in the Sovereign Room. It is great to see so many shareholders here today. We are conducting a hybrid AGM again this year. So I'd like to welcome everyone joining online from wherever you may be. There are a few procedural and housekeeping matters to run through before we get underway.

For those in the room, we will be serving a light lunch at around 12 noon. However, if the AGM has not finished by that time we will not be adjourning for lunch. You also have been given a card when you registered this morning. Yellow cards are for shareholders who may speak and vote. Blue cards are for shareholders who may speak but not vote. You will need your card to ask a question or to re-enter the meeting.

A slide is going up behind me which explains how to vote. If you have any queries about how to vote, please speak with one of our team members in the room or in the shareholder registration area outside, who will be able to assist you.

The procedure on how to ask a question here in the room is now being shown on the screen. For shareholders joining us online, on your screen you will see our Virtual Meeting Guide. This contains all the information you need about how to vote and ask questions. You can also call the help number shown on your screen if you have any difficulties.

In terms of how we will manage shareholder questions today, for each question session we will rotate between taking questions from online, from the room and on the web phone. We may have quite a few questions to get through so we please ask shareholders to be patient.

I will read the online written questions to the Chairman as they have been written by shareholders. If we can't answer your question, or we can't get through all the questions today, we will respond to any unanswered questions after the meeting, either directly through the answers to common questions or through the answers to common questions on our AGM website.

If you have any individual customer or shareholder issue, please speak with one of our customer service team members here today.

For shareholders submitting written questions online, one of our customer service or share register staff will be in touch with you after the meeting.

For shareholders joining us online, the online platform is now open and I encourage you to submit any questions you may have now.

With those procedural matters out of the way, I will hand over to your Chairman, John Mullen.

John Mullen:

Good morning, ladies and gentlemen. My name is John, John Mullen, and it is my great pleasure to welcome you this morning to Telstra’s 2023 Annual General Meeting. Thank you all for joining us today and for your continued support and investment in Telstra.

This is of course also a hybrid meeting, so a very warm welcome to the many shareholders who have chosen to join us online. A quorum is present, and it is my pleasure therefore to formally declare today’s meeting open. A Notice of Meeting was distributed earlier setting out the business and resolutions to be considered today. I propose to take that Notice as read.

There are a number of items of business on today’s agenda and all of them are now being shown on the screen. Voting on items 3 to 5 will be conducted by poll and that poll is now open. Instructions on how to participate in the poll were distributed earlier but assistance is available at any time, should you need it.

I am pleased to be joined on stage today by all of my fellow Board members; Company Secretary, Sue Laver, our Chief Financial Officer, Michael Ackland. Directors Maxine Brenner and Ming Long, having been appointed during the year, are standing for election. Current directors, Bridget Loudon and Elana Rubin are also both standing for re-election today. You will hear from each of them shortly. Sarah Lowe from our auditors Ernst and Young is also here today and I’m sure she would be happy to answer any questions you may have on the conduct of the audit, or on the auditor’s report itself. Our senior management team is also present.

This will be my last AGM as Chair as I come to the end of what has been a tremendously rewarding 15 years serving on the Telstra Board. I will only comment briefly on the year just passed and will leave our CEO, Vicki Brady, to provide more detail but I would like to take this opportunity to look back and reflect upon what has been an extraordinary 15 years.

There have been many ups and downs and lessons learned, and I will try and share some reflections with you in a minute.

Firstly though, looking briefly back over the last 12 months. It has been a very successful year on almost all fronts. We farewelled Andy Penn as a very successful CEO of Telstra, and we welcomed an outstanding new leader for the company in Vicki Brady.

We attained most of our financial targets and we delivered within guidance. We have made good progress in our first year of delivering against our T25 strategy. We have returned to growth, strength in mobiles, and our investment in customer experience all paying off with Episode NPS, Net Promoter Score, at record highs and customer complaints at record lows.

Our sustainability initiatives continue to progress well and lead the telco sector in Australia. The year has seen substantial progress on many fronts, but of course there is always so much more to do.

Before moving on, ahead of today’s meeting we received a number of questions about Telstra’s support for a First Nations Voice to Parliament, so let me address that one up front. We recognise that there are different and passionate views out there in the community, both for and against. In Telstra’s case, we decided that supporting the Voice was in the best interests of the Company and our shareholders.

It was not a decision taken as a result of the personal views of any Board or management members individually and indeed just like the community there are differing views amongst both our Board and management. However, where we are all in agreement, was that support is in the best interests of the Company and therefore our shareholders.

Telstra is a long-time supporter of reconciliation and has strong connections with First Nations through our employees, customers, stakeholders and communities across the country. It was made clear to us that the majority of First Nations peoples endorsed the Voice as critical to the future of reconciliation, and we took these views very seriously.

We also strongly believe that reconciliation is a positive step forward for our country and for the economy and therefore positive for our business and our shareholders. For this reason, and because we are a values based company that supports our words with actions, we supported the Yes campaign by providing $1 million of advertising spend.

Following the referendum outcome on the weekend, we respect the result that our democratic system has delivered. We remain committed to reconciliation and we will continue to work in close partnership with First Nations people and communities across Australia.

So now if I may, let me share a few reflections on the last 15 years, some of the things that went well, some of those that did not go so well, and some of the lessons learned.

Let me start by saying that Telstra is in a really good place. The Company is a completely different entity than it was 15 years ago - stronger and better in so many ways. The speed and scale of change in the telco and technology sectors is staggering. These last 15 years have seen the launch of 3G, 4G and then 5G; the launch of the first iPhone through to the iPhone 15 and the complete revolution of mobile communications.

The Telstra that we knew was also impacted significantly by the creation of the NBN. During this time, Telstra transformed itself into a dynamic modern telecommunications leader. We were the first to launch 4G and then 5G in Australia and we consistently rate as having one of the best mobile networks in the world. We cover more of Australia with our mobile network than any other company and customers have access to high quality voice, text, video and internet communications in more places at a range of different price points than ever before.

The last 15 years have also seen an exponential increase in the amount of mobile data flowing over our network and the number of things connected on our network, from schoolrooms to tractors, telehealth services and work from home setups.

You may be surprised to know that the price of our entry level month to month mobile plan is just $2 more today than what it was 10 years ago but the data included has increased by 25 times and that’s not to mention the increases in coverage and speed on the network and that nearly all of our in-market mobile plans now come with unlimited standard voice calls in Australia.

While providing this huge increase in data availability and speed and helping to enable enormous digital advancement, Telstra has lost over $6 billion of profit in the last decade or so. This has been predominantly from the impact of the NBN but also the loss of voice revenues, SMS revenues and other pressures, and had an inevitable impact on earnings, dividends and our share price.

We have bounced back strongly. Our T22 program to radically restructure the Company to offset some of these negative impacts has been extremely successful. Financially, over those 15 years we have paid out over $45 billion in dividends to shareholders. We have paid some $20 billion in tax to the nation and our contribution to society beyond financial considerations has also been considerable.

As a corporate citizen we are active on many fronts. To protect customers and the public from ever rising cybercrime, Telstra blocks more than 9 million scam calls and almost 280 million incoming scam and unwanted emails every month and around 20 million SMS messages since we launched our Cleaner Pipes initiative in 2022.

We are making a big contribution to the transition of Australia’s energy sector by supporting more than $1 billion in renewable energy projects to date and we are one of the largest corporate contributors to renewable energy projects in the country.

Last financial year we supported some 1.2 million customers in vulnerable circumstances to allow them to stay connected and we have expanded this to reach more customers experiencing mental health challenges, disability, homelessness, family or domestic violence or who need emergency relief due to natural disaster. We also invest heavily in disaster preparedness and response to keep communities connected.

We are working to improve digital inclusion across a range of areas; in how we help seniors and First Nation Australians to grow their digital skills, in how we provide a range of price points for customers experiencing cost of living pressures and in how we are bringing new and better services to regional and remote Australia, including with Low Earth Orbit satellites and other technologies.

When I look at Telstra today, it is almost unrecognisable from the company I joined back in 2008 and I must pay tribute to the many, many people across our organisation who have made all of this possible. Firstly, when I look at my Board colleagues here today, I feel immensely privileged to work alongside individuals of the calibre, experience and ability they represent.

I believe that we have the strongest Board today that we have had in my 15 years and every single individual is exceptional. Exceptional not just in capability and contribution but also in diversity and character. Diversity on Boards today is so often just a euphemism for a male/female ratio. Telstra has a good balance there, but real diversity comes from diversity of thought, of values, of background, of age and more, and I am intensely proud of what we have achieved around the Telstra Board table.

Everyone brings a different perspective, skill, experience and contribution to the table but we function as a united team and how good is it that we were perhaps the first and maybe only large ASX corporate to need a director’s parental leave policy, as we have a young mum sitting on this Board with us.

I am proud too that the strength of the Board is allowing for a seamless transition in Chair from myself to Craig Dunn. Craig is a simply outstanding director and is absolutely the right person to lead the Board into this next phase.

Then when I look at our management team, again I feel that we are looking at the best management team that we have had in many, many years. The Board could not be more delighted with the way that Vicki has taken up the reins as CEO after the very successful tenure of Andy Penn.

Vicki is an outstanding leader who is widely respected within the Company and outside, amongst investors, the business community, government and other stakeholders. I have absolute confidence that Vicki and her management team will take Telstra on to new heights in the years to come and will retain Telstra’s position as the leading telecommunications company in Australia, and a company that directly or indirectly impacts the lives of almost everyone in Australia.

If I look forward and reflect on the challenges that my colleagues have ahead of them, I think that the years ahead will probably see just as many changes and new challenges going forward as we have seen in the 15 years that I have been here.

It will no longer be my responsibility but it will be that of Craig, Vicki and their colleagues to set the direction going forward. As I step down, I have four thoughts to pass on which of course my colleagues may choose to agree with or reject as they see fit.

The first is about the evolving role and value of telecommunications services. Telecommunications is a highly competitive industry but Telstra has been good at competing and will continue to be so. However, I believe that the big changes in our world are going to come from other areas of disruption changing our industry on a global scale.

Satellite technology is going to change the nature of the industry, especially in regional areas and in this context, an ever increasing challenge is how to monetise the extraordinary technology and capabilities offered by telco’s like Telstra. Telstra and the industry pay for the networks and the capacity that carry all this explosion of traffic but when you think about the volumes of data carried, we get paid less and less for it.

We need to set policy and regulatory frameworks that allow the industry to remain financially sustainable, and this is even more important now given the critical role that telco infrastructure and services will continue to play in Australia’s digital future.

While Telstra does better than most, telecommunication returns on capital are still low and finding a solution to this and sharing more in the rewards to be gained from increased connectivity will be a key challenge for my colleagues going forward.

Telecommunications is so much more than just being able to give someone a call on the mobile or access a website to check your bank account or even buy a footy ticket. The reality is that telecommunications represents the essential digital infrastructure of a modern successful nation and it impacts everything that we do both in private and in business.

Telecommunications drives productivity across all facets of life and increased investment in the nation’s digital infrastructure with industry, community and government working hand in hand is critical to the nation’s future prosperity. I urge my colleagues to make sure that Telstra plays a leading role in engendering this cooperation and investment in the future for us and our children.

Second, when I look back at what we have not been as successful at as I would have liked, I consistently land back on the customer experience. This is truly a glass half full / glass half empty story, because to the credit of management, on the positive side, there is no question that every single metric around the customer experience has improved dramatically in recent years.

Ombudsman complaints against Telstra have reduced by nearly 70% since the beginning of T22 and are at their lowest on record. The number of inbound calls to customer service over the four years to [FY22] reduced from around 36 million to just over 10 million, a reduction of 71% and we can see that customers are feeling the benefits of digitisation, comparing the new digital stack to the old, Episode NPS has doubled and the average time for fixed activations has halved.

However, even though the percentage of errors and failures has improved dramatically and in most cases is the best that it has ever been, there are still too many instances of customer experience failures. Even one error is too many in today’s digital world and society’s ever increasing expectations for rapid and efficient service.

I urge my colleagues to redouble their efforts to be relentless in driving improvement and not to rest until Telstra is seen as a role model for modern digital delivery of telecommunications services.

Third, I would urge my colleagues to be bold and to take risks. Not decisions that risk the whole Company of course, but sitting and waiting for the world to change, rather than driving the change itself, is guaranteed to ensure that one is always behind and not in front.

While not perfect, Telstra actually has a pretty good record in this regard. For example; our 2010 decision to spend around $1 billion to grow market share in all product segments, ramp up customer service and to simplify the business; our 2016 decision to invest $3 billion in digitisation and networks; our 2018 decision under T22 to simplify and digitise, create InfraCo and dramatically reduce cost; and our 2019 decision to double down on 5G launch investment to lead the industry.

All these led to us maintaining our market leadership, investing for the future, and delivering a better customer experience. If we hadn’t, we would not be in the strong position that we are in today. To my colleagues, be brave and keep this up. You will get criticised for the odd failure but I am 100% sure that the Company will do better by continuing to take such risks than by sitting on its hands and just hoping that things will go well.

Fourth and finally, let me make a few comments on the extraordinary changes that we have also seen in these last 15 years in respect of the public company sector, governance, regulation and the general business environment, as they relate to Telstra.

Many things are for the better, and overall there's no doubt, business is better, more ethical and better regulated than it has ever been. This said, the change has been profound and while all of it was well intentioned and done for the right reasons, the consequences have perhaps not always been what were intended.

The focus on executive remuneration is one example. Setting remuneration for executives should be exercised by a Board to attract, motivate and reward executives. Today, however, industry is effectively increasingly the outsourcing remuneration to a whole new industry of remuneration advisors and proxy advisors with executive remuneration becoming ever more complex and being required to meet a whole selection of criteria from different stakeholders to obtain shareholder approval.

Today there is also a simplistic view held by many that if a company’s share price is down, then executives should receive little if any variable compensation. If the share price is down due to acts or omissions of management then of course that is fair, but if the share price is down because of external events outside management’s control, and they have a massive task in front of them to get the Company back on its feet, then in my view it is even more in shareholders’ interests to motivate and reward executives for their hard work in these challenging times than it is in good times.

The reality, however, is that this is very difficult for the Board of a public company to do without coming under criticism from all this range of third parties. Another example would be that for some reason it's believed that paying directors part or all of their compensation in shares somehow limits independence. So the great majority of companies pay their directors in cash.

I cannot think of any better way to align shareholders’ and directors’ interests and the Company's interests than to pay directors in shares, with a simple time lock on how long they have to be kept before they become unrestricted.

There are other examples of how complex corporate governance has become over the years and the result has been that the average large company Board today spends an ever increasing amount of time on governance and process and less on strategy and performance. In my view, these trends are to the detriment of the public company structure in Australia and the huge beneficiaries of all this of course, have been private equity and private capital generally.

Private companies today perhaps have a far better balance between strategy and performance versus governance. Decision making processes are shortened, risk taking is encouraged, investing for the longer term not just the next half’s result is paramount, and the remuneration process is greatly simplified.

About 15 years ago when I started, private capital was not such a significant player, but today that has completely reversed. At the executive level more and more talented executives just do not want all the public scrutiny and hassle so they prefer to work in private equity or other private structures and the same increasingly goes increasingly for directors.

So I think there is a lot that we can learn from private equity and private capital in how to make companies leaner, faster and more efficient and I hope that the pendulum starts to swing back a bit the other way as we still need a healthy and dynamic public company regime in Australia.

So I will close here by saying again that your Company is in great shape and performance is strong. The future looks exciting and Telstra is right in the middle of the most profound technological change the world has ever seen. Telstra is today and will remain, the essential core of our nation’s infrastructure and will have a more and more important role to play in the prosperity and success of our nation going forward.

I profusely thank you as shareholders for allowing me the extraordinary privilege of being on the Board of Telstra for 15 years and being Chairman for seven. These have been some of the best years of my working life. Thank you to my fellow Board members for the fantastic support, friendship and contribution you have given me over these years and thank you to the management team and employees of Telstra for having put in all the hard work that has brought the Company to where it is today.

I wish Craig every success in taking on the role of Chair and I have total confidence that the combination of Craig and Vicki, with the respective Board and management teams behind them, will take Telstra on to a whole other level of achievement in the years to come.

I shall continue to watch from afar with great interest and much affection. Thank you and let me now hand over to Craig to say a few words as well.

Craig Dunn:

Thank you, John and good morning, ladies and gentlemen. John, on behalf of the Board and Telstra’s shareholders can I express our deep thanks and appreciation for your service over the last 15 years.

You’ve made an enormous contribution to the Company, especially in your last seven years as Chair. You’ve helped steer the Company through some of the most significant changes in its history, including the NBN negotiations, which you referred to, and their very substantial impact on the business, and of course, the Company’s very successful transformation under the T22 strategy.

Today, under John's leadership, Telstra is leaner, it's more agile, and it's strongly positioned to grow, with a world class network and with infrastructure assets, that will help underpin Australia’s digital economy for decades to come. So John, once again thank you and all the very best wishes to you and Jacqui. Well done.

So following this meeting, today, I will take on the role of Chair of Telstra. I am deeply honoured to be given that opportunity. I want to thank my colleagues on the Board for their support. I am very energised and confident about Telstra’s future, and I look forward to continuing to deliver for you, our shareholders, for Telstra’s people and for our millions of customers right across this great country. Thank you, and I’ll now pass over to Vicki.

Vicki Brady:

Thank you, Craig, and good morning everyone. I am delighted to be here for my second AGM as CEO and I look forward to hearing your comments and questions.

There are three things I want to cover today. First, my priorities and where I see opportunities after 12 months in the role; our financial and operational highlights, including progress against our T25 strategy and our focus for FY24.

At the last AGM I let you know that my first priority was to radically change the experience for our customers, and that this would fuel our growth. This continues to be my highest priority and as you’ll hear today, we are making good progress. We are seeing the positive impact of product simplification, digitisation, answering consumer and small business calls in Australia and bringing our retail stores in-house.

We have customer satisfaction at record highs and customer complaints at record lows. We’re delivering better customer experiences and customers are choosing us. For example, we added more than 360,000 new mobile handheld services across our consumer, small business, and Belong brands in FY23. We have much further to go and we are focused on accelerating our digitisation and migrating our consumer and small business customers off legacy systems to help remove pain points for our people and our customers.

Looking beyond T25, as connectivity increasingly underpins the way Australians live and work, we are in a strong position to play an even more important role in Australia’s digital future. The infrastructure investments we’re making today from our intercity fibre network and submarine cable network to continuing to expand our 5G network will help enable the future and see us strategically positioned for growth.

We’re working with a range of industry and technology leaders across our Enterprise business to grow our digital capabilities in sectors critical to Australia and the world and we are well placed to support industries as they continue to digitise. We will both a connectivity and a technology partner to our customers and we will continue to invest in capabilities and partnerships to grow our offerings in areas including AI, data analytics, cloud, internet of things, and cybersecurity. We’re also bringing new and better connectivity options to regional and remote areas that will help to lift digital inclusion and participation in the digital economy. I believe Telstra has a critical role to play in Australia’s future and the significance of that role will only grow.

This is a tremendous opportunity but it requires significant investment and we continue to operate in a challenging economic environment. In addition to inflationary pressures, traffic on our mobile network is growing at around 30% each year while CPI data shows that telecommunications pricing has reduced in real terms in recent years. We need to get the balance right so we can continue to invest [sustainably] in Australia’s digital infrastructure. This has led us to make some difficult decisions in the year, including to increase some pricing but I believe this was the right call to enable us to grow and invest.

We’re also conscious many Australians are experiencing cost-of-living pressures and we need to make sure we are supporting our customers in vulnerable circumstances and providing choice. The changes we made in recent years to remove lock-in contracts and move to a multi-brand strategy mean we can continue to provide customers with flexibility and options with plans at different price points. We also helped more than 1 million customers in vulnerable circumstances stay connected in the last year. It is a complex operating environment with a lot to balance and we are focused on delivering for our customers, our teams, our shareholders and for the communities we operate in.

Turning now to our financial highlights, our FY23 results showed continued growth in reported and underlying earnings with positive momentum across our key indicators. Total income was up 5.4% and EBITDA increased 8.4%, driven by momentum from our mobiles business and support from the acquisition of Digicel Pacific. Underlying EBITDA increased by $699 million, or 9.6% to $8 billion. EBITDA growth flowed through a 13.1% increase in net profit after tax to $2.1 billion. Reported earnings per share increased 16% to $0.167. Underlying ROIC increased to 8.1% and is back above our cost of capital.

On the back of continued growth in the year, the Board resolved to pay a fully franked final dividend of 8.5 cents per share, bringing total dividends for the year to 17 cents per share and representing a 3% increase compared to last year. While our overall momentum is good, we have some parts of the business performing well and others where we continue to see challenges. Our mobiles business remains central to our growth and continues its very strong performance. Our Consumer and Small Business Fixed, International, Infrastructure, and Telstra Health businesses also grew earnings.

At the same time, there are aspects of our Enterprise Fixed business that are experiencing headwinds. In particular, Data and Connectivity and Calling declined at a greater rate than we anticipated. We are focused on maintaining momentum in fibre, scaling and simplifying our products to meet customer needs, reducing costs and [driving] growth across Network Applications and Services.

We remain disciplined on costs, particularly considering the external economic environment. We also made the decision to maintain the current ownership structure of InfraCo Fixed, at least for the medium term, as we believe this will create the greatest value for shareholders. Our focus remains on delivering long-term, sustainable growth and the objectives and principles of our capital management framework, including seeking to grow our dividend. InfraCo Fixed plays an important role in enabling this, particularly in an inflationary environment.

We’re almost at the halfway point in delivering on our T25 strategy and one year in, we are winning customers and gaining good momentum across our four strategic pillars. Starting with customer experience, Episode NPS improved 6 points to 43 and is at historic highs while TIO complaints from consumer and small business customers reduced by more than one third on the prior year and are at historic lows. We made great progress on digitisation. Overall, we have digitised 68% of our key service transactions like billing enquiries and we are well on the way to digitising all key service transactions by FY25. We continue to lead the industry on stopping scams. We launched our Scam Indicator Pilot with CBA to help detect phone scams before it’s too late, and our Cleaner Pipes program is detecting and blocking more email, SMS, and phone scams than ever before.

On network leadership, we achieved our FY23 5G population coverage target of 85% and 41% of our mobile traffic was on 5G. On our intercity fibre project, construction is well underway and we are seeing strong interest from hyper-scalers, other operators, satellite providers, and national enterprises.

The decision by the Australian Competition Tribunal and ACCC not to grant authorisation of our Multi-Operator Core Network Agreement with TPG was a disappointing outcome. However, we remain committed to improving customer experience outside metro areas. Our deals with satellite providers Starlink and OneWeb are good examples of this and will mean better experiences for our customers in regional and remote Australia.

On growth and value, we delivered growth in underlying EBITDA and EPS and we continue to show discipline on costs and improved ROIC. We have grown underlying ROIC to 8.1% and we are focused on further growth to FY25. While our cost-out ambition is being challenged by high inflation, we still expect to achieve the large majority of this by FY25. We remain absolutely committed to delivering on underlying EBITDA and EPS growth ambitions.

On the place you want to work pillar, our employee engagement score was 80, ranking us near the top companies globally, however below our 90th percentile target. From an FY19 baseline, we reduced our absolute Scope 1 and 2 emissions by 30% and we reduced our absolute Scope 3 emissions by 28%. This is great progress towards our ambition to reduce absolute emissions by at least 50% by 2030.

We continue to invest in digital leadership to help drive better customer experience and lift productivity. We are growing our capabilities in data and AI internally and through partnerships, including our Quantium Telstra venture and we are determined to be a leader in how we are applying AI. Overall, our T25 strategy is on track, including our growth ambitions in underlying EBITDA and earnings per share.

Turning now to guidance for FY24, which I am confirming today. Underlying EBITDA guidance is consistent with our T25 ambition for a mid-single-digit CAGR FY21 to FY25. Capex guidance of $3.6 billion to $3.7 billion includes around $300 million of strategic investment outside of business as usual for the intercity fibre and Viasat infrastructure projects; around $150 million for Digicel Pacific; and increased commitment to infrastructure investment in International. Importantly, we expect to continue to achieve strong cash flow, enabling us to invest in growth and deliver returns to shareholders.

FY24 will be a critical year for us with a lot to deliver. We will continue to prioritise activities with the greatest impact on customer experience and invest in the capabilities and assets we need to deliver sustainable growth. There are four key areas we are maintaining - are key to maintaining our financial momentum and delivering sustainable growth for shareholders. The first is mobile, underpinned by network leadership and delivering new network experiences for our customers. The second is growth from infrastructure and maximising InfraCo Fixed value.

The third is continuing overall growth in Fixed Consumer and Fixed Small Business segments and to support this, we have created Telstra Business to meet the specific needs of our small and medium business customers. The fourth area, as I spoke to earlier, is improving Enterprise Fixed performance. This includes driving growth in network applications and services, for example through our proposed acquisition of Versent, a market-leading technology consultancy business.

I would like to end by saying a few words about John and the enormous contribution he has made to Telstra over the last 15 years and indeed, to the Australian telecommunications sector as a whole. He has been a great support and mentor to me as well as to Andy Penn and helped steer Telstra through the most significant transformation in our history, indeed the industry’s history. John has had an immense impact on the organisation and on me personally, and on behalf of the whole Telstra team, I thank you for your guidance and support.

I would also like to offer my congratulations to Craig Dunn who will succeed John as Chair after this AGM. Craig has already made a big contribution over the seven years he has served on the Telstra Board and I’m looking forward to working closely together.

A big thank you to our incredible Telstra team from the CEO leadership team, the Board, and I, for your energy, commitment, and care for our customers and each other over the last 12 months. It is your efforts that have led to our continued growth, our progress against our T25 strategy, and our solid foundation for growth beyond T25. Finally, I’d like thank our shareholders for your continued support and investment and our Board for your leadership and guidance over the last 12 months. One year into the CEO role, I am feeling very confident about our future and I am confident that we have the right plan and are on the right path. Thank you.

John Mullen:

Great. I’ll just get myself in order. Okay. Thank you, Vicki, thank you very much. We will now move to the formal part of the meeting and the items of business are being shown on the screen. Nathan outlined at the start of the meeting how you can ask a question and vote.

Just a reminder that if you have any difficulty using the online platform, please check our virtual meeting guide on our website or call the help number shown at the top of your screen. As I mentioned earlier, voting on items 3 to 5 is being conducted by poll. Mr Chris Healey of Link Market Services, Telstra’s share registry, is acting as returning officer in relation to the poll.

We have received proxies from over 15,600 shareholders and direct votes from over 6,600 shareholders. We will display the proxy and direct votes recorded for and against each item on the screen when we get to that item. Before numbers include proxies received and available to be voted by the Chairman of the meeting.

I turn now to item 2 on today’s agenda, which is to discuss the Company’s financial statements and reports for the year ending 30 June 2023. This item provides shareholders with the opportunity to ask questions about our 2023 financial statements and reports as well as the business, operations, and management of Telstra. You can also ask questions of our auditor.

I’ll now take questions from shareholders about our 2023 results or any general questions about your Company. Shareholders, I invite you to move to a microphone to ask a question and for shareholders joining us online, please submit your written questions or raise your hand to ask an audio question through the online platform. To ensure that there’s an even spread of questions from shareholders, I will rotate the sequence for taking questions. I’ll start with online written questions, then move to questions from the floor, and then any questions on the web phone and continue on that basis. If you have a customer-related question, please see one of our team members here today. Customer-related queries received online will also be responded to by our customer service team.

Nathan, to start, do we have any online questions?

Nathan Burley:

We have some. Yes, we do. We have some online questions and the first one is from [Teresa Callaero]. Telstra’s operating expenses increased by 4.1% during the year. This would be due to the effects of inflation on Telstra’s business. Telstra increased prices to its customers by 7.1% during the year. Do you consider increasing prices to your customers by 70% above Telstra’s inflation rate to be fair and reasonable?

John Mullen:

Thank you for the question. The 4.1% figure is of course an aggregate of a huge amount of different inputs and costs, it’s not just one single cost. Telstra received cost increases across a broad range of its input costs and some of them far in excess of inflation. Electricity is an example; I think it was up $100 million or something like that last year alone. We have to respond by cutting costs elsewhere, controlling costs tightly to try to make sure that we come in with a figure that allows the Company to continue to grow its earnings. It isn’t a direct comparison. We’re very careful to minimise the amount of price increase that we put through in today’s world and certainly, as you’ve seen, it hasn’t exceeded the cost of the CPI increases which many other companies have done.

Nathan Burley:

Our next question online is from [Bruce Bebbington]. Telstra received $230 million per year under the Universal Service Guarantee 2018 until 2032 to provide fixed voice services and copper continuality. (a) When is Telstra planning to close the copper network, and (b) what are the proposed alternatives to the copper network specifically in rural and remote areas when the closures commence?

John Mullen:

Well, obviously the universal service requirements that were imposed on Telstra were done at a time when the world was a very different place and we had old copper lines everywhere and old plugs and switches and all of those things. Obviously, today the world has moved on. We still have that obligation and we still absolutely honour it but we are working with government and others to look at how will the next generation of a universal service obligation be delivered, whether it’s through satellite or other mechanisms. We’re also closing the 3G network next year I think, but again, we will not close that and we will not change any existing service until there is at least equal if not better replacement for it.

Nathan Burley:

The next question is from Bruce Bebbington again on a similar topic. Telstra advised us in July that Telstra will be shutting down the copper network within two years, by July 2025. It is currently shutting down the copper network rather than maintaining it as per the Universal Service Guarantee. Rural and remote customers are being put onto 3G Next Generation Wireless Link despite it being shut down in June 2024. Why is Telstra placing customers on 3G when 4G is available, and for those customers who do not receive 3G, what is proposed to happen to those customers?

John Mullen:

Okay. I think I half-answered that with the first question but let me just - the first answer - let me just try again. This is an evolutionary process. There are a lot of technologies available like fixed wireless and there is not just 3G as an alternative - and satellite, not just as an alternative to the old copper network. As I said, we’re working closely with government to see what that next phase should look like. We will be phasing out copper obviously, it’s becoming more and more obsolete, and we will be transitioning through 3G to 4G and ultimately even 5G for regional customers. Again, we absolutely commit no one will get their - lose their service, whether it’s copper, 3G or any other form, until there is a better replacement for it that will maintain or improve the service they receive today.

Nathan Burley:

Okay. We’ll take one more question online before moving to the floor. Another question from Bruce Bebbington. Telstra Prepaid, when migrating legacy plans, Telstra has offered customers either Telstra Plus points or talk and time credit up to three years. However, customers who elected, defaulted to the talk and time credits for up to three years are having their services deactivated during that time despite having talk, time, data credit. This deactivation does not permit the receipt of calls and access to emergency calls for six months as per the terms and conditions. Can you explain why this is occurring nationally and why Telstra offered up to three years when it cannot honour the offer and terms and conditions?

John Mullen:

Thank you. That’s a very detailed question and I think I might defer to Vicki to respond, please.

Vicki Brady:

Yes. Thank you, Bruce, for your question and you rightly point out, as we move through the migration of our prepaid customers - so, just for everyone in the room, we now have all of our prepaid customers in our new digital environment off our legacy environment where the experience is a much better one. Bruce, yes, we were very careful in making sure as we migrated customers they had the right support and plans in place. To be frank, it’s the first time I’ve heard the feedback that you’ve just given so I’d be very keen for us to follow up and understand the details because any offer we’ve made, obviously we will honour that, so that will be one I’d be happy to follow up offline and make sure we understand exactly what is happening. Thank you.

Nathan Burley:

John, we’ll now take some questions from the floor, and the first question we’ll take is from microphone 2.

Operator:

Chairman, I’d like to introduce Mike Robey to speak from the ASA.

Mike Robey:(Shareholder)

Good morning, Mr Chairman and Mr Chairman-Elect. My name is Mike Robey. I’m a volunteer monitor for a not-for-profit organisation called the Australian Shareholders Association which looks after the interests of retail shareholders. May I start by welcoming you to your swansong, Mr Chair, and say that over the years the ASA has had a respectful relationship with Telstra and has always had the ear of the Chair and has made time to hear our concerns. So, thank you very much for that.

Today I hold roughly 18,000 shares in proxy, which makes us I think the 12th largest shareholder of the Company, so retail shareholders are significant in Telstra’s stock book. I have two questions if I may. The EGM in July (sic) last year paved the way for monetisation by the potential sale of the fixed network and others, much like the success in selling 49% of the mobile towers which we enjoyed because of the special dividend, but this monetisation is now being put on hold, put on ice. Given that shareholders are potentially trading off a new special dividend, if you like, for future benefits, can you give us some idea of what the possibilities are in not selling off this and where Telstra might monetise it. That’s the first one, if I maybe make the second one as well so that I’m over with.

John Mullen:

I’ll try and keep up with it, Mike.

Mike Robey: (Shareholder)

All right. The next one is, as you mentioned in your speech, telcos have lost all their high-margin services in recent years. Those of us who remember limited calls which cost by the call, texts which were charged at $0.20, international roaming, which was a rip-off, it basically gave you an enormous amount of revenue, it’s all been replaced now by all-you-can-eat services and a data package with a choice really of speed and volume. So, where is the future going to come from, where’s the growth, because we can see sliding into more and more of the same and as you said, with higher and higher costs in the network. They’re my two general questions.

John Mullen:

Thank you, Mike and I’ve enjoyed our interactions over the years as well. We’ve met personally on a number of occasions. Let me talk firstly about the monetisation question of InfraCo. I think Vicki addressed this to a degree both in her full year comments but also in the speech just now. It was the result of an exhaustive process. There has been a completely transparent and unemotional discussion around the Board table and in management as to what is the best outcome for shareholders. If we’d thought it was to continue to monetise, i.e., sale of some of those assets, we would have done so but after a lot of discussion and advice, and despite the success of the towers, the Amplitel deal, we decided it was not in the best interests of shareholders.

The reason for that was varied but we still believe that there is upside in those assets that we should extract before we choose to monetise them. Secondly, of course, the world has changed. Since we first started talking about this, interest rates has risen, inflation has risen and asset values have come down quite sharply. It’s always a trade-off; do you sell some or all of the family silver for a quick hit today, which shareholders think is wonderful, and you give that money back but then tomorrow you now have to live with that decision and you have a smaller or a weaker company going forward. You have to balance all of those things. As I said, if we’d felt that the right decision was to monetise we would have done, and we’re not saying that it won’t be the right decision at some stage in the future, it may well be, and that will be up to obviously Vicki, the management team, and the Board at that time.

Your second question is a good one, about growth. It’s probably the question that’s top of the list for most large telcos around the world. The good news is that we are growing despite all those pressures and I think it’s quite staggering actually that the management team have been able to replace as much of those billions of dollars of lost profit that they have. The NBN effectively halved our bottom line and then those other pressures that you just mentioned took several billion dollars more away. The fact that we’re back up to $8 billion of EBITDA is a huge credit to the management team.

When you go through that and you pick it apart, obviously the area that we’re no longer receiving large benefit from is the fixed business where we used to own the assets and made a margin on them. Today NBN owns the assets and we’re a reseller with a low margin. That’s not going to change, there’ll be ups and downs in prices but that’s not going to change going forward, and there’s been a drag, but against that, if you look at our mobile performance it’s been absolutely stellar and continues to be stellar with strong growth experienced over these two years, particularly this last year has been excellent, and that growth is continuing.

The one thing about telcos and telecommunications is the future is hard to predict other than that there’s going to be a huge increase in demand for the carriage of data, especially on a mobile platform. Only a few years ago no one had heard of Netflix, and I think it’s like 25% of internet traffic or something today. 5G, it’s been here for a little bit but we’re still discovering the use cases and there will be more and more of those driverless cars and automation, AI and all these other things, and we’re right in the centre of that with our 5G infrastructure.

I feel pretty confident that you will see continued growth from our core business going forward, and we’ve got a few things around the edges like Telstra Health, which I think will do very well, as well in the future, but our core mobiles business is going to continue to drive the growth of the Company for the next foreseeable while.

Nathan Burley:

Thanks, John. We will now move to microphone 1 for the next question.

Operator:

Chairman, I would like to introduce Howard Pascoe from Melbourne to speak.

Howard Pascoe: (Shareholder)

Good morning, everyone. Congratulations having your AGM in Melbourne, wonderful to see, congratulations, Board. Secondly, MCG, if you used to go there when you first started, Mr Chairman, remember that you couldn’t make a mobile phone call during the grand final or the finals. The telcos couldn’t handle the volume of traffic. Now you go to the MCG during the finals and the mobile phone reception is excellent, which means that the technology has advanced out of sight. Now, they were the good points. What happens if you die? Now the issue is, single account holders if you die, you’re hearing on the media that the telco wants to speak to the account holder and they can’t speak to the account holder because the account holder is dead. Now what the issue is that in this audience you could say that there’s more than a third of the population in this room have not got a will. So, if you die, what happens to your accounts with your telco?

The other question I ask, and the first person I met at Telstra at the entrance to [Jeff’s Shed] was you’ve got a mobile phone, it’s a young person, have you told your telco the authorised people that can act on your behalf if say you die in a car accident? The person said no. The question I ask the Board is should all your customers have informed the telco the authorised people if they haven’t done their will or listed powers of attorney, have you got the authorised people on the records in case the person dies?

I’ve contacted Federal Parliament, the Federal Minister, last year was Paul Fletcher, about the issue. I spoke to - I’ve contacted Michelle Rowland, the current Federal Minister for Telecommunications, complained about the power of the Australian Telecommunications Act of 1997, [this was] all embracing, it makes it so difficult for people that die and they haven’t informed their telco about the authorised people who act on their behalf. It's an issue that politicians find hard to deal with. It’s still outstanding, and love your comment.

John Mullen:

Thank you, Howard, for that question. I’d have to say firstly I sympathise with you, having lost a father and a mother-in-law in the last 12 months, and having to deal with the practicalities of losing a loved one, I absolutely agree. Unfortunately it’s not just telecommunication services, it’s across a whole range of people’s positions and activities in society that are quite complicated to fix when on the time of death.

Obviously from the telco perspective, obviously we don’t know when someone’s going to die and quite often people’s minds are elsewhere, understandably, they don’t think well the first thing I need to do is to call my telco or bank or whoever it is, to let them know of the deceased. They’ve got much more pressing matters to deal with, so inevitably we send bills to people sometimes who have died, without our knowing et cetera.

Our systems are far from perfect but there is actually I know a great focus on it right now to try and put better structures in place. Remember from the other perspective, we can’t just take someone’s word over the telephone to transfer a phone account to someone else, there are a lot of probity issues there to make sure that - and domestic violence situations and all sorts of other things, you’ve got to be extremely careful to protect the customer’s identity and the like.

It's a very complicated thing but your question is absolutely valid and to the point and I can assure you we are all over that.

Howard Pascoe: (Shareholder)

Thank you.

Nathan Burley:

I think we’ll stay with microphone number one.

Operator:

Chairman, I would like to introduce [Dell Billar] to speak.

Dell Billar: (Shareholder)

Good morning Mr Chairman and CEO, I will be very brief. You have my congratulations for your achievements, it looks like in your presentation you are involving almost everything what moves on this country, which I don’t believe is right, if was right, my apologies, it’s too much of it. Why don’t you dwell on negatives to make sure that you can improve? Because if everything is honkey dory, there’s nothing for you to do. Is that?

Secondly, I would like to know why the shares from $7.00, nobody mentioned that, came down to whatever it is today? Secondly, I believe that there is a culture of management or Directors which they take their bags from one company, goes to another one, and so on. The question is very hard, how many Directors have been in the Telstra Board and left Telstra since Telstra became private? Thank you.

John Mullen:

Wow, okay. Well so we never said, I don’t think, that we think everything is honkey dory, to the contrary, we’ve obviously had some good successes but we have plenty of problems as well and we’re very conscious of those issues which we’re working on the whole time.

That’s what the management and Board does. In a meeting like this we just take two or three things into a short story, but believe you me behind the scenes there’s a huge amount of discussion about the challenges, and I mentioned some of them, customer experience, we’ve made some huge improvements but there’s a long way to go, so we spend a lot of time talking about that. So, not all honkey dory but we’re certainly hopefully going in the right direction.

Market share, I think we probably, if I understood right, maybe referring to the fixed market share where, or the reseller of the NBN, was that the question?

Vicki Brady:

Share price.

John Mullen:

Oh share price, sorry I thought you said market share. Well share price, I come back to what I said before, we’ve lost many billions of dollars of earnings, $3.5 billion from the NBN alone, voice I think was close to $1 billion, SMS probably many hundreds of millions, global roaming, all of those things. All of those have gone and if the management hadn’t done a fantastic job to build the Company back up again, the share price would be a lot lower than it is today.

Lastly on the culture, how many directors since we started? My god, that one I have no idea, but we can dig it out if you’d really like to know, and get that information to you.

Dell Billar: (Shareholder)

The reason is because those people, they put their things in their bags and they left, that’s the problem. With your permission I would like to tell you a little thing. I was a share - sorry, a phone user of Telstra, I went overseas and I paid $250 to keep my number when I came back. I gave up all those numbers because they were so complicated to go out of Telstra because they could not offer. What I am trying to say on what you’re losing is on a grass roots, on a shops which are people very poorly trained and it’s the fault of management, not their fault, and unfriendly behaviour to the customer.

So, you may have go to have a look and visit to see how those people they react or interact with the customers, thank you.

John Mullen:

Thank you, you’re absolutely right about the stores and one of the things that’s not honkey dory is the performance of the stores at the moment, we know that. We’ve as you may be aware, transitioned them from third party ownership into wholly owned ownership by the Company and we’ve had a number of issues. Some issues are consistent with the rest of industry, trying to attract qualified personnel during a difficult labour market, but also some problems of our own making around systems and the like.

So, we’re very aware of that, but again I know that management are right on top of that issue, but thank you for raising it, it’s perfectly justified.

Nathan Burley:

Thank you, John, we’ll now move back to online questions as there’s no web phone questions at this time. This question is from James. Regarding copper being phased out in two years, is it still being installed from fibre node to property at the moment?

John Mullen:

If the questions are we still installing copper, then the answer is no. Copper is obviously becoming increasingly redundant, is being replaced by fibre where appropriate, and as you get out into the regional areas, as we were discussing before, by other technologies that have been worked on today including fixed wireless.

Nathan Burley:

Our next question is on behalf of [Helen Lotus] Super Pty Ltd. Question to the executor of Telstra. Some people are switching to other providers. Telstra’s services are $20 expensive than any other service provider. What is Telstra doing to retain these customers?

John Mullen:

Well we actually very consciously maintain that price premium because we know that we also maintain a service premium, so Telstra offers, in our view, the best service in the market and we charge for that. In terms of market share, we’ve actually gained market share and certainly holding our own or gaining market share in most segments. So, I think hopefully a lot of customers understand and accept the premium that you have to pay to access the best network.

Nathan Burley:

Our next question is from [Peter Calliero]. Thank you for holding a hybrid meeting. As a shareholder recovering from an operation, you can understand that I am in favour of hybrid meetings. My question is, how much extra does it cost Telstra to conduct a hybrid meeting compared to a physical meeting only?

John Mullen:

Thank you, that’s a great question. Look, it doesn’t cost financially a huge amount more. The administration and the work behind the scenes, which is run by my colleagues here, we Directors just turn up and they do all the hard work, that side of it is a lot more complicated and I think we’re going to probably start a university course in how to vote at AGMs soon, the way it’s getting so complicated.

But the team’s managed that, so not being flippant but the actual increase in cost is minimal, the increase in workload for team is considerable but it’s worth it because it’s very important to us that all shareholders can participate.

Nathan Burley:

We’ll continue online. This question is from [Joe Alvario]. Can the CEO confirm that she is not using Telstra resources to campaign for her views that Australia Day should be abolished? Many shareholders and customers would be against abolishing Australia Day, as this is a very important day to them.

John Mullen:

I can let Vicki answer for herself but I can assure you, personal views do not carry the day in the decisions made by Telstra as a corporation. We collectively discuss between management and the Board and we adopt positions like the Voice and other things like that. In Australia Day the decision was taken to allow employees to choose another day if they so wish, but that is not the personal whim of any one person, myself, Vicki, Craig or anybody else, it’s a conscious decision made by the management and Board as to what’s best for the Company. If you want to add anything else?

Vicki Brady:

Yes, thank you for the question. So our enterprise agreement that was voted on last year by our employees, in that enterprise agreement it offers the option for our employees to choose which day they would like to celebrate Australia Day. So, that was voted on by our employees and overwhelmingly supported, so we have that flexibility.

Nathan Burley:

Okay, we’ll take one more question online before moving back to the floor. This question is from Joe Alvario again. Can Telstra stop using resources to make political statements during election campaigns like it did with the referendum on the Voice, which it publicly supported? This was wrong and did not respect shareholders and customers against the Voice, which included some Aboriginal people. It was shareholder abuse and an attempt to curry favour with the government.

John Mullen:

Sorry, I disagree with that. Again, I think I mentioned at the beginning we had a lot of debate as to the best approach to take on that issue, as with many other social issues, and the majority of social issues the Company doesn’t take a position, we don’t think it’s appropriate. But every now and again we do think it’s appropriate, particularly in the case of the Voice, where we are not a Company that has some peripheral relationship or contact with those communities. We’re engaged every single day with Indigenous communities across Australia.

We’ve built more blackspots, I think close to 1,000 with 80% of the blackspot coverage that the country enjoys today has been Telstra that’s been there. We don’t make any money out of those services, they are there to bring connectivity to the bush and to contribute to quality of life in those communities. So, we think our engagement with the Indigenous community is really important, and therefore in our case, it’s not the case for every company but in our case we felt it was the right decision to support that case.

Nathan Burley:

Okay, we’ll move back to the floor, question four has a question.

Operator:

Chairman, I’d like to introduce [Ian Hamilton] from Melbourne, to speak.

Ian Hamilton: (Shareholder)

Good morning. Before I get to the question, I’d like to compliment Telstra on two things that they’ve done recently, the first one is including unlimited calls in the fixed home line service fee, this brings this service into line with mobile plans. It was about five years too late but at last it’s been done. The second one is that there is now free public phone box calls, most people aren’t aware of this and this is a good community service, however it’s getting hard to find a phone box to use. They’re being removed at an alarming rate.

You need to keep these in existence, in appropriate locations, particularly for emergency use. The main body of the question is that some companies using Telstra telecommunication services to conduct their businesses are making monstrous profits, mainly through social media and through advertising they charge through social media. This makes you their business partner.

Considering most people seem almost surgically attached to their mobile phone and seem to refer to it every five minutes, even take it to bed with them, and it’s more than a mobile phone, it’s a handheld telecommunication service, wireless internet on which phone calls can be made. Are you getting a fair share of the profits and how can you get more of a share of it?

Also, scammers and fraudsters are using the same service to conduct their crime, including lying about being Telstra staff. Can even more be done to stop them and prosecute them? Say when someone rings up and says I’m calling you from Telstra, and this seems to happen a lot, once they say those words in combination, can the call just be cut out, disconnected, and if they really are calling from Telstra, if they could punch in an authorisation code within five seconds, it would prove to anyone who picks up the phone that they’re getting a genuine Telstra call?

Has Telstra considered setting up an historical equipment, phones, phone books and phone box display in all Australian capital city museums, as well as selling and making money from old and unwanted telecommunications memorabilia? Including phone boxes, some people seem to want to buy one, like that phone box you can see on the mural behind, there’s people that want one of them to put in their house or in their back yard. Are you able to sell old ones to them at a price so that you cannot just throwing your stuff in the tip and just getting rid of it?

John Mullen:

Well that’s quite a collection of questions, so let me try and answer them in turn. Firstly, thank you for the compliment about the two things that you think are good, which we obviously think the same, so the unlimited calls firstly and then you did mention the free calls from the public phone boxes, I think there’ve been over 23 million calls made since we introduced that. 250,000 of which more or less were 000 calls, so people who were really in a bad situation. So, I think hopefully the community will recognise that’s a pretty wonderful service and we’re very, very proud of it.

We’re also, I can’t remember the numbers but Vicki can correct me, I know we’re starting free Wi-Fi as well from I think we’ve got it in 1,500 or something of that sort of number of boxes, how many?

Vicki Brady:

3,000.

John Mullen:

3,000 sorry, and that is also going to be expanded by another 10,000 or 12,000 boxes in due course, so we’re very committed to that initiative and I think it’s been a really good one.

Your second question was around fair share of data or the revenues from the explosion of data. I actually referred to that in my opening comments. That’s one of the biggest challenges for telco, so what you use on your mobile every day, whether it’s Facebook or internet generally or whatever you’re doing, those companies are obviously making a lot of money out of the connectivity that telcos provide and we actually get paid proportionally less and less. It's a big challenge, the industry is on it and it’s very topical for us and our management team as to how to ensure that we get our fair share of the revenue that’s generated by these new services.

You mentioned I think your third one was scam calls and the like. Again, I think we, both myself and Vicki, listed the sheer number and the magnitude of calls and texts and emails that we intercept is mindboggling. When you think of how many still get through, it just shows the scale of the problem. Your question about a code, that’s been looked at, the problem is firstly if they can find out bank accounts or other things, they’ll find out the code pretty quickly as well, so then can you even trust the code?

People don’t have access to that code at the time they make the call, et cetera. So, Telstra will never ring you up and ask you for your bank account details or any of these things, and if you are concerned, you’re better off hanging up and calling back a registered Telstra number so you know you’re speaking to a Telstra person.

It is a scourge and a plague on our society, obviously not just Telstra, it’s the banks, it’s everyone is in the same situation. We’re doing everything we can, I think we’re doing more than most.

The museum display, well we do have it in museum but I don’t think it’s in every capital city, but we will take that on notice and you’re obviously welcome to go and see the museum at any time. The last question was phone boxes, I don’t know, but I happen to have an old phone box in my house, which was bought by or acquired by the previous owner, I don’t know where it came from but you obviously - well it’s in the garden, not in the house, you obviously can do so. But maybe Vicki put it on the next Board meeting agenda [unclear] thank you.

Ian Hamilton: (Shareholder)

Where is your museum?

John Mullen:

In Hawthorn.

Ian Hamilton: (Shareholder)

Thanks.

John Mullen:

Thank you, great questions.

Nathan Burley:

Okay, we will move back to online questions, John. This question is from Bruce Bebbington again. Both the Chair and CEO have commented on support to disabled, homeless, family and domestic violence and mental health. Many of these customers rely on prepaid as they cannot access postpaid or fixed services. Prepaid customers have been receiving texts advising them to recharge to be able to make calls and texts while they are in credit.

If these customers, many of whom are under financial stress, have recharged based on the text and the website and paid when they do not need to, will Telstra discontinue this practice and refund any moneys paid as a result of this practice?

John Mullen:

Well look, I can’t comment on any specific incidents, I’m obviously not aware of them. But the reason that these texts are sent is to warn people who hadn’t otherwise noticed that they will lose their service if they don’t recharge. We do the same if you don’t pay your postpaid, if you don’t pay your bill. You don’t just get cut off overnight, you get an alert to tell you that that is the situation. Because everybody can miss those sorts of things if you’re busy. I think it’s a practice that is actually the benefits far outweigh the negatives.

Nathan Burley:

Okay, we’ll continue online. Joe Alvario has another question. It is not right to charge customers who choose to receive paper bills a fee as they would have many valid reasons for making this choice and should not have to state their reasons for doing so as this could breach their privacy. Can this policy please stop?

John Mullen:

Look again we realise that that’s an inconvenience for some, but the world is going digital and we have to go with it, so yes, we do impose a small charge for a paper bill, but there are also a whole range of exceptions to that too. If you don’t have internet access or other things like that, we waive that charge.

There is a, I can’t remember all of the issues but I know that there are quite a number of situations in which you would not get charged. So, again we’re very careful about how we do that, but it is, unfortunately, the way the world is going.

Nathan Burley:

Okay, we’ll move back to the floor. Microphone one has a question.

Operator:

Chairman, I would like to introduce [Bronnie Gerincheck] from Melbourne, to speak.

Bronnie Gerincheck: (Shareholder)

Chairman, my question is to Vicki. During your speech, you said you’re grateful to all the staff that do the work. Why is it that as an ex-employee over 40 years, the alumni [discount] has been removed? Also the manner in which it was done was pretty atrocious, that I would suspect. Secondly, since then you’ve increased the price by at least $10 and I’d like to know why please?

Vicki Brady:

Thank you, Bronnie for raising it. So, the first thing I would say is we do recognise and appreciate the loyalty of all of our alumni of Telstra. You’re right, we took the discount away, it was taken away as part of our move to our new digital stack, so as we simplify our products and plans, we had to make the choice about taking away some complexity, and unfortunately building the discount in our new environment in the timeframe we needed to migrate, was a trade-off, a difficult trade-off we made.

I fully accept the first round of communications to our alumni discount holders was not good enough. We did follow up with subsequent communications and so I apologise for the first round of communications, it could have been handled far better. It is, unfortunately it is an example of one of those trade-offs we’ve had to make as we move to the new environment where the experience is significantly better for our customers and part of driving the efficiency in the business to be able to deliver the overall investments and returns in the business. But apologies for the first round of communications.

Nathan Burley:

John, we’ll move to microphone number two.

Operator:

Chairman, I’d like to introduce [Alan Brigill] from Hastings.

Alan Brigill: (Shareholder)

Hello everyone. I haven’t got much to lose because I’m dying. I’m addressing you, Vicki Brady, I believe you’re corrupt, you destroyed Telstra BigPond email and you bought in this other rubbish that still doesn’t work. I rang up and spoke to your 2IC, she rang me back and I was assured it would all be fixed up. I believe from what I’ve been told it was sold to Thunderbird. Well Thunderbird’s not the best to use. I’d actually set myself up to do an OHS degree and I found that Telstra BigPond was the best system I’d ever seen in my life, and I’ve been using the bloody internet since it started, I was one of the first to have the internet in my house.

I used Dodo originally. I just cannot believe how you have destroyed Telstra BigPond, and I’d like to bloody well know why you did it, why you got rid of the best email system, the easiest to use and now you’ve got this bullshit with this blue and bloody brown one that I had a look the other night, it still doesn’t work. Can you answer that? Have you got the guts to answer that?

John Mullen:

Alan, I’ll answer that one. Firstly, if you make offensive statements to anyone up here, we’re not going to answer your question, full stop, you can go somewhere else, right? But if you have a legitimate complaint about BigPond, I use BigPond too, I know some of the issues, if you have a legitimate complaint, we will do everything we can. There are people here in the audience who, staff members, sit down before you go, understand exactly what your problem is and we’ll have the senior management sitting here to deal with it.

Alan Brigill: (Shareholder)

It’s actually very legitimate.

John Mullen:

I’m not saying it isn’t.

Alan Brigill: (Shareholder)

The best system that I’d ever seen. I looked at all the others, I looked at Outlook, I looked at all the others and they were rubbish, garbage, and even Thunderbird’s got problems.

John Mullen:

Alan, this is a Telstra AGM, there are lots of other shareholders here. You have raised…

Alan Brigill: (Shareholder)

I know it is, that’s why I’ve turned up I’m [inaudible] here in Melbourne.

John Mullen:

You have raised a specific issue relating to your service, a legitimate one and we will deal with it, but please not in front of 400 people.

Alan Brigill: (Shareholder)

Yeah, but there’s probably thousands of other people that got chopped off on May 22 I think it was, without any notice, there was no notice, nothing.

John Mullen:

I think I’ve answered the question. Alan, please sit down or we will cut the microphone off. Thank you.

Nathan Burley:

We’ll take another question from microphone number two.

Operator:

Chairman, I’d like to introduce Fred Cornelius from Essendon.

Fred Cornelius: (Shareholder)

Chairman and Board, I have two issues. One is you’ve increased your prices for Foxtel and the internet, that’s fine, but the service hasn’t improved. I have frequent dropouts, frozen screens, so while there are price increases, what about increasing the service? The second issue I have is that some time ago, I bought Telstra equipment and then a few years later Telstra decided that they were going to change the system and all this equipment became incompatible and redundant.

Telstra offered no compensation to replace those items. If you’re going to change the system when we spend hundreds of dollars buying your equipment, don’t you think it should be right that you should replace it when you put a new system in, and give us a new item that’s compatible with the system you’ve put in, instead of just shutting it off?

John Mullen:

Thank you, again I’m sorry I’m obviously not aware of the specific details of the issue that you’ve had. What you’re saying sounds perfectly reasonable, but again all I can ask is we do have customer service teams here in the auditorium, so before you leave, make sure you grab one of them and I can give you my mobile number, or actually not mine anymore, Craig’s. We will follow it through and give you an answer on your particular issue. But I’m obviously powerless to answer it here because I don’t know what’s happened.

Fred Cornelius: (Shareholder)

The point I was trying to make with the second issue is that why doesn’t Telstra have a system in place to automatically replace these items, without us having to go and bring it up at something like the AGM or one of your technical assistants? Put in a system where we automatically get in, we don't have to put through this mill.

John Mullen:

Yes. I get you and we all - we do replace a lot of equipment with that. I'm not - it depends what sort of equipment and why and - but we will look into it for you and we will fix it for you.

Fred Cornelius: (Shareholder)

Thank you.

John Mullen:

A pleasure.

Nathan Burley:

We'll move back to online questions. This is a follow-up question from Bruce Bebbington. Noting the responses about the copper network, does this mean that my landline will not be disconnected on 29 November and forced on to 3G and satellite when it doesn't work? Will the Board commit that all copper landline closures and forced migrations will cease immediately? Further, will the Board commit that those customers who have been forced migrated will have their service method reviewed with a view to reopening closed copper landlines?

John Mullen:

Look, I can't make any commitment on it, exactly what will happen to which bit of copper when, but I think I've already said we do make the commitment nobody will lose the service they have, whether it's through replacement of copper, it's the closure of 3G or any other service. It will only be done when an alternative offers at least as good, if not better service is available to that customer. So you will not be disadvantaged.

Nathan Burley:

The next question is online, and this is a comment from Peter Calliero. This shareholder is in favour of your decision on Australia Day and The Voice.

John Mullen:

Well, thank you. You know, that's a - there's a famous quote, which I think is - was by Voltaire's biographer that: I disagree with everything you said, but I will defend to the death your right to say it. I think that should characterise all these debates. We live in a pluralistic society, where people have different views. We respect all of those views and we respect that not all of us will always agree with everything, either the Company does or decisions that are made in the public arena.

Nathan Burley:

Next question online is from Joe Alvario again. What efforts are being made to improve Telstra customer service? It only takes a look at the customer reviews on the internet to discover the awful customer experiences that occur. This is no - this no doubt results in lost sales, as other customers choose not to be subject to the poor treatment from some Telstra staff. Customer service does not seem to be an important priority.

John Mullen:

Okay. Well, I think I tried to actually address that upfront in my opening comments. Even one bad customer experience is one too many, and we take that very seriously. I think I mentioned some of the statistics of the improvements that the Management team has made. It's been absolutely dramatic reductions of - I think we had 36 million inbound customer service calls. They've been reduced to below 10 million. Now, huge reductions. The Ombudsman's complaints down by [around] 70% and the like. Obviously, when you've got 18 million customers or whatever, even a small percentage is still a lot of people. So we're very, very conscious of that and I don't think there is a higher priority, Vicki, for you and your team, but to continue to drive out all of those complaints.

Nathan Burley:

John, there are no further questions online or on the floor or on the web phone for this item, so that concludes the question session for this item.

John Mullen:

Okay. Yes. Okay. We've got no web phone.

Nathan Burley:

No. There's no web phone questions, John, so we can move on to the next item.

John Mullen:

Okay. I can now move to item three. Yes?

Nathan Burley:

Yes.

John Mullen:

Okay. Next up is item three, Director election and re-election. As I mentioned earlier, Maxine Brenner and Ming Long are standing for election and Bridget Loudon and Elana Rubin are standing for re-election. Their details are set out in the notice of meeting. Items 3(a), (b), (c) and (d) will be voted on separately, but to assist with the efficient conduct of the meeting, for the benefit of all shareholders here today, I'll deal with the discussions of Maxine and Ming's elections and Bridget and Elana's re-elections together. So I would now like to invite Maxine, Ming, Bridget and Elana to address the meeting. While we hear from the Directors, if you have any questions on their elections and re-elections, please come to your nearest microphone or, if you are online, please submit your written questions or raise your hand on the web phone. Who's first? Maxine, I think. Yes.

Maxine Brenner:

Me. Yes. Thank you, Chairman, and good morning, fellow shareholders. I too would like to pay my respects to the traditional owners of the land on which we meet and pay my respects to elders past and present. I'm grateful to have the opportunity to introduce myself to you, the owners of Telstra. As an executive, I was both a lawyer and investment banker, specialising in mergers and acquisitions, corporate finance, restructures and large corporate transformations. This led to my being appointed to the takeovers panel, where I not only helped develop policy for takeover regulation in Australia, but also adjudicated over a number of significant takeovers in Australia. At the same time, I embarked on my non-executive career, which started over 28 years ago.

Since then, I've sat on over 15 boards, ranging over a wide number of industries, including mining, energy, airline, airports, finance, property, food and supermarkets, education and, with your support, telecommunications. I bring that wide, cross-sectoral body of experience to my role at Telstra. During that 28 period, there have been achievements and, inevitably, some mistakes. I'm passionate about learning from both and committed to bringing the insights from each of those areas to my work at Telstra. Since February this year, when I was first appointed, I've worked as a member of the Audit and Risk and Nomination Committees. I've both the commitment and time to devote myself to the requirements of my role on the committees and the Board. With your support, I'd feel privileged to continue working with my colleagues on the Board and Vicki and her excellent Management team to build upon the strong heritage of your Company. Finally, I'd like to acknowledge the outstanding leadership of our Chair, John Mullen.

He has led our Company through difficult times and to where we are today. Thank you, John. I look forward also to working with Craig as our new Chair. Thank you.

John Mullen:

Thank you very much, Maxine. I think, Ming, you're next. Yes.

Ming Long:

Thanks, John. Is that on? Yes. Good morning, everyone. My name is Ming Long and I'm honoured to have the opportunity to speak to you regarding my appointment to the Telstra Board. I can scarcely believe that when I arrived as a migrant in Australia over 40 years ago that I would have the opportunity to serve on such an iconic Australian company Board. At that time, we'd moved from a capital city overseas to a small country town in regional New South Wales. I have a deep appreciation for the country, its people and the possibility of what it can achieve. I believe Telstra is integral to Australia having a connected future where everyone can thrive. As we face an increasingly complex, connected and disrupted world from climate to AI, it is more important than ever that we understand the diverse perspectives and expectations of our stakeholders, so that we can deliver for them with confidence.

I am very conscious of the important role a Director on the Board plays in the stewardship and governance of Telstra in this environment and to continue to deliver enduring value to our current and future shareholders, but also to our current and future customers, employees and other important stakeholders. I want to express my deep gratitude for the opportunity to serve on the Board of Telstra, and I'm confident with my experience in finance, sustainability and real estate, they arm me to serve on the Board of such a nationally significant company. Thank you very much for your time and consideration.

John Mullen:

Thank you, Ming. Bridget.

Bridget Loudon:

Thank you, Chair. Good morning. Good morning, everyone. My name is Bridget Loudon. I was born here in Australia, but I spent most of my childhood in Ireland. I returned to the lucky country when I was 21 and I'm very, very proud to call Australia home. It has been an immense privilege to serve on the Board of Telstra over these past three years. It's also been my honour to serve on the People and Remuneration Committee. Telstra is on a bold journey of transformation and growth, sitting at the heart of a country on a similar journey. Our T25 strategy will see us build on the foundations of hard work over these past few years to reach new heights in a digital world. It's a pleasure to address you today to seek my re-election to the Board. As a Non-Executive Director, I hope to continue to bring a deep focus on the lives, experiences, hopes and challenges of our customers. I also hope to bring fresh perspectives and a natural instinct for how great technology products get built and how companies can prepare for the future.

I draw on my deep experience in entrepreneurship, technology and commercialising products and services in the digital world. So thank you for listening to me, and with your support, I look forward to serving this excellent company and its shareholders for another three years. Thank you.

John Mullen:

Thanks, Bridget. Last, Elana. Please.

Elana Rubin:

Thank you. Good morning, all, and I also pay my respects to First Nation people who might be attending. I am seeking re-election as a Director of Telstra. It's been three years since I first introduced myself to you, and much has happened through that period. At the time of my election, I spoke about my pleasure in joining a company which is so central to how we live, work and engage and my pride in how Telstra was responding to the COVID situation to support employees, customers and vulnerable members of our community. These sentiments remain true. I also spoke about the privilege of being involved in the governance of organisations and my belief that companies that have regard to the needs of all their stakeholders are best placed to deliver long-term sustainable performance. Milestones over my first term at Telstra has been the finalisation of the T22 strategy and the development of our current T25 strategy with its focus on growth, improved customer experiences and strong shareholder returns.

We brought our retail stores inhouse, moved our consumer contact centres onshore, transitioned to new technology, monetised our Towers business and worked to reduce our impact on the environment. Throughout these initiatives, I've been an active contributor to the Board discussion and have brought my diverse experience and perspective from working across a wide range of sectors to the discussion, as we navigated through many issues, including improving financial performance and customer satisfaction, reducing reliance on legacy platforms, increasing cybersecurity, driving employee engagement, promoting sustainability and climate change, just to mention a few. Throughout all our discussions, I've been mindful of balancing shareholder, customer and broader stakeholder interests. I've also chaired the People and Remuneration Committee and one of two Directors with rural and regional responsibility and sat on the Audit Committee for a period.

But perhaps the most important milestone of the last three years for the Company has been the appointment of Vicki Brady as CEO following Andy Penn's retirement. They say that the most important function a Board undertakes is the appointment of a CEO. I'm confident that we could not of selected a better CEO than Vicki. You've heard today that we've also appointed a new Chair, Craig Dunn, following the retirement of John Mullen as Chair. I join others in saying quite publicly and loudly that John has been a fabulous Director and Chair and has made a huge contribution to Telstra. I'm delighted with Craig's appointment and I believe he will steward the Company well through the completion of T25 and beyond. I'm very proud of the work that Telstra does in delivering for shareholders, customers and supporting the community. With your continued support, I look forward to being elected for another term. Thank you.

John Mullen:

Thank you, Elana, and, thank you, fellow Directors. So the Board, other than Maxine and Ming, in respect of their own election, of course, and Bridget and Elana in respect of their own re-election, the Board recommends the election and re-election of each Director. The proxy and direct voting position for items 3(a), (b), (c) and (d) are now being shown on the screen. As indicated in the notice of meeting, I intend to vote all available proxies in favour of the elections of Maxine and Ming and the re-elections of Bridget and Elana. I will now take questions from shareholders on item three. Nathan, over to you.

Nathan Burley:

John, we do have some questions on item three online. The first question is on behalf of Helen Lotus Super Pty Ltd. With the re-election of the new Director, Maxine Brenner, there's scepticism and concerns and issues that I wish to raise, as she used to work for the Qantas Board and that she was and is responsible for Qantas' governance failure and that she does not have any experience or capability in customer service. Why should I vote for her?

John Mullen:

Thank you. So, firstly, questions relating to anything to do with Qantas or Maxine's role as a Qantas Director are inappropriate and we will not be answering them. Now, this is a Telstra AGM. If you have questions about anything to do with Maxine's tenure at Qantas, I respectfully suggest that you attend the Qantas AGM and you ask those questions there. All I can do is talk about Maxine's role as a Director of Telstra, where she is a first-class and exemplary Director. Maxine is smart, engaged, very experienced and is a strong contributor, with a lovely personal style. In my view and the views of my fellow Directors, shareholders are very lucky to have someone of her calibre representing them on the Telstra Board and we don't intend to say any more than that. Lastly, if you will permit me an observation, though, obviously shareholders are free to do whatever they want, but sometimes judgments are made a long way away by people who never had a - even known a particular Director and I'm not referring to Maxine at all here now.

It's just a general comment - whose election is being discussed. Now, of course, there are bad Directors and it's our job to address that through an appraisal system. We have a very tough and rigorous appraisal system of Director performance every year. Now, as Chairman, over the years, in different companies, I've had to ask a few Directors to step down. But I don't think it's unfair to ask shareholders to give us a little credit when the Board recommends a Director for election. Now, sometimes shareholders trust us with billions of dollars of investment decisions, the appointment of CEO is probably the most important decision a Board can make, but not a judgment as to whether a particular Director is a good Director or not. Now, we know Directors here and in other places well. We work alongside them every day and we see their contribution firsthand. I can assure you that at Telstra or at anywhere else, we would never put anyone up for election who we did not feel would do a really good job on shareholders' behalf.

So I've said my bit; I'll stop there and go to any further questions.

Nathan Burley:

John, there is no further questions online or the floor or the web phone for this item. So that concludes the question session for item three.

John Mullen:

Okay. Thank you. I'll get my act together. Okay. So - yes. Thank you, Nathan and shareholders. So we - that's finished our discussion of item three. If you haven't already done so, please submit your votes online or complete your voting card for items 3(a), (b), (c) and (d). So I now move to items four and five on today's agenda, which relate to the allocation of equity, to your CEO, Vicki Brady, [under] Telstra's F23 - financial year '23 executive variable remuneration plan, or EVP, and the adoption of our 2023 remuneration report. Items four and five will be voted on separately, but as they both relate to remuneration‑related matters, we'll simply deal with the discussion of these two items together. Details of the proposed grants to Vicki under item four are set out in the notice of meeting.

Vicki's total remuneration package for [FY23] during which she held the role of Chief Financial Officer and Group Executive Strategy and Finance until 31 August 2022 and then CEO for the remainder of '23, FY23, included variable remuneration delivered through the EVP. In summary, a number of restricted shares and performance rights to be granted was based on the dollar value of Vicki's individual EVP outcome and her individual EVP outcome was determined by the Board, taking into consideration Telstra’s performance during the 2023 financial year against the specific measures set by the Board as well as her individual performance.

The Board, other than Vicki, of course, considers Vicki's total remuneration package for the 2023 financial year, including the proposed grants to be appropriate in all the circumstances and we recommend that shareholders vote in favour of items 4A and B.

Item 5 provides an opportunity for shareholders to comment on and ask questions about our 2023 remuneration report and whilst the vote on this item is advisory, the Board takes the outcome of the vote into consideration when reviewing Telstra’s remuneration practices and policies. The Board recommends that shareholders vote in favour of item 5 the adoption of our remuneration report. The proxy and direct voting positions for items 4 and 5 are being shown now on the screen. As indicated in the Notice of Meeting, I intend to vote all available proxies in favour of the grants to Vicki and the adoption of the remuneration report.

If you have any questions regarding items 4 or 5, please now come to your nearest microphone, alternatively, as before, you can submit your written questions or raise your hand to ask an audio question through the online platform.

I will be concluding the AGM at the end of this question session, so if you have any final questions on any subject that you would like to ask about your company that are relevant to shareholders as a whole, please also ask those now. I’ll now take questions from shareholders on items 4 and 5, as well as any remaining questions on the early items of business. Nathan, do we have any other online questions?

Nathan Burley:

Yes, we do, John and the first online question on this item comes from [Hong Nyen Jin]. Telstra’s share price has dropped its value by more than 10% in the last four months. How was this reflected in item 4 and 5?

John Mullen:

Thank you. Obviously, we don’t have any direct control over how the share price goes up and down and items 4 and 5 refer to the remuneration practice for the entire year that obviously takes place and is finalised before the events of the last month or two. So though we’re very comfortable that the messaging and the intent of everything I've just said relating to the prior financial year have been very appropriate and share price will go up and down, unfortunately, that’s the market. Let’s hope it goes up.

Nathan Burley:

Thanks, John. We’ll now take a question from the floor from microphone number two.

Operator:

Chairman, I’d like to introduce Mike Robey from the ASA.

Mike Robey: (Shareholder)

Mr Chairman, we share your concerns with the remuneration report complexity and depth. We would like to state that in fact of all the companies on the ASX, yours is probably the best laid out, so even though it’s a bloody long read, it is quite well laid out and some of the descriptions of why certain targets and so on are very well communicated. So we think it’s a model for other listed companies. We do have one small problem which we talked about at a previous time, but I think it’s probably worth shareholders hearing about it.

Vicki’s achievement of 75% of maximum was pretty much the same as Andy’s, but in fact, all of the staff working under her received considerably less. So how can you have the boss get a greater share of their maximum and the staff that actually do the work get a lower share? So that’s our only concern, thank you.

John Mullen:

Thank you, Mike. I think I’d start by correcting your last bit about the staff who do all the work. I think Vicki works harder than anybody, so it’s a collective effort. But yeah, no, look, there was a very - it’s a smart observation, but there is a reason for it. So under the EVP plan, the senior leadership all end up with one collective result as you rightly said. But we then have introduced a multiplier on individual personal performance that can increase or decrease your relative percentage payout against that communal target.

In Vicki’s case, we genuinely think she has made an unbelievably good start. She’s been incredibly diligent, she’s taken the company - the handover from the company seamlessly. She’s taken the company on in a way that the Board is absolutely delighted with. As a result, she got a high multiplier and it was higher than some of the others and that will change every year depending on performance of individuals.

Everyone is well-performing, but obviously, some perform even slightly higher level than others and we try to reflect that with the multiplier, but that was the reason why there was a difference.

Nathan Burley:

We have another online question from Joe Alvario. Haven’t decisions that were made to discontinue landline phones that could be used when there was no power affected the safety of customers who now cannot use their landline phone during emergency when there is a power outage?

John Mullen:

Well, I mean I think that refers to the fact that when Telstra was the provider, the old phone system was powered independently. Whereas now under the NBN, there is no such plant it’s my understanding, therefore, in the event of power failure, you do lose that ability. But obviously, mobiles is where people now fall back on, but that was a decision of government, not of Telstra. That was the creation of the NBN that created that.

Nathan Burley:

John, I’ve been advised there are no questions on the phone, there’s no questions online and we have no further questions on the floor.

John Mullen:

Wonderful, so I think that closes us up. Yeah, okay, good. Thank you and shareholders, we have now finalised our discussion on items 4 and 5. Please again submit your votes online or complete your voting card for these items. Shareholders, that concludes the formal business of today’s annual general meeting. For those of you online, if you haven’t already done so, please submit your votes. For shareholders here in the room who are using a voting card, attendants are carrying ballot boxes throughout the room and ballot boxes are also located near the exits.

The poll will remain open for a further 10 minutes to enable shareholders to submit their votes and the results of the poll will be available later today and can be obtained by visiting the ASX or our website. Just before I finally close the meeting, just again, I would just refer there were a couple of specific shareholders who had issues with their services. Please don’t leave without speaking to one of us to get those addressed. We will take that on board now before you go.

I therefore now declare our 2023 Annual General Meeting closed subject to the finalisation of the poll on items 3 to 5. On behalf of the Board and management, thank you, shareholders for joining us today for my last AGM. It has been a pleasure and a real privilege to serve you and I wish everyone all the best for the future. Thank you. 

Annual General Meeting

The AGM of Telstra Corporation Limited was held on Tuesday 11 October 2022 in the Hilton Sydney Ballroom, Level 3, 488 George Street, Sydney NSW 2000 and online using the platform provided by our share registry, Link Market Services. The recording of the meeting is available below.

2022 AGM recording

Video content description

Recording of the 2022 AGM held on Tuesday 11 October 2022 in the Hilton Sydney Ballroom, Level 3, 488 George Street, Sydney NSW 2000.

NIC MCKECHNIE:

Well, good morning shareholders. I'm Nic McKechnie. I am the communications Executive at Telstra and it's my pleasure to be your MC today. Before we start official proceedings, I'd like to welcome to the stage Aunty Norma Ingram.

AUNTY NORMA INGRAM:

(SPEAKS AN INDIGENOUS LANGUAGE) Morning, everyone, how are we? We have fun getting here this morning? It is my great pleasure and responsibility to welcome you to country this morning for your AGM. I want to acknowledge all of you for being here. I think you've got some buses or something here as well, I think. But it is a big responsibility for me. I am Aunty Norma Ingram. Aboriginal protocol is that Aboriginal elders are called aunty or uncle. So, I'm OK with Norma, Aunty Norma, just don't call me late for dinner. But I always love to do an Aboriginal welcome to country 'cause it is so important. I'm from mid western New South Wales, a town called Cowra, just past Bathurst. It's my mother's mother's traditional country and I could trace my ancestry back through her way back, before Captain Arthur Phillip came. My father is Riverina, but I have lived on Gadigal country, where we are today for many, many years and I am acknowledged and recognised and respected Aboriginal elder in this community.

So, I want to acknowledge that we're out of the traditional lands of the Gadigal people of the Eora nation. The Gadigal is one of 29 small clan groups that is Sydney area out to Redfern, Waterloo. The Gadigal, like all of our over 200 Aboriginal nations or language groups that we have right across this country, have cared for this country for over 60,000 years. So, I've got to tell you, my friends, 60,000 is really a Western concept. We always say we've been here since the Dreamtime and we'll continue to be here, and I'm so proud that I can say I belong to the longest continuous practice culture on the entire planet. So, go anywhere in Australia, you can see Aboriginal culture practised as it was practised 60,000 years ago. One of our major, I guess, aspects of Aboriginal culture is our kinship system. So, our kinship system is not just our human relatives, they are our fauna and flora, our animals and our plants. And so what we say is we have respect, responsibility and reciprocity. So, it is our responsibility as Aboriginal people and as Aboriginal elders to look after country, to look after our family, our animals, our plants, because what it means is that if we look after them, they can look after us.

And that's what Aboriginal welcome to country is all about, it's about acknowledging Mother Earth, it's about saying, Yes, Mother Earth. But it's far more than that, it's about acknowledging that 60,000 years of culture, it's about acknowledging the people who have taken care and continue to take care. And, you know, as Australians, you also have a part to play in that as well and it shouldn't be just up to Aboriginal people to care for country, this is our country. But we praise Mother Earth and we pay a responsibility to her through our songs, our dances, our stories. And if you look at the Gadigal, the Gadigal Sunrise people, they are salt water, their totem is the whale. And so all of those things are very important to us as Aboriginal people with our 200 Aboriginal nations right across this country. And we will continue to look after country, we will continue to pay respect. I want to acknowledge elders, most certainly Aboriginal elders right across our country, but elders who have gone before us, our elders are here with us now.

And I want to acknowledge elders from other nations and other countries. So important because they are the ones who have set the footprints, they are the ones who hold the history, who uphold the law and who guide us, if we just want to have a look and just pay attention to what they're doing. So, I just want to congratulate Telstra. I was looking at the videos and I thought, just we've come a long way since we set up the smoke signals, haven't we? I looked at that and I thought, Telstra is still able to work with our traditional owners, our Aboriginal people, our custodians, still able to work with them, looking at ancient knowledge, ancient cultures with modern day technology. And so I do look at that and I thank Telstra for making those connections because as I said, and I continue to say, our people continue to look after country and it's really great that Telstra could do that and work with our people so that we're not losing our land, so that we're not digging up our land without doing it the right way and the respectful way.

So, I just want to congratulate you on your AGM, your annual general meeting. I just do wanna say it's been a great pleasure. We have not, as Aboriginal people in this country, have not ceded our lands. We have never signed any treaty. So, it's great that we can work with people, with companies in this in this country. And so what I say, when you get the chance, take off those shoes and those socks, stand on Mother Earth, feel her power, whether it's sand or dirt or grass or whatever, stand there and you will feel the power. Talk to Mother Earth, tell her that you respect her, tell her that you will look after her and then she will look after you. So, as we always say, always was always is, always will be Aboriginal country. Let's think about that. And I want to thank you all and I want to welcome you to Aboriginal country, welcome you to Gadigal country and just continue to think about that and how we can pay respect to Mother Earth and really look after her. So, thank you everybody, welcome to country and enjoy your AGM and make some good decisions.

Thank you. (CLAPPING)

NIC MCKECHNIE:

Well, thank you so much, Auntie Norma. I, for one, will look forward to taking my shoes off afterwards and connecting with the earth. But it's so important that we do all listen and learn. And so that was a wonderful welcome to country and thank you very much. Well, welcome to everyone in the room today. It's great to see so many shareholders here today after not being able to meet in person for the last few years. Welcome also to everyone joining us online here today from wherever you may be. Today is a special day for us, as we have not one but two shareholder meetings. This is the first one, our annual general meeting. Once we've finished our AGM after a short break, we'll hold the second meeting, which is the scheme meeting for our proposed corporate restructuring. We'll be serving a light lunch at around midday today. However, if the AGM has not finished by that time, we will not be adjourning for lunch. And this is our first ever hybrid AGM with shareholders joining us in person, online and by phone.

So, it's going to run a little differently to previous meetings. For those of you here in the room, you're here today, you'll have been given a card when you registered this morning. Yellow cards are for shareholders who may speak and vote. Blue cards are for shareholders who may speak but not vote. You will need your card to ask a question or to re-enter the meeting and you can see those details from the slide up behind me. If you have any queries about how to vote, please speak with one of our staff in the room, he'll be very happy to help you or in the shareholder registration area outside and I'll also be happy to assist you. The procedure on how to ask a question in the room is being shown on the screen. For shareholders joining us online, on your screen, you'll see our virtual meetings guide. This contains all of the information you'll need about how to vote and ask questions. You can also call the help number that's shown on your screen if you're having any difficulties. And in terms of how we'll manage shareholder questions today, for each question session, we'll deal with questions from the floor here first, then we'll move to online questions, followed by phone questions.

I'll be reading the online questions to the chairman as they have been written by the shareholders. If we can't answer your questions fully or we can't get through all of the questions today, we'll certainly respond to any unanswered questions after the meeting, either directly or through the answers to common questions, which we will put up on our AGM website. If you have an individual customer or shareholder issue, please speak with one of our customer service staff here today, who again will be very happy to assist you. For shareholders submitting questions online, one of our customer service or share registry staff will be in touch with you after the meeting. For shareholders joining us online, the online platform is now open, and I would encourage you to submit any questions that you have now. So, with all of those procedural matters out of the way. I'd like to hand over to your chairman, John Mullen.

JOHN MULLEN:

Great. Good morning, ladies and gentlemen. My name is John, John Mullen. And it's my great pleasure to welcome you this morning to our 2022 annual General meeting. Thanks very much to everyone for joining us and for your continued support and investment in Telstra. Can I also start by saying how delighted I am to be back speaking to a roomful of real people and shareholders once again. But as Nic said, this of course is a hybrid meeting. So, a very warm welcome to the many shareholders who have chosen to join us online. A quorum is present, and therefore, it's my pleasure to formally declare today's meeting open. A notice of meeting was distributed earlier, setting out the business and resolutions to be considered today. And I propose to take that notice as read. A number of items of business on today's agenda, and all of them are now being shown on the screen. Voting on items three to five will be conducted by poll, and that poll is now open. Instructions on how to participate in the poll were distributed earlier, but assistance is available at any time should you need it.

It's important to also point out that following the AGM after a short break, we will reconvene for a separate scheme meeting. The scheme meeting is to seek shareholder approval on the scheme of arrangement, the next step in our proposed corporate restructure. The restructure was a key component of our T22 strategy and is now a key part of our new T25 strategy that was announced last year. As we'll discuss at this key meeting itself, the restructure is an important next step in our drive to increase the transparency of our infrastructure assets and to improve management focus on our infrastructure and customer businesses and consequently, provide us with more flexibility to create additional value for you, our shareholders. Now, I'm very pleased to be joined on stage today by all of my fellow board members, company Secretary, Sue Laver and our CFO, Michael Eklund, current directors Craig Dunn and Eelco Bloc, also both standing for re-election today and you'll hear from each bean shortly.

Sarah Lowe from auditors Ernst and Young is also here today. And I'm sure that she'll be very happy to answer any questions that you may have on the conduct of the audit or on the auditor's report itself. Our senior management team is also present and in many ways, today marks the end of one era for the company and the beginning of another. Shortly, you'll hear from your new CEO, Vicki Brady, whose appointment followed the decision earlier this year by Andy Penn to retire after more than seven years in the role. Vicki is a highly capable and professional executive, and she could scarcely be better qualified to lead Telstra into this new era. Vicki was previously Telstra's chief financial officer as well as before that, managing our largest business segment being consumer and small business. As a result, she knows our company inside out and she's made an enormous contribution to the company already, including through her work in helping develop our new go-to-market plans as part of the T22 strategy.

Vicki also played a key leadership role in the development of the T25 strategy, which is going to be absolutely critical to the success of the company going forward. And I and the board believe that she is therefore the ideal person to lead Telstra into its next phase of growth. Then let me now also take the opportunity to offer a special vote of thanks to Andy Penn for his incredible contribution to Telstra. Andy led the company during a period of significant change and he will be remembered for his courage and setting a bold ambition through T22 to deliver a transformed experience for customers, shareholders and employees. And there is no doubt that T22 has delivered beyond expectations. It's also laid the foundations for the T25 strategy and our renewed focus on growth and innovation. In recent years, Andy not only ensured the successful delivery of our T22 commitments, but also provided outstanding leadership during what has truly been an extraordinary time as we have navigated, both as a company and a nation, through the challenges of the pandemic.

Andy also built a very strong leadership team and perhaps the greatest testament to this was our ability to announce internal successors to the roles of both CEO and CFO. And we were thrilled, therefore, to announce Vicki and Michael in these roles earlier this year. Now, without Andy's exemplary leadership, I think it's safe to say Telstra simply would not be in the strong position that it is today. So, on behalf of the board and shareholders, I'd formally like to thank Andy for the extraordinary contribution he made to Telstra and to congratulate Vicki on her new appointment. Right. And let me now turn (COUGHS) Excuse me to the company's recent performance, and in particular, the successful completion this year of our T22 strategy. I think it's fair to say that four years ago when we launched T22, Telstra was in a very difficult position. We've seen the rate of digital adoption accelerate rapidly, along with customer expectations for a seamless digital experience. We knew that we had to respond boldly to the enormous impact that the creation of the NBN would have on Telstra.

And we knew that we had to radically simplify and digitise Telstra and once and for all try to remove the customer pain points that has frustrated our customers and our teams for too long. Now, we knew all of this when we launched T22 in 2018 and embarked on what has been one of the largest and most ambitious transformations of the telco globally. The strategy leverages many of the significant capabilities that we had already built through the strategic investment of $3 billion to create the networks for the future and to digitise the business. And this year I'm delighted to report the past four years of discipline, focus and hard work have really paid off, and the underlying business of your company grew again in fiscal year 22, and we are now positioned for continued growth. Our investments in innovation and technology and digitisation and networks, in improving our customer experiences and ways of working, and our disciplined approach to capital management mean that Telstra today is a fundamentally different company with an incredibly bright future.

Vicki will take you through the financial highlights shortly, but I wanted to touch on just some of the key achievements made under T22. That we have famously reduced the number of in-market products and services for our consumer customers from 1,800 to just 20 and stripped away the lock in contracts, excess data and the other charges that used to frustrate our customers. Our 5G network now is the largest and fastest in the country, covering 80% of the population, and it's among the very best globally. Our total network now cover some 99.5% of all Australians and stands at over 2.6 million square kilometres. We have completely modernised and digitised our systems. Our direct headcount has been reduced by approximately 8,000, but simultaneously we have recruited 1,500 new hires in software engineering, data analytics, artificial intelligence, and cyber security. Our cyber security capabilities are now considerable and our teams are working around the clock to protect our networks and our customers from unprecedented levels of malicious activity.

In the last 12 months alone, we have blocked more than 1 billion malicious emails, 200 million scam calls and we're currently blocking 1,500 scam texts every minute of every day. Do you know how many still get through? So, should I just say the magnitude of the problem we're facing. Another significant change has been to bring our consumer and small business contact centres back onshore. I've been a member of the Telstra board for 14 years now and chairman for the past six and I don't think there's been a single AGM where we have not faced questions from shareholders about offshore contact centres. Well, I'm delighted to say that those days are over. Over the past months we have had around 2,000 new team members across the country so we can answer consumer and small business calls in Australia and create a better customer experience. Our commitment to hybrid working also means that those new team members are located in cities and towns across Australia, including regional hubs like Maryborough, Bunbury and Bathurst.

Thanks to hybrid working, that means that the person helping you could be in your state, your suburb, your town, or who knows? Even your street. And on any given day, nine out of 10 of our consumer and small business service team choose to work from home. Another significant change this year concerned our licensee stores, which have all been brought back in-house and are now Telstra owned and operated. Almost half of all sales interactions and more than three quarters of all service interactions with consumer and small business customers are now digital. And the benefits of a better system are tangible and the number of calls now coming into Telstra's consumer and small business contact centres has fallen by more than 70%. These improvements are also reflected in our episode Net Promoter Score results, which are stronger than ever, improving five points in the last 12 months and 18 points since the T22 program began. Fiscal year 22 was also a pivotal year for Telstra financially, as we saw the near-final negative transitional effects of the NBN rollout in our reported results and the growing momentum in our underlying performance.

Vicki will talk to you more about FY22 results in a minute, but it was especially pleasing to be able to increase the total dividend for the first time in quite a few years. The increase recognised the confidence of the board following the success of our T22 strategy and the ambition in our T25 strategy of high teens earnings per share growth from fiscal year 21 to fiscal year 25. Inside the business, the adoption of agile at scale work practices has transformed our approach to prioritisation and resource allocation so that we are faster to market, more efficient and more customer-focused. We also continued to look for opportunities to grow our business and to unlock value from our infrastructure assets. Last year, we finalised a significant transaction with a consortium made up of the Future Fund, Commonwealth Superannuation Corporation and Sunsuper to sell a non-controlling 49% interest in our InfraCo Towers business for $2.8 billion. Importantly, we retain 51% ownership of the towers business now called Amplitel and retain full ownership of the active parts of our network, ensuring that we can continue to maintain our network leadership.

And approximately 50% or $1.35 billion of the net proceeds of this deal would indirectly return to shareholders during fiscal year 22 via an on-market share buy-back. We also invested $75 million of the proceeds to further enhance connectivity in regional areas. The remainder of the proceeds were used for debt reduction to ensure that we maintain balance sheet strength and flexibility. In October last year, we announced the acquisition and partnership with the Australian Government of Digicel Pacific, adding a leading mobile business in PNG, Fiji, Vanuatu, Tonga, Nauru and Samoa with 2.8 million customers to our international business. We completed this acquisition in July of this year. Our intercity fibre project, announced in February, will provide ultrafast connectivity between capital cities and improved regional connectivity. We have finalised contract negotiations for the first stages of the build, and we have held detailed discussions with customers, including signing up Microsoft as a major anchor tenant.

In satellites, Telstra will build and manage the ground infrastructure and fibre network in Australia for Viasat's new series three satellite system and construct a major fibre project to build state-of-the-art inter-city dual fibre paths across the country. We also announced an MOU, a memorandum of understanding with the LEOSat provider Oneweb and are working towards building a commercial relationship with testing of their network underway as well. Telstra Health was selected to deliver the 1800RESPECT for service for an initial five years at an estimated value of around $200 million, adding to the strategic health software of the company, acquisitions in GP practice management and specialist billing and clinical coding. Through all of this activity, we continue to build on our work to be a leading, responsible business. And we know that businesses can only be successful in delivering sustained value for their shareholders if their customers, employees and communities are also successful.

Our commitment takes many forms, that includes significant action on climate change, where we are certified by the Australian Government's climate active program as carbon neutral in 2020 and continue progressing towards the other two climate targets to enable renewable energy generation equivalent to 100% of our consumption by 2025, and reducing absolute emissions by at least 50% by 2030. At the same time, too many Australians, and particularly vulnerable Australians in difficult circumstances are at risk of being left behind in the digital age and becoming even more marginalised. Telstra has a key role to play here, building access through our network investment, ensuring our products and services are affordable, and by supporting a range of programs to build digital skills. We're also providing more network coverage to more people in remote and regional areas. And over the seven years to the end of fiscal year 22, Telstra will have invested $11 billion in our mobile network nationally, with 4 billion of this invested in our regional mobile network, providing additional capacity and new and improved coverage.

Last year, we also announced significant forward investments, including $150 million in regional investment for fiscal year 22 and an additional 200 million co-investment fund to improve regional connectivity over the next four years. This work continues to shape Telstra as a responsible, sustainable and community-minded organisation, one that is purpose-led and values-driven. And we're very proud of this work. Looking ahead, the company has now moved from T22 to T25. Y25 marks a really exciting new era again in Telstra's history, one that will see us accelerate growth from our core, as well as continuing to scale a successful health and international businesses. We will build on the simpler world that we have created for customers. We will provide an exceptional experience with even greater personalisation and consistency across our channels. We will offer the products and services they need to connect as individuals and businesses grow. 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 expand our regional network by an extra 100,000 square kilometres so we can continue to deliver leading mobile coverage and build and sustain our network leadership. We will continue to improve our reputation as a responsible business with further action on climate, digital inclusion and building fairness and accessibility into all that we will do. We were successful with T22 because we were bold. We set ourselves some big, ambitious goals and executed with discipline and transparency. The same disciplined approach will be taken with T25. Turning now then to changes this year on Telstra's board. One long serving board member, Nora Scheinkestel, reached the end of her four three-year term as director and has notified the board of her intention to retire at the conclusion of today's scheme meeting. Nora has simply been an outstanding director, and I'm very, very sorry to see her retire. She was one of the very best directors that I've ever had the pleasure to work with. She has been part of the board at a time when Telstra has gone through some of its greatest challenges and transformations, this includes her chairmanship of the Audit and Risk Committee from 2012 to 2019, and her membership of the Due diligence committees, which helped guide Telstra through the NBN transaction as well as our current proposed corporate restructure.

So, on behalf of the board, I would like to express my sincere thanks to Nora and offer her our very best wishes for the future. (CLAPPING) More broadly, Telstra has a strong and talented board and we continue to bring on outstanding individuals to replace those that retire. In that regard, we expect to announce two high quality new directors in the next few months. Now, a number of investors have also asked me recently about my own future as chair. So, I've been on the board for 14 years, so it's only natural for there to be a speculation on my tenure, especially as we now have Vicki in place as our new CEO. So, well, my current term with the board ends in October next year, but I have two significant obligations still ahead of me. Firstly, I need to do everything I can to support Vicki in her new role, and secondly, I need to ensure that in addition to the capable directors already on the board, the board is strengthened by the addition of new directors so that my colleagues have a strong line up of candidates from which to choose when deciding on my successor.

If both of those tasks are completed by next year's AGM, then I will not be standing for re-election. If we're unable to complete all of this in that time, then provided my colleagues support the decision, I would stand for re-election, but with the intention of transitioning to a new chairman within the first six to 12 months of my next term. Now, 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. COVID has turbo-charged the digitalisation of our society and further underscored the crucial importance of the connectivity that we provide. Geopolitics remains volatile and uncertain, and that has changed the threat landscape and increase the demands on our cyber defences and strategic supply chains. Now, Vicki will touch further on cyber security in a minute, but may I just say that it is easy for third parties to be critical of companies who have suffered devastating cyber attacks, such as happened recently to Optus.

Let me be blunt, however, and say that it's very easy to be critical when it isn't you in the firing line and we should all avoid hubris because no-one can afford to be complacent and no organisation can ever be 100% sure that it is completely protected and safe. The threat sophistication of the attackers grows every day. And to address the threat, business needs to put aside competitive rivalry and work constructively across industries, with government and with the community to protect Australia from this modern scourge. Then at the same time, everyone's aware that inflation and cost of living pressures continue to increase and this is also something that we are incredibly mindful of. The changes we've made under T22 position as well in this regard. Most consumer and small business customers now have incredible flexibility with us. Their mobile Internet service plans are no longer on a long term contract. They can move between plans even once a month if their circumstances change. They can also take advantage of a multi-brand strategy and a range of propositions that give them real choice.

Equally, we continue to work closely with customers who find themselves in difficult situations, and particularly working with people in vulnerable circumstances. In this regard, through various initiatives we today helped some 750,000 vulnerable customers to be able to maintain connectivity and participate in our modern digital world. There's no easy or short term fix, but we remain very sensitive to cost of living pressures and the pressures of that creates for customers and employees. Lastly, another issue of some concern is the current critical shortage of skilled labor in the technology sector, an issue that clearly impacts on Telstra. The new Federal Government deserves real credit for its genuine efforts to address this and other critical issues in a considered, consultative and collaborative way at its recent Jobs and Skills Summit. The debate on how to address skills shortages has some way to run yet, but most people agree on one important point, skilled migration is an important part of the solution, and the system that enables it must be made simpler, more efficient and transparent.

Historically, migrants have supplied about a third of the increased skill requirements of the Australian economy and given Australia's ageing population, we should expect this trend to accelerate in the future. With the world rapidly digitising and with many companies, including Telstra, requiring ever more technically skilled workers, this is an area we cannot afford to fall behind. For Australia to be competitive, we must invest in skills and training, particularly in growing industries like technology, but we also need ready and steady access to skilled labour from offshore, as required. So, let me conclude again by saying we have many achievements to be proud of this year. The many tangible benefits of T22 are now clear and they underpin our commitment to return the business to underlying growth and position it for success in the future through T25. It's an exciting strategy to meet an exciting future. And finally, before I invite Vicki to address you, let me sincerely thank you, our shareholders, for your support during the year.

Let me also thank our millions of customers because without them there would be no Telstra. And finally, a really sincere thank you to every Telstra staff member, the board greatly appreciates all that you do. And I believe so too do our shareholders. Thank you very much for listening. And let me now introduce our new chief executive officer, Vicki Brady, and invite her to address the meeting. Thank you. (CLAPPING)

VICKI BRADY:

Well, thank you, Chairman. And good morning, everybody. I am delighted to be here for the first time as your chief executive Officer, and I look forward to hearing your comments and answering any questions you have of me. This morning I will cover two things. Firstly, I will comment on the financial and operating results from FY22 and an overview of our priorities and guidance for FY23. Secondly, I will provide some detail on the growth aspirations of our new T25 strategy. Before I do that, given it is my first time here as CEO, I wanted to briefly touch on what my immediate key focus areas are and some of the drivers behind them. FY22 was a particularly important year for Telstra. As the chairman just took you through, we successfully closed out our T22 strategy and the financial headwinds from the transition to the NBN are largely behind us. At the same time, the world is going through a period of upheaval, with changes in the geopolitical landscape, supply chain disruptions and economic pressures such as inflation coming on top of the growing impacts of climate change.

These things are driving different opportunities and challenges for all businesses, and to prosper in this environment, we will need to think differently and boldly. One thing I am sure of, and as COVID has demonstrated, connectivity and technology, Telstra's core products and expertise, will play a key role in helping our country and the world to respond to these challenges. Put simply, what we do and deliver has never been more important. Which brings me to my key priorities, which are strongly grounded in our T25 strategy and ambitions. Number one, we must continue to radically change the experience for our customers. We have made huge progress through T22, but delivering exceptional customer experiences, being known as a leader in customer excellence isn't just the right thing to do, it is critical to us unlocking future opportunities, opportunities to fuel our growth. And that growth is my second priority. Growth will come from customers trusting us to play a lead role in delivering the technology that can make a real difference for them and their organisations.

Connectivity is at the heart of so much of our lives, and Telstra is in an extraordinary position with the team that can bring together our market leading networks, products, services, and solutions for consumers and enterprises. That demand for our products and services, with connectivity playing a foundational role in everything we do, means we are well-placed to grow into the future. The increased reliance on connectivity we provide means we need to be vigilant in protecting our networks and platforms. We are seeing increasing cyber threats, and the recent attack on one of our competitors puts into stark focus just how real these threats are. You may have also seen reports of a data breach at one of our third-party suppliers. I want to be clear that this was not a breach of any Telstra system and did not involve any customer data. The hackers accessed the names and email addresses of some of our employees. We have taken important steps to protect our networks and customers, but ongoing vigilance is required and the job is never done.

We are also blocking unprecedented levels of malicious activity from reaching our customers, including calls and SMS, while at the same time helping our customers to protect themselves and their businesses. With a growing number of these cyber attacks, some of our customers are asking us what ID documents we keep, for how long, and for what reason. These are all fair questions and people are right to be asking them. Like many companies, we are subject to multiple pieces of legislation and rules in relation to retaining our customers ID data. We collect it and fiercely protect it through our cybersecurity capabilities. But we agree the time is right for a discussion on the laws around keeping data. As we do, we have to get the balance right, and it's a fine balance between identifying our customers, protecting them against fraud, maintaining their privacy, and helping law enforcement combat crime. Given advances in technology and the broader work being done on trusted digital identity, I think that balance is achievable and we really look forward to working with the government on it.

I will now turn to the financial results. FY22 was a pivotal year for us. As well as successfully marking the end of our T22 program, we also saw the last financial effects of the rollout of the nbn and the growing momentum in our underlying performance is showing through. Those final financial nbn impacts saw reported total income's decline of around 700 million in one-off nbn receipts, and 300 million in nbn commercial works. Total income for the year therefore decreased 4.7% to 22 billion on a reported basis, while NPAT decreased 4.6% to 1.8 billion, and earnings per share were down 7.7% to 14.4 cents per share on a reported basis. The declines reflect both the impact of the nbn and one-off gains from asset sales last year. In contrast, underlying EBITDA on a guidance basis, increased 8.4% to 7.3 billion, driven significantly by an outstanding performance in the year from our mobile's business. Underlying EBITDA included an in-year nbn headwind of 340 million. This is the last year of in-year nbn headwinds and brings the total cumulative impact of nbn on Telstra's EBITDA to 3.6 billion per annum.

Encouragingly, underlying EPS was up 48.5% to 14.4 cents per share, and as the chairman just highlighted, we are pleased to announce an increase in the total dividend for the first time in a number of years. I will now turn to the operating highlights for the year. As I said, mobiles performed very strongly, adding 700 million in EBITDA growth. We added 155,000 net retail postpaid mobile services, including 121,000 branded, demonstrating the benefits of our clear leadership in 5G. Retail prepaid unique users were up 215,000. In wholesale we added 218,000 services, and we added over 1 million Internet of Things services. Our performance in fixed for consumer and small business has been more challenged. Net new retail bundles were -87,000, although bundle and standalone data ARPU increased by 2.4%. Not withstanding the disappointing fixed IO performance, we are confident of restoring financial momentum by leveraging the many value adding home broadband features Telstra offers. In Enterprise and in line with our previously communicated aspiration, we return to growth at both the income and EBITDA level.

Fixed Enterprise EBITDA grew by 2.3%, with NAS EBITDA growing by 152 million to offset weakness in our data and connectivity business. InfraCo Fixed income was 2.4 billion, with core access revenues, including nbn recurring receipts, up 3.1%. InfraCo Fixed growth will be further supported by our inter-city fiber project announced in February. This will provide ultra-fast connectivity between capital cities and improved regional connectivity. Telstra Health had a strong year both operationally and strategically as it continues to scale. Telstra Health revenue for the year was up 13%, or 51% to 243 million after including the MedicalDirector And Power Health acquisitions. Finally, on our operating highlights, underlying fixed costs were down 454 million and total operating expenses were down 906 million or 5.8%. In summary, FY22 has seen our core business perform strongly. Our mobiles result was outstanding, Consumer and Small Business Fixed grew in the second half, Enterprise returned to growth at the top line and bottom line, and we've started to realize the benefits of setting up our infrastructure assets as standalone InfraCo businesses.

Turning now to FY23 guidance, which I am confirming today. The ranges and basis on which guidance is provided can be seen on the slide. Guidance across all measures includes our Digicel Pacific acquisition that completed in July. Our Underlying EBITDA guidance is consistent with our previous FY23 ambition, plus a contribution from Digicel Pacific. Our CapEx guidance includes an uplift in mobile investment, around 150 million for Digicel Pacific, and around 350 million of strategic investment, outside of business as usual, for the Intercity Fiber and Viasat infrastructure projects. Finally, on guidance, we expect to continue to as achieve strong cash flow, enabling us to invest for growth and deliver returns to shareholders. FY23 free cash flow is expected to be around 1.1 billion, lower at the midpoint of guidance than FY22. Increased EBITDA in FY23 contributes positively, but this is more than offset by increased CapEx as well as working capital and other benefits in FY22 not repeating.

With that, let me turn back to T25 and the future. T25 is built on four strategic pillars and aims to deliver, first, an exceptional customer experience you can count on. As I said at the start, nothing is more important than continuing to improve customer experience, and this sits at the heart of our T25 strategy, leveraging the capabilities we have built. Second, leading network and technology solutions that deliver your future. Connectivity is central to how the world works and our customers are demanding more from us than ever before. We are committed to continuing to provide them leading network and technology solutions. Third, sustained growth and value for you, our shareholders. Our financial ambitions are clear. We aim to grow our underlying business through to FY25, demonstrated by the key metrics of EBITDA, ROIC and earnings per share. With cash flow generation and opportunities ahead to monetize assets, although we have made no decisions yet in this regard, we will focus on maximizing our fully-franked dividend and seeking to grow it over time.

And finally, the place you want to work. The last one is built on three key areas, excelling in new ways of working, accelerating our digital leadership, and doing business responsibly. As the chairman said, we will take the same transparent and disciplined approach to T25 as we did to T22. That means we will continue to publish a scorecard that clearly shows our progress against our commitments and metrics. Today, you heard the chairman call out some of our early progress in his speech, including our intercity-fiber build and our support of the Viasat satellite ground network. In conclusion, FY22 clearly shows the financial momentum within our business, and we expect that momentum to continue through growth in our underlying business. While the current economic and global environment remain volatile, we are well placed to manage through it with earnings growth, strong cash generation, and a strong balance sheet. Demand for our products and services has never been stronger. We have a clear strategy to grow our business, deliver industry-leading networks and technology, continue to improve our customer experience, and attract and retain the best talent.

I echo the thanks of the chairman to you, our shareholders, and I am equally humbled and proud to be given the job of leading this iconic company. I would also like to thank the board for the faith they have put in me. And I want you to know I feel the weight of that responsibility that comes with it. As we have laid out today, Telstra plays a critical role in providing the networks, connectivity, and technology that connects our nation. I am energized by that responsibility and confident we have the strategy and the team in place to fulfill it. Lastly, I want to take the time to thank the entire Telstra team. I am supported by a group of extraordinary, values-driven people working together to deliver an exceptional customer experience to fully realize the value of our unequal assets and ultimately to deliver better returns for you. Thank you. And with that, I will now hand back to the chairman. (APPLAUSE)

JOHN MULLEN:

Great. Thanks a lot Vicki. So we will now move to the formal part of the meeting. And the items of business are being shown on the screen. Nic outlined at the start of the meeting how you can ask a question and vote. Just a reminder, if you have any difficulty with the online platform or the phone system, please check our Virtual Meetings Guide on our website or call the help number shown at the top of your screen. As I mentioned earlier, voting on items three to five is being conducted by poll. Ms. Emma Jones of Linked Market Services Limited, Telstra's Share Registrar, is acting as returning officer in relation to the pol. We have received proxies from over 15,000 shareholders and direct votes from almost 14,000 shareholders. And we will display the proxy and direct votes recorded for, and against, an item on the screen when we get to that item. The 'for' numbers include proxies received and available to be voted by the chairman of the meeting. So, I now turn to item two on today's agenda, which is to discuss the company's financial statements and reports for the year ended 30 June, 2022.

So, this item provides shareholders with the opportunity to ask questions about our 2022 financial statements and reports, as well as the business operations and management of Telstra. You can also ask questions of our auditor. Now, if you have any specific questions about the scheme, could you please hold onto those and ask them at the scheme meeting, which will be held later today, after the AGM. So I'll now take questions from the floor. Shareholders, I invite you to move to a microphone and ask any questions about our 2022 results or any general questions you have about our company. For those of you not here in person, please submit your questions through the online portal or raise your hand on the phone line if you haven't already done so. I have four microphones here. So, please, any questions for us? We have a question from number four?

NICOLE MCKECHNIE:

Chairman, I would like to introduce Mr. Bernard Power.

BERNARD POWER:

A general question, Mr. Chairman. You mentioned earlier that you were having difficulty recruiting the best technical talent, but I do notice on the CVs of both the board and the senior management, those are people mainly from a financial or commercial background. Do you not feel perhaps that Telstra should have a bigger technical representation in this forum? Thank you.

JOHN MULLEN:

Well, thank you for the question. I think the days of having a technical director on the board are over. Every director on the board needs to have an understanding of technology. They don't have to be a deep specialist, but you need to have a good understanding of technology and how it impacts our world. And I believe that we really do have that. And in particular, we have three directors. We've had the highest levels of experience as CEO or boardroom level of major telcos larger than Telstra. So I think we've actually got an excellent level of technological capability on the board. Thank you for the question. Number three.

NICOLE MCKECHNIE:

Chairman, I'd like to introduce Penelope Fisher.

PENELOPE FISHER:

My name is Penelope Fisher. I'm a shareholder in Telstra from the original fruit, and I'm also a Telstra customer. And I cannot tell you how extraordinarily disappointed I am in the performance of Telstra to me as a customer. I have actually had nothing but problems since I converted to the nbn in January 2022. I have taken this up both with Telstra as case managers have been appointed to me and rotated, and changed to the degree, do I just feel like pass the parcel. I've taken it to my local member for Wentworth, Dave Sharma, who's now no longer my local member, and I've also taken it to TIO, over and over and over again. Due to a car accident, I'm a Priority Assist customer, and yet I have had an ongoing fault issue with both my home line and my internet, which is not covered by Priority Assist, but home line is, since March of this year. I had somebody who was appointed to me, Mr. Charlie Wilson as my case manager, who has now left Telstra, and somebody called Jade Smith has taken over.

She has not contacted me on my phone in the past two months. She says she has, but she hasn't gotten through to me. She's never written a letter to me to tell me how to contact her, she's constantly sent me only two emails. And when I've actually said to her, "Why have the agreements or the offer as a contractual offer that was made by Charlie Wilson, not been honored by Telstra once I've agreed to them?" she has not been able to get back to me and tell me why. I cannot tell you how aggrieved I am, not just for myself, but for those other people who are in vulnerable positions for whatever reason. Mine is due to a car accident, bilateral hip replacement, damage to my spine, lucky to walk away. But there are other people older than me who don't have the linguistic skills or education I do, who are actually in a position that Telstra has placed them in, by not honoring their word and not fixing the problem. If the nbn is not delivering, I can't sue them, I have a third-party relationship with them, but Telstra can.

That the nbn network is not working all over Australia. There's problems with the nbn network that many, many people recognize. Apparently, the ACCC have complained to the government about the current legislation, especially for Priority Assist, and also the current Ombudsman for the TIO have also complained that the legislation needs changing. But it's not just the legislation that needs changing, it's Telstra's working relationship with the nbn that needs changing, because the nbn network has regular outages, both planned and unplanned, which leave people without any way of connecting. I have not had mobile signals in, or in the area around my home, since 2012. So if I lose my home line and my internet, but it's not covered by Priority Assist, only the home line, I have no way of getting the assistance I might need. I think this is extremely poor performance as a company, and I would like to know what kind of measures you are going to be taking to address it? And I agree with the person who asked the question before, I'm surprised that there's not more technical expertise on the board, but more financially-heavy expertise on the board.

Of course, the company must survive as a company, but it has to have something to sell that is a technical and sophisticated product to its customers. So I'd like to know what you intend to do about fixing the nbn network problem as well as how you intend to assist customers who are Priority Assist customers? I can't work from home, I can't start a business from home, and I can't study from home because of these issues. Thank you.

JOHN MULLEN:

Well, firstly, nobody likes hearing the difficulties that you've experienced and I unreservedly apologize on behalf of the company for the troubles you've experienced. Now, there's a lot in your question. Let me try and get some of the bits. Firstly, you'll forgive me, in your particular circumstances, obviously I don't have the knowledge at my fingertips, but we have people here who will be able to help you. And let's make sure before you leave today, you sit down with an appropriate person from Vicki's team and we will get your issues resolved. So that's point one. Point two, I think, yes, you're right, there have been quite a few difficulties experienced by the whole industry with the transition to the nbn, that's no secret. However, we have a very good working relationship with the nbn, after perhaps some difficult times at the beginning as everyone's finding their feet. The rollout is pretty well complete now, and I can assure you nbn is trying really hard to fix those issues in conjunction with us.

Sometimes it's a Telstra problem, sometimes it's an nbn problem, but we do work constructively together to try to address those. I know it's of small comfort to you, with the experiences you've had, but actually the transformation of Telstra's customer experience has been absolutely radical. A long, long way to go, and when you've got millions and millions of customers, there will always be someone who has a bad experience from time to time. But I think you heard some of the statistics that we mentioned earlier, that the number of calls coming in are reduced by 70%. We brought 166 of the stores in-house, where they can be directly managed by Telstra Management. We brought a hundred percent of the Consumers and Small Business service calls that were handled overseas, brought them back on. Our net promoter score has climbed dramatically up to, I think, plus 37 at the end of the T2022. We've done other things as well, like with the free calls from phone boxes. I believe some 17 million customers have done some 17 million free calls.

We're extending that to fixed line opportunities as well. We've helped some three-quarters of a million vulnerable customers. So while, yes, I don't, in any way, downplay the difficulties you've had, believe me that the transformation of Telstra service performance has been dramatic. And T25, probably the single biggest component, and Vicki and I have discussed this at length, single biggest focus is to take that service performance up another level. Now, there'll always be somebody who has an experience from time to time, that's life, but we really want to get it to the point where Telstra's recognized as a seamless digital and first-class customer service organization. We've still got a way to go, but we've made a lot of progress. And I would just circle back. Please don't leave today, until you sat with one of us. I'm happy to talk to you with Vicki and some of our team, and we will address your issue and get it resolved. Thank you. Number three.

NICOLE MCKECHNIE:

Chairman, I'd just like to introduce Margaret (UNKNOWN).

MARGARET:

I'm not used to doing this, but I would like to speak to somebody on the board. I have had problems with my legs from here down. I have to walk every day, but I've had problems with my legs in the last few weeks, through the stress of not resolving the Telstra nbn problems. Everyone has been extremely nice to me, except for somebody about two or three weeks ago, when I went into the Telstra place at Chatswood, at Westfield, where they happened to know me, because I've been in there so many times. With all these scams, I know people who have been scammed and I didn't know sometimes, still don't know always, if it's Telstra ringing me. So I make a journey into Westfield, and I was on the phone for an hour and not understanding the technology that the girl was using. And I never will understand it, and especially when my head is all fuzz. Now, I think it's since, and I lost the use... I don't know if I was going to faint or whatever. But since then, I've had the stress. My brother died on the 21 July, I've lost three other friends since then, going back for years.

But I think it's about two weeks into July that I first had a problem with the screeching so badly on the phone, and a friend in hospital leaving the longest message she's ever left, and I could not understand any word in that message on the answering machine. The phone, I have been told, has dropped out as many as 50 times, even when I'm not even talking on the phone. It's still dropping out 50 times, 20 times, 30, 17. I do believe that it was fixed last week by one fellow Con, C-O-N, Con. Greek background, lovely fellow, who started supervising the other technicians that came out. And a new line should have been put in when we had problems with Telstra before. Where I live, in that area, we had problems with Telstra for years. The technicians had come out. There'd be water in the little black boxes in the pits. What do you call it? Condensation. My mind is not even working properly. I have made a very bad investment. I went into the bank to invest in a term deposit so much, and it was suggested double the amount, because I had too much standing.

I had intended that money to go somewhere else. Now, I can't think clearly. That's how stressed I have been. I have missed out on meals. My weight went down to under seven stone. I should be eight stone, two or four. Now, it's not funny to have... And about two or three weeks ago, my head, I can't explain it, felt if I didn't just pull back and just... And I have been nice to everybody. I ended up in the last two or three weeks telling the people that I'm frustrated. That's the strongest word I've used. Yesterday, the Priority Assist fellow, I've had Priority Assist for a long time. I walk very quickly, my movement's are very quick and everybody thinks I'm very fit. I'm not. But I do what I'm told to do by the physio every day and I go for a walk every day. And that keeps me going. I'm sorry to take up so much time, but I'm not as articulate as that lady. And Vicki, you are very articulate. Thank you for explaining things so clearly this morning. I would like to speak to somebody. But Con, who took responsibility, the line has gone from that box, up to that box, to there, up to there, and up to my garage.

Now, it goes down through between the two brick walls, and the line by nbn has been completed, but the phone is still not right. And the fellow yesterday said, "Just stay calm." Well, it's very hard and I didn't raise my voice, but I didn't even think that was the right word. I think that Telstra could... And as I said, everyone's been extremely polite in what they say. They think that it's fixed, but if it's not, the line needs to be replaced. Well, now that was done last Saturday. And it was done very quickly and efficiently, I believe. And this Con had a wonderful way of keeping me calm, keeping me confident. That's lacking when nobody takes responsibility for anything. And when the technician is leaving, he says, "I think the line has been fixed. But if it's not, you need to replace the complete line." Well, this is costing Telstra. For that lady, for me, we're not the only ones. I have so many friends who have a connection in their house, but they don't use it. They're obviously paying the bill, which may be something, but they don't use their phone.

And the other thing, yeah, they gave up trying to get in once they switched over to nbn, they just gave up. But the mobile in my area, that also doesn't work very efficiently in my house and I took it out onto the street. I don't normally use the mobile. I'm not good with the technology. Went out there, it cut out five times. I thought it was me. But no, apparently, selling off these towers is not a good idea because Telstra are not allowed onto the properties. The one tower has been out of operation for nine months. This was mentioned to me about three, four weeks ago, nine months. And another one has been out of operations since, at some stage, for two months, the mobile in my area. And it's something to do with... Oh, what do you call it? See, I can't think at all. But please, I realized the whole of the country, there are problems in every area because it's all grown too quickly. Everything's grown too quickly, a we keep bringing new people into the country. Let's try and resolve what we can in the country with... The health is disgraceful.

But you're a communications company, so you need to be able to communicate with people and not let us get as uptight as we are. It's part of my personality too, so I can't blame. Overall, I've been very happy with Telstra, but not since I changed to nbn. Thank you.

JOHN MULLEN:

OK. Thank you very much. And again, I can only apologize for all the troubles you've had with the nbn connection. Again, you'll forgive me, I'm obviously not aware and nobody here will be aware of your specific circumstances, but I can give you a full commitment that again, before you leave today, speak with one of our customer service representatives, or if you can't get satisfaction there, speak to Vicki or myself and we will address your issue for you.

MARGARET:

Thank you, but unfortunately everybody is passed on to the next person, to the next person. I don't know how many people have come into my home, and because I'm a Priority Assist person, I've had to stay at home, so I need to get out. I live alone, I need to have company. I've had to put off so many... I can't even go to the hairdresser, I can't make a hair appointment, but I can't make medical appointments. I haven't been able to make since... Well, it was due in about July. I haven't been able to make my breast... I've had breast cancer, but years ago, but I have to go every 12 months. I haven't been able to do that. I've canceled other important appointments. My friends are not ringing me. They're sick and tired of hearing the stories, because it's on my mind. It's either that or grief at the moment, and there's not much of the grief coming through because it's all Telstra or nbn. I can't even stay in bed till 8:00 at morning, which I never ever do. I'm an early morning person, I like to walk early, but I can't even... Because I feel my body needs it so much, to have a morning in bed, I can't do that for fear of... The technicians come before or after the time.

You may have an appointment there, they'll come there and they'll say, "Because you're priority, we come early if we can." So look, I appreciate all of that, but what it's doing to me, I can't go on. I so badly need a holiday. You know? As so many other people.

JOHN MULLEN:

Absolutely. So look, we hear you loud and clear. I obviously don't know whether it's a Telstra issue, it's an nbn issue, but whatever the issue is, we will get somebody onto it straightaway and seek to resolve it for you as quickly as possible. Thank you. Number one?

NICOLE MCKECHNIE:

Chairman, I'd like to introduce Judy Stevens.

JUDY STEVENS:

Hello, Chairman. I have something positive to say. I'm a senior, I live in the CBD, and I've got a prepaid plan that's fantastic, and I really appreciated you giving free phones from public phones, free calls. I hope this will continue because our vulnerable people, or medical emergencies when a mobile mightn't be about, would really work. And you have a George Street store. I've been going in there to see John for more than a decade. They're very, very good in there and I just want to thank Telstra for looking after us.

JOHN MULLEN:

thank you. It's understandable when... (APPLAUSE) It's understandable when people have difficulties that they would raise it with us, but not everybody takes the trouble to thank us when things go well. So, really appreciate those comments. Thank you.

NICOLE MCKECHNIE:

Chairman, I'd like to introduce Antoinette Grant.

ANTOINETTE GRANT:

Thank you very much. I sympathize with speakers one and two, even so, I think if people get too long they have to be cut off. But I had similar problems, and I don't wanna talk about those because I'm in the middle of resolving it, but I have had similar problems. The thing is I've been a Telstra customer for about 40-odd plus years, and I intend staying with Telstra because the money is staying in Australia. That is my very, very strong belief. I just thought I might offer some opinions on how to resolve one or two problems. One is when you talk to the sales line or any other line, you constantly get somebody different. And so, you're starting again after waiting obviously for some considerable time, you get somebody who needs the explanation from beginning to end and you get absolutely sick and tired of it. And everybody has been very nice, exactly as this lady said. Everybody is trying to be helpful, but not usually able to be helpful, and not being able to follow up. The other thing is, somebody told me the other day, if you have problems with your phone cutting out, because I have a phone and an answer machine that has worked perfectly for more than 30 years, if you let the phone ring too long, it cuts out the phone.

So if you cut down the time that your phone rings before you answer it, that apparently seems to solve the issue for some people. And it might be worthwhile just checking up on that.

NIC MCKECHNIE:

Thank you.

JOHN MULLER:

Well, thank you very much for the first, for the kind words at the beginning. You know, we absolutely understand how critical connectivity is to everybody, but also to older or more vulnerable customers. And one of the main reasons that the company moved to the free calls from phone boxes was exactly that, in case of emergency, health or whatever, you know there's somewhere you can go. You can make a call, even if you've got... you've lost your mobile or you haven't got access or whatever. I think that's a hopefully a really positive step forward. On the other issue you raised, one of the reasons that we put such a lot of effort into getting digital interaction with customers is to reduce the risk of being passed from one person to another. You'll have one line of communication. But of course, we understand that digital interaction is not for everybody. And that's one of the reasons, again, why we brought the customer service people back onshore. So that you're now speaking to somebody here in Australia.

Because we think that again materially improves the experience that you will get. So, thank you for the suggestions. You're actually on the money. Those are things we're working hard on and we will continue to re-double our efforts accordingly.

NIC MCKECHNIE:

Chairman, I'd like to introduce (UNKNOWN)

SPEAKER:

Good morning. Just (UNKNOWN) is actually the name. In order to address the skills shortages that you mentioned in your speech, I just wondered what the practice and attitude to in-house training is. Corporations used to have a very different attitude. There was a lot of in-house training. And I know that has changed in, well, not just in recent decades. One of the reasons, I've heard, is that people will take the skills and move to another company and so the company that's trained them doesn't benefit. That's not necessarily the case if those people are looked after and promoted and valued. I'm reminded of meeting somebody a number of years ago in London who was a graduate trainee with IBM. Remember them? That was before even Microsoft existed. This particular meeting. And I was astonished to hear that the number of courses she was going to be on in the first two years, I think it was approximately 40% of her time, which was just phenomenal. They had the attitude that they, you know, train people their way and the people stay with them and they promote them.

And many people stayed for many, many years. Anyway, the question really is what sort of in-house training does Telstra have? Thank you.

JOHN MULLER:

Thank you. Thanks very much for the question. Look, I think I can actually give you some good news there. I think Telstra's in-house training capabilities and human resource capabilities are absolutely first class. The time that I've been here, I've been nothing but astounded by it. So, we have actually, in the last two, three years, completely transformed the way employees work in Telstra. And I think we have some 17,000 people today working in Agile teams, which is a complete change from the old silo sort of mentality that existed in older corporations. We have extensive training programs, as we've - remember, with the migration of our fixed business to the NBN, we had a lot of jobs that were now surplus. And many of those people have been retrained into new roles elsewhere in Telstra. We've had some 2,000 new, very technically capable people as part of that transition and we also, for retention of - attraction and retention, I think we have some of the more generous terms and conditions of employment in Australia.

We pay at top end of pay scales. We have quite a lot of benefits of 16 weeks of parental leave, I think, 15 days of additional personal leave. A whole lot of other benefits that not every company offers, which hopefully makes Telstra an attractive place to work. So, my comments were I think it's a problem for the whole country, the attraction of technical skills, but I think we're probably doing better than many in being able to attract and retain really, really capable talent. Thank you.

NIC MCKECHNIE:

Chairman, I'd like to introduce Patricia (UNKNOWN).

PATRICIA:

Thank you.

JOHN MULLER:

Can you help her with the microphone?

PATRICIA:

A little bit. Thank you. I'm not going to make a complaint. I'm going to tell you how wonderful it is that you put your call center back to Australia. Being in my - Being over 80 and going downhill, it's wonderful to speak to someone who speaks my language. And I do think that you should put a time limit on how long people are allowed to speak. Because it almost, almost... makes you shut your eyes when it goes on for too long. Thank you.

JOHN MULLER:

Thank you. And if I may be so bold to say, you definitely don't look like you're going downhill. You look pretty good... pretty good for your age. I hope I'm half as good. As for terminating questions, look, I think it's important that we listen to what people have to say. That's what we're here for. It's the one opportunity that individual shareholders get to really engage with the board and with senior management. And we take that responsibility very seriously. Obviously, the people who do maybe speak for longer, they're not doing it to annoy anyone. They're doing it because they're really emotionally connected to the issue and it's important to them. So, I hear you and understand what you say, but I think I'd rather let people have their say and we do our very best to try to resolve it, rather than cutting people off in mid-flow. But thank you for your comments. (CLAPPING AND AUDIENCE CHATTER)

NIC MCKECHNIE:

Chairman?

JOHN MULLER:

Yes?

NIC MCKECHNIE:

I would like to introduce Peter Starr.

PETER STARR:

Good morning, John, and good morning fellow shareholders. John, I'd like to thank you very much for extending the courtesy on this 17th of August to myself to attend Andy's farewell in Sydney. It's a tradition that was held by your predecessor, Catherine Livingstone and David Thodey. I've been around since Sol Trujillo was CEO. And welcome, Vicki. A bit of a baptism of fire this morning, but anyway. Sincerely, John, it's good to see you have the tie on today. You didn't have it on - I had the suit on but I couldn't - John, on a serious note. I think it's important that you're thinking about maybe going in 12 months. On behalf of the shareholders I represent, I think it's important... leadership to stay, John. If you need to stay, we'd support that. Welcome to you, Vicki, on behalf of the shareholders. Big shoes to fill, your two predecessors. And John, if I may, Nora - I was with David Thodey on Sunday when he flew out to Europe. And he asked me to mention that he's really appreciated all the time and the things you've given to the board, and he wished you the best of luck, Vicki.

A question I have for you, John, is that we've seen what's happened with Optus, and of course, a lot of people are worried. I've had some clients that have been caught up in that, unfortunately. Not many. But for the reassurance that you may be able given and even Vicki, about people's data being protected. I know that I raised with the current minister that they're going to look at why telcos have to hold specific information for such a long period. And this is what happened in Optus. And that information was hacked, and passports, driver's license, and Medicaid cards, it's an absolute nightmare. So, maybe you'd like to just touch on that. Thank you.

JOHN MULLER:

Sure. Thank you. Thank you very much, as always. An AGM wouldn't be the same without you here. So, good to see you. Thank you. So, there are a few questions in there. Firstly, a couple of us had to search in the bottom of closets to find ties, particularly on a tour of our overseas directors. But we all found one. So, I'm glad you appreciate that. You commented briefly on my tenure. Look, and I would... I'd love to stay chairman of Telstra for another decade. I love the company passionately. I find it thoroughly enjoyable and interesting. But I also believe strongly that there's a cycle. There's a time in all organisations, both for senior management and for board members, where it's time to give someone else the keys and take the company on to the next level. So, I'm not about to rush off tomorrow. I'll make sure there's a smooth transition, but I think that sadly, that time has come where I need to do what I think is the best thing for the company. Then more seriously, or more importantly, and I've talked about the Optus situation and (UNKNOWN) but I think like Vicki said, and I say we can never give 100% guarantees.

It's just not possible. But firstly, as Vicki said, the Pegasus, the breach that happened to us, as Vicki said, was not actually Telstra. It was a third-party provider with some data that we could pretty well get from anywhere. I mean, I was on the list, so was Vicki. It was just name and email address. That was all it was. It was definitely wasn't a breach of Telstra's systems at all. And we are extremely vigilant, trying to ensure that we don't have any such breach. But, you know, we were talking about it yesterday, and a little anecdote, last weekend I was trying to do some work in the garden. I managed to hit a pipe, to my wife's chagrin. There was water everywhere. I had to get an emergency plumber in. So, firstly, on the telephone, they took my credit card details. Then when the plumber finally came out, I had to pay for the fix. He asked to see some ID. I gave him my driving license. So, I thought after it was all fixed, it was fine. But I thought afterwards, that company - I don't even know who they are because they were emergency plumbers.

They have my name, my address, my mobile phone number, they have my credit card number, and they had my driving license number. That data has gone into the ether. I don't know where it went. Have they deleted it? Have they sold it to someone? Have they kept it on file? Unfortunately, every one of are exposed to that every day. And so, the ability for us to say unequivocally, you will never have an issue, we just can't do that. But what I am extremely confident of is that Telstra's got the highest levels of security and protection that I've seen in industry in Australia. I think it's full credit to the team (UNKNOWN) and others here, who have put us in a really good position. Not 100% but I think better than most. And I would be bitterly disappointed if the same thing happened to us as happened to some other organisations. I hope we can give you some comfort of the level of capability that the company possesses. Thank you. Actually, sorry, I just noted you said one other thing about the laws requiring organisations to retain information.

That is a really good point. And there are a whole multitude of regulations and laws that require us to keep data in certain ways for certain periods of time, etc. And that's an issue right across industry. And I think the government is right on to that. And we are very much involved in discussions with them, trying to minimise that. You understand the push pull. On the one side, we're required to keep information for fraud purposes, law and order, well, that side of things. We need to be able to help authorities by law. But equally, does that need to be kept forever? No, it doesn't. So. I think the government is going to have to hopefully come up with a streamlined set of rules that everybody can adhere to. So, everyone knows how long your data is kept for and why. Sorry, I forgot that bit. Another question on three? Yeah.

NIC MCKECHNIE:

Apologies (UNKNOWN) Chairman. I would like to introduce (UNKNOWN)

SPEAKER:

(UNKNOWN)

NIC MCKECHNIE:

(UNKNOWN)

SPEAKER:

Yeah, that's okay.

NIC MCKECHNIE:

Thank you.

SPEAKER:

Thank you. Thanks for this opportunity. It's the first time I'm attending this shareholders meeting, even though I've been the shareholder since the beginning of the Telstra has been there. I've been a silent shareholder until now. So now, I'm looking at actually looking at my shareholdings. What I can see here is like Telstra has been growing, their total income has been gone from 29 billion to 22 billion in five years. And the profit has halved from 3.6 billion to 1.8 billion in five years. So, what kind of things can we expect in five years from now to Telstra? 'Cause, I can see, like, Vicki has given the next year it's going to be something like 23 billion revenue. But I don't know what will be the net profit out of that? And then what would be the outlook for the next five years? Can we expect any growth, not the negative growth we have seen in the last five years?

JOHN MULLER:

Yes. Thank you very much. It's a really good and important question. So, there are lots of competing issues. But by far, the biggest issue that reduced Telstra's profitability was the effective nationalisation of half of our business by the government to create the NBN. The NBN, I think recently declared a $4.4 billion EBITDA profit. I mean, all of that has come out of the industry. And Telstra obviously, being the largest player, suffered the worst. We lost over 3.5 billion dollars of net profit with the creation of the of the NBN. That's the single biggest reason. One of the challenges that Telstra had was that unlike in some other countries where it was sort of done overnight and shareholders knew from one day to the next - New Zealand and I think some other areas - what the new company would look like after being been cut in half. In Australia, It was eked out over a number of years. So, every year, when management started the year, they had a headwind of hundreds of millions of dollars of profitability that was going to be transferred to the NBN.

The good news is - I think both Vicki and I said - that it is over. Thus, we have now returned to growth with all of that NBN impact finally behind us. And in our outlook that we published for the year, is for earnings and revenue to grow this year. And we're very confident. One of the reasons why the board was willing to increase the dividend was that we are very confident of that trajectory. We're very confident of the capabilities of management now to take Telstra to a whole new era where we go back to growth again. I hope that helps.

NIC MCKECHNIE:

Chairman, I'd like to introduce (UNKNOWN)

SPEAKER:

Good morning, everybody. I'm (UNKNOWN) the shops under control. And also that we don't have to go overseas to make a phone call. Because you couldn't hardly understand those people, most of them. So, that is two big pluses. Also, I think there should be a little bit media promotion made, whereby there are lots of people having shares in your company but don't have the telephone in Telstra. So, why couldn't we promote more people who are directly or indirectly benefits from the share of the dividends, whereby those that are still with the opposition. And also, that way, the profits stays in Australia, whereby the profit of the other companies most likely go overseas and maybe partly even in the tax haven. So, we should have more promotions to keep that all the shareholders or most of them are, you know, trying to promote that indirectly or directly their benefits to being a shareholder customer. And that way we're getting, you know, a lot of people more into the system. By Telstra... at Telstra.

Thank you very much.

JOHN MULLER:

Thank you. Well, obviously, I can't comment on the structure of our competitors, but Telstra is 100% an Australian company. I think well over 90% of our shareholders are Australian. Well over 90% are Australian. And obviously, all of the profits that we make are retained in Australia and they're distributed to by and large Australian shareholders. We obviously do have a portion of our investors, particularly our institutional investors who are overseas. But retail investors are almost exclusively here in Australia. So, thank you. We agree and we're doing our best to make sure all of those other companies' customers end up coming to us, both as shareholders and customers. I have one, number four.

NIC MCKECHNIE:

Chairman, I'd like to introduce Brian Upton.

BRIAN UPTON:

Just a very short question, I hope. When I've been reading a lot of the correspondence lately, you know, I've been coming across this word Agile. Now, to me, I mean, my kind of mid-eighties and when I get on the tennis court, I find that I'm not quite as agile as I was as a teenager. So, I imagine you have a slightly different version of this, unless you mean your Agile teams are all scurrying around the office all the time. So, could you perhaps give me a couple of examples of what you mean by Agile?

JOHN MULLER:

I'll give it a go, and I'm sure you don't have to wait till your age to feel it. Agility was something in the past. I experience it every morning. Look, basically, I'm looking at Alex who'll give me a withering stare if I get this wrong. But basically, in legacy companies in the past - and Telstra was no different - you had lots of silos of activity, both regional or functional. And they really didn't talk to each other that much. So if you're starting a new project, you had to get somebody from -

BRIAN UPTON:

What do you mean by silo?

JOHN MULLER:

Sorry?

BRIAN UPTON:

The word silo has a different, you know, connotation to me. From the country.

JOHN MULLER:

Groups of people... groups of people and functions. So, the IT department would be sitting over here in isolation, the pricing department would be sitting here, and so on. And if you were launching a project - Vicki is launching a project, you've got to try and find representatives from all these and try to get them to talk together. And that is often quite inefficient. What Agile basically does is break down the structures of verticals and say, "This is the issue. We're going to have a combined team with multifunctional capabilities and from different areas. And then we're all going to work on that at the same time and we're going to do it in short bursts of activity where we set short term goals. We collectively, have we achieved them all? Yeah, we've done nine out of ten. Now, we'll fix the 10th. Now we move to the next goal." And basically, it transforms the speed of decision making. It means that the teams can make decisions and judgements without having to go back to their bosses and other departments and all these things that slows it all down.

That's basically what's happened and I think it's an extraordinary story. Telstra has moved some 17,000 people from the old way of working to Agile. And it's held up as a bit of a poster child I think, of Australian industry, how that's done.

BRIAN UPTON:

Yes, that sounds great to me, but I'm just wondering, I mean, communication is your thing. How come it's been in silos for so long? You know, why didn't you have this kind of worked out 30 years ago? It's a matter of simple communication. You talk to people.

JOHN MULLER:

Well, that's a very, very good question. But I think the whole you know, it's not like Telstra was the only one. That's the way we all do business. When I when I grew up in business, no one thought to question it. And suddently, better minds now have said, "Well, actually there are other ways of doing these things."

BRIAN UPTON:

(UNKNOWN) I'm pretty ancient, but anyway, go on. Thank you for that (UNKNOWN)

JOHN MULLER:

I hope it was helpful. Is that right, Alex? Yeah, thank God. Number two.

NIC MCKECHNIE:

Chairman, I'd like to introduce Chris (UNKNOWN)

CHRIS:

Good morning, Chairman, Board. In the interest of being a more Agile company and with a great history behind it, I'd wonder what the strategic direction is for Telstra in regard to the other. So, fifth generation mobiles, we're talking about 80% coverage of the nation. And for the standard mobility, we're talking about 90 something. OK, so the question I have for you, and I'm an engineer by training, is there are large numbers of entities, shire councils, startup businesses that have basically found a fill-in niche competing against Telstra for those areas that Telstra finds it not profitable or worthy of pursuing in terms of this great big nation of ours. So, my question to you is - well, I'll give you an assessment. My assessment is that Telstra provides a very robust, very efficient solution technically. But the challenge is that for large areas of Australia, it's not worth pursuing. It's not worth pursuing because it's costly and the hurdles for profitability can't be met. And so therefore, we choose to go all those remote areas we won't service, or will continue using the legacy system that in some cases was put in two to three decades ago.

So, my challenge to you, the board, is to look at ways to extend the reach, even if it's not profitable. But it does build the concept of Telstra as a nation serving emergency service-backing organisation. And I'd say, in some ways, that build it and they will come. OK, that's it. Thank you.

JOHN MULLER:

Great. Thank you. Another good question. Look, I'd like to think that we are actually doing that, that Telstra does have, by far, the most extensive network. I think we have a million square kilometers more coverage than the next competitor, approximately. We've invested 4.5 billion in regional mobile and about 1.5 billion in fixed in the regions over the last five, six, seven years. The government's blackspot program, which is focused very much on areas where they are not economic. We have been overwhelmingly the biggest contributor to that program. I think over 900 sites or something that Telstra has subscribed for. Much greater than all the other competition added together. And we're continuing to do that. I think in 2025 we've committed to another 100,000 square kilometers of coverage. I'm absolutely confident that we will maintain network leadership and network supremacy across the nation. What is going to be interesting is that I think networks' priority is going to be defined differently as we go forward as well.

So, geographic coverage, obviously, but also as we move into a 5G world, the density of networks in cities, so ensuring there are no dead spots once you start moving into driverless cars and all of these sorts of autonomous things, you obviously can't afford to have the signal go down at the traffic light. So, it's got to be completely ubiquitous across town. So, I think it's not just going to be square kilometers. I'm confident we will retain our leading position there by a long way. But we will also be doubling down on the depth and scale of 5G networks to ensure that it's not just coverage but it's also accessibility everywhere. I mean, I just recently moved house and I'm delighted to tell Vicki that I actually got one gig download speed on my mobile, which is the first time I've seen that outside the laboratory. I think (UNKNOWN) organised especially for the day, but no, it's fantastic and that is a quantum leap forward in speed and capability that the whole industry didn't possess only a year or two ago.

Well, Nic, it looks like we've maybe concluded all the questions from the floor. In which case would you be so kind as to move to our online and then I think phone after that. Yeah?

NIC MCKECHNIE:

Yeah, that's right. Thanks, John. We do have several questions online. The first one's from Michael (UNKNOWN). So hopefully, Michael, I've got your name pronounced correctly. Telstra has had five years of declining sales and profits. You have reduced costs and overheads with your T 22 strategy. When are shareholders going to see a turnaround with increased sales and higher net profits? The NBN can no longer be used as an excuse for falling profits.

JOHN MULLER:

Excuse me. Well, hopefully I've addressed that in an earlier question. You're absolutely right. The NBN over the last five years is now behind us. So, it's not an excuse. It was never an excuse. It was just the reality of what was taking place. But as that is now, as you've observed, behind us, so the company is moving back into growth, and I think I've covered that both in terms of revenues and also profitability.

NIC MCKECHNIE:

Great. Thanks, John. Next question is from James Brown. Why is Telstra continuously pursuing NBN Co to install underground infrastructure over neighbouring properties, enforcing their right of entry when underground copper cable is obsolete? And given 5G network is forthcoming to this area, there is no valid reason to install underground infrastructure unless it was fibre optics to the premise, which is not the case. NBN Co has an obligation to follow TIO guidelines and this is questionable.

JOHN MULLER:

I'm not 100% sure what's behind the question. But look, we have no control, obviously, over what NBN does with its fibre. There are rules that govern our interaction with NBN and the provision of services to the home, where that is now exclusively NBN, over the industry. In business enterprise areas, it's a slightly greyer area and yes, the NBN does lay fibre sometimes where we have fibre and that's something we continue to have to work through as the thing rolls out, as industry rolls out. But again, we're not always best friends with NBN, but I think we have a good working relationship. It's important to the whole country and to us that NBN is successful, so we do our very best to work with them to achieve that outcome.

NIC MCKECHNIE:

Thanks, John. Next question is from (UNKNOWN) Stephen asks, the Digicel acquisition was very unusual, with taxpayers granting us billions in what effectively was a national security move, as China attempts to increase its influence in the Pacific. In light of this apparent role for Telstra in Canberra's national security strategies, what is our position in relation to making political donations and how do we go about lobbying ministers and regulators who specifically negotiated the Digicel deal with both the current and former government?

JOHN MULLER:

OK, a few questions in there. The easy one to answer is we do not make political contributions. We do occasionally attend dinners where we pay to attend that dinner or an event, a speaking event or whatever. But we do not make any political donations. Digicel was indeed a unique opportunity. It was negotiated by Andy and the team at the time, with the board's full support. And I can assure you that they were not easy negotiations. They went on for quite some time because, well, obviously if your government asks you to help, it's beholden on you to do so. But we were not going to do so at the expense of Telstra shareholders. So, we had a lot of discussions to make sure that, yes, we gave every possible assistance to the government of the day, but at the same time we would only do it if it was a good deal for Telstra and Telstra shareholders. And I'm very confident that that's where we landed, and it will be very good for Telstra shareholders going forward.

NIC MCKECHNIE:

Thanks, John. Next question is from Gavin Smith. Why do Telstra shareholders and our customers have to bring their Telstra problems to a shareholder meeting to get their issues resolved? Why cannot our employees and company take ownership to solve customer issues much quicker and to be more thorough?

JOHN MULLER:

Again, hopefully I've covered that. You don't have to come to Annual General Meeting to get your issues resolved. All of our doors are open. My door is open, Vicki's is open if you, for some reason, can't get resolution from the representatives of the company with whom you normally interact. But if you do bring it here, obviously, we will listen, and we'll do our very best to resolve it before you leave.

NIC MCKECHNIE:

Great. Thanks, John. Next question from (UNKNOWN) Inflation is currently 6.2%. Can you please advise, number one, what impact this is expected to have on Telstra's revenue cost and profit? Number two, whether the income performance measure noted in the remuneration report will be adjusted to focus on real growth rather than nominal growth.

JOHN MULLER:

So, what impact will it have? Obviously, it has a big impact on all of us in this room. And it behooves us to manage our costs as effectively as we can, which I think the company has done extremely well. On the other side, we have had modest price increases below the level of inflation. So, we try to always balance affordability, customer service and returns to shareholders, and we need to try and balance all of those. And what was the last bit?

NIC MCKECHNIE:

Sorry, John, I have just gone past that question. Technically challenged on coming back to it, so perhaps we'll just come back to that in just one moment.

JOHN MULLER:

(UNKNOWN)

NIC MCKECHNIE:

Yeah. Growth rates. We'll come back to that, John.

JOHN MULLER:

OK.

NIC MCKECHNIE:

OK.

JOHN MULLER:

Alright. Sorry. I should have written it down.

NIC MCKECHNIE:

Apologies for that. Next question from Edward Leslie Manuel. What plan does Telstra have to compete with those recent communications supply businesses that operate with small overhead costs? Given there are 11 on the (UNKNOWN) working for Telstra customers, shareholders and staff.

JOHN MULLER:

Well, I mean, look, Telstra is a ubiquitous legacy telecommunications provider that services most, if not all, of the needs of Australians. We don't seek to be a small niche provider. There are lots of other companies that I'm sure can do very well by taking a little piece of Telstra's world or the industry's world and just focusing on that and I'm sure, being very competitive. But we have a full range of services, full geographic coverage and a whole different promise and offering than those small niche operators. There's no point in comparing them. We're trying to achieve different things.

NIC MCKECHNIE:

So, I'm going to just go back to the second part of the question before. So, it was whether the income performance measure noted in the rem report will be adjusted to focus on real growth rather than nominal growth.

JOHN MULLER:

Yeah. So, every year the board spends a lot of time, firstly, through the People and Human Resources Committee. On looking at the incentive targets for all of the executives for the following year. And we have to take into account a whole raft of things, not just inflation and nominal versus inflation-linked, etc. I'm very comfortable that the committee is sufficiently diligent in looking at all the impacts. And remember, in the years gone by, we've actually had falling revenue. We still have to incentivise management. I think you have to incentivise management more in bad times than you do in good times. In good time, and the tide lifting all boats, etc., it's easy to convince yourself that you're doing a great job when there are a lot of external influences helping. In really tough times, like Telstra experienced when the NBN started to impact its profitability and our revenue fell and our profitability fell, that's when the real mettle of our management was challenged. And so, it's the board's job to absolutely incentivise managers to perform really well in that situation as well as in a good situation.

So, we don't just look at the nominal inflation figure and just base it on that. There's a lot more factors that goes into the decision.

NIC MCKECHNIE:

Alright. Thanks, John. Next question from Gavin Smith. Did Telstra ever get paid for all the copper piping we owned and not just hand over for free?

JOHN MULLER:

Yeah. To my knowledge, we sell the spare copper that we don't use. (UNKNOWN) I can't remember (UNKNOWN) how much it is, but it's quite a material sum. When copper's disconnected, we don't just leave it in the ground. It's taken out and it's resold.

NIC MCKECHNIE:

Great. Thanks, John. Next question from Margaret Mary Larkin. In my opinion, more staff need to be employed in busy Telstra offices and also proper customer service training provided to staff, not just online. So many customers that I speak with detest entering a Telstra office, especially if older, due to a delay and poor quality of service. Except for a few exceptions.

JOHN MULLER:

Well, I'm disappointed to hear that you've had those experiences. I think we've heard from several of the shareholders and customers in the room today that they've actually had very good experiences in the stores. And as Vicki and I, I think, mentioned, we have brought all 166 of those stores back in-house and they are managed directly by Telstra now, rather than a third-party franchise, as was the case before. Which I think is hopefully going to address most of those issues that you raise.

NIC MCKECHNIE:

Next question is from Margaret (UNKNOWN). I do not agree with company's proposal towards net zero, as all of the countries who are manufacturing the wind turbines and solar panels are not complying to this and continue to pollute our planet. Net zero will drive Australia into further bankruptcy.

JOHN MULLER:

I'm not sure if that was a statement or a question, but obviously, we take our obligations... ethical obligations as well as legal ones very seriously. We have committed to carbon neutrality by 2020, which we achieved. We've committed to 100% renewable energy or to source 100% renewable energy equivalent to our use of energy by 2025, and to a 50% reduction in total emissions by 2030. And we just last year, I think, really upped the bar by including our scope three emissions as well, which was 70%, I think, of all the total emissions. So, it's quite a significant charge. I'm very comfortable that we've got an ambitious but realisable target doing our bit to help the global problem of climate change.

NIC MCKECHNIE:

Thanks, John. Next question from Chris Wood. Chris asks, customer of Telstra for 20 plus years and a shareholder. Recently misled repeatedly re plan change, repeated lack of response, many calls to call center, significant language barrier and poor service. No willingness to remedy and told to go to Ombudsman. I've observed continued decline in customer service and frustrating interactions with overseas call centers and chat services. What is Telstra doing to increase and maintain customer service levels and services being returned to Australia?

JOHN MULLER:

Well, I think we've covered most of that. We're doing an awful lot in that area and the results are showing. I won't go through all of them again. But like with other speakers, please contact us in the same way that you've contacted us for this question. Give us a name and address and we will have somebody call you. (UNKNOWN) and we will have somebody call you and address your specific issues as soon as we can.

NIC MCKECHNIE:

Thanks, John. Next question from Giles Francis Baxter. Is Telstra still attempting to gender balance its current workforce by using methods that actively discriminate against males to ensure more females get promoted? If so, how do you justify this practice as discrimination in any form is wrong? I can only imagine how your loyal male workforce feels being overlooked in this disgraceful way.

JOHN MULLEN:

Well, the simple answer is no, but I won't stop there. It would be rude. No, I think we've done actually a really good job on diversity within Telstra. It's never a never finished program, but we're at some 34% overall, I think, of female representation on the board and executive level, it's over 40 and we have a whole number of programs running on a graduate program. I think we see 50% of the graduate intakes to be female, but not just gender. So indigenous, I think 5%, disability, five or 10% as well. So we are very conscious of the need for diversity and we don't discriminate against anybody, neither men nor women.

NIC MCKECHNIE:

Thanks, John. Next question from Teresa Calogero. Hopefully, I've pronounced your name right, Teresa. The Telstra dividend paid is greater than the profits made, EBITDA with interest rates increasing, can Telstra continue to borrow money to pay the dividend? This has happened in the past and Telstra has had to slash its dividend. Isn't it wise to cut the dividend now so it is lower than profits made?

JOHN MULLEN:

No, it's firstly I think by EBITDA it pretty meant net profit, but yes, the dividend was, I think it was 115% of net earnings this year. The reason we still decided to increase the dividend was because at the conclusion of the T22 program, we really now see the company returning to growth and we think that we can justify the increase in the dividend. We know how important dividend is to shareholders. We can justify it because we think our growth is now going to continue. We would not be doing it if we felt that the company's earnings were going to be flat or falling in the future. So while that percentage is higher today as earnings grow, that percentage will fall back. Obviously, we do not intend to maintain an above 100% for the long term, but we're very comfortable that the trajectory is good.

NIC MCKECHNIE:

Another question from Giles Francis Baxter. At the AGM, I'm hearing so many issues about customer service. So what is Telstra going to do about these issues? There... These are our shareholders. So I can only imagine how our other customers are feeling who don't have the same loyalty to the company. If we don't fix this, we will continue to lose our customers to other companies.

JOHN MULLEN:

Well, again, I think that we've discussed that subject at length. I won't go through all the things again, but I can assure you it is absolutely top of mind for the board. It's top of mind for Vicki and her team in T25. And although it's of no comfort to someone who's had a bad experience, the improvement has been absolutely radical. When you look at all of the numbers and the metrics which the board do all the time, the improvement has been dramatic. Not fixed. Still plenty of issues that we haven't resolved, of course, but compared to where the company was only a few years ago, it's dramatic. Like 70% of inbound calls coming in have been eliminated simply because those people don't have problems anymore. There's still a lot of people who do and we're working on them, but I'm very comfortable that we're on the right trajectory.

NIC MCKECHNIE:

So another question from Gavin Smith, what is the benefit to Telstra shareholders of another on-market shareholder buyback when this value should have been paid to current shareholders whom remain with Telstra even today? All the best and thank you to the Chairman for all of the work for Telstra over many years.

JOHN MULLEN:

Well, a share buyback does benefit the current shareholders. And the whole reason that you engage in a share buyback is to reduce the number of shares on offer and therefore the value of the company is now divided by a smaller number of shares than it was before. Therefore, the value theoretically should rise. And similarly, we have fewer shares to pay a dividend to. So it gives the company the ability to pay a high dividend going forward. So a share buyback is directly beneficial to the shareholders of the day.

NIC MCKECHNIE:

Paul (UNKNOWN) asks a question. The official cash rate has increased 2.5% to 2.6% and is forecast to increase to 3.75% in 2023. Given the impact this will have on the discount rate used in Telstra's impairment testing, can you please advise the impact of the rise in interest rates on the carrying value of goodwill and other assets?

JOHN MULLEN:

So obviously the audit committee are external auditors and the board review that every year and we do an impairment test on all assets. But you'll be glad to know that even with the rise in interest rates, we have no risk of any impairment across any of our businesses.

NIC MCKECHNIE:

Thanks, John. Giles Francis Baxter, again. I understand that Telstra has now ceased its Telstra alumni discount for its past employees. I would like to see Telstra reverse this decision. We all know that we often pay a premium price for Telstra services, but if our ex-staff can still tell all of their family and friends that they are still with us, that's much more effective than many of those TV commercials which are now running and probably more cost-effective in the long run.

JOHN MULLEN:

Let me take that one on notice and we'll talk with management and make a decision whether we leave it as it is or revert.

NIC MCKECHNIE:

Thanks, John. Chris Wood asks, Is the chat function also operated in Australia? I'm cheeky we talk about messaging function for customer service.

JOHN MULLEN:

That I'm not sure. Vicki, would you know the answer to that one.

VICKI BRADY:

Yes. So thank you for the question. A lot of our chat functionality is still operated by team members offshore, not all onshore in Australia.

NIC MCKECHNIE:

Thanks, Vicki. Peter Caliero, I noticed the broadband business had a poor year. What plans do you have to improve the broadband business in future years? Are other telcos eating your lunch in broadband?

JOHN MULLEN:

Well, I don't think anyone's eating our lunch, but clearly, the broadband has been challenging for us. The migration to the NBN, we've had quite a few people talking about some of the service issues that came with it. Also, obviously profitability issues in the, when Telstra was the provider of wholesale provider of broadband services, we obviously made a higher margin than we do now where we have to buy that service off the NBN. So it's not where we would like it to be, but we have the ambition to get it into the teens in terms of returns, which I think we will achieve.

NIC MCKECHNIE:

OK. Question from Stephen Mayne. Did any of the five main proxy advisers AC, SI ownership matters, Glass Lewis, ISS and ASA recommend to vote against any of today's resolutions. Has there been a material proxy protest vote against any of today's resolutions? Will you disclose the proxy votes before the debate on today's resolutions so shareholders can ask questions about the reasons if there have been any protest votes? And did you consider disclosing the proxy position to the ASX with the formal addresses as more companies are doing these days?

JOHN MULLEN:

Right. A lot of questions in there Stephen. And so no, there have been no recommendations against any of the resolutions of the meeting. We do disclose the proxy positions of the resolutions before we actually finalise the discussion, as we always have done. We had no protest of any on anything material to advise the ASX, but obviously, if there was something material then under the normal disclosure rules we would do so.

NIC MCKECHNIE:

Thanks, John. Asked by Giles Francis Baxter, as Telstra has separated its structures, towers, poles, masts, etc. into a stand-alone company, will this increase the costs of supplying our mobiles network? Also, as the cost of hosting mobiles infrastructure increases, will the mobiles group go back to building their own structures again to save costs?

JOHN MULLEN:

If I understand the question right to all the different questions in there, firstly, and we will cover it at the scheme meeting afterwards, but the scheme will not change anything that customers, employees, shareholders experience. It is purely a legal restructure so it won't be any impact there. As far as I know, we build all mobile towers and infrastructure that we need. Now I'm not quite sure what was meant by that last part of the question.

NIC MCKECHNIE:

OK. Thanks, John. That deals with all of the online questions for item two. We're now going to turn to the phone and see if there are any questions on the phone. Operator, are there any phone questions for this item?

SPEAKER:

Chairman, I have a question from Mike Roby. Mike, please go ahead.

MIKE :

Good morning, everybody. It's still mourning. And my name is Mike Roby and I'm a volunteer monitor for the not-for-profit Australian Shareholders Association and hold about 98 million, about 100 million in proxies for most of this time. We do actually represent all retail shareholders. And may I first start by apologising for not having somebody in the audience. We did have a person on the ground planned to be in Sydney, but he got the flu and was coughing and probably would have emptied the stadium given the current concerns with COVID so it wasn't COVID. May I first start Mr Chair, by thanking you for meeting us in advance where a number of our questions were advanced. And in fact the questions prior in this meeting have answered many more. We also wish to thank Mr Tan, the best for the future and welcome Miss Brady to the running of our company. Look, given that many of the questions have been answered, I might just like to say that typically shareholders are often presented with eye-wateringly expensive transformation projects, and Telstra was a fairly expensive project with associated large write-offs.

And we assess that shareholders find it quite difficult to assess how they've gone because a much of the, if you like, the emotion happens under the water. However, may we congratulate you on yours? It was very well communicated. I think, your my comms on how the whole T22 was structured, measured and assessed were extremely good and the customers have noticed that the simplification of plans in large part and the removal of what we call gotcha costs for contracts and so on has basically led to and the improvement of online services, basically pretty obvious to most customers. I think you've done a great job so well done on that. And we do, of course, being shareholders that we just would like to see the shareholder value increase over the next year and are looking forward to the impact of the T25. Look, I might leave it there because we have some questions later on. Thank you.

JOHN MULLEN:

Great. Well, thanks very much. And sorry you couldn't be here. But I know we have met with your team before, and always happy to do so in the future as well. So thank you for the comments on T22 success that we we're really pleased, really chuffed. I think it's an absolutely fantastic achievement of management to have delivered what they have done and we obviously share your view and concern that we continue to deliver increased shareholder value going forwards.

SPEAKER:

There are no further questions on the telephone at this time.

NIC MCKECHNIE:

Thanks, John. That concludes the question session for this item.

JOHN MULLEN:

Great. Okeydoke. First, I should, I think advise that lunch is now being served outside for anyone who's interested. So next up is item three, the director re-election. So as I mentioned earlier, Eelco Blok and Craig Dunn are both standing for re-election today. And their details are set out in the notice of meeting. Items three A and three B will be voted on separately. But to assist with the efficient conduct of the meeting for the benefit of shareholders today I'll deal with a discussion of Eelco and Craig's re-election together. I would now like to invite Eelco and Craig to address the meeting. While we hear from them both. If you have any questions on their re-elections, please come to your nearest microphone, submit your questions online, or raise your hand on the phone line. Eelco.

EELCO BLOK:

John, thank you. Good morning, ladies, gentlemen and fellow shareholders. My name is Eelco Blok, and I have had the honour serving on the Telstra board of directors for the past three years. I've participated in our T22 transformation, one of the most ambitious transformations in the history of the telecommunications industry. I'm excited about our T 25 strategy and look forward to contributing to this next trajectory. Since leaving my role as CEO of Netherlands-based KPN four and a half years ago, I've built on my over 35 years of experience in the telco industry. In addition to my responsibility on the Telstra board, I'm serving on the Greek OTA group of companies and Fairfirm Board performing advisory services for IFM investors and served on the board of directors of Deutsche Glass Pfizer, all related to the evolving telecom industry. These positions help me stay current with industry trends and keep me prepared to contribute to the strategic direction of Telstra. I would be honoured to get your support so I can keep contributing to the future of Telstra.

I look forward to serving Telstra during the next three years. Thank you.

JOHN MULLEN:

Thank you, Eelco. Craig.

GRAIG DUNN:

Thank you, John and Eelco. Good morning, ladies and gentlemen. It's been a great honour for me to serve on the board of Telstra as your representative, and I am grateful for the opportunity to say a few words to you this morning. Telstra, of course, occupies a very special place in the history of our great nation and has always made an enduring and very significant contribution to the communities in which it works. And I know it will continue to do so going forward. As John and Vicki have pointed out through the successful implementation of T22, over the last three years, the company has gone through an extraordinary programme of change. I think that means Telstra is much better served going forward to adapt and grow in a rapidly changing environment and to do so in a way that better serves our customers and importantly reward you appropriately for your investment in the company. During that time. It's been my great privilege to be part of a very diligent and hardworking board, very ably chaired by John.

It's also been my honour to be a member of the Audit and Risk Committee and also to have chaired that committee for the last three years. Following on from Nora. I'm very conscious of the important role a board plays in the stewardship and governance of any company and believe my background and career, including my learnings from my previous roles, mean that I can make a real contribution to the board of Telstra. So thank you for listening to me this morning and with your support, I look forward to continuing to serve Telstra and its shareholders over the next three years. Thank you, Chairman.

JOHN MULLEN:

Thank you very much, Eelco and Craig. So the board other, of course than Eelco and Craig in respect of their own re-election, unanimously recommends their re-election. So the proxy and direct voting positions for item three A and B are being shown on the screen now. As indicated in the notice of meeting, I also intend to vote all available proxies in favour of the re-election of Eelco and Craig. So, I will now take questions from the floor.

SPEAKER:

Chairman, I'd like to introduce Natasha Leave.

NATASHA LEAVE:

Thank you, Chairman. Excuse me. Not a specific question about these candidates, but I did note that you mentioned that they. Are going to be a bit of a changeover in the board members. I'd just like your reassurance that Telstra's committed to having at least 40% female representation. And also you've talked about diversity within your workforce. I think that it's necessary to emphasize that there should be mindful of needing to have greater diversity in other areas across the board because the board should be representative of the community it represents. And as I say, that's best practice and has shown that companies perform best when they do reflect the community. So we have that assurance?

JOHN MULLEN:

You unequivocally have that reassurance. Yeap. We publicly commit to the 40% target on the board and there will occasionally be ups and downs with people leaving and join depending on timings. But overall our commitment is absolutely solid. We will achieve that diversity

NATASHA LEAVE:

Other forms of diversity.

JOHN MULLEN:

Yes, absolutely.

NATASHA LEAVE:

Yeah. And that some of the boards are moving towards 50%. But that's another discussion.

JOHN MULLEN:

Yes. Well, we have two more. I think I mentioned earlier we have two directors about to join where I'm pretty confident that you will view the choices positively.

NATASHA LEAVE:

Right. Thank you.

JOHN MULLEN:

Thank you.

NIC MCKECHNIE:

Chairman, I would like to introduce Peter Starr.

PETER STARR:

Thanks, John. Some years ago, you probably remember that the votes that I had in relation to you, Craig, that given what had happened at Westpac. So I'd just let you know that there's been a change from the votes I hold. So we'll be voting for you. That was in a period of, as you know, what happened at Westpac and now most of the board's gone. I was one of the strong opponents for the whole board to go. Thank you, John.

JOHN MULLEN:

Thank you. Well, we much appreciate that. Craig is an exceptional director and we give him our unanimous support and we're pleased to hear that you do as well. Thank you. Looks like we've exhausted the room, I think. Nic.

NIC MCKECHNIE:

OK. Great. Let's go to online, John. So we have a question from Stephen Mayne. Craig Dunn was CEO of AMP for five years until 2013, a company which has been an ongoing disaster for shareholders for more than 20 years. When he last stood for election as a Westpac director in 2018, there was a 35% protest vote, so he retired at the 2021 AGM. He suffered a 29.6 protest per cent protest at the Telstra AGM in 2019. So why has the board endorsed his re-election today and how big was the proxy protest vote?

JOHN MULLEN:

Well, actually, I find that question somewhat offensive. Craig is an absolutely outstanding director. This is a Telstra shareholder meeting, is not a Westpac shareholder meeting or anything else. In the years that Craig has been with us, he's been an absolute exemplary director. I would state my reputation personally and I'm sure my colleagues would as well, on his integrity and the contribution that he brings to our board. Extreme level of diligence in chairing the Audit Committee. Also, a number of the subcommittees that we've had, he has participated in exemplary fashion. His judgement, diligence and skills are second to none. And as I say, I would bet my personal reputation on Craig's ability to be one of the best directors I've ever worked with.

NIC MCKECHNIE:

Thanks, John. Another question from Stephen. After 14 years on the board and six years as chair, it is very unusual for a chair to flag possibly running for a fifth term next year and potentially staying for 16 years in total. Could the Chair explain what process is currently in place to source his replacement and also who conducts his performance review within the board each year? Who on the board is leading the process to ensure the chair doesn't stay too long? And will any third parties be involved in the chair's succession process?

JOHN MULLEN:

Well, Stephen, you'll be glad to know you won't have to put up with me for too much longer because I am not going to stay here all that much longer. I think I mentioned it a little bit earlier, so we have a pretty robust process going on. One thing that was very important is that we didn't have the CEO succession and the chair succession at the same time. I think everybody would agree that doesn't make for good sense and stability in a company. We had a very successful CEO succession process, absolutely delighted with Vicki as our new CEO. So the focus has now turned into my succession, which is top of mind for the board. We have a number of excellent candidates on the board already, and then we are also filling a couple of the vacant positions in the coming months with some external directors. I believe at the end of that, my colleagues, they won't be my decision. My colleagues will have a really robust and qualified number of candidates to choose from to be my successor. As for timing, I think I said in my speech, if we get all that done by next AGM, next October, then I won't stand for re-election.

If for any reason we're still finalising the board renewal or whatever with my colleagues' approval, I would be prepared to stay on for a number of months, perhaps to finish that process if it added value. If it didn't, then I'd leave anyway. If it did, I would be very hopeful that we could resolve it all in a matter of months, not years. So, Stephen, I will not be here for another full term. Rest assured.

NIC MCKECHNIE:

Thanks, John. There are no more online questions for item three, so we're going to go to the phones. Operator, are there any phone questions for this item?

SPEAKER:

Chairman. I have a question from Mike Roby. Mike, please go ahead.

MIKE :

Thank you, Mr Chairman. Look, we, too, are aware of Mr Dunn's position of CEO of AMP at the time when that company developed a damaging culture on a profit before customer service as revealed by the royal commission. We also know that last year there was continuing fallout of Westpac in the form of $113 million fine from ASIC's stemming from the same commission at the time when Mr Dunn was a board member at that company. We did agonize over the decision of his re-election. But given the improvement in customer service and culture in Telstra during a period in which Mr Dunn was a director, he's clearly changed his way and so will in balance vote in favour. My question actually is a general one concerning your board skills matrix, which we did discuss when we met. These are quite important to shareholders because we can assess if proposed incoming directors do in fact fill skills gaps. So, the more granular the skills matrix, the more we can sort of kind of test our understanding of why you've picked particular directors.

And this is particularly important this year because you plan a significant refresh of the board. Your matrix is, we believe, through high level, there are much better models out there in the marketplace, and it's really not particularly useful at giving shareholders much guidance for independent candidates. So may I ask that you provide somewhat more granularity in the coming financial year please, as you repopulate the board? Thank you.

JOHN MULLEN:

Yeah, sure. Firstly, I'd just one correction. Craig was not at AMP when any of the issues you referred to arose and had absolutely nothing to do with Craig and his tenure at AMP. For the record. On the skills matrix. Look, we continue to refresh that every year. We also assess performance and I think part of the previous question as well. We have a review of all director performance and skills and capability and contribution every year and the chair of the audit committee reviews my performance similarly. So we all get to compare equally. I'm very comfortable that we have a good balance of skills across the board and some deep domain experience with our ex Global CEOs a big telecommunications companies overseas through governance, through customer focus, through a whole range of different attributes. I'm pretty confident the balance is good. I think the new directors coming in will maintain or even improve that balance. But certainly, I hear your question and we'll make sure that in the next annual report we try and put a little bit more granularity around that for you.

SPEAKER:

There are no further questions on the telephone at this time.

NIC MCKECHNIE:

Great. Thanks. So, John, that concludes the question. Session for item three.

JOHN MULLEN:

Fantastic. Thank you. So now I move to items four and five on today's agenda, which relate to the allocation of equity to your CEO, Vicki Brady, and to Telstra's FY22 Executive Variable Remuneration Plan or EVRP and the adoption of our 2022 Remuneration Report. Details of the proposed grants to Vicki under item four as set out in the notice of meeting. Vicki's total remuneration package for 2022, during which time she held the role of Chief Financial Officer and group Executive Strategy and Finance included variable remuneration delivered through the EVP. In summary, the number of restricted shares and performance rights to be granted was based on the dollar value of Vicki's individual EVP outcome, and her individual EVP outcome was determined by the board taking into consideration Telstra's performance during the 2022 financial year against the specific measures set by the Board, as well as the individual performance. The board, other than Vicki considers Vicki's total remuneration package for the 2022 financial year, including the proposed grants to be appropriate in all the circumstances and recommends shareholders vote in favour of items 4A and 4B.

And five provides an opportunity for shareholders to comment on and ask questions about our 2022 remuneration report. While the vote on this item is advisory, the board does take the outcome of the vote into consideration when reviewing Telstra's remuneration practices and policies. The board recommends that shareholders vote in favour of item five the adoption of our remuneration report. Items four and five will be voted on separately, but as they both relate to remuneration-related matters, we will similarly deal with the discussion of the two items together. So the proxy and direct voting position for items four and five should be now showing. Yes, they are now being shown on the screen. As indicated in the notice of meeting, I intend to vote all available proxies in favour of the grants to Vicki and the adoption of the remuneration report. So if you have any questions regarding items four or five, please come to your nearest microphone, submit your questions online, or raise your hand on the phone line.

I will be concluding the AGM at the end of this question session, so if you have any final questions you'd like to ask about your company that are relevant to shareholders as a whole, please also ask those now. So let me move to questions from the floor, please. Number three.

NIC MCKECHNIE:

Chairman, I would like to introduce Peter Starr.

PETER STARR:

Thanks, John. This question always comes up. Came up for Andy, it came up for David. So in relation to this, I think it's a very proper and right thing that the granting of the rights to Vicki we'll certainly be supporting it with the votes I have and wish you all the best, Vicki. And just one other thing, John. Andy, I hope you are enjoying your retirement. It was great to catch up and I think Vicki's catching up with you later on tonight. Thank you.

JOHN MULLEN:

Well, thanks very much for the kind comments. And I think Andy will definitely be enjoying the first AGM. He didn't have to sit in the seat and face all sorts of questions. That's very nice comments. Thanks a lot. Any other questions from the floor? Nic, it looks like no more questions from the floor. It's a first.

NIC MCKECHNIE:

OK. No problems. Paul (INAUDIBLE), John is asking, Telstra's annual report highlights that the share price of $3.85 is unchanged from the price in FY 2019 and a long way from the T2 price in 1999 of $7.40. Given your past remuneration policies have not contributed to any growth in share price or shareholder value, what changes have Telstra made to ensure executive remuneration is actually aligned with shareholder value?

JOHN MULLEN:

Well, I would just remind you that the reason, the main reason that earnings in the share price have not advanced further is because 50% of the business was re-nationalized by the Government. 50% of our earnings were transferred effectively to a new government entity. Inevitably, that led to a decline against previous periods. But I think we've commented a couple of times, we're absolutely delighted that that transition is now behind us. The new Telstra is free of that baggage and we are able to judge the performance of the company and management on the growth that we now deliver going forward and we are on a good trajectory to do that. So I believe we have addressed the issue.

NIC MCKECHNIE:

Thanks, John. The next question is from Stephen Mayne. And before I read this question, can I just make the point that I am reading the questions verbatim and some of the material in the questions may not necessarily be the view of Telstra. Could the Chair and CEO please comment on the ESG elements in Vicki's contract and incentives and whether on the environmental side they are concerned about Telstra being a permanent minority shareholder in Foxtel, which carries Sky News, the largest source of climate-denying propaganda in Australia? When are we going to stop being embarrassed by being in a minority partnership with the Murdoch family, which continue to fight positive climate change policies on a global scale?

JOHN MULLEN:

OK. Well, I can answer that one pretty quickly. We're very pleased with our ESG progress. The first part of your question. It previously was not an executive compensation. We have now included it for the first time. Which I think management wholeheartedly support. I think it's a good measure to include and we're in a good trajectory. So I think that's in a very good place. With respect to your comments about Foxtel, I won't worthy some of the things you said there with the response and we respect Foxtel, we respect Foxtel shareholders. The reason that we're a shareholder in Foxtail is that all of us use mobile devices today and the content that is shown on those devices is critical to many customers using us. Foxtel provides one of a number but a very important access to media. Telstra does not want to become a media company ourselves. We're going to go and buy a film studio in Hollywood or something. We're very happy to partner with other major players. And Foxtel is an excellent and valuable shareholder, as is their owners.

NIC MCKECHNIE:

Thanks, John. And another question from Stephen Mayne. Telstra has 1.25 million shareholders, but it is estimated less than 5% bother to vote at the AGM. When disclosing the outcome of voting on all resolutions today, including the REM items, could you please advise the ASX how many shareholders voted for and against each item similar to what happens with a scheme of arrangement? This will provide a better gauge of retail shareholder sentiment on all resolutions, and it was a disclosure initiative adopted by the likes of Metcash, Altium and Dexus after their 2021 AGMs.

JOHN MULLEN:

I don't normally... So, the deciding factor in any vote is the number of shares voted rather than the number of individual shareholders. Sue, do we... Is there any reason why we couldn't or would? No.

SPEAKER:

(INAUDIBLE)

JOHN MULLEN:

OK. Leave it with us, Stephen. Let me take it up and we'll discuss. I don't think it's a huge issue either way, but we'll certainly have a look at it and we'll get back to you.

NIC MCKECHNIE:

Great. So no more online questions, but we will go to the phones. Operator, any phone questions?

SPEAKER:

Chairman. I have a question from Mike Roby. Mike, please go ahead.

MIKE :

Thank you very much. Look, first of all, congratulations on placing Vicki on exactly the same package that the previous CEO left. I think that's probably a model that will be copied in the future and basically lead to a bit of diversity interest in women participating in big companies. My question is about the performance rights portion of the CEO's plan in which they can be awarded even if the shareholder return is negative. Now, we understand in the past the famous NBN headwinds and the enormous amount of money that was destroyed from Telstra provided unusual conditions and therefore there was some pain coming and we could not expect a continuing increase in share price. However, while you are in discussions today and with us, it is clear that these headwinds have almost died down and the future will be a newly transformed Telstra in a much more sort of clear wind. So why should shareholders continue to suffer negative returns if the total shareholder return remains negative? Thank you.

JOHN MULLEN:

Yeah, it's a really good question. I know we've discussed this many times, but I think I referred to earlier that actually in difficult times in a company, in times when the company is under pressure, even if it's for whatever reason, competition or government, fiat or whatever it is, those are the most important times for you to reward your management coming to work every day. It's difficult. You're under a huge amount of pressure from media, from shareholders, from right across the board, and delivering the best possible performance as a management team at that time is absolutely critical to the fortunes of the company. And if you don't have the top people earning the commensurate level of income for the work they put in, then the result, the loss of the shareholder value decline will be even bigger. We'll see share price fall more and you'll see dividends reduced more, etc. So, you know, we are firmly of the view that we need to tailor the plan to the objective of the day. Now, you're absolutely right, the NBN is behind us, so we're not anymore building in a factor of a negative headwind from NBN that's behind us.

But we will tailor the plan each year to the challenges of that year and obviously increase shareholder value, increase share price dividend, all of those objectives figure high on the list. I think... I think we're in a good place there.

SPEAKER:

There are no further questions on the telephone at this time.

JOHN MULLEN:

Fantastic. OK. I think that brings us to the end. Nic, before I move to close the question, do we have any other questions there?

NATASHA LEAVE:

I do have one final question online by Chris Wood. Just coming back on a question he asked previously. He says, My apologies. I should have also asked if the chat function will be brought back to Australia.

JOHN MULLEN:

Back to you again, Vicki. Sorry.

VICKI BRADY:

No. Thanks. Thanks, Chris, for that question. At the moment, we don't have those plans. Immediate plans to bring it back onshore. But as part of our strategy, obviously, customer experience is right at the front and centre of that. So that's something we'll consider over time, but no immediate plans.

JOHN MULLEN:

Thank you.

NIC MCKECHNIE:

Thanks, Vicki. So there are no further questions online, John.

JOHN MULLEN:

Fantastic. OK. Thanks, Nic. And shareholder. So now we've finished our discussions on items four and five. Please submit your votes online or complete your voting card for these items. Shareholders, that concludes the formal business of today's annual general meeting. For those of you online, if you haven't already done so, please submit your votes. For our shareholders here in the room, there are attendants carrying ballot boxes throughout the room, and ballot boxes are also located near the exits. The poll will remain open for a further 10 minutes to enable shareholders to submit their votes. The results of the poll will be available later today and can be obtained by visiting the ASX or our website. So I now declare our annual 2022 general meeting closed, subject to finalisation of the poll on items 3 to 5. And on behalf of the board, I thank you, shareholders, very much for joining us today in person, online or on the phone. So we will now take a short 30-minute break and commence the scheme meeting at 12:40.

Yeah? (INAUDIBLE) If everybody wants to stay, please get a sandwich or something. Cup of tea and then we'll start the scheme meeting, as I say, in exactly 30 minutes time. No, it's too late now.

SPEAKER:

No, you're on.

JOHN MULLEN:

I'm on? Yeah, sorry, for those of you still in the room, please visit the shareholder registration desk outside to register for the scheme meeting if you want to attend.

Scheme Meeting

The Telstra Corporation Limited Scheme Meeting was held on Tuesday 11 October 2022 in the Hilton Sydney Ballroom, Level 3, 488 George Street, Sydney NSW 2000 and online using the platform provided by our share registry, Link Market Services. The recording of the meeting is available below.

2022 Scheme Meeting recording

Video content description

Recording of the 2022 Scheme Meeting held on Tuesday 11 October 2022 in the Hilton Sydney Ballroom, Level 3, 488 George Street, Sydney NSW 2000.

SPEAKER:

We acknowledge the lands of the traditional custodians across Country. From the Noongar peoples in the West, to the Kulin and Kurnai nations of the South, and the clans of Nipaluna. To the Ngunnawal peoples and their sunrise peoples of the Gadigal and (UNKNOWN) of the East to the Yaggera, Turrbal and Bindal peoples of the North. And we pay out deep respect to them, to their Wisdom Keepers of the past, to the knowledge holders and seekers of today and our future Custodians. Our lands nurture us as we continue the connection and our spirituality with Country. (VIDEO PLAYS)

NIC MCKECHNIE:

Well, good afternoon again, I am Nic McKechnie, Communications Executive at Telstra. And I have the pleasure of being your emcee for this scheme meeting relating to Telstra has proposed corporate restructure. I would like to begin by respectfully acknowledging that I am joining today from the lands of the Gadigal people of the Eora nation. On behalf of Telstra, I would like to acknowledge and pay my respects to the Traditional Custodians of Country throughout Australia and recognize their contribution and connection to land, waters and culture. We pay our respects to their Elders past, present and emerging. Well welcome back to shareholders who joined us for our AGM earlier today. And welcome to everyone joining us online from wherever you may be. This is a hybrid meeting, as I mentioned earlier, with shareholders joining us in person online rather and by phone. For those of you in the room here you'll have been given a card when you registered for this meeting. Orange cards are for shareholders who may speak and vote, purple cards are for shareholders who may speak but not vote, you will need your card to ask a question or to re-enter the meeting.

A slide is about behind me now which explains how to vote. If you have any queries about how to vote, please speak with one of the staff in our room, or in the shareholder registration area outside and they'll be happy to assist you. The procedure of how to ask a question here in the room is now being shown on the screen. And for those shareholders joining us online today on your screen, you'll see our virtual meetings guide. This contains all of the information you need to know about how to vote and how to ask questions. You can also call the help numbers shown on your screen if you're having any difficulties. In terms of how we'll manage shareholder questions, we'll deal with questions from the floor first here, then move to online questions followed by phone questions. I'll read the online questions to the chairman as they have been written by our shareholders. For shareholders joining us online, the online platform is now open and I would encourage you to submit any questions that you have on the restructure now.

Now with all of those procedural matters out of the way. I'll hand over to your chairman John Mullen.

JOHN MULLEN:

Nice, thanks very much, Nic. So as we mentioned earlier, there's one other resolution to be considered today, which seeks shareholder approval of the proposed scheme of arrangement. So this resolution has been shown on the screen now and further information is provided in the Notice of Scheme meeting and the Scheme booklet itself. Nic outlined at the start of the meeting how you can vote and ask a question. And just a reminder that if you have any difficulty using the online platform or the phone system, please check our virtual meetings guide on our website, or call the Help number shown at the top of your screen. Emma Jones of Link Market Services Limited Telstra's share register is acting as a returning officer in relation to this poll. The results will be available later and can be obtained by visiting the ASX or on our website. We received proxies from over 12,000 shareholders and direct votes from almost another 12,000 shareholders. The proxy and direct voting position is being shown on your screen now.

The four numbers include proxies received and available to be voted by the chairman of the meeting. As indicated in the scheme booklet, I intend to vote all available proxies in favour of the scheme. So I will now take questions from the floor. I believe there are a few... (INAUDIBLE) Pleasure. Yeah. Sorry, a bit us mess up (INAUDIBLE), where is that? (INAUDIBLE) OK. (INAUDIBLE) OK. Alright, cancel all of that start again. When it comes to the end, do you? (INAUDIBLE) OK.

Good afternoon again shareholders. So thanks very much for getting back together after the AGM, both in the room and online. And I hope you've had a chance to get something to eat in the break. It's a pleasure to welcome you to this scheme meeting where we are seeking approval from shareholders on the scheme of arrangement, which is the next step in our proposed corporate restructure. A quorum is present and I formally declare the meeting open. The notice of scheme meeting was distributed with the scheme booklet and sets out the resolution to be considered today.

And I propose to take that notice as read. The vote on the scheme resolution is only the only item of business on today's agenda. And voting on the scheme resolution will be conducted by poll. The poll is now open. Instructions on how to participate in the poll we distributed earlier, but assistance is available anytime should you need it. I'm pleased to again be joined on stage by all of my fellow board members, company secretary Sue Laver and our chief financial officer Michael Ackland. Sarah Lowe from our auditors, Ernst and Young is also here again, along with the senior management team. The corporate restructure was a key component of our T22 strategy, and is also a key component of our T25 strategy announced last year. It’s an important next step in our drive to increase transparency of our infrastructure assets and to improve management focus on our infrastructure and customer businesses, and consequently provides us with more flexibility to create additional value for you, our shareholders. It also recognizes the world has changed significantly on the back of the pandemic.

This is expected to accelerate digitization in the home, the workplace, and economies more broadly, and reinforces the importance and value of the telecommunications infrastructure and connectivity that enables digitization. Delivering on our strategy, including the investments we've made in digitalization and networks, together with the benefits that will flow from the restructure positions us well to capitalize on these changes. The restructure involves the establishment of the Telstra group limited as the head entity of this Telstra Group, and the movement of entities assets and liabilities within the Telstra Group. It is an internal legal reorganization only and will not in itself result in any immediate change to the underlying assets or business activities of the Telstra group. It will provide us with more options and potential to realize additional value for Telstra shareholders from our infrastructure assets. And importantly, if the scheme is approved, there will be no change to the level of your shareholding and you'll receive one Telstra Group Limited share for each of your existing Telstra shares unless you are an eligible foreign shareholder.

Telstra Group Limited shares will have the same dividend and voting rights as Telstra shares. As you would have seen in the scheme booklet, the independent expert that assessed the scheme, Grant Samuel, concluded that the scheme is in the best interest of Telstra shareholders. Telstra directors will all be voting their Telstra shares in favour of the scheme and unanimously recommend you do the same. This recommendation is based on our detailed assessment of the potential advantages and disadvantages of the scheme set out in the scheme booklet you would have received. I'll briefly summarize those advantages and disadvantages now. Firstly, increased transparency of the assets of a customer and infrastructure businesses, allowing management to drive performance and efficiencies, while also providing a clearer picture for shareholders and potential investors to value the business. Increased focus on our customer infrastructure businesses through separate management teams with business-specific strategies supported by dedicated risk teams under a group-wide risk management and compliance framework.It will do this while limiting disruption to the Telstra Group’s businesses, including its arrangements with NBN. This heightened standalone focus is expected to deliver value to Telstra shareholders over time and greater flexibility and optionality to realize value from the Telstra Group's fixed infrastructure assets over time and potential to take advantage of opportunities that may arise to create value for Telstra shareholders. 

The disadvantages of the scheme - overall we do not think there are any material disadvantages from what has been proposed. But as explained in the scheme booklet, there are a few costs and risks associated with the proposal. Those costs are the one-off costs to the Telstra Group that are expected to arise if the scheme is implemented. Those costs, excluding stamp duty, are not considered to be material to the Telstra Group. The overall one-off costs associated with the scheme, most of which have already been incurred or will be incurred regardless of whether the scheme is implemented, are expected to be $126 million excluding stamp dutyand comprise incremental IT systems and process costs, advisor fees, the cost of the independent expert, and costs associated with the scheme meeting and ongoing additional costs for the Telstra Group that might not otherwise arise. They will mainly be incremental costs in connection with the administration of the new corporate structure and, in aggregate, are not material to the Telstra Group. 

The risks associated with implementation of the restructure are summarized in the frequently asked questions, A15 in the scheme booklet, and outlined in more detail in Section 2.9 of the scheme booklet. 

Next steps - so should shareholder approval be obtained today, there are a number of next steps and key dates. Firstly, the scheme needs to be approved by the court to become effective. This approval will be sought at the second court hearing which we expect to be held on 19th October 2022. If that approval is received, the last day of trading in Telstra shares on the ASX will be on the 20th of October with the new Telstra Group shares commencing trading on a deferred settlement basis the next day on the 21st of October.

Eligible shareholders will receive their new Telstra Group Limited shares on the top at implementation date, which is expected to be the 31st of October 2022. And the shares will commence trading on a normal basis the next day on the 1st of November. 

The final component of the scheme is expected to be implemented on the 1st of January 2023. That's the component that will help separate our infrastructure and customer businesses into separate subsidiaries. However, that component will not result in any change to the number of shares you hold. From a sequencing perspective, implementation of that component is occurring later so that the various transfers occurring in connection with the restructure occur in the correct order. 

With that, I will now turn to the formal business of meeting. 

 

Yeah. You can see why you need a new chairman now. So now I do turn to questions I don't need to go through it (INAUDIBLE). Yeah, fantastic. OK. So we will move to questions, please from the room to start with.

That's good didn't look like we... I know we do. No, I don't think we have any there. OK, as I move to online, I know we've got a couple of quite technical ones coming in, I'll do my best to answer a higher level issues. But Lyndall Stoyles if you’d be so very kind, our group general counsel, will be able to answer anything complicated.

NIC MCKECHNIE:

We do have one from the floor.

JOHN MULLEN:

We do, OK. Thank you.

NIC MCKECHNIE:

Chairman, I would like to introduce Peter Star.

SPEAKER: 

John, just for clarification, the idea of this was always my it's understanding to create shareholder value. So down the track, if Telstra wanted to float, for argument's sake, the health business we could do it if this is done, correct?

JOHN MULLEN:

The general principle is just yes to increase focus on particularly the infrastructure assets of the business.

SPEAKER:

Yup.

JOHN MULLEN: 

And also allow us where we to want to bring external shareholders in or float, as you say, any of the pillars, we could now do that, which we couldn't do before.

SPEAKER:

Correct. So just in relation to the shares that are held by all the people here, does that mean on the new... if this is approved, do they get a one-for-one or do they get... if they hold 500, they get 500 and the new?

JOHN MULLEN:

They get exactly the same, one for one, there will be no change your shares it all intents and purposes are exactly the same shares afterwards, as they were before they just are now in a different company name, a holding company, and it doesn't change anything, it doesn't change any of your entitlements, share price, dividends or anything.

SPEAKER:

And just one final question in relation to the DRP. Is it the board's intention to maintain the DRP?

JOHN MULLEN:

Yes, it is and the DRP will be reinstituted on the new shares as soon as that practical.

SPEAKER:

Thank you, John.

JOHN MULLEN:

Any others? Are we good. Alright, we're good, Nic.

NIC MCKECHNIE:

OK, great. Alright, we'll move to online questions. First question is from Steven Mayne. Does the current DRP really need to be terminated as part of this process? Why can't the current instructions be grandfathered into a new scheme? How many of our 1.25 million shareholders are currently registered for the DRP? And is it true that as of October 20, when the scheme becomes effective, we won't have any shareholders registered for a DRP?

JOHN MULLEN:

Now my understanding is that's not the case with DRP isn't terminated and shareholder elections are grandfathered will apply under the DRP program that will operate in the new company the same as it did before in the old.

NIC MCKECHNIE:

OK, thank you. Next question from Steven Mayne when AMP sold its life business for $3 billion, Australian law did not require it to seek shareholder approval. Same when Suncorp recently announced a proposed $4.9 billion of its banking division to ANZ. Does the chair agree that Australia's shareholder approval regime is bizarre and inconsistent, when we regularly don't get a vote on material transactions, but an internal restructure like this requires a vote that is a waste of everyone's time and money?

JOHN MULLEN:

Well, it's not a waste of everyone's time and money. It's actually a very good move to increase shareholder value and is a sufficiently substantial reorganization of the company that we do require shareholder approval.

NIC MCKECHNIE:

Question from Gavin Smith, is there any net financial gain to the Telstra and shareholder within fin year 2022-2023 or 2023-24 by this conclusion?

JOHN MULLEN:

No, as we said before, it will change nothing. If in the future, we decide to monetize one of the four pillars by bringing another shareholder in whatever. Well, that will be a decision that's taken at the time and that will obviously have impacts on shareholder value or we wouldn't be doing it… but from one year to the next, as you just said, no impact.

NIC MCKECHNIE:

Thanks, John. Question from Theresa Caloiero. Will this scheme restructure open Telstra’sassets to be used by our competitors? And how is this a good thing for we shareholders? Will this reduce one of our competitive advantages ie our technology?

JOHN MULLEN:

Again, it changes absolutely nothing assets and our businesses continue to trade exactly the same every day as they did before. It doesn't involve competitors or access to any of our network, it's purely a legal restructure.

NIC MCKECHNIE:

Thanks, John. Question from Stephen Mayne if Telstra had attempted to legally implement this restructure by way of contract, without using a scheme of arrangement, the courts and a shareholder vote, who would have litigated against us to prevent that from happening? Can you cite any examples of other listed companies which have gone through such an expensive process for what is an internal restructure that impacts no third parties in a material way?

JOHN MULLEN:

We obviously looked at all the possible ways of doing this, and there are, as you say, a number of different variants. We felt, after a lot of debate, a lot of internal and external advice, that this was the most effective way of doing it. We also felt it important that something of this size and significance did come to shareholders for a vote. Therefore, the scheme arrangement was the approach that we considered to be the best in the circumstances.

NIC MCKECHNIE:

Another one from Steven Mayne, John, what is so different about the Victorian stamp duty regime that even with exemptions for what is an internal restructure with no assets changing hands, we're still going to be up for at least $18 million dollars in additional stamp duty liabilities payable to the Victorian Government. In what way are all the other states different in their approach to Victoria when it comes to stamp duty?

JOHN MULLEN:

Well, all the states are different. That's unfortunately got nothing to do with Telstra, and there's not in our power to control or influence. The laws are the laws and we have to comply with the state stamp duty rules as they are today.

NIC MCKECHNIE:

Thanks, John. Another question from Gavin Smith. Why would I have not received today's important information by mail by now if I reside within a city of Western Australia? That being before today's vote, did Telstra's mailing occur sufficiently early enough for this important decision? Is the board aware of any other shareholders with this issue? I'm attempting to read the online information supplied now within the last 20 minutes.

JOHN MULLEN:

Well, sorry that you received it late. I'm informed that there's the shareholders were sent the information about the scheme on the 2nd of September which is quite some while ago, so I'm not sure why you, unfortunately, didn't receive it. But I think it sounds like a mail issue rather than a timing issue on our part. Thanks, John, question... I am not aware of anyone else having the same problem as you, as you just mentioned.

SPEAKER:

(INAUDIBLE) Sorry to interrupt, but I am shareholder and I didn't receive it in the post either. No.

JOHN MULLEN:

OK. (INAUDIBLE) I'm sorry, if you didn't, there definitely was mailed to all shareholders.

SPEAKER:

I've just received it five minutes before I came in here. And I don't know anything about this scheme. So I feel quite left out of the picture, if you like, as a shareholder. And I think that there may be other people who are in the same position. Obviously, you don't account for the behaviour of Australia Post. But it doesn't surprise me that I actually haven't received it. But I should have received it with all of the information about the Annual General Meeting. I really think I should have.

JOHN MULLEN:

Now, there's separate communication but also, it has been available online, and you may not have...

SPEAKER:

I didn't not have any notification on at all so I couldn't look online at it. So that man is obviously not alone and not receiving this communication. All of my communications come by post. And of course, you can't guarantee Australia Post. But I wasn't given any notification whatsoever that this was on the board.

JOHN MULLEN:

Obviously, I can't comment I don't know why you didn't whether it was a mailing address error, maybe our records error or maybe it was a post I honestly can't comment, unfortunately.

SPEAKER:

Well, I've just...

JOHN MULLEN:

So I'm very sorry to hear that.

SPEAKER:

I've just received the Annual General Meeting. I haven't moved for 30 years, I've received the Annual General Meeting information. I've also received my dividend statement received recently. So it can't be something to do with my mailing address.

JOHN MULLEN:

All I can say is the vast majority of people have received it, just for the responses we've had from 1,000s and 1,000s, of shareholders. So I don't know why your particular case you didn't. But we also regret that unfortunately, it did.

SPEAKER:

Obviously, it's regrettable. But I would actually like to say that the gentleman who's actually put the issueforward is actually not alone in this. And I dare say that we're both not alone in this. Thank you so much.

JOHN MULLEN:

Thank you.

NIC MCKECHNIE:

Thank you. Thanks, John. Another question from Steven Mayne. It seems very unfair that foreign shareholders are going to be compulsorily sold up as part of this process. How many shareholders is this going to affect? And what is the estimate in terms of the number of shares that we will be forcibly selling?

JOHN MULLEN:

Yeah, no, that was something I was interested in, as well. So I do understand it's absolutely minuscule. The reason it arose is that the laws in some countries prohibit the reissue of shares and the way that we are doing it without certain legal requirements being satisfied in those countries first, but it is an infinitesimally small percentage is less than 0.1% of ineligible foreign shareholders around 2,000 maximum. So it's a tiny, tiny fraction.

NIC MCKECHNIE:

And just for Steven, I did lose the last half of that question, so I will come back to it in a moment, it disappeared off my screen. So we'll come back and make sure that we get to your full question. 

Another one from Steven Mayne. Are you disappointed that only 12,000 of the 1.25 million Telstra shareholders voted in this scheme meeting? What sort of marketing campaign did you run to turn out the vote? That said it doesn't really matter, given that 99.2% of voted stock supports the scheme. Could this vote have been held as part of the AGM rather than a separate meeting?

JOHN MULLEN:

Well, I think the fact that 99.2% approved it means that we have communicated it and shareholders have appreciated it. And I think it's a good idea and are supporting it. I think technically, I can't remember exactly why. But no, we needed a separate meeting. But it's all the same meeting, everyone's sitting here at the same time with 20-minute break. So whether it had of been formally part of the AGM or a separate meeting. But it doesn't make any difference. Alright. Though the court ordered it that way.

NIC MCKECHNIE:

Thanks, John. I'm just going to get back to the question from Stephen that I was only able to get halfway through before. So it seems very unfair that foreign shareholders are going to be compulsorily sold up as part of this process. How many shareholders is this going to affect? And what is the estimate in terms of the number of shares that we will be forcibly selling? If you simply issue new Telstra shares to these holders? Do you really think ASIC or some other regulator is going to come after Telstra forcing us to act in such an unfair manner? Does the law need to be changed to be more accommodating of foreign shareholders?

JOHN MULLEN:

No I don't think ASIC will come after us because we've doing everything correctly as we should. We're not talking about Australian laws here we're talking about the laws of other countries and don't think we have any jurisdiction over that.

NIC MCKECHNIE:

OK, thanks, John. There are no more online questions. I'm just going to go to the phone's operator, are there any phone questions?

SPEAKER:

There are no questions on the telephone at this time.

JOHN MULLEN:

Excellent, so I think that wraps us up, Nic. Yeah. So...

NIC MCKECHNIE:

So we have one more online, John. Sorry. Let me just quickly go to that one for you. So we've got a question from Gavin Smith. Will this separation recommence the solo system? Or how will this be handled within Telstra silo system rather sorry, silo. Oh the silo. Silo. Sure, I thought was some technical legal term. No, it's completely unrelated. OK, I think that looks like it from me John.

JOHN MULLEN:

Is it all? Awesome. OK, so thanks, Nic. Thanks, shareholders. So we've now finalized our discussion. If you haven't already done so please now submit your votes online, or complete your voting card. Attendants are carrying ballot boxes again, somewhere in the room. And ballot boxes are also located near the exits. So that finally even with my administrative stuff concludes the business of today's scheme meeting, the poll will remain open for another 10 minutes to enable shareholders to submit their votes. And I now declare the scheme meeting closed subject to finalization of the poll. On behalf of the board, thank you all very much for joining us and for your support today. Thank you.

SPEAKER (VIDEO PLAYED):

Thank you. There's going to be some damaging storms on our West Coast today there could be... No worries, Mr King, I understand. Moving to Newie? Great spot. Yeah, I heard about the storm. I'll get your Wi-Fi sorted. We have a few options for your dad. Let's get your business back online.

The 2019 AGM of Telstra Corporation Limited was held on Tuesday 15 October 2019 from 9:30am AEDT at the Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf VIC.

2019 AGM recording

Video content description

Recording of the 2019 AGM held on Tuesday 15 October 2019 at the Melbourne Convention and Exhibition Centre. 

(UPBEAT MUSIC PLAYS)

CAROLYN BRIGGS:

Good morning. Good morning, everybody, and welcome to this beautiful part of the city down near the this beautiful centre for the AGM for Telstra. So my name is Carolyn Briggs and I'm the Eldest spokesperson of the Boon Wurrung, which is the language Yaluk-ut Weelam, which means the people of the river. So I'm here to welcome you all. So I've introduced myself, so I know who you are, and I've got to pay my respects to the Telstra board that are out here this morning and also pay my respects to you. I also pay my respects to my Elders and to my Ancestors and to our futures, our younger generation who are coming through. So, and the language afforded to me, it's (SPEAKS AN INDIGENOUS LANGUAGE) That means welcome to our beautiful home, the land (COUGHS) the lands of the two great bays. (UNKNOWN) being Port Phillip Bay and Marin being Western Port Bay. But it's also about this beautiful river that runs flows past us, which is known as the Yarra. But to our people, it was known as the Birrarung.

And it's also when we put ga on the end of it, it's Birrarung-ga, meaning the country of the river. So you're a part of the country of the river. You're getting in a little bit of a history lesson in language. So as a descendant of the First Peoples of Melbourne, we welcome you and the word (SPEAKS INDIGENOUS LANGUAGE) means come with a purpose. The land that we now stand is the traditional country of the (UNKNOWN) clan of the Boon Wurrung language group. The Boon Wurrung people were part of a much larger nation, or confederacy, known as the eastern colon. Colon means mankind. The Boon Wurrung and the eastern colon have a unique history and culture, and we are pleased to be able to celebrate that history and heritage with you today. Just that word (SPEAKS INDIGENOUS LANGUAGE), come, ask the common. What is your intention for coming? It is to be a part of this AGM the 2019. Traditionally, the Boon Wurrung and the other clans of the (UNKNOWN) nation would meet just like you to celebrate, to trade.

These celebrations were held each month to celebrate the coming of the new full moon. The descendants of the Boon Wurrung in the eastern colon have continued to take an active and progressive approach to the leadership and protection of our values. This is one of this one, this is one more way that we can acknowledge and celebrate our shared indigenous history and heritage. In traditional society of the eastern colon, we were committed to the maintenance of our society by valuing the importance of learning, showing respect, celebrating life and honouring the sacred ground. This importance of learning was a transmission of knowledge and understanding that ensured our culture survived. This commitment to learning has been a part of every generation since time began. And that's one of the reasons why we are still strong today. We believe that you must respect the past in order to understand its futures. And according and these are the things that have maintained our guiding principles for our life ways.

Showing respect. In our traditions, visitors are always welcome. But but they are required to show respects to the (UNKNOWN) the laws of the land. This is the same way we show respect to each other's diversities, cultures, religious or spiritual beliefs today, and we are here to celebrate the 2019 Telstra AGM. This is also a celebration of life. The arrival of new children, the coming of the six seasons, the visiting of the neighbouring clans was very much an important part of our traditional life. We talk about respecting sacred ground. We should all acknowledge the sacred ground on which we stand, and Melbourne is a host to many people from many different nations, and we still call upon them to respect sacred ground by understanding its history and heritage of the first people of the eastern colon. And today is my hope that we can all take pride in our shared history and celebrate the strength of this great country of ours. And according to our traditions, our lands will always be protected by our creator, Bunjil who travels as an eagle and (UNKNOWN) who protects our waterways travels as a crow.

Bunjil, asked of First Peoples to ask all visitors to make a number of commitments, one not to harm the (UNKNOWN) lands, not to harm our knees, our waterways and particularly not harm Bunjil's children. And if you accept these laws or these dumb bars, this is about allowing you to travel through our many landscapes in safety. And this is one way we do this by your commitment is through the exchange of a small bow dipped in the water of the land. So once again, (SPEAKS INDIGENOUS LANGUAGE). I wish you well in your endeavors with the new AGM for this year. So let's celebrate, (SPEAKS INDIGENOUS LANGUAGE) and the celebration. I want you to all say (SPEAKS INDIGENOUS LANGUAGE). You can do a bit louder. You know, because you're articulating 2,000 generations of say the word come. What's your purpose for coming? Thank you. (SPEAKS INDIGENOUS LANGUAGE). I wish you well. (VIDEO PLAYS)

SPEAKER:

It's always been about people about bringing us closer together, connecting us and the communities where a part of. Making sure each and every one of us gets to experience the best technology on the best network. Because in the right hands, we know our network has the power to change things, to help us take care of each other, get back on our feet, build up the next generation and connect our businesses with the rest of the world. No matter who you are or where you live, with the power of connection, everyone can live better, more fulfilling lives. Everyone can thrive. (VIDEO ENDS)

JOHN MULLEN:

Great. Good morning, ladies and gentlemen. My name is John Mullen, and it's my pleasure to welcome you this morning to Telstra's 2019 Annual General Meeting. All of the directors are here, including your Chief Executive Officer Andy Penn, and I join them in offering you a very warm welcome this morning. Thank you also to Auntie Carolyn for the earlier welcome to country. Today's meeting is being webcast, so welcome also to those shareholders joining us online. And with a quorum present, I would like to formally declare today's meeting open. The notice of meeting was distributed earlier and that's about the business and the resolutions to be considered today. So I propose to take that notice as read. There are a number of items of business on the agenda today, all of which are shown on the screen behind me. Items three to five-set out resolutions to be voted on today. Item six is a conditional item and any vote cast on it will be of no effect unless we receive what is known as a second strike on the remuneration report.

To assist with the efficient conduct of the meeting, I declare the resolutions on items three to six now properly before the meeting. Voting on items three, four and five and if required, item six will be conducted by poll and that poll is now open. If for any reason any shareholder wants to leave the meeting early, you can still vote by completing your voting card and placing it in one of the ballot boxes near the exits. I'd like to now formally introduce the colleagues with me here today. With me on stage or Andy Penn our Chief Executive Officer,, Sue Laver a company secretary. Vicki Brady, chief financial officer and my fellow members of the board. And can I particularly welcome new director Eelco Blok, who has been nominated by the Board for election at today's meeting. I would also like to introduce Andrew Price from our auditors, (UNKNOWN). I can see him I see over there. Andrew's available. if shareholders have any questions about the audit or the audit process. So let me now turn to Telstra's activities and performance during the 2019 financial year.

This year has been one of the most important years in Telstra's history. And why did I say that? I say that because 2019 was the year when we commenced a T22 strategy to transform Telstra for the future. A year in which we completed our nearly $3 billion strategic investment program that was needed to create the types of networks we will need in the future and to completely digitize our business. And a year in which, as an industry, you pass the halfway mark in the migration to the NBN. I don't want to appear overly dramatic, but it is our belief that the T22 transformation that Telstra is undertaking today is the most radical and ambitious being undertaken by any telecommunications company in the world today, and we have made significant progress already. And Telstra today is a very different, much simpler and more customer-focused organisation than we were just a year ago. (UNKNOWN) will give you more detail shortly. But let me just try and give you a few examples. Firstly, we have produced more than 1800 consumer and small business plans to just 20 in-market plans.

We've done away with locking contracts on all new consumer and small business, fixed and mobile plans. We've eliminated excess data charges in Australia on all our new mobile plans. And since 2016, the number of calls coming into our contact centres has fallen by more than 15 million per year, and our goal is to reduce them by another 16million by 2022, all driven by a better customer experience. That will be a reduction of over two-thirds of the calls coming into Telstra, or 31 million calls in total. And the number of trucks that we needed to dispatch to repair faults with 900,000 fewer than last year. And we've achieved around 1.2 billion of annual cost reduction since FY16, with a further target of another 630 million this year. We are on track to achieve our target of an annual $2.5 billion reduction in underlying fixed costs by fiscal year 22. Now, in this regard, we announced around 6000 direct employee row reductions this year, and that, of course, is a source of great concern at every employee as a person with a family with hopes and aspirations.

And we must never forget the human dimension in these decisions. However, shareholders should be aware that one of the biggest drivers of this is the transfer of Telstra's fixed line business back to government ownership. So while we've lost 6,000 employees NBN now employees, 6,400 employees and many thousands of contractors in addition. So overall employment has actually risen in the industry. And clearly, it's simply not possible to maintain all those employees, and the part of the business that they worked in has been transferred to another entity. Now, our industry is changing in an extraordinary pace, and it will never be the same again. And if we don't adapt, we will fail. No business is too big to fail today if it doesn't reinvent itself on a continual basis. So you're witnessing the greatest transformation that Telstra has ever undertaken way beyond anything that we have tried to do before. A couple of years ago, Andy Penn said that Telstra was becoming a technology company. It was a predictable coterie of critics who said that Telstra was aspiring to be another Google or Facebook, which of course, was not at all what he meant.

But Andy was absolutely right. Like other telcos, the world over Telstra has come from a world of monopoly or semi monopoly telephone operations, originally just connecting person to person with voice communication. But that world has gone forever, and our industry today is exploding into a world of cloud computing, machine learning, artificial intelligence, internet of Things, autonomous vehicles, big data, drones, satellite technologies and many, many more. This is the new technological world, and the old world is not coming back. And while we may not like it, the days of Telstra's high legacy margins and 100% dividend payout ratio are not coming back, either. So let me now turn to Telstra's performance during the year. Firstly, our results were in line with guidance and with market expectations. We delivered what we said we would deliver. However, as expected and previously flagged, our results also reflected current market realities, including the impact of the NBN and intense competition.

We reported total revenue of 27.8 billion, EBITDA of 8 billion and net profit after tax of $2.1 billion. A major reason for the decline in the profit compared to last year was the impact of the NBN, which represented some 600 million of negative recurring EBITDA headwind during the year. Combined with a total interim dividend paid in February 2019, shareholders will receive a total dividend of 16 cents per share fully franked for FY19, which will be returning $1.9 billion to shareholders. Now, what is particularly significant about our results this year, however, is that they indicate an inflection point for the business. The clearest view of the future financial performance of our business is one that excludes the NBN headwind. And in this respect, we expect fiscal year 20 to be a pivotal year for us financially as momentum in our underlying business is expected to deliver up to $500 million of growth, excluding those NBN headwinds. This is a significant improvement on the decline of around 400 million in fiscal year 19.

2019 was also the year in which we again demonstrated clear network leadership. We were the first operator in Australia and in fact amongst the first in the world to launch 5G, the next generation of mobile telecommunications technology. 5G is enabling extraordinary new developments and opportunities and new fields such as those that I mentioned, Internet of Things, machine learning, artificial intelligence and so on. We continue to expand on network, and Telstra's mobile coverage footprint now stretches out to more than two and a half million square kilometres, vastly more than any other mobile network in Australia. And our coverage extends to 99.5% of the Australian population. We are really proud of this, and our commitment remains to work cooperatively with governments and with other stakeholders to continue to do our absolute best to bridge the gap between metro and rural areas better than anyone else. And in this regard, just how important actually is Telstra to Australia and to Australians?

Well, we now provide over 23 million customer services, including more than 18 million domestic mobile retail customer services, 3.7 million retail bundles and standalone fixed data services and 1.4 million standalone voice services. We estimate that up to 95% of Australians use Telstra in some way on a regular basis, even if they don't realise it. An example If you are on a competitors network and you do a Google search, your request likely goes from your phone via a Telstra submarine cable to Google in the US and back again. If you use an ATM or you pay for something by EFTPOS or you book a taxi or an airline ticket, chances are your bank or other organisation will be using Telstra to provide the service. 65 million voice calls are made every day on our fixed and mobile networks and more than 33 petabytes of data received and sent. Submarine cables linking us to the outside world are long enough to encircle the planet 10 times. We offer voice, data and video of a mobile fixed NBN, wide band, narrowband and other networks from machine to machine transmission.

Now, this complex array of technologies works exceptionally well and is exceptionally reliable. Yet with this scale of customer interaction, only one small part of this complex system needs to go wrong, and that can equate to thousands and thousands of unsatisfactory experiences for customers. As chairman, I receive a lot of complaints and I respond to every one of them because that is my job and they disappoint me every time. When I analyse those complaints, they often relate to the systems that we're using, legacy systems that are difficult to navigate, systems that are now being removed or improved as part of T22. Despite the best of intentions, there's always human error where maybe a customer's billing is wrong. Maybe the technician didn't come the time promised. Maybe the NBN connection doesn't work, and NBN blames Telstra, and Telstra blames the NBN and so on. As I mentioned before, we receive about half a million calls per week, mostly to address relatively minor but frustrating issues.

And despite the substantial reduction we have achieved in these complaints and calls, we still have a long way to go and I feel this frustration keenly, as do my fellow directors and Telstra's employees, especially as they work so hard every day to improve things. This then is why Telstra's T22 strategy to radically simplify and streamline the business and digitise our interactions with customers the greatest extent possible is so critically important. Now let me make a few comments about the NBN. The creation of the NBN 10 years ago has had a seminal effect on our industry and on Australia. And it's always easier to comment with the benefit of hindsight, I know, but it is my view that over the last 10 years, private-sector competition between strong players such as Telstra, Optus, TPG and others was always going to build 100 megabit broadband access and speed to the majority of the population in Australia and an ongoing competitive landscape and at no cost whatsoever to the taxpayer.

Governments could then have decided how much subsidy they were willing to provide the industry to extend this coverage to regional and rural areas where private sector economics were unattractive. This would all have been at a fraction of the tele cost of today's NBN. Instead, however, in the end, in the NBN, we have created a state-owned monopoly that's going to cost the country more than $50 billion. This said, however, we got here, and Telstra too must be a part of the blame for this due to its recalcitrance in helping government at the time. But whether we like it or not, the NBN is here to stay. And today it is in Telstra's interest, it's an industry's interests and the country's interest to do all we can to make the NBN successful. And Telstra is unequivocally trying to play its part in achieving this.

SPEAKER:

However, that decision 10 years ago has left a number of substantive challenges for the industry and Australia to solve. In the 12 years since the NBN project was announced and the 10 years old since the NBN itself was formed, Australia's mobile industry has consistently ranked amongst the best in the world. In August this year, the Speed Test Global Index rated Australia as having the second fastest mobile networks in the world after South Korea. However, in the same test, Australia's fixed broadband industry ranked 58th fastest in the world behind countries like Moldova, Belarus, Panama and Andorra. Financially, the impact on all fixed broadband providers has been significant, despite some compensation paid to those operators whose fixed line businesses have been nationalised. In Telstra's case we estimate that we have now absorbed around 50% of the economic headwind that the NBN creates for us, or about $1.7 billion on an annualised basis, with more than 60% of Australia's homes now connected.

Telstra has in part being compensated by the government for this, of course, the majority of which is being returned to shareholders. But after the end of the NBN rollout, Telstra will be worse off by more than $3 billion per year into the future. The impact on the bottom line, and therefore EPS from which we pay dividends is even greater and up to 50% reduction net profit after tax, resulting in an inevitable flow through to dividends and share price. There are few precedents in corporate Australia for a challenge of this magnitude and there's no magic solution to make up for the loss of up to half of the company's net profit. But we are not sitting on our hands. Our T22 program is a radical and ambitious initiative to fundamentally restructure Telstra to enable us to respond rapidly to this changing environment and to continue to lead the Australian telco market. Then there have been claims by some that the payments NBN makes to Telstra for infrastructure access are the reason why NBN's wholesale prices are so high.

In fact, as the industry well knows, exactly the opposite is true. These payments to Telstra have actually helped keep the cost of the NBN down. By the NBN's own admission, without access to Telstra's very extensive network of exchanges, fibre, ducts, pits and pipes, the NBN would have had to build all this infrastructure from scratch at a much higher cost and over a much longer period. Then another tropical matter which is becoming problematic is the question of the NBN's starting to sell directly to enterprise customers. Now, the original mandate for the NBN was that the NBN would be wholesale provider only and would not favour or discriminate between retail service providers or RSPs. It certainly wasn't envisaged that NBN Co would negotiate contracts directly with customers and encourage them to seek special deals from certain RSPs. That, however, is what we are seeing today. Instead of remaining a wholesaler, the NBN is now going outside this mandate and is targeting our customers directly.

As one of our competitors clearly noted recently, the reasons why the industry objected to this are three. Firstly, reciprocity. It seems inequitable that the NBN can now move outside its mandate and sell directly to our customers. But RSPs in the industry have to stay within their mandate and cannot sell to the NBN's own protected market in return due to regulations which prevent retail providers investing in fixed line infrastructure to provide consumer services. Secondly, the original intent of the NBN was to bring high speed internet a competitive pricing to those without such access. It seems a waste of collective resources to be delaying investment in the consumer rollout to people yet to be connected and instead be focusing investment and the enterprise market where the NBN is duplicating existing high speed fibre for no service or speed advantage. And thirdly, the NBN's government ownership gives it a very significant cost of capital advantage over the private sector, which is being used to its competitive advantage.

Now, we understand that maximising the financial return of the NBN is important, however, for the NBN to be allowed to move outside its mandate and to achieve this, but reciprocal competition from RSPs remains restricted seems inequitable. There's very little doubt in my mind that were the NBN open to competition, wholesale broadband prices in Australia would fall materially. Now, let me be clear, we are not recommending that the nation's policy settings be changed, but we are saying that if the policy settings are not to change, then both sides should respect their original mandates. And lastly, may I try to make another important comment on affordability, affordability of the project itself and affordability of retail broadband services. You would have seen that Telstra, along with much of the rest of the industry, has been recommending that the NBN reduces wholesale broadband prices. This has been criticised by some as being self-serving, and while of course this would benefit Telstra, it would also benefit all the rest of the industry and all of the actual uses of broadband since without a drop in wholesale pricing, the inevitable outcome will be higher retail prices.

Dismissing the industry's suggestion as whingeing may make good media headlines, but this avoids Australia facing into the real ends issue here for both the industry and for the country. When Telstra was a regulated wholesale provider to the industry, Telstra charged on average about $20 per user per month. The NBN is now charging some $44 per month on average, and the NBN states its ambition is to get that up to $49 by fiscal year 23. As a very broad generalisation, a retail service providers average internal cost is in some 12 to $18 on top, plus approximately another six to eight for the (UNKNOWN) cost to connect. So, this gives an all in cost for an RSP to resell the NBN of over $70 per month. Market prices to the consumer, however, are averaging below $70 per month, excluding GST. Now, clearly, losing money is unsustainable for all 180 odd RSPs out there, and this is why we have already seen some companies starting to withdraw from reselling the NBN. In addition, these economics are leaving many companies to invest in 5G fixed wireless and other technological solutions to allow them to offer competitive broadband without using the NBN at all, which just makes the situation even worse.

Ironically, it's actually beckoning in the interests of those competitors that are embracing these new technologies that NBN's prices remain high, so the alternative technologies become more attractive. And bottom line of this is that Australia already has some of the highest wholesale broadband pricing in the world. And if this trend continues, over time most resellers of the NBN will withdraw, or they will go broke. The downside of this, in turn, will be fewer service providers and, ultimately, higher broadband prices to the consumer. Alternatively, a reduction in the wholesale price of the NBN would mean that reselling the NBN would be profitable for all RSPs, resulting in a dynamic and competitive broadband industry and retail prices would be kept materially lower. Now, Telstra will compete either way, but surely a reduction in the wholesale price, a competitive market and lower prices for consumers has to be a better outcome than a high priced oligopoly, both for the industry and for Australia.

To this end, we welcome the announcement yesterday by the ACCC that it's launching an inquiry into NBN pricing from an affordability perspective. Now, let me just close this out by saying, by stressing, here that I'm in no way criticising the leadership of the NBN. To the contrary, they are capable and professional people with whom we have a constructive and engaged relationship and whom we respect. These challenges are not of their making either, as they too have to work with the cards they have been dealt and they are doing their very best in difficult circumstances. But this is not just an NBN or a Telstra problem, it is a problem for the whole of Australia to resolve, government, industry and the NBN together. So, turning now to the changes this year in Telstra's leadership. Andy will talk about his management team shortly, but we continue to completely reshape our board to put in place the right balance of experience, including global telecommunications experience, technical expertise and fresh thinking.

I may be biased, but with a couple of new appointments still to come, I think that we're building one of the strongest boards in Australia and a board fit for purpose to help steer Telstra through these unprecedented times. You will hear shortly from the director standing for election, but can I again firstly welcome Eelco Blok. Eelco brings more than 30 years experience at the Netherlands leading landline and mobile telecommunications company, KPN, and he is an outstanding addition to our board. Then directors will be aware that two current directors, Craig Dunn and Nora Scheinkestel, are also eligible for re-election. Both are highly valued and respected members of our board, and both have made huge contributions to Telstra. Let me start with Craig Dunn. Craig is an outstanding director who joined our board in 2016. He is the current chairman of the Audit and Risk Committee and a member of the Nomination Committee. In my view, Craig is one of the best public company directors in the country.

We are aware that there has been commentary around Craig's association with the AMP, where he was CEO more than six years ago. However, it is important to note that at no time whatsoever has Craig ever been accused of anything improper himself. All I can say as chair is that Craig is an extremely valuable director with exceptional skills in the areas of finance, risk and general board supervision, and the board supports his re-election 100%. Were he not to be re-elected, it would be a great loss to Telstra, and I therefore ask you too vote in favour of his re-election. Let me then also comment briefly on the other director standing for re-election today, Nora Scheinkestel. Nora is a member of the board's Audit and Risk Committee, Nomination Committee and Remuneration Committee, and previously she was chairman of the Audit and Risk Committee from 2012 to 2019. If successful, this will be Nora's fourth three year term. In accordance with our board tenure principles where a non-executive director is approaching the end of their third three year term, a more formal review of their continuing directorship takes place, including considering length of service when making an assessment of the director's independence.

Nora is simply an outstanding director and brings considerable skill, wisdom and experience to our board. And in particular, Nora has a deep corporate memory, including being involved in the NBN transaction from the very beginning. With a number of directors only being recently appointed, this continuity of key corporate knowledge is critically important to us. So, when the board considered Nora's tenure, independence and contribution, it had no hesitation in unanimously recommending she remain a member of the Telstra board. I hope that you too will support her re-election. This brings me then to the issue of executive remuneration and items four, five and potentially six on today's agenda. Shareholders will recall that last year significant concerns were raised around the remuneration report by proxy advisers and others, meaning that a substantial number of shareholders did not approve the report. This gave us what is termed a first strike, and this is deeply disappointing both to me and to my board colleagues.

We were disappointed because the Telstra board takes this responsibility incredibly seriously. We spent a huge amount of time really trying to get the balance right between protecting shareholders interests and not overpaying executives, while at the same time motivating, incentivising and retaining the best management talent that we can. This is particularly the case where, as in our situation, market dynamics, including ones outside management's control, have been challenging and shareholder returns have not always been able to be at the level that we would have hoped for. But the fact is is Telstra is a $42 billion market cap company with around 30,000 employees, 1.3 million shareholders, and we operate a leading edge of telecommunications markets here in Australia and around the world. We are operating in times of great challenge and volatility, and the future of the company depends on our implementing one of the world's largest and most complex transformation strategies within a tight timeframe.

And in that environment first class leadership could not be more critical, and attracting, retaining and motivating high calibre executives depends on a number of things. One of course of which is remuneration. Overseas and Australian executives will simply not leave well-paid jobs elsewhere to join Telstra unless we have a competitive remuneration strategy. This year, Telstra's remuneration committee and the rest of the board again spent a significant amount of time trying to get the structure right. We consulted extensively, we listened, we worked, and we reworked our executive compensation scheme to try to find the best balance. The plan for a FY20, therefore, includes a number of material changes to try to better align with the creation of sustainable long term shareholder value. We have reduced maximum potential remuneration. We've increased the equity versus cash ratio. We have extended vesting for restricted shares. We've expanded the clawback provisions on our equity terms and a number of other measures.

And we strongly believe that these changes strike the right balance between protecting shareholder interests, not overpaying executives, but at the same time motivating, incentivising and retaining talented leaders. And we really, really hope that shareholders will agree. I'm on the record as saying that some executive remuneration in Australia and especially overseas, has been too high in the past, and there's no doubt that this has damaged the reputation of big business around the world. However, executive remuneration in Telstra has been progressively trending down. I absolutely do not think that this is the case in Telstra today. Indeed, I would like to particularly stress how important it is to reward and motivate management in difficult times, even more so perhaps than in good times. It's a natural reaction for shareholders who have seen their shares reduced in value to be disappointed and to question whether executives are feeling the same pain as well. However, the share price cannot be the only metric by which we evaluate management performance.

External factors can mean that you can have a reduction in the share price despite outstanding management performance, just as you can have increased share price despite mediocre management performance. If in the end the only criterion is the share price itself, then why even bother with the complicated remuneration structures that we have? Simply pay the executive a fixed amount and do away with a whole industry that has grown up around remuneration, including proxy advisers and company remuneration committees that spend an inordinate amount of time trying to get remuneration right. But if you want to pay on performance, then you have to look at a lot more than just the share price to judge good or poor management performance and really understand the drivers inside the business. For Telstra the reality is that external factors, including the impact of the NBN headwinds I mentioned earlier, are very substantial drivers of our company's performance, and this would have been far worse if management had not done such an excellent job in this environment.

We genuinely believe that Telstra's management has performed excellently this year, and we are fortunate that the last 12 months has also seen Telstra's share price rise materially and outperform the market. This has led to a well-earned increase in compensation for the team and for our chief executive, Andy Penn. His actual pay increased by 34% this year, but the context for this is really important to understand. The remuneration that Andy has received actually fell by almost 50% over the previous two years because Telstra was under pressure from a number of external factors over which Andy had little control, including the impact of the NBN headwinds that I mentioned earlier. So, even with a rise this year, therefore, the total remuneration that he received is still more than 20% below where he was three years ago. And ultimately, because Andy received such a significant portion of his total remuneration in the form of shares, we are comfortable that his remuneration is directly tied to Telstra's share price performance, and it mirrors shareholders own experience.

For all of that, however, executive remuneration continues to challenge the board, and we continue to search for solutions that satisfy everybody. In the end, all we can do is to diligently and transparently set targets for management that we think are ambitious and will deliver lasting value to shareholders despite the market environment. And we believe that that is what we have done this year. But we must also never forget that incentive schemes are designed to be an incentive, not a disincentive. Chairs and directors may come and go, but in the end, the single greatest contributor to shareholder value in the business is a talented and motivated management team. When I was younger, almost every executive aspired to be the CEO of a big, public company. Today, there's a real risk that the media scrutiny, the populist criticism and governance challenges, are starting to lead talented executives to look for alternative career paths, such as private equity as an example, where they can build their careers out of the spotlight.

So, there's no doubt transparency and accountability are, of course, good things, but we need to be very careful that the pendulum does not swing too far and we lose top talent, as this ultimately will only be to the detriment of shareholders. Andy is a strong leader and has assembled a very talented and high performing management team to steer Telstra through these unprecedented times. Rewarding Andy and his team appropriately for their efforts is critical and in this regard I cannot apologise for continuing to do what we believe is the right thing for the company and the right thing for shareholders in the long term. So, let me close then by touching on Telstra's role in society more broadly. In the past year, the Australian corporate landscape has undergone a seismic readjustment, particularly in the wake of the recent banking royal commission. Customers, regulators, investors and the community at large have very publicly reminded large organisations of the value that they place on companies being transparent, ethical and accountable in everything they do.

An important part of that is how companies conduct themselves and the contribution that they make to the communities of which they are part. That is a good thing, and Telstra can be very proud of its record in this respect, especially regarding the important role we continue to play in connecting and supporting communities, including in regional and remote areas and in serving the needs of our customers in vulnerable circumstances. As digital technologies play an increasingly central role in our world, there remains a significant gap between those who are connected and those who are not. And to bridge that gap, this year we helped around one million customers living in vulnerable circumstances to stay connected, including providing assistance for people on low incomes impacted by domestic or family violence or living with a disability. We also reached more than 30,000 people through our digital capability programs and created more than $110 million of value through our social investment programs.

Through the Telstra Foundation we also support digital learning experiences in schools, public libraries and remote indigenous communities. No other telecommunications company in Australia and, in fact, few other businesses full stop, can match Telstra for its involvement in and positive impact on the communities in which we operate. This year, we also achieved 40% reduction in our carbon emissions intensity, and we collected 15.5 tonnes of mobile phones from our customers for recycling. It is an ongoing source of enormous organisational pride for all of us. So, to sum up then, 2019 was an incredibly important year for Telstra, a year in which we met guidance and market expectations. Where we maintained or grew market share in key areas and where we built significant early momentum behind our ambitious T22 strategy. The NBN is what it is and we have to work with us, but in the end, The end of the nbn rollout is actually insight. After which, looking at Telstra's performance and progress will become much clearer again.

T22 is positioning us for success at a time when telecommunications networks are amongst the most important pieces of infrastructure in the world. A time when the demand for connectivity has never been greater. And to succeed in this new world, we need to find ways to translate demand into revenue and profit to completely reinvent Telstra as a new, digitally-enabled business, able not just to compete but to win. And that is exactly what we are doing. We're still closer to the start of T22 than the finish, but we are confident that we're moving at speed and creating sustained value for our customers, our shareholders, and our employees. You can be confident that you have shares and not just the best telco in Australia, but one that is respected around the world, and we're all working extremely hard to make the company even better still. Finally, and before I invite Andy to address you, let me sincerely thank you our shareholders for your patience and your support during the year. Let me also thank our customers for their ongoing support, as without them, there would be no Telstra.

And lastly, but by no means least, let me also thank every Telstra staff member. The board greatly appreciates all that you do, and I believe so too do our shareholders. Thank you for listening. And now let me introduce our Chief Executive Officer, Andy Penn, and invite him to address the meeting. Thank you. (APPLAUSE)

ANDY PENN:

Well, thank you very much, chairman, and good morning, everybody, thank you all for joining us here today, particularly including those who have joined us online. We do very much value this opportunity to meet with shareholders and to keep you across the many incredible opportunities that face your company in the future. We also welcome, of course, the opportunity to hear your comments and your feedback, and to address any of the questions that you may have. In my presentation this morning, I'd like to cover four things. Firstly, and building on the chairman's comments earlier, I will provide an overview why this year has become such a pivotal year for your company. Secondly, I will comment further on the progress we are making in transforming your company through a T22 strategy. Thirdly, I want to explain why telecommunication networks will have such a significant influence on the success of our economy and our nation over the next decade and why 5G is absolutely central to this. And finally, I will confirm our guidance for the 2020 financial year.

The chairman has already taken you through our financial results for the year, but I wanted to share why I believe 2019 was such a pivotal year. Notwithstanding the intense competitive environment and the challenging structural dynamics of the industry, including the nbn. 2019, was the year in which we believe we have started to see the turning point in the fortunes of the company from the changes that we are making. 2019 was the year in which we completed the Strategic Investment Program, which we announced in 2016. Whilst we will obviously continue to make investments, we are now doing so on a business as usual basis. 2019 is the year in which, as you heard from the chairman, we passed the halfway mark on the nbn. And 2019, was also the year in which we again demonstrated a clear telecommunications network leadership by being the first operator in Australia and among the first globally to launch 5G, the next generation of mobile telecommunications technology. 5G is clearly going to be important for Telstra's growth in the future, but it's also going to be important for Australia's future, and I will explain why that is the case in a moment.

Finally, 2019 was also the year in which we commenced the T22 strategy to radically simplify our products and services, improve the digital experience for our customers, establish Telstra InfraCo as a separate business unit, simplify how we work, reduce their cost base, and improve our portfolio management. In short, then 2019 was a year in which we made very significant progress in our program to make Telstra's challenges of today and to put us in the best possible position for the future. Telstra today is already a very different, much simpler company, a more focused customer organisation than we were a year ago. Importantly, though, we are well-positioned for the era into which we are about to head the 2020's. Let me now comment, therefore, on the progress this year on the many initiatives under T22. T22 is built fundamentally around four pillars and two critical enablers, building the networks for the future and digitising our business. We have made a very strong start, so let me cover some of the highlights.

Firstly, under pillar one to radically simplify our product offerings, eliminate customer pain points, and create all-digital experiences. We have completely overhauled and simplified our product range, reducing more than 1,800 consumer and small business plans to just 20, creating simpler, more flexible ways for customers to choose the best value connectivity set devices for them. During the year, Telstra became the first telco in Australia to introduce no lock-in plans across both fixed and mobile. We also launched our build-your-own mobile plans to give our customers freedom and flexibility and removed excess data charges on all-new mobile plans. As the chairman said earlier, one of the most pleasing measures of the progress we have made was a 22% reduction in the number of calls coming into our call centres from our consumer and small business customers during the year. We've also significantly improved our online experience, including refreshing the Telstra 24 by seven app and our digital experience now accounts for more than 53% of all service transactions, including account management, prepaid product, and billing-related inquiries.

As well as flexibility, simplicity, and choice, our customers also though want to be rewarded and recognized for their loyalty towards Telstra. And in response to this, this year, we launched Telstra Plus, a program offering customers the opportunity to earn rewards, discounts on new technology, as well as bonus entertainment, and much more. Our support for our small business customers was also improved this year, with no locking contracts, and excess data charges removed on new mobile and tablet plans, as well as more dedicated support services. This includes account management for all small business customers for a new 24-7 tech support service where we have trained 1,000s of dedicated small business specialists. Last month, we also launched Telstra Purple Australia's largest Australian owned technology services business. Telstra Purple brings together Telstra's enterprise business technology service capabilities. It consists of 1,500 certified experts in network, security, cloud collaboration, mobility, software, data analytics, and design.

Turning then to pillar two, the creation of Telstra InfraCo. Telstra InfraCo now controls assets with a book value of more than $11 billion and it is responsible for key network assets to Telstra, including data centres and exchanges, most of our fibre network, the residual copper and HFC networks not transferred to the nbn, the international subsea cables that the chairman mentioned poles, ducts, and pipes. Let me take a moment, though, to remind shareholders the rationale for setting up Telstra InfraCo, which is threefold. Firstly, we're conscious that the investment community increasingly considers infrastructure assets differently from operating businesses. Therefore, InfraCo provides a greater degree of transparency for our shareholders on the very significant infrastructure assets that we own. Secondly, by housing our infrastructure assets in a separate standalone business unit. This creates and facilitates stronger management focus on maximising the value of these assets. And thirdly, to create optionality for the future, particularly for when the nbn might be privatised, given that this is the stated policy of both sides of government.

And encouragingly, we are making good progress on all of these objectives. The third pillar of T22 is on simplifying our structure and ways of working. A critical part of transforming Telstra for the future is changing how we work to allow our people to collaborate more easily so that they can deliver better, faster outcomes for our customers. The chairman has described earlier the changes that we are making in our workforce and in particular, the numbers of people that are impacted. And that is why we are continuing to make sure that we support those people through up to $50 million transition program, which provides a range of services for those that are moving into new roles. The full strategic pillar is delivering an industry-leading cost reduction program and portfolio management. We accelerated our cost program in the second half of 2019 and into 2020, and we remain on track to reach our target of reducing our annualized fixed costs by 2.5 billion by 2022. The other aspect of pillar four is focused on actively managing our portfolio to monetize up to $2 billion in assets.

In this regard, throughout the year, we restructured Telstra Ventures, we exited Ooyala, and more recently we sold the Edison Exchange in Brisbane's CBD, as well as entering into an agreement to sell three international data centres. We also recently announced the establishment and part sale of an unlisted property trust to own 37 of Telstra's exchanges, including existing properties. As part of this transaction, Charter Hall-led consortium has acquired a 49% stake in the new trust for $700 million. This reflects a capitalization rate of 4.4% and values the entire property trust at more than 1.4 billion. So, combined the recent changes to Telstra ventures, the sale of the Edison Exchange and the other transactions that I have mentioned bring the total value of assets monetized as part of T22 to around a billion dollars. T22 is built on the foundation provided by our strategic investment program that we announced in 2016. We have now completed this program having invested $2.6 billion digitizing the business and building the networks of the future.

But let me be clear, without these investments, the initiatives that we are undertaking within our T22 program would just not have been possible. The digitization aspect of the program has seen our customer management, our provisioning, our billing HR, and many other of our computer systems upgraded, digitised, and taken to the cloud as key enablers of the many customer experience improvements that we are delivering. As an example, the announced enhanced functionality on our Salesforce customer management system has helped increase our sales pipeline over the past year. We also introduced Telstra Connect as a single digital channel for business-to-business-customer interactions. Bringing together more than 50 active portals that we previously had. Ongoing investment in our network has also been very important and a foundation for our T22 program. This is about building the networks for the future, including launching 5G this year. I will talk more about 5G in a moment, but in addition to 5G, we also added more than 250 new mobile sites and upgraded a further 1,200 including extending our 4G coverage even further.

As the chairman have mentioned, we now have mobile coverage to 2.5 million square kilometres of Australia's landmass. At least 1 million square kilometres than any other mobile network operator in Australia. Service reliability and resilience also (UNKNOWN) critical factors for our mobile customers and a key network differentiator for Telstra. Since 2016, customer impact hours from outages have been reduced 76% as a consequence of the ongoing improvements that we have been making. We also continue to lead the market in key speed benchmarks. Independent third party recognition for the speed and quality of our network this year included winning the P3 and systemic network surveys for Australia's best mobile network and the Netflix Speed Index for the last 18 months in a row. Perhaps the most significant network achievement this year, however, was launching 5G. Telstra is a global leader in 5G and was the first to introduce it here. The rollout is ongoing and is currently focused on CBD locations and selected regional centres, where more than 4 billion people work, live or visit every single day.

We have already enabled more than 350 sites and base stations around the country in ten cities. We will increase this to more than 800 by the end of the calendar year, and we expect 5G coverage to increase almost fivefold over the next 12 months. As a further 35 Australian cities and major towns are connected. 10s of 1,000s of customers are already enjoying 5G today. In fact, our customers that currently have a 5G device are spending around 26% of their time and 61% of their data on 5G and their 5G devices can let them experience twice the speed of 4G. Ultimately, we expect 5G to deliver speeds up to ten times faster than 4G. 5G is a critically important telecommunications technology, therefore. However, the real point about 5G is that it is arriving at the same time as other key technologies are converging and maturing cloud computing, artificial intelligence or machine learning, edge computing, software-defined networks to mention, but a few because as we move into the 2020s, it's the combination of these technologies that is going to propel the world forward in automation and robotics, autonomous cars and trucks, augmented virtual reality tools, robotic surgery, the economic and productivity gains will be extraordinary.

The changes to our society will be transformational. And the common feature of this technology innovation is that it all depends on high capacity, fast, and reliable telecommunication networks. And that is why it is so important to get the policy settings for telecommunications in Australia, right. It's not just about Telstra. This is for the future success of our nation. In this regard, we believe there are six key principles and policy areas where focus is needed right now to ensure Australians can take advantage of the economic and social opportunities that this rapidly evolving technology environment create. Firstly, Australia needs a policy and regulatory framework that is pro-investment. High-quality telecommunications networks require an incredible amount of capital investment. Telstra spent $4 billion alone just in the last 12 months on capital expenditure. The industry in total has spent more than 12 billion a year over the last three years, and the investment is crucial. There is no point with application developers and software engineers or service providers investing in great products and services.

If the network providers do not have the capacity or the incentive to invest in the communication platforms to support them. We, therefore, urge policymakers and regulators whilst asking legitimate questions, such as whether customers are getting a good deal and a low price. Please do so through the lens of the amount of capital the telecommunication companies need to invest. Most telcos returns on invested capital already below their cost of capital unless the economics, therefore in the industry are allowed to improve. The consequence will be lower investment in the future, which will lead to poor quality networks similar to that which you see in many international markets. Competition is intense in our industry, in both fixed and mobile. The last few years in particular has seen increasing data allowances to customers and other inclusions, as well as falling prices. Competition is good for industry, and it is good for customers, but it would be wrong to conclude that there is insufficient competition in Australia today.

A second objective is the need to ensure the social and economic benefits of the nbn are realised. Australia needs the nbn to be successful, as you heard from the chairman, but as he explained, there are areas where without change our fixed-line networks in Australia are going to continue to fall behind when compared internationally. This will clearly have a negative impact on Australia's competitive standing. Yes, we need the nbn to be successful, but not at the expense of the rest of the industry failing. That has to change. The third objective is that we must have a regulatory and policy framework that has the same rules and for the same service, regardless of the origins of the industry or the provider. Technology is evolving very quickly, and regulation is struggling to keep pace. As a consequence, some of the policy settings in place today are no longer fit for purpose. For example, many companies such as Telstra hold telecommunication carrier or broadcast licences. These licences impose very significant obligations on us and liabilities, if we do not meet these obligations, there are serious consequences.

At the same time, many of the services that we provide are increasingly mirrored by companies who sit outside of this regulatory framework, including those that operate over the internet rather than traditional channels. These service providers do not have the same universal services obligations. They do not provide the same customer protections as telecommunication companies. I'm not criticizing them for that. I'm simply making the point that it is an unlevel playing field when it comes to regulation and this is bad for competition and bad for customers. My fourth point is on the critical issue of security, cyber breaches and security incidents are definitely on the rise. Our 2019, cybersecurity report shows that 65% of Australian businesses were interrupted one way or another by a cyber breach over the last 12 months. Meeting this challenge needs tight engagement between government who control national security policy and the private sector, where much of the technical innovation in cyber to security takes place.

The importance of ongoing engagement on critical topics such as regulation and encryption, data retention, the operation of networks, interception grow more important by the day. In fact, more important by the hour. My fifth point is that policy and regulatory framework for telecommunications needs to be pro-innovation. As a nation, our future has to be built on innovation. It is the key to diversifying and strengthening our economy. The key to driving the creation of new globally connected industries. The key to developing a strong services based export sector. And the key to produce to boosting productivity and driving new employment. Telstra is part of this. We're currently in the process of recruiting more than 1,500 new roles into the companies in new areas such as software engineering, data analytics, and data science, and cybersecurity. However, the pool for which we are recruiting domestically is too small. Last year, Australia's tertiary system produced about 1,200 software engineers.

Telstra is seeking to recruit 1,500. India produced 44,000. We must therefore continue to support and increase the emphasis on science, technology, engineering, and mathematics subjects through every layer of education, training and retraining sectors in our curriculum and in our classrooms. We must also systematically review our regulations in every industry and every sector, in everything from R and D, immigration visas, dialling up the incentives, and dialling down the red tape. My final point is that we must have a framework that is pro customer and in particular in pro in inclusion. Too many Australians and particularly regional low-income Australians are simply missing out on the opportunities of the digital age. Policy must continue to recognise these divides and contribute to a future where a focus on affordability, accessibility, a digital ability programs, work to build inclusion, particularly for vulnerable and low-income customers, those that are most in need.

ANDY:

As a society and as an economy, as businesses and as individuals, we have become incredibly dependent on our telecommunications networks. That is why telecommunications is fast becoming and arguably already is the single most important infrastructure in every company, in every community, in every state, and in every country in the world. It is also why Telstra remains absolutely committed to ensuring that business is future fit with the best network. Shareholders would be aware that just last week we announced that we will switch off our 3G technology in June 2024. As we grow and upgrade our mobile network, we have reached a point where we must say goodbye to the older network technology, just as we did in 2016, when we switched off 2G to give 4G a boost. We're now at the point where we need to look at switching off 3G to give that spectrum to 5G. Before finishing up. I would like to reconfirm our guidance for the 2020 financial year. The guidance, which can be seen on the screen behind me, was updated last month following the release of NBN's 2020 corporate plan.

That plan indicated a 25% reduction in the total number of premises forecast to be connected during 2020, from two million to 1.5 million. A change, obviously, of that magnitude does materially impact Telstra's guidance on total income, underlying embittered, and the amount included in the NBN headwind, as well as their net one-off NBN receipts. Less the NBN net cost to connect. This change also led Telstra to update a 2020 cost reduction target from 660 million to 630 million. The changes to forecast activations also affect and defer SSI receipts from NBN from 2020 into the future. This, of course, will also be partly offset by the natural hedge, including benefits from lower NBN costs to connect lower network payments to NBN and retained wholesale EBITDA. I want to reinforce, however, that the only change to this NBN rollout and their corporate plan has changed our guidance for 2020. I would also like to highlight that the updated plan does not alter our view provided to the market in August, that our underlying EBITDA when we exclude the NBN headwind is expected to grow by up to $500 million in 2020.

This is a significant improvement on the decline of around 400 billion in 2019 and goes to the point that the chairman has said why this is such an important year and such a point of an inflection point for the company. So, let me summarise before I hand it back to the chairman. 2019 was a year in which we met our guide and built important momentum behind our 02:22 strategy. As expected, and as previously flagged, our results currently reflect the current market realities, including the impact of the NBN and intense competition. Whilst these factors will continue to influence the year ahead, we are now approximately halfway through the negative headwind from the NBN and we expect the hard work from our teams to translate to momentum in the underlying business. That progress was the result of the combined efforts of many people, including many dedicated employees. Every day they are focused on serving our customers and helping to return value to our shareholders. And on your behalf, I want to sincerely thank them for their efforts and their commitment.

I'd also like to thank the Telstra management team, many of which are here today for their dedication, hard work, and willingness to step up to the very significant challenges this year. I'm incredibly proud to work with such a talented and committed group of professionals. We are sitting at an incredibly exciting inflection point in technology, in telecommunications, and for Telstra. We are only a few months away from the dawn of the 2020s. We're already at the dawn of 5G and we have entered a period of rapid technology innovation, which will provide significant opportunities for your company in the future. T22 is about positioning in this world as a simpler, more digitally enabled business with the best network, the right economic model, a strong balance sheet that skills and capabilities, cultures, and ways of working that we need to succeed. Thank you. And let me hand it back to the chairman.

SPEAKER:

Great. Thank you very much, Andy. So, turning now to the film business of the meeting. The atmosphere of business for today's meeting is set out on the screen. I will shortly introduce and invite questions on all of these items. But before I do, I'll outline the question and voting procedures for today's meeting. When you registered this morning, you will have been given a card. Yellow cards are for shareholders who may speak and vote, blue cards for shareholders who may speak but not vote. You will need your card to ask a question or re-enter the meeting. I will introduce each item and then invite questions from the floor. There are several microphones located in the room, as you can see with the numbers there. If you'd like to ask a question, please move to the reserved seating area behind one of the microphones. Please share your card to the microphone attendant and give your name. As a courtesy to all shareholders. Please also state your affiliation if you are not here today in your personal capacity.

The microphone attendant will invite you to the microphone when your turn comes. As always, in the interests of all shareholders, please try to ask only one question at a time, and keep your questions and comments in no more than two minutes to allow as many shareholders as possible to speak, and for me to remember what you asked, and also, please, ask questions which are relevant to shareholders as a whole. If you have individual, customer, or shareholder issues, that's fine, but please speak with one of the customer service staff here who can help you. They are located in the room here and in the customer service area outside wearing Telstra shirts. If we can't answer your question fully here today, then we will aim to provide you with a response after the meeting. As I mentioned at the start of the meeting, voting on items three to five and six, if required is being conducted by poll. For shareholders who are able to vote at today's meeting. You can lodge your vote by completing the voting boxes on your yellow card.

If you have questions about voting at any time today, please speak with one of our staff in the room here or in the shareholder registration area outside who will be happy to assist you. We have received proxies from nearly 22000 shareholders and direct votes from approximately another 13,200 shareholders. The votes recorded for and against each item will be shown on the slide behind me at the conclusion of a discussion of that item. The four numbers displayed for items three to five and against four items six, if required, will include proxies received and available to be voted by the chairman of the meeting. Miss Emma Jones of Link Market Services Ltd, Telstra Share Registrar will act as returning officer in relation to the poll. The results of the poll on items three to five and six if a second strike is received on the remuneration report will be available later today on the ASX and on our website. Lastly, a light lunch will be served at approximately 12 noon. However, if the meeting is still underway at that time, we will not be able to adjourn the meeting for lunch.

So, I turn now to Item two on today's agenda, which is to discuss the company's financial statements and reports for the year ended 30th June 2019. This item provides shareholders with the opportunity to ask questions about and comment on 2019 financial statements and reports, as well as the business operations and management of Telstra. You may also ask questions of our auditor shareholders. I now invite you to move to the microphone to ask any questions you have about our 2019 results or any general questions you have about the company. We're ready to go. Number three?

EMMA JONNES:

Chairman, I would like to introduce Sue Shields from the Australian Shareholders Association.

SUE SHIELDS:

Good morning, my name is Sue Shields, and the volunteer company Monitor with the Australian Shareholders Association. Today, I hold proxies from over 2000 shareholders for approximately 27 million securities, which puts the RSA in your top 10 shareholdings. The ordinary dividend this year represents a 59% payout ratio on underlying earnings, while the Australian Shareholders Association appreciates that in determining the dividend, the board took into account the objectives of maintaining financial strength and flexibility. It's well short of one of the principles of Telstra's capital management framework, namely a payout ratio of 70 to 90%. What assurances can you give us concerning future payout ratios?

SPEAKER:

Great. Thank you. Thank you very much. Good question. I can't give you a firm assurance to your question. The policy on capital management is well laid out, and it seeks to achieve a combination of both balance sheet strength while returning as much as possible to shareholders at the same time. We are very conscious that this year my ordinary pay that 59 on the special, I think about 63%, overall payout this year was around 88%. It's inevitable. Well, that's our framework. But there will be fluctuations from time to time. This was a particularly unusual year with a lot of redundancy costs and restructuring going on. Next year will be a cleaner year and we hope, going forward as well. So, we're very confident that over time, we will absolutely adhere to those two measures we have given being served in the minds of ordinary and approximately 75% of the special. So, you can be assured of that. Thank you. Another one?

EMMA JONNES:

Chairman, I would like to introduce Shane Murphy from Sydney, New South Wales, to speak.

SHANE MURPHY:

Thank you, John Andy, And shareholders. I stood here as a national president of the CIA. You were not here, but in Sydney, 12 months ago or around that time at the last AGM. And since then, we've continually seen customer frustrations, lower payments to shareholders, and whilst we've seen a slight increase in the share price. We're seeing a significant increase in offerings in pay or remuneration to the CEO. At the same time as that, offering of some 33 to% 34% remuneration increase is being offered, workers are still struggling to get an enterprise agreement with the company. Whilst we have made some significant inroads over the past negotiation meetings, we are still without an agreement for working people. They are being offered or paid pay rises below inflation. And yet today we still have the CEO being offered some 34% increase in overall remuneration. That clearly causes us as representatives of working people in this nation, in this company, concerns. There's a clear disconnect between what current workers who form a big part of the success of this company are being offered compared to those at the executive level or the CEO.

Thank you.

SPEAKER:

Thank you, Shane. I, of course, 100% understand where you're coming from, but let me try and make a couple of points in response to that. Firstly, I did mention in my earlier comments it's Andy's total remuneration rose by 34%, but that is firstly a fixed and variable amount. The fixed remuneration of the CEO at Telstra has been falling for 10 years and is now lower than it was 10 years ago, and his variable remuneration goes up and down with results. And yes, it went up 34% this year. But let's not forget, it went down 50% in the last two years, so he is still 20% below where he was two years or three years ago. So, no one is expecting your members to take a 50% reduction in their compensation and remember they have a fix, but they also have a variable pace, which you didn't mention. So, there is an SGI component there for employees as well. That said, look, there's no easy answer to your concern other than saying that the amount being offered today, which I think is 1.5%, is actually more than inflation.

Inflation, to my knowledge, is a little bit lower than that, and I have every confidence that the management team will find an acceptable resolution for both you and the company. Thank you.

EMMA JONNES:

Chairman, I'd like to introduce Kyle Robertson, from Northern Victoria.

KYLE ROBERTSON:

Mr. Chairman. My question is about the risk with 5G. Given that Swiss Re-lists 5G and its top five risks for 2019. Can you confirm that Telstra has no public liability insurance for any injury caused by 5G and therefore assumes full direct liability for all claims? Why does the board deem it appropriate to expose shareholders to such extreme liability by deploying 5G technology before the safety of technology has been positively established through comprehensive independent testing instead of through extrapolation, assumption, and experimentation on the public and further infringement of the Nuremberg code prohibits experimentation on human subjects without consent. It says consent is absolutely essential. I want to make it clear I do not consent.

SPEAKER:

OK, thank you. The whole industry, including Telstra, has spent an inordinate amount of time and money on researching any potential health impacts of all ages, not just 5G. So, have governments, so have a wide number of international studies. I can assure you, we are acutely aware of our responsibilities in those areas. But there is absolutely not one shred of evidence that 5G or for that matter, 4G has any harmful effect on humans. And I realized for those that believe, like anti-vaccination or even the flat Earth society, it is very hard to change people's opinion. (CROSSTALK) Just let me just finish. If ever there is any indication whatsoever that we and the industry are wrong, you can be 100% sure that we will not only accept the liability, but we will be all over it. But as of today, there is absolutely no evidence.

KYLE ROBERTSON:

May I just refer you to Professor Martin Paul from the University of Washington? I met the professor there, who, in an open letter to ARPANSA, stated 187 bodies of evidence about human exposure and health risk?

SPEAKER:

Well, the same thing about vaccination and flat earth. I'm sorry. We can only go with the science that is proven by a majority collective view, and there is no such science today.

KYLE ROBERTSON:

I'll also state, for the record, that I am electrically sensitive, so I really don't care what your studies may or may not prove because I feel it.

SPEAKER:

I can see you are a very sensitive person, and so am I to this issue. We will do the right thing, I can assure you.

KYLE ROBERTSON:

Thank you. And before (INAUDIBLE)

EMMA JONNES:

Chairman, I'd like to introduce John Ellery from Warragul Victoria to ask his question.

JOHN ELLERY:

Yes, good morning members of the board. Just to introduce myself, John Ellery. I'm a senior union official with the communications union. Previously, I spent, from 1975, 19 years working in Telstra's leading research area, so I'm not unaware of the circumstances of new technology and all that sort of stuff. I've spent the last 25 years watching a really great company go downhill. And quite frankly, you people on the board really need to ask one simple question of yourself. And that is, where are you taking this company? This company now employs less than 25,000 staff.

SPEAKER:

Originally, it probably employed about 100,000 Australians. So all those Australians that used to work for a once-great icon in Australia. Most of them don't work for that company anymore, and it's an absolute disgrace. The intention with T22 is to have 9,500 job cuts, not the reported 8,000. It's 9,500 job cuts. That will leave less than 20,000 staff once this program of Mr Penn is completed. You, you the board, have corporate responsibility given you have been set up by the Australian taxpayer. That's where Telstra came from, a company owned by taxpayers who clearly expected jobs in Australia for Australians. That arrangement allowed many thousand Australians to be employed and pay their taxes and do all sorts of things that every average everyday Australian as a worker did. You have 20,000 staff members who are seeking security in their job. With Telstra not with some constructed arrangement that you're pursuing at the moment. Which is to appear to throw most of those people across to wholly-owned subsidiaries.

That's what we're learning out of our enterprise agreement negotiations. That your master plan is to probably get the bigger, wider Telstra down to about 5,000 staff. Now that is outrageous. People who are moved or potentially moved across to subsidiaries are in a very precarious position. And we call on you to stop that madness. You've also got 20,000 staff, as Shane mentioned before, who are being offered a paltry ludicrous pay rise at the very same time that Mr Penn is seeking a 34% pay rise. Again, we say absolutely outrageous, ludicrous and you should stop this nonsense. You have an extremely contentious enterprise agreement proposal that is really all about trying to force staff to take long service leave, for instance, at the behest of the manager, not at the individual. People who have been a long-serving staff of yours are now being pushed into taking long service leave when the boss wants them to. Again pull back on these ludicrous plans that you have, you claim it's cost-cutting we say it's ludicrous.

So I repeat, what is your master plan for these 20,000 current staff? Or is it only to have 5,000 Telstra staff and then have the rest of them moved over to subsidiaries? Or just plain sacked or moved or their jobs moved offshore? You've been pretty good at that. You got a lot of calls in the staff offshore in Manila. You got a lot of technical staff not even working for Telstra, doing Telstra work that was done in Australia by high-level technical people over in Pune, in India. So you've really got a real question about you. About what are your moral guidance, what is your moral guidance? About, you know, where are jobs being produced in Australia? 20,000 of your current staff really wanna know where their future lies. I'll leave it at that. Thank you, board.

AUDIENCE:

(APPLAUSE)

CHAIRMAN:

OK, thank you. I did try to address some of this in my earlier comments. Of course, we take it very seriously. We do not like, we feel the human impact of losing staff. But your suggestion that because Telstra once employed 100,000 people, somehow we're doing badly when we no longer employ that. I think if the measure of a company's success was how many staff it was employed, not sure that the shareholders in this meeting would be very happy with us. The reality is our world is changing. I've been through the impact of the NBN. Half of those 6,000 which is ultimately gonna be 8 or 9,000. Those people are losing their jobs 'cause we're losing half of the business that we used to operate. Are you really suggesting that we keep those people just sitting in an office somewhere while the work is being done in another part of the industry? Unfortunately, we're not alone. Every industry is going through. If you're going to David Jones and go in the lift, there isn't somebody who got Jingjing which floors you press a button.

No, that is happening across every industry, and ours is probably at the leading edge of it. Your 5,000 staff thing, is the first I've heard of that. I'm not aware of anybody on the board I can see management nodding. We've never heard of the 5,000, so I'm not sure where you've invented that from. Where are we going? Well, we're just trying to explain we're going through the biggest transformation this company has ever been through. The T22 program is extensive. It's to make sure that Telstra survives and wins in this environment where everyone is going through the same thing. You look at every big Ttelco, they have exactly the same thing. They're laying off staff. They're restructuring, they're embracing technology. Sadly, that is the reality of life. And one more thing on Andy's pay. I really have to say I struggle that for some reason the business community is singled out. You know, if somebody devotes their life to sports and on a Friday night, they then instead of going out with their mates, they go training and they give up their holidays and weekends.

They get to top of their sport, they get rewarded for it, and no one seems to begrudge that. And so same with music. The online gaming industry young kids can earn $5 million now by playing Fortnite. And even influencers you can earn millions of dollars just by wearing a nice jacket and standing in front of a landmark. And yet, when a business executive devotes a huge portion of their life, they work long, long hours, weekends. They miss family events when they get to the top of their profession. Somehow, it is morally wrong that they get rewarded for it in an international global market. I think that is wrong. Thank you.

AUDIENCE:

(APPLAUSE)

CHAIRMAN:

Number three.

SPEAKER:

Chairman, I would like to introduce Scott Hunter from Melbourne, please.

SCOTT HUNTER:

Good morning. I've got a few brief comments to make. In 1983, there were 26,000 public phone boxes. There's now 13,000. These are public assets originally paid for by the taxpayer need to be kept and maintained, and therefore emergency calls are often needed. The new design has no privacy to make a call. It used to be a booth with a bench to put one's bag and documents on. The new ones don't. They're designed by someone who doesn't use them. 50 cents for a call if you use a $2 coin, you don't get change. Every other device in this country, ticket machines, drink machines give change. Why don't phone boxes? The Telstra pricing of some services is wrong and unfair. The cheapest home phone plan is $42 a month, with each call to a mobile phone charged at $1 a minute. Mobile plans can be got for $30 a month, which is $1 a day, with unlimited calls to mobile phones. One is too cheap, the others too dear. There are a lot of pranks attempted scam robbery nuisance calls that need to be blocked, traced and stopped permanently.

Particularly once fraudulently claiming to be Telstra staff. The technology is available to do this. The aim of these scammers is to steal information to rob everyone they contact. This could bankrupt potentially everyone in Australia. Don't wait for the government to ask you to stop these calls. Telstra should show leadership and do it themselves. Is there a Telstra museum? If so, where is it? If not, why not? It could display PMG Telecom and Telstra history in artefacts, phones, phone books, phone boxes and phone cards. There's a secondary market for these items and souvenirs. Telstra should be middle manning the price. When someone comes out to connect up the NBN and the contractors are used through incompetence, cut off the Telstra service to a house and you have to ring up and get Telstra to come out and repair it at Telstra's expense, and you're left without a phone for three days. Does Telstra pass on the cost of this back to the NBN or do they just pay it themselves? If they pay it themselves, why?

And when you sack 4,000 middle-level management staff that leaves staff at the bottom unmanaged. Is this wise? What happens to the sacked staff? And it's not just the person sacked, but the position forever. Can't you retrain them as the IT staff you need?

AUDIENCE:

(APPLAUSE)

CHAIRMAN:

Well, thank thanks for sticking to the two questions. Yeah, that's one two three four five six seven eight, that's nine. But I'll do my best. I'll do my best. So on the phone boxes, I have to say I'm not intimately acquainted with why it doesn't give change. But I'm sure Andy if you got do you wanna say anything about that?

ANDREW PENN:

Well, I'd happily say so. We actually have 15 and a half thousand public phone boxes at the moment. They're under the universal services obligation with the government, so we work with them regarding the design and the placement of them. But ultimately, you know, our aspiration is actually to make them free. So it does not make sense to go through and systematically upgrade the technology to provide change we'll make them essentially free over time.

CHAIRMAN:

Great. The next one was on mobile charges. Look, this is a very dynamic industry. Mobile plans have to be competitive with the rest of the industry. We make no secret of the fact that we're more expensive than most operators because we believe we have the best network and the best service. But that said, we have to be competitive or people wouldn't use us. On the scams, that is a very difficult one. And it's easy for you to say we should just wave a magic wand and fix scam calls. We can and do block numbers where we know that scams are originating. But the technology is out there is to rotate through millions of different numbers. A call comes from a different number every time. We and the rest of the industry we're working with, ACMA are working with ACCC on trying to find ways of identifying the sources of these scam calls and trying to build technologies to beat them. But it's a constant race as the scammers and the criminals, like in many areas of society, are always innovating and one step ahead.

All I can say really is the individual has to try to use their own wisdom, and if you don't trust it, just hang up. If it's really important, it'll come back. If it isn't just hang up. And there is actually a Telstra brochure which can be found on the website and saying, Is it really Telstra calling? That will give you some guidance through that. But sadly our society does have criminals in it and we don't have a solution to fixing every single one of those criminal attempts. Is there a Telstra museum? Yes, there is, and it is in Hawthorn, it is actually well worth a visit. Some fantastic history in there. Regarding the NBN I can't really generalize. It depends when a fault is fixed, whether the fault was the fault of the NBN or it was the fault of Telstra or some other matter. But I can assure you, we don't give NBN a free ride there. You asked what had happened to the 4,000 middle management staff? Obviously, I don't know the individual outcomes. But I do know that Telstra's invested $50 million in trying to help people retrain outside the company.

And within the company, we have an extensive retraining program, which I think we'll see 1,500 people or something or more actually move into other jobs. That I think was the end of your nine questions. I hope I've answered those. Thank you. Number four.

AUDIENCE:

(APPLAUSE)

SPEAKER:

Chairman, I would like to introduce Vince Misquera (UNKNOWN) from Sunshine Victoria.

VINCE MISQUERA:

Good morning, John. I have a two-part question. My first question is directed to the CEO, Andy. I'm a former employee of Telstra. Andy when your predecessor, David Thodey was in charge we had an active Telstra alumni program. Under your leadership, it has gone quiet. My second part is second question is when I was going to university many years ago, a professor of economics said to me that the salary of the lowest-paid employee and the highest-paid employee should never be more than 10 times that. So that we don't have a situation where we have CEOs becoming too rich. Would you look at having some sort of a ratio for Telstra? Thank you.

AUDIENCE:

(APPLAUSE)

CHAIRMAN:

Let me answer the second bit, and then maybe Andy you have a go at the first bit. So on the multiple. Yeah, that is something that we are very conscious of. If we look around the world, Australia and Telstra actually performs pretty well and obviously still not to the satisfaction of everybody. The multiple in the United States is 287 times, multiple in the UK is 200 times. In Telstra, it's about 60, but depending on because so much of Andy's pay is variable and goes up and down. If you've got no variable pay, it would be 20. So on a fixed comparison, it's only 20. But obviously, that goes up with whether it's been a good year or a bad year. So we are as Australia amongst the lowest, and Telstra sits pretty well within that within Australia as well. Do you wanna have a go at the first question, Andy?

ANDREW PENN:

Yeah, sure. Look well, obviously. Telstra has a very rich and significant Alumni being such a large organisation. And at different points in the past, we've had various different alumni programs. We obviously take feedback in terms of how they received it and how people want to engage with the organisation. You know, we've mentioned the Telstra museum that's something that a number of our alumni get involved in. Telstra exchange, which is something that we use in terms of our broader communication. As well as Telstra Super, which obviously is an important part of the post-employment support of employees. The formal alumni program was not getting is a significant support that we would have aspired for it to have. I'm very happy to continue to get feedback from former Telstra employees and I'm personally like to speak to them from time to time and get their feedback as well 'cause it's something that we'll continue to look at.

CHAIRMAN:

Thanks, Andy. Number four.

SPEAKER:

Chairman, I would like to introduce Peter Star from Sydney, New South Wales.

PETER STAR:

Morning, John. How are you?

CHAIRMAN:

Good, Peter. Welcome, as always.

PETER STAR:

Yes if I'd been here last year, maybe we wouldn't have got the strike. I apologize for that. For those who don't know, I've been a long term shareholder for more than 12 years. I also represent a number of other shareholders and (UNKNOWN) superannuation pension funds. John, it's always a hard thing remuneration across the board, and I go to a number of meetings. But from where I stand and I heard what Sue had to say. I feel that you look at the mum and dad shareholders look at the share price. And I know it's easy to gloss over and say, Oh, well, it doesn't matter because, you know, back in February 2015, we were at $61 but we've had NBN and all the rest and we got $11 million. And I know Nora's been there and I've been there when all that negotiations and everything we went through. It's a hard thing for mum and dad shareholders sometimes to say, well, you know. Friday, our shares closed at 357. Yesterday we closed the 350 because of some announcement, you know. We just getting tossed around and we feel it, especially for the people who are holding and continue to hold and indeed even reinvest.

So I just think that as far as what we're gonna pay Andy from the shareholders I represent and myself personally. I don't have a great problem with it, but I just think we just need to be aware of the alignment as far as where the shares and the price sits. Because that's what affects mum and dad shareholders. And this company is made up of a lot of mum and dad shareholders. John, your predecessor, Miss Livingston, was probably wish that she was back here instead of being dragged through the mess at CommBank and the Royal Commission and the tears that's brought her. But you're here. So it is the mum and dad shareholders are very important to this organisation and to this company. So I'll have some other things to say on other questions. But and again, the second one just for you, John. Andy, I don't know if Michael Eklund is here. Is he here, Andy?

CHAIRMAN:

Depends on what you're gonna ask.

PETER STAR:

Don't worry.

CHAIRMAN:

Yes, he is. He's here.

PETER STAR:

I hope he got the message from his staff.

CHAIRMAN:

Did he get the message? He did.

PETER STAR:

Now he knows me, he'll be able to talk to me. Thanks, John.

CHAIRMAN:

Thank you. Look, Peter, of course, we are acutely aware of the impact that the share price has on mums and dads, on superannuation funds and the like. We have, I think, pretty well. The highest retail shareholder base of any major corporate in Australia of around 50%. Which is all of the people in this room today and many, many, many more. We have 1.3 million shareholders, the vast majority of whom are private individuals. So we absolutely understand that we are all shareholders too. Every one of us sitting on up here is a shareholder, so we experience it too. The reality is, however, we only have a limited degree of control over what happens to the share prices. And big business is no different to a little business. You know if you're in a small business, if you've got two news agencies and they're both making a profit and you sell one newsagent, you'll only have one news agency left. Are you gonna employ all the same number of staff? Are you going to earn the same? No, no, you're not.

And that's what's happening to Telstra. The NBN is taking away about half of up to half of our net profit, which from which dividends are paid and obviously impacts the share price. So that's the fact we can't do anything about it. But other than that, we then have to not just sit on my hands, but we have to try to rebuild Telstra as actively as we can so that we can increase dividends again one day and see our share price rise. And that's what's the T22 program is all about. And there are many thousands of people working extremely long hours trying to deliver the sort of result that you ask for from mums and dads shareholders. So we will never forget it. We can't unfortunately wave a magic wand. But we will never forget our responsibility.

PETER STAR:

Thanks, John.

CHAIRMAN:

OK. Number one.

SPEAKER:

Chairman, I'd like to introduce Ian Blair from Carlton Victoria to ask his question.

IAN BLAIR:

Thank you very much for this opportunity. Firstly, I'd like to congratulate the board for having a good presentation, and I hope that it's available on the net rather than just having it as a printed document. (CROSSTALK) Secondly, I in over a 10 year period, worked for five years with Telstra, so I'm a strong Telstra fan.

SPEAKER 1:

I've got one observation and one question. Firstly, I was there at the time of the NBN negotiations. And I was appalled that the board rolled over with Richard Alston and let the government turn around and take it away. Telstra was in a fantastic position to have rolled out the whole NBN, done it for half the cost, and yet got totally Turnbull and everyone else torn it apart. So, I think it's too late to plead. But in future, have a bit of backbone to stand up to the government. And to turn around, Telstra is a huge company. And with all the fathers and mothers and families, shareholders, you should be able to convince the government on proper policy. So, Gina Rinehart was prepared to get out on the mining industry, and the mining tax. Let's see the board on the back of a truck going around and convincing the government on good telecom policy because as you rightfully pointed out, the whole future digital disruption is going to dominate every industry. And we need to be on top of it. So, the question is, how about Telstra having a fantastic training program that's available to us shareholders, so that we can keep up with 5G, and what the next one is, but also train their staff that are coming away so that we don't have to get them in on 457 visa's thing.

We've got the talent in Australia, let's train them and use them here. Thank you.

JOHN MULLEN:

Good. Well, firstly on the NBN, and backbone, et cetera. I think I made some comments earlier. They're clearly some strong views around these to what the NBN could have been or not been if things had been different. But they weren't, where we are. I mean, please don't forget that when you're negotiating with a government, it's not a normal commercial relationship, because they just pass a law to make you do what they want you to do, and that's quite hard to fight. However, today we are where we are. And yes, we absolutely try to have a backbone, as you put it, to robustly defend the interests of Telstra. But we're also mindful, as you heard from both Andy's comments to mine, that this currently, anyway the NBN and the broadband issue. That's a national issue, that's not a Telstra issue, or an NBN, or anybody else. It's a national issue that the whole industry and government needs to get together to resolve. And you can be sure that we will absolutely do our part in that. Then, I think you asked, how do you as shareholders ensure that the company is keeping up with technology and leading Telstra in all the changes that are going on?

I can honestly say there, I've been amazed in the time that I've been at Telstra that, Telstra really does punch above its weight as the expression goes on a global basis. So, we may be a big fish in the little pond here in Australia, when you go overseas, Telstra's very little fish in a very big pond. But I'm constantly amazed at the access that Telstra gets, the recognition that Telstra gets for the innovation that takes place under Andy and the team. And it's something a long tradition. A whole number of industry firsts have taken place here in Australia, the most recent one being 5G on the Gold Coast with Ericsson, which I think was the first. That was the first global demonstration of how Andy, personally sits, not just on the GSMA but he's on a quite number of industry bodies and forums where Telstra's voice is heard loud and clear. And I can absolutely say, Telstra is right up there at the cutting edge of change in our industry. And we as a board will continue to 100% support Andy and the team in making sure that Telstra stays there.

Something I think you can be justifiably proud of. Thank you. Number three.

SPEAKER 2:

Chairman, I would like to introduce Norman Wong, from Melbourne.

NORMAN WONG:

Thank you. Mr Chairman, members of the board, and shareholders. My question is, how active are your customer satisfaction surveys if they exist? Thank you.

JOHN MULLEN:

Thank you. So, trying to keep pace, obviously, with what the customer thinks, given the number of customers we have, 18 million or more, is always a challenge, and no measure is perfect. We measure two principle metrics, which is around the Net Promoter Score Methodology, which is a widely accepted methodology used in the marketplace around the world. We divide that into an episode. And by episode NPS we mean, when you've just had an interaction or an experience with Telstra, you've just been on the phone, or you've just bought something from the store, or whatever you've just that moment done, we ask you for your feedback on Telstra's performance and customer service, at that moment in time. That we feel represents the cutting edge of change and improvement that we're making in Telstra. Then, we also measure what is called Strategic NPS, which is a sort of general perception of Telstra, would you recommend Telstra to someone else, et cetera. That inevitably lags movement. If the company goes into decline or starts to really improve, it takes a while before the general perception changes will do eventually.

So, what happens in an episode will ultimately impact Strategic, but it takes time. So, we measure both in order to try to be on top of the now, but also the general impression that Telstra is creating. And you'll be glad to know that we are making good gains. Still nowhere near where we'd like to be, but we're making good gains and management are targeted at every year. Part of their variable compensation is based around achievement of improvement in those Net Promoter Scores. Thank you. Number three, again, I think, you know.

SPEAKER 2:

Chairman, I would like to introduce Hans Witteveen from Seymour Place.

HANS WITTEVEEN:

Thank you. Good morning, Mr Chairman.

JOHN MULLEN:

Morning.

HANS WITTEVEEN:

In the financial statement, the cost reduction program and reducing fixed costs. It always comes back to staff reductions, 8,000 people, whatever it is. My question is, how is this balanced against maintaining skill levels with it to keep the company going? I did take note of the CEO's comment that we're recruiting people for new skills. But at the same time, you also need to keep people to maintain the old levels until you're at the new platforms. You spoke fairly convincingly on the need to recognize the skills of the board. You spoke less convincingly on the remuneration of the actual staff. But the real question is when you let 8,000 people go, how are you dealing with maintaining the skills to keep the business going?

JOHN MULLEN:

Yeah. Look, that's obviously a critically important issue. It's also a complicated issue, 'cause of the people that leave. Some people are leaving because we just don't have that job anymore. Some people are leaving because technology has changed and that particular activity is now being replaced with another, and a whole variety of different reasons. But I do know that our HR team, you know, very ably led by Alex Badenoch, who is here, puts a huge amount of time and effort with the rest of the management team, on ensuring that the skills mix is right is fit for purpose. Sometimes you lose people you don't want to lose. Of course, it doesn't always go to plan. But by and large, we've been actually really reassured that if anything, the skill set of Telstra is improving. It's rising. It's not declining, as a lot of those older, more manual jobs are disappearing and they're being replaced by more high tech jobs. But it is something we absolutely have to focus on. The race is for talent just as much as it is for financial success.

And we have to make sure that we're up there and a leader, in that respect. Number one, please.

SPEAKER 3:

Chairman, I'd like to introduce Bill Davey from Victoria.

BILL DAVEY:

I'm Bill Davey, a shareholder. My question is, what percentage of revenue comes from broadband as against mobile services? And what's your estimate in, say, five years time, the split between the revenue streams?

JOHN MULLEN:

Sorry, what percentage comes from the segments and?

BILL DAVEY:

Percentage of revenue comes from broadband services as against mobile services?

JOHN MULLEN:

Well, correct me if I'm wrong, Andy. I think our fixed revenue is about 19 or 20% of our total revenue, and the data and IP revenue is about nine.

ANDREW PENN:

In mobile, would be close to about 40%.

JOHN MULLEN:

Mobile close to 38, 40%. Yeah. But mobile is a bigger contributor to margin, than the others.

BILL DAVEY:

And what's the estimate in, say, five years time? Is that more mobile against fixed broadband or?

JOHN MULLEN:

Well, we would hope to maintain a strong fixed base despite the whole of the, will change going on in the NBN. That's the one, obviously, where we have less certainty, probably. Mobile is clearly going to be an absolute critical success factor for any telecommunications company in the future. I mean, we have nearly 50% market share. It's our biggest profit generator, and we have by far the best network in Australia. So, we will be doubling down on our performance in that area. That said, obviously, fixed, we're now becoming just a reseller of the NBN, and we have to try and succeed in that world. And we've done actually quite well there in that as the transition took place from a direct relationship with the customer to the relationship through the NBN. There are a lot of predictions that Telstra will lose, share, et cetera. Well, we haven't. In fact, if anything, we've certainly held not growing market share and the old data and IP area, that's obviously an area of considerable flux.

I made some comments there about the NBN's activities in that area. That's an important part of a small but still very important part of our business. And we have to see that transition through it, whether it's to new wideband solutions provided by Telstra, or a resetting of the NBN.

BILL DAVEY:

Thank you.

JOHN MULLEN:

Thank you. Number four.

SPEAKER 4:

Chairman. I'd like to introduce Lee Kilton from Northern Rivers, New South Wales.

LEE KILTON:

Thank you, Mr Chairman. I am representing my self-managed super fund, and I have taken a 50% hit in my earnings from my investment in Telstra this year. So, I feel the pain of some of the staff who haven't had increases. I don't share the pain with the board, because you haven't had any decrease at all. But that's the way it is. Last year, we had a reduction in profit after tax of nearly 10% in the company. This year, we're down 40%. And that is the net profit after tax, which in fact is what affects most of our investment in the company. It seems to me that this meeting should have been held seven or eight years ago when we were given hope for the future by the new technologies, and the new systems that are being put in place. Last year at the AGM, you mentioned that the NBN was the main contributor to our woes, and we all pointed out to you that this wasn't something new you had known about the NBN for some time. Next year, you're saying that we're hitting even greater headwinds with the NBN.

So, I wonder whether 10% to the 40%, will go next year, and consequently what happens to our dividends in years ahead? The buck stops with the board and as I mentioned to you last year, there's no point in bemoaning the fact that we have an NBN rollout that we've known about for 10 years. You've been on the board for more than 10 years and the one or two other members of the board that have been there for significant periods of time. Surely at that stage when they introduced the NBN, you did some modelling as to what the effects of the rollout would be and how you would maintain value in the company when that started to take place. You know, you talked about the newsagent having two newsagents and selling one and not expecting it to be the same business afterwards. Well, what did your modelling say you should do with this company when shares were up around the $6.50 mark, when the CEO was appointed, and when you took over as chair? And we're now sitting at $3.50 in round terms. So, you know, we can say the share price is of little relevance because we can't control what the market says.

What the share price does is it is the collective intelligence of the investing public out there, both here and overseas, as to whether this is a company worth that sort of money to invest in. So, I get back to my point that the collective responsibility here rests with the board as to the direction and the quality of the company and what we are doing with the resources within the company. I asked a question at last year's AGM as to what you're doing with board renewal. Because I don't see any younger faces who've grown up with digital technology, sitting on the board or even recommended for board positions. I see a lot of people who are professional directors that sit on the board that haven't grown up with that space of technology that we are needing to take this company forward. So, can you please explain to me what you are doing with board renewal that reflects the future direction of the company, not the past history of the company? Thank you.

JOHN MULLEN:

Thank you. OK, let me have a go at the first bit. Yes, we did know 10 years ago that the government had an intention to create an NBN. We did not know what form that would take. We did not know how that would be structured. We did not know when it would actually finally happen. So, in all that meantime, we had to continue running Telstra because there was no NBN. So, to suggest that we should have suddenly made all those changes 10 years ago in anticipation of the NBN might have arrived, I think it's a little ludicrous. That said when the NBN did arrive, yes, we did make a whole lot of projections. And one thing, whether we're at fault or I don't know, we certainly read the whole industry estimate that reselling the NBN would be a profitable occupation. Now, we all had different views of how profitable we certainly had our modelling. That, unfortunately, has turned out for the whole industry to not be the case. So, absolutely is the board accountable, 100%, so is management. But it's very easy to say, well, you've lost half your net profit, we'll just go and replace it.

I had this conversation with shareholders all the time. So, what do you actually recommend that Telstra does, that it's not doing now with the G20 program anything else? And very easy to say, just find, 3 billion. But that is equivalent to finding another ASX 20 company. It's the equivalent of creating overnight another Qantas. So, I really think it's a little impractical to expect that a board or management team can wave a magic wand, and just achieve that. That said, we are on the hook 100%, and accountable for doing something about it, which is what we are doing. And the T22 program is one of the most ambitious in the world, if not the most ambitious. As I mentioned earlier, I found it quite interesting that in recent times we used to go overseas a lot to look at other major telcos and see what lessons we could learn, 'cause everyone is going through the same challenges, and they don't have any solutions either. We have gone overseas to look and see what we could learn. The T22 program is actually engendering traffic the other way, and we are starting to have a number of visits from very large international telcos who are coming to look at the T22 experience and the Telstra experience as being leading, in this respect.

So, have we got it alright? No. Are we able to fix everything and fill every gap? No, but I can assure you we are trying extremely hard and that has been recognised in the Global Telco World. Last but not least, your comment about board renewal. Let me say two things. One, I'm extremely proud of the board renewal that we have. We now have an extremely well-equipped board for the challenges of today. We have three leading technology senior executives from around the world who have been through this sort of thing in much bigger economies than ours. We're extremely lucky to have them. And then, we have some very diligent and talented local directors as well. We have two vacancies that we are about to fill. I had been hoping that I would be able to do it before this meeting in order to address exactly your question. Both of those will be filled before Christmas. And one of them you'll be delighted to know is an awful lot younger than all the rest of us on this board. And we look forward to introducing you to her next year.

Number one.

SPEAKER 3:

Chairman, I'd like to introduce Patrick Masrani from Sydney to come to the mike.

PATRICK MASRANI:

Chairman, board, shareholders, Minchin's been made of the Telstra alumni program this morning, it's a cause that the board's devotion could not be questioned on. Indeed, you've bolstered their ranks by nine and a half thousand. Those staff who haven't yet graduated to alumni status are increasingly concerned that their roles are going to be moved into subsidiaries, like corporate nesting dolls. Their terms and conditions undermined each step further removed from the company that's taken. What undertaking can you give to those staff that their conditions won't go backwards, that they won't be undercut through the creation of subsidiaries? Thank you.

JOHN MULLEN:

Yeah. I don't understand why there would be a fear that I mean, a company like Telstra, I don't know how many companies we've got in the group. We've got many 100s, and our employees and or assets are structured all across those. It really is. We are, however, one group. And whether an employee is in this part or that part doesn't make any difference to the terms and conditions. So, we have no intention of some sinister methodology of moving somebody from one company to another, in some way disadvantage them or give them less terms and conditions than they have today. We've no intent to do that.

PATRICK MASRANI:

Sorry. Chairman, just for clarity. So, to understand correctly, that you would not be in a position to give an undertaking that staff will not be transferred to subsidiaries, where they would receive less favourable conditions than that which they currently receive as Telstra employees?

JOHN MULLEN:

I can give you an undertaking. There is no intent to transfer somebody from Company A to Company B, just to reduce their terms and conditions. Absolutely. OK.

PATRICK MASRANI:

Noted.

JOHN MULLEN:

OK. Number three.

SPEAKER 2:

Chairman, I would like to introduce Dr Michael Chong, please, from Rosanna.

DR MICHAEL CHONG:

Mr Chairman, thank you for the opportunity to ask questions. I'm respecting myself, my wife, my family, I'm super fun and the children. We all got Telstra shares from the beginning. And first of all, we bought the share because it was a monopoly. I like Monopoly. Unfortunately, the government changed their mind. And then, they stripped their monopoly from Telstra. And it's very, very unfortunate. But now.

SPEAKER:

This NBN has been built gradually, but now they're not just wholesaler. They're also pinching the customer from the Telstra (INAUDIBLE) and other Optus. Like Coles, Woolies and (INAUDIBLE) they're pinching customer. Would that impact the profit of the retailers? Second thing is that if you, because it's very hard to earn money in this section. Can you ask Mr. (UNKNOWN) create a new business in the Telstra Corporation so they earn money to compensate for the loss of business in Telstra. Thank you.

JOHN MULLEN:

Was there any money to compensate the loss of...?

SPEAKER:

I'm not sure. I mean, the reference was to the NBN entering into the enterprise market. I'm not sure.

JOHN MULLEN:

I'm not sure I got all of your questions so come back if I've left anything out, but we should keep the NBN in perspective. Yes, it's a big impact on our business, but we still have an extremely dynamic and successful business outside the NBN. And I don't want the whole focus just to be on the impact of the NBN. Our mobile business, it's 50% market share in the company. We are absolutely world leading. I gave you some of the statistics earlier, that's probably a rank number two in the world. That is the future of Telstra. So don't be too alarmed that because we're having battles in the fixed area with the NBN that it spells doom for the whole corporation. It doesn't. That said, we were asked about backbone. Yes, we are fighting our corner in that whole fixed area, because it is an important part of our business, a profitable part of our business. And the particular issue that I raised was the mandate of NBN not to go direct to our customers, but to sell wholesale through ourselves and other service providers.

That we believe, is critical, head to the structure and the order that governments have put into the fixed market, whether we like it or not, it's the way it is. But both sides need to respect their mandate. So we will be pressing government and NBN very hard to try to make sure that they honor their side of the bargain. Just like we are honoring our side of the bargain. Thank you. Number four.

SPEAKER:

Chairman, I would like to introduce Kevin Saunders from Melbourne, Victoria.

KEVIN SAUNDERS:

Thank you chairman. I'm a shareholder both directly and as a part of our superannuation fund. My question, you've clearly pointed out today, the impact of NBN on our business. And you refer to it, I think quite cleverly as owning two shops and now you only have one shop. My point is I would like to know, as we now have one shop, do we still require such a large board and senior management? And should our CEOs still be paid the same salary? Thank you.

JOHN MULLEN:

Well, I think that's just a reiteration of the subject we've been over a few times. I would again stress, boards are really important, but what is a lot more important is management teams. And the one thing that you as shareholders can guarantee will damage your interests, is if you don't have a top, talented management team to navigate through these difficult times. Managing a business in good times is an awful lot easier than managing business in difficult times. And it's absolutely critical that the board ensures that you as shareholders have an outstanding management team. Which I believe we do, but we have to support them and remunerate them accordingly or we won't have such a team. Number one, please.

SPEAKER:

Chairman, next up I've got an Emily Cross from Melbourne who would like to ask her question.

EMILY CROSS:

I apologize for my croaky voice. Gentlemen, first of all I usually get up on principle at AGMs because apart from the lady representing other shareholders, no other female has as yet taken to the (INAUDIBLE) microphone here. So, could you unravel this particular little story for me? As I look around the room, most of people have got hair my color. So I thank you for the platinum plan, but could you unravel this story for me? At the Carlton shop where I usually go for my appointments, in the last six months the first young person who used to take my problems has gone off to do a musical career. He was brilliant. Second one got moved to another store to be manager, good luck to them. Another one has gone off to USA somewhere to take up a position with some US IT company. So my question is, what efforts do you make to keep young people at these lower levels in stores in the company, and give them opportunities to become one of you?

JOHN MULLEN:

That's a very good question. Let me try and answer it with an anecdote. A friend of mine, I discovered by accident, actually has a son working at Telstra. Who is, I'd say he's probably 28 or something like that, a young person. And my friend said, "Would you meet with him and just have a chat? It would make his day." (INAUDIBLE) "I'd love to, of course, no problems." I went and had a coffee with him a little while ago in Sydney. He is an extremely bright young man involved in the digitization project. That's digitizing our company from top to bottom, working in agile teams. And I came away from that meeting so infused probably more, I think, than he was. He said that the digital transformation program going on in Telstra today is the most exciting in Australia. Everybody in his area wants to work in it. I actually know with another hat of being told the CIO, the chief... The head of IT in Toll, said to me that we can't recruit anybody in digitalization because all the engineers have gone to Telstra.

So we do actually have an extremely dynamic young middle core there that is building a Telstra of the future. And these people are all my children's age, they're not our age. Our job is the supervision of the entity overall, but the people who will be sitting here in years to come will be some of those really bright, driven, dynamic and motivated young people in Telstra. I can absolutely assure you, there are a lot of them. Thank you. Well, believe it or not, there are no more questions as yet. Shareholders, even better news, lunch and refreshments are now being served outside. So if I wait... No more questions? Great. OK. There are no more questions there. That's finished, that item. Now, our next item is item three, being director election and reelection. As I mentioned before, we have three candidates standing for election or reelection and their details were served in the notice of meeting. So, I would now like to invite the three candidates, Eelco, Craig and Nora to address the meeting, in that order.

EELCO BLOK:

Thank you, John. Good morning, ladies and gentlemen, my name is Eelco Blok. I'm very honored to have been nominated to join the board of Telstra. I've enjoyed the journey so far since I joined the board in the beginning of this year. I'm Dutch and have 35 of years of telecommunication experience, of which the last seven years from 2011 until 2018 as CEO of KPN, the Dutch former increment operator. In addition, I was on the board of directors at the industry association, the GSMA, and given my telecommunications experience and the transformation of KPN, I believe I'm well positioned to contribute to Telstra, particularly as the company transforms under the T22 strategy. I look forward to continue to add as much value as I can to this great company, its customers, its employees and its shareholders. Thank you. (APPLAUSE)

JOHN MULLEN:

Great.

CRAIG DUNN:

Well, thank you, John. And good morning, ladies and gentlemen, it's been a great honor to serve on the board as your representative, and I'm grateful for the opportunities to speak to you all today. Telstra of course occupies a very special place in the history of our great country and has always made a very significant contribution and an enduring one to the communities it serves, as I know it will continue to do so. But as John mentioned in his opening remarks this morning, no company's future can be guaranteed or its success can be guaranteed, particularly in a world of such constant and rapid change. And so it is critical that a business can respond and adapt quickly and decisively. That means sometimes making very difficult decisions to stay relevant and to keep providing value to its customers. It obviously needs to do that in a way that's responsible, but also in a way that adds value to the risk capital that you shareholders invest in the company. And as John and Andy has explained, T22 does just that.

And in an environment that we are facing as a company, it's important that the stewardship and effective governance of Telstra, the board level, is done very well. And it's also important that those that take on that responsibility are equally committed to the delivery of the T22 program as it works its way through the next couple of years. And I like the rest of my colleagues, I'm very committed to the roll out of T22. I believe I've made a demonstrable contribution to the board, and I believe I have the career experience to keep doing so. I've worked in the financial services sector for nearly 25 years. I've lived and worked overseas, both in Asia and in Europe. And during that period, I've learned some very valuable lessons, which I think are things that can be shared at Telstra, including during the period of the global financial crisis. And more recently, as with other directors, following the Royal Commission into Financial Services. And a key lesson that stands out for me from both those experiences is the importance of good corporate governance and effective board oversight in providing a clear compass for sound decision making for the benefit of shareholders and customers alike.

I've also made a significant contribution to the development of sound public policy settings in financial services. I've been on a number of important government inquiries. And I think, again, that's something that I can add to given the regulatory oversight in the telecommunication sector. And finally, in a large and complex organization like Telstra, I think it's critical that your board's make up include directors with strong financial backgrounds. And with that in mind, I was very honored to take on the role of chair of Telstra's audit and risk committee earlier this year. So with your support, I look forward to continuing to support you and working for this great company. Thank you. (APPLAUSE)

NORA SCHEINKESTEL:

Good morning ladies and gentlemen, I feel we are starting to sound like a bit of a broken record, but I can't emphasize enough how Telstra is at the forefront of the profound change that's happening in society today. And it is brought about by new technology, but also by fundamental change in the way where living, working, playing. And Telstra is helping our customers, both retail and business to adjust to these changes, which are affecting every aspect of their lives. But we too are feeling the impacts. And that is why we have embarked on this very important transformation program, T22, so that we can better serve our customers, but also be a fitter and stronger company, delivering good returns to our shareholders and providing meaningful roles for our employees. I've served nine years on the Telstra board. And normally I would've retired at this meeting, but the board has asked me to serve another term subject, of course, to your deciding, to reelect me today. That's because they believe that my experience in the nine years here at Telstra, but also in more than 25 years, serving on many other boards across pretty much every sector of our economy will be of help as we progress through this significant transformation.

I've been part of reshaping other companies facing intense competition in their markets, significant disruption and huge regulatory change. I've chaired many audit and risk committees of major listed Australian companies. And believe that that background will continue to help the Telstra management team and board manage the critical risks which are inherent in the important work we are undertaking. We've also had a lot of change. As the chairman mentioned, we've had change on our board of directors and obviously in our own management team as we prepare ourselves for the challenges that lie ahead. The board therefore also recognized that I could bring both continuity and some corporate history. Indeed, as I think it's been mentioned earlier today, I joined the board while the ink on the first NBN deal was still wet. So I've seen two of those now and we look forward to the next stage. Delivering on T22 and then setting the course for Telstra for the next phase ahead, I think is critical, not just for our company, but indeed for our country.

And I do believe that I can help the Telstra board and management team achieve those objectives. Thank you.

JOHN MULLEN:

Thanks Nora. Right. So now we turn to the formal part of the reelection. So item 3A on today's agenda, which is to consider the election of Eelco Blok. As you've heard Eelco joined the board in February, this year as a member of our nomination committee. And over this last year, we've been recruiting some very talented telecommunications professionals, which greatly add to the wealth of experience we have on the board. Eelco has added to that significant depth, given his recent experience and the similar challenges facing operators all around the world. And he brings great value to the board as we continue to execute on our critical T22 strategy. So the board other than Eelco himself of course recommends his election. I will now take any questions you may have regarding Eelco's election. Do we have any questions? Yes, yes.

SPEAKER:

Chairman and introducing Joanna Richardson from Yarraville.

JOANNA RICHARDSON:

Thank you everyone. I'm OK. I really like the idea of the retention of corporate memory and experience balanced with the renewal of the board. I'm also interested in diversity across boards, not just of gender and age, but background. I'm a bit curious as to why we've gone to Europe rather than our closer neighbors in Asia, which is a very broad idea, but just what was the thinking behind going to the Holland? Yeah.

JOHN MULLEN:

Yes, certainly. So I can assure you, it's not an easy thing finding directors of the talent and capability of some of my colleagues here. We undertook a global search across Asia, Europe, and the United States. It, it is important to us that we try and get a balance because the three regions are very different. The United States in particular is a very dynamic, highly competitive, low regulated environment. Europe is a much heavier regulated environment, a lot more like us, and Asia's probably more emerging and sort of in between the two. We interviewed a number of very capable candidates. And for this position, Eelco was the outstanding candidate. Head and shoulders above the others that we met with. It wasn't necessarily a specific target that we had to have someone from Europe. What we did have to have was somebody who really understands the deep technological change going on in our industry. It is a kind of enormous change as you've heard, but technically it's extremely complicated and I'm the first to admit that myself, when management are presenting a very complicated technological issue, I don't have the skills to necessarily drill down into every last part of that proposal.

And it's very important that we have a number of directors who do have that experience and are able to do that. And Eelco certainly fits that bill. He has deep technical knowledge about our industry, which is absolutely critical. And you don't want your whole board to be all in Tokyo industry. You want a balance as you said, a diversity of backgrounds, which is what we're working on doing. We are cognizant that the gender ratio has dropped due to losing two female directors. We're in the process of rectifying that so that we will get ourselves back up to a much better level by the time we meet next year. Thank you. OK. If there are no more questions, then we will now vote on this item. The proxy and direct voting position is being shown on the slide behind me. As indicated in the notes of meeting, I intend to vote all available proxies on this item in favor of your Eelco's elections. So please now complete your vote for item 3A. Good. Thank you. Congratulations, Rilke. I now turn to item 3B, which is to consider the reelection of Craig Dunn.

As you heard again, Craig has been an on executive director since 2016, a member of the nomination committee and also fulfills an important role as chairman of the audit and risk committee. As I mentioned earlier, he's an outstanding director. He's a highly regarded business leader with significant expertise and experience in financial services, financial technology, and providing strategic advice for government and major companies. The board, other than Craig of course recommends his reelection. And I will now take any questions you have in relation to his reelection. Do we have any questions?

SPEAKER:

Yes. Chairman reintroducing, Sue Shields of the Australian shareholders association.

SUE SHIELDS:

Could Mr. Dunn expand on how, on reflection, his experience at AMP and Westpac adds to his contribution at Telstra?

JOHN MULLEN:

Yeah. Thank you for that. I might ask Craig to respond directly. I think it'd be a lot more fitting than coming through me.

CRAIG DUNN:

Yeah. Thank you, John. And, and thank you for the question. So I'm sure like others who've had responsibilities in leading or governing in financial services, given recent events, they've reflected very deeply on their learnings. And I've certainly done that. I touched on briefly in that in my address to the meeting, but just to go into a bit further detail to answer your question, the sorts of things that I've reflected on go to increasing a focus on non-financial risks. Also to making sure that companies have good and different procedures in place for vulnerable customers who often face greater challenges than sort of the broader customer base. To make sure that we have very good root cause analysis that goes around our customer complaints so we can learn from customer complaints and improve (INAUDIBLE) for customers. And also, I'd say, just making sure that there are very clear accountabilities for management in the day-to-day responsibilities for the organization. And I'm seeking to apply all those learnings as a director on the board and also in my role as chair of the Audit and Risk Committee.

JOHN:

Thank you very much. I think we have another question on (INAUDIBLE).

SPEAKER:

Yes, chairman. I would like to introduce Lee Kelton from Northern Rivers, New South Wales.

LEE:

Chairman, my comments really follow on from what I said earlier on. I have difficulty with this and the following re-election candidate in that they're both being part of a board that hasn't delivered value for shareholders. And I believe in board renewal, and I believe this is an opportunity to have a board renewal. And I see absolutely no reason why we should be re-electing members to a board that hasn't performed.

JOHN:

OK, well, Mr. Kelton, you're obviously entitled to your opinion. One thing I can assure you is we are undergoing board renewal, significant board renewal. If you look along at the table, here are a lot of relatively new faces. And as I said, by the end of the year, we'll have another two new faces. So actually, the issue is more the other way of keeping corporate memory, which was why I was so strongly recommending. I hear you, sir. But I think that your board is actually in a good shape. I feel it's the strongest board since I've been at Telstra and many other boards I've been on. I think this is a very strong board indeed, representing your interests. Number four, again, I think.

SPEAKER:

Chairman, I would like to introduce Peter Starr from Sydney, New South Wales.

PETER STARR:

Thank you, John. Through you, John, to Mr. Dunn, the concerns I have on behalf of the shareholders that I'm here representing myself is you were at AMP and the fallout, as we know from the royal commission and what's happened there. I just can't see how you can not shoulder some responsibility for that, given that you were the CEO and now you're seeking re-election here for the board. And I have to tell you honestly that I can't vote for you.

JOHN:

Thank you, Peter.

PETER STARR:

Thank you, John.

JOHN:

I would just make two quick comments. Firstly, Craig left the board...Left the AMP more than six years ago. And secondly, there is absolutely no allegation whatsoever being raised of anything improper on his part. All I can say is this is a Telstra meeting and a Telstra board. Craig is an exceptionally useful, diligent, and professional director on the Telstra board, and we would be far, far worse not having him on the board. So I and all of my colleagues 100% support his re-election. We think he is a man of great integrity and he brings a lot. Any more questions? Fine in that case thank you very much. I also intend to vote all available proxies on this item in favor of Craig's re-election, so please complete your vote now for item 3B. Thank you, congratulation Craig. I turn now to item 3C on today's agenda, which is to consider the re-election of Nora Scheinkestel. Nora has been a member of your board since 2010. As you heard, she's a member of the nomination and remuneration committees.

She's also a member of the Audit and Risk Committee, which she chaired extremely ably for close to seven years until earlier this year. She's an outstanding director and has served as chairman and director on a range of companies across various industry sectors and in the public, private, and government area. She continues to make a very significant and valuable contribution to our board, and, as I mentioned earlier, provides continuity in light of the changes of the board in recent times, and the board, other than Nora, unanimously recommends her re-election. I will now take any questions you may have regarding Nora's election well, please. Peter.

PETER STARR:

Thank you, John. Hi, Norah, how are you? I'm very glad that you decided to stay another term. I think it's important. All the proxies in my own personal votes will be voting for you. I think you've done an outstanding job. You were there when we were negotiating the contracts. If Sol Trujillo hadn't have staffed it up, Telstra would have built NBN. That's the reality of it for those who don't know. But thank you, Nora.

NORA SCHEINKESTEL:

Thank you.

JOHN:

Praise indeed, Nora. Thank you. I think that's it. Any more questions? No. Good. Thank you all for your questions. We've now finalized the discussion and the proxy and direct voting position is being shown on the slide behind me. Similarly, as indicated in (INAUDIBLE), I intend to vote all available proxies on this item in favour of Norris re-election. Please now complete your vote for Item 3C. It looks like it got ahead of me. So it's great. Congratulations, Nora. Great. I now turn to Item four on today's agenda, which is to consider the grant of restricted shares and performance rights to RCA Andy Penn under the Telstra FY119 executive variable remuneration plan as outlined on the screen behind me. Details of the proposed grants are set out in the expansion attached to the notice of meeting. In summary, the number of restricted shares and performance rights to be granted to the CEO was based on the dollar value of the CEOs EVP outcome. The CEO's EVP outcome was in turn determined based on the performance of Telstra over the 2019 financial year as against specific measures set by the board for that year.

Each restricted share is a fully paid ordinary Telstra share. These shares are restricted (INAUDIBLE) and the CEO will not be able to sell any shares until after the 30th of June 2021. Each performance right entitles the CEO to one fully paid ordinary Telstra share, but the CEO will only be able to receive these shares of Telstra relative total shareholder return ranks at the 50th percentile or greater against an ASX 100 comparator group over a five year period ending in June 2023. The CEO cannot trade any performance rights granted to him. The board, other than Andy Penn himself, excuse me, considers the grants of restricted shares and performance rights to the CEO to be appropriate in all the circumstances, and recommends shareholders vote in favor of items 4A and 4B. And I will now take questions on these two items. Mark (INAUDIBLE).

SPEAKER:

Sorry, it's me again, Mr. Chairman. Can you just clarify these performance rights are being issued based on a value of $3.73 roughly, is it?

JOHN:

It's on a VWAP of five days or seven days, I think.

SPEAKER:

According to the booklet... So there's a dollar value applied to the...

JOHN:

Yeah, $3.7332.

SPEAKER:

...to the award, and that's divided by the share price of $3.73.

JOHN:

Precisely to give the number of grants. Yeah.

SPEAKER:

I know this may sound a bit harsh, but again, when the CEO was appointed, the share price was about $6.50 in round terms. I would be a lot more comfortable if he was assessed on this bonus that he will get on the share value when he took over as CEO. Not drawing a line under the last few disastrous years and saying, let's just issue him right at a reduced level. I mean, to me, he should be judged on his performance since taking out...since taking office, as opposed to some arbitrary figure, which, you know, most of us wouldn't have been happy getting a $3.70 for our shares when we paid $6.50 for them. So I would just ask that maybe we reconsider the number based on what the share price was when he started having an influence on the share price of the company.

JOHN:

Look, I hear you, but his incentive is not on a share price target, it is on a range of metrics that we believe are the right metrics to drive a successful future for Telstra. Every year we go through those, there are quite a number of metrics that make up the EVP, both financial and non-financial. And it's against the success of those that ultimately a grant is given the share prices then just an arithmetic exercise. To calculate...

SPEAKER:

Mr. Chairman that's not an arithmetic exercise. We can talk about gymnastics in the remuneration system, but he is being given a number of shares based on a value which is well below the value of the shares when he took office. So you can talk about the metrics and everything else. The bottom line is the number of shares being offered under this system are based on a much reduced value in the shares in the share value.

JOHN:

The number of shares are based on the share price at the time the scheme is put in place and at the time the targets are set and if Andy delivers on all of those and the rest that are on his team and all of those metrics, obviously we anticipate the share price will rise. It may, it may not, but we can only judge Andy on the things that he can control himself, which, by the way, is a standard market practice across all of the industry. Thank you. Peter again.

PETER STARR:

Thank you, John, just for the benefit of the other shareholders in the room. I just want to point out that I did races in an email to Mr. Payne, and he did respond. And I have to say, John, that our leanings are with the previous speaker, but I can see that you do work hard Andy I know that for a fact. So I will be voting for...But as I said, John's already acknowledged that you know, the mum and dad shareholders really look at that share price, you know, and I know it's a big thing for mum and dad shareholders, as John's acknowledged. And just one other thing, John, while I'm here. I was just asked to mention for those who remember David Thodey, I keep in regular contact with him. He did ask to say hello to all the mum and dad shareholders as well. Thank you, John.

JOHN:

OK, I don't want to be seen to be pushing back, but somebody very eloquently said earlier and it was lovely when we were a monopoly. Monopolies are great things if you have them. They are very bad things if you're everybody else. The world, the world has moved on. Telstra is not the monopoly provider anymore. The NBN is here to stay. It has transformed the landscape. Technology is developing left, right and center. There are new entrants. There's 5G. This is the real world and I understand the angst and concern of this new shareholder. But just to say I wanted to go back to where it was and be $6 and payout 100% of dividends. It's just not going to happen. We are in a dynamic, competitive world today and no amount of wishful thinking, looking back is going to help. We are where we are today. The responsibility of the board and the management is to try to move us forward from where we are today and deliver as much value to you as shareholders as we possibly can. And that's what we're trying to do.

Sadly, that will not please everybody and we can't turn the clock back. Thank you any more questions. Yes, number three.

SPEAKER:

Chairman, re-introducing Hans Witervane from Seymour Place. Thank you. Thank you again, Mr. Chairman. The previous speaker raised the question of the value of the shares and I believe that because today's dated the decision date, therefore the date of legal effect and the shares should be valued at whatever the market says today. You were fairly eloquent in terms of $6 (INAUDIBLE) which is what I fondly remember. But as you said, we can't go back. The value of the shares should be whatever the market says today, and I believe in legal terms today is when we decide and that's what the CEO should get.

JOHN:

Well, the shares are set at the price at the time the scheme is (INAUDIBLE) and you are being asked to vote on the issue of shares as at that point in time and the price that relates to that, it's not the share price as it is today itself. This was how long ago? Yeah. I mean, it's obviously this has been has to be worked out well in advance of an AGM and all the board has to approve the metrics, the incentives for the management for the forthcoming year. And these calculations are done at that time. And you as shareholders are then asked to ratify that, which you obviously have every right not to do so if you don't agree. OK. I think there are no more questions on that one. So the board...I'm sorry. We will therefore we finalized and we will therefore move to the voting in the proxy and direct voting position again should be being shown on the slide behind me. As indicated in last meeting I also intend to vote all available proxies in favor of the grants to the CEO. So please now fill in your voting cards for items, 4A and 4B.

Thank you very much. So I now turn to item five on today's agenda, which is to consider the adoption of the remuneration report for the year ending 30th of June 2019. In my opening address, the start of today's meeting, I tried to cover all the key aspects relating to remuneration at Telstra this year. I highlighted some of the key enhancements that we've made to the executive variable remuneration plan for the 2020 year to ensure it continues to best meet the overall objectives of our remuneration policy and delivery of T22 strategy, and aligns with creation of sustainable long term shareholder value. We've also, of course, had some quite considerable debate among shareholders here from the floor on this matter already. However, if there are any more questions, I will now take them on item five.

SPEAKER:

Chairman reintroducing Sue Shields. The Australian Shareholders Association supports the remuneration resolution, and we recognize that a comprehensive review and consultation has resulted in significant changes. Increase in investing period of the restricted shares from two to a four year period and the five-year relative total shareholder return on performance shares are high ground compatibility with ASA guidelines. And we thank you for including us in your consultation.

JOHN:

Well, thank you. Those are kind words, and we equally much appreciated the input we got from professional organizations such as yourselves and others. We did indeed engage very broadly, and we had some 44 meetings with major shareholder groups on this. And thank you for your kind words. Much appreciated. OK, I think...I'm sorry, number three.

SPEAKER:

Chairman re-introducing Scott Hunter from Melbourne place.

SCOTT HUNTER:

Yeah, before in justifying payments to Telstra stuff. You said something about sports, people that get paid more in game players and whatever. And these were just bowl kickers, bowl movers, button presses and Twitter influencers who take far more out of society than they're worth and what they put in that's irrelevant to what Telstra paid. But Telstra staff getting say for the CEO $6,000 a day and the 10 executives on Page 46 get over a million a year, which works out to a daily figure of $3,000 a day with the potential to double it. People would say that if they had a job like that, they're on a pretty good wicket. And the incentive to having a job like that and keeping it is to just keep it for one more day. And why do you need long-term incentives when you're rewarding them so well?

JOHN:

Well, thank you. I don't really know how to respond beyond what I've already responded many times to very similar questions. We absolutely recognize executive pay is a sensitive issue, but all we can do is to really diligently, do our very best to ensure that we get a balance between motivating and incentivizing the best management in the business and making sure that we represent shareholders interests at the same time. And I believe we do, we will never please everybody, of course, but I think we have found that balance as best we can.

SPEAKER:

Chairman, I'd like to...

JOHN:

Peter.

SPEAKER:

Chairman, I'd like to re-introduce Peter Starr from Sydney, New South Wales.

JOHN:

It would be easier if you come sit up here with me it will make it alot quicker.

PETER STARR:

Thank you John just quickly it's probably good, Andy, that you don't make too many more appearances on the 2GB Ray Hadley Show. I think run the company. But he did alright, sir.

JOHN:

I take that as a compliment, Peter, thank you. Great. No more questions. OK. That means we have now finalized the discussion on Item five, the proxy and direct voting position on this item, as well is being shown behind me. And as indicated in the last meeting, I intend to vote all available proxies in favor of Item five as well. Please now complete your vote for this item. Shareholders based on the proxy and direct voting. Sorry positions displayed on the screen for Item five and the number of votes that have been informed are represented on the floor today. It is clear that more than 75% of the votes cast or to be cast on Item five will be cast in favor of the remuneration report. This means that the company has not received a second strike and as a result, shareholders are not required to vote on Item six. The conditional spill resolution item six, therefore, will not be put to the meeting. Shareholders, that concludes our discussion of all items on today's agenda. If you haven't already done so, please do complete your voting now.

Every vote's important. Attendance are carrying ballot boxes throughout the room, and ballot boxes are also located near the exits. The poll will remain open for a further 15 minutes to enable shareholders to cast their votes, and the results of the poll on items three to five will be available later today and can be obtained by visiting ASX or our websites. All items of business having been considered, I can now declare the meeting closed, subject to finalization of the poll. Thank you to all of those of you who viewed the AGM online. Thank you also to our microphone attendance, audiovisual and other support making today go so smoothly. Lastly, thank you very much to all of you for your attendance today, and I now invite you to join us for lunch in the foyer outside. Thank you very much.

2018 AGM recording

Video content description

Recording of the 2018 AGM held on Tuesday 16 October 2018 at the Hilton Hotel in Sydney. 

2017

The 2017 AGM of Telstra Corporation Limited was held on Tuesday 17 October 2017 at the Melbourne Convention and Exhibition Centre, 1 Convention Centre Place, South Wharf VIC.

2017 AGM recording

Video content description

Recording of the 2017 AGM held on Tuesday 17 October 2017 at the Melbourne Convention and Exhibition Centre. 

PAULINE:

My name is Pauline (UNKNOWN), a Yorta Yorta woman with bloodlines connecting me to South Central Victoria, the home of five Kulin Nations. This acknowledgement of country is an important act of cultural respect, and I take this moment to honour the Elders who have lived and died for their culture. Elders who continue to carry knowledge and practice culture, articulating who they are in their own words and by their own definition. Standing right here, I acknowledge the Boonwurrung, the river Birrarung, Woiwurrung, Wathaurong, Djadjawurrung, and my great, great grandparents country, Taungurung. I acknowledge that I live and benefit in this country called Naarm, Melbourne. I'm kept nourished and connected and grounded. And for this, I'm grateful. Working within Telstra gives me the opportunity to embed cultural knowledge and listen for areas where we can transform together. We can drive change, embedding cultural knowledge. This is vital to who we are and how we do business. Because Telstra's business connects so many people in the far corners of this country, including our international relationships.

We are mindful that who we are and what we do, can have a ripple effect, creating impactful, positive change in people's lives. It's a lifetime commitment to look after our humanity, and we can't be complacent. We owe it to ourselves and to each other. I'm proud to say I'm of the oldest living culture in the world spanning 65,000 years. And you can imagine we've seen a few highs and we've seen a few lows, and we've taken a few risks. But we're still here. I guarantee we'll see a few more highs, we'll see a few more lows, and undoubtedly take a few more risks. That's not only a constant for us. It's a universal theme throughout human societies. I would also like to take this opportunity to extend this acknowledgment to all of you here today. And lastly, in his own words, humanitarian award winner Gunditjmara man Archie Roach says, Be careful when you walk through this land. A child was born here. Thank you and have a great day. (VIDEO STARTS) It's a magical time to be alive. Things we never imagined possible in our part of our everyday lives, cars that drive themselves, farms that run themselves, in cities that think for themselves.

To many, it's daunting, to others, it's the greatest opportunity of our times. That's us. We are technology optimists. We believe in the power of technology to help transform any business of any size in any location. Now, we have reimagined ourselves as a world-class technology company that empowers people to connect. Our network has always been exceptional. Now we're making it smarter, more intuitive, more attentive, so we can become the makers of the magic. Together, we can make billions of devices talk to one another. We can make our cities run like clockwork. Help our architects walk through buildings before they're built. Let our farmers know when it's time to water and help our front line stay safe. Together, we can help secure your most valuable information, and expand your business from Sydney to San Fran. And less time that takes to fly there. There is no one better placed to be Australia's world-class technology company. We have the history, the partnerships, and the resources.

Together, we will be the magicians. And together we will thrive. (VIDEO ENDS)

JOHN MULLEN:

Thank you, Pauline. Thank you very much for that acknowledgement of country, earlier. Good morning, ladies and gentlemen. My name is John Mullen. It's my great privilege to be the chairman of your company. On behalf of my fellow directors, it's a pleasure to welcome you all here this morning. And I also extend a very warm welcome to the many shareholders joining us today online. We have a quorum, and I would therefore like to declare the meeting now open. And notice of the meeting was distributed earlier, setting out the business and resolutions to be considered at today's meeting, and I will take that notice as read. There are five items of business on today's agenda. Firstly, presentations by myself, and the Chief Executive Officer, Andrew Penn. Secondly, a discussion of our 2017 financial statements and reports. Consideration of the re-election of directors, consideration of the proposed grant of performance rights and restricted shares to the CEO. And finally, consideration of the remuneration report.

Voting on items three to five will be conducted by a poll, and that poll is now open. If for any reason, though, you wish to leave the meeting early, you can still vote by completing your voting card and placing it in one of the ballot boxes near the exits. For those shareholders who have registered to use the link vote app, it is also now open for you to lodge your votes electronically if you so wish. Let me now introduce my colleagues here with me today. So, with me here on the stage, Andrew Penn, our Chief Executive Officer, Damien Coleman, our Company Secretary, Warwick Bray, Chief Financial Officer, and my fellow members of the board. Can I also introduce Andrew Price from our auditors, Ernst & Young? Andrew is available to answer any questions that you may have on the conduct of the audit, or on the auditor's report itself. So, let me start by making some comments about Telstra's performance in the 2017 financial year. 2017 was a year of solid progress for the company. It was a year where we delivered our guidance to the market.

We grew income, earnings and profit on a continuing all like for like basis. On a reported basis from continuing operations, total revenue increased by 4.3% to 28.2 billion, and EBITDA was up 2% to 10.7 billion. And one of the most important measures for any company, though, is that it continues to attract new customers. And this year, Telstra added 218,000 new retail mobile services, and 132,000 new retail broadband services. In addition, we achieved 676,000 new NBN connections. Now, these results show that we are very much holding our own in what is an increasingly competitive and rapidly changing marketplace. This year, we also continued our important work to continue to reduce costs and boost productivity. We were able to reduce our underlying fixed costs by $244 million, and we remain on track to achieve at least 1.5 billion of productivity savings by financial year 22. In short, we still have a long way to go, but we are making good progress. And this year, the board announced the fully franked final dividend of 15.5 cents per share, bringing the total dividend for the financial year to 31 cents per share.

So, that combined with the 1.5 billion on market and off-market share buybacks that we completed during the year, means that we returned $5.2 billion to shareholders in the 2017 financial year. And that level of return was one of the highest made by an ASX listed company. Now, shareholders would also be aware, though, that this year we announced the change to our dividend policy. Because I know that this is so important to many of you, I would like to comment on that in some detail. In understanding why we took this decision, it's firstly really important to understand the context. Telstra today is a strong, well-run, and well-performing company. But like many companies around the world, we're also facing unprecedented change, and challenge. Our results this year were achieved in the most competitive market environment that I have seen in nearly 10 years as a Telstra director. For Telstra, those challenges have been driven by a number of factors, including intense competition in both fixed and mobile marketplaces, an exponential rate of change in technology and connectivity, and unprecedented growth and capacity demand.

A rapid acceleration in the rollout of the NBN, which will ultimately cost Telstra some $3 billion in earnings before interest, taxes, depreciation. And the announcement that a fourth mobile network will shortly be launched in Australia. Those factors all underpin the board's decision this year to change our dividend policy. And I'm going to step through three of them carefully to help shareholders better understand why we took the difficult decision that we did, and why it is absolutely the right decision for the company. So, the first challenge that we're facing is the exponential rate of change in technology and the growing demand for connectivity. In Australia and around the world, digital technologies are now a primary engine for economic growth, and an increasingly central feature of most of our lives, and a catalyst for incredible change. I don't think there's any precedent for the scale of change that we're seeing, all of which is driven by the extraordinary pace of technological innovation.

No business at all is immune from direct or indirect impacts, and many are being disrupted. And disruption, of course, occurs where someone finds a better, quicker, easier or cheaper way of delivering a service or product. And that's what people are continually trying to do in every industry. And if we do not stay ahead in our industry, then it will unquestionably also be done to us too. 20 or 30 years ago, people thought little of having to wait a month or two for their phone to be connected. And those days are over. We're in the age of Amazon, the age of Uber, the age of Netflix. If you can't go online and get a product the same day, you simply go to another supplier. That's the type of fast, streamlined, easy experience we aspire to offer our customers. We want to eliminate frustrating and time-wasting visits to stores, the emails and telephone calls backwards and forwards, the delays and complications and frustrations. We receive around 135,000 customer service calls per day. And when I say we're committed to delivering a brilliant customer experience, we're not talking about reducing 135,000 calls to 100,000 calls.

We're talking about eliminating the need for as many calls as we possibly can every single one if that is possible. We're talking about being able to buy and activate a new phone within a few hours over the internet. We're talking about making Telstra a pleasure to deal with 100% of the time and never a frustration. Now, that is our aspiration. That is the sort of company we must become if we are to succeed in the future. We are making substantial progress towards that, but it is not an easy challenge, and we know that we still have a very long way to go. Now, in addition, these industry changes are also fundamentally altering the economics of the telecommunications sector. User prices have plummeted, but the average mobile subscriber price per megabyte falling 99%, between 2005 and 2013. And this is continuing to trend down as customers demand more value. At the same time, data speeds have skyrocketed, and today's 4G networks are 12,000 times faster at transmitting data than 2G was. And the next generation 5G, the technology, which Telstra will begin trialling next year, will be another 100 times faster, than 4G again.

All the while, demand is increasing dramatically. Last year, over 5,000 petabytes of data trebled over Telstra's fixed and mobile networks each day, 40% more than the previous year. And therefore, the volume of data that we carry is effectively doubling every 18 months to two years, where customers are expecting to pay less and less. I really cannot think of many other large established businesses in Australia, where usage of core products and services is increasing at such a pace. The second major challenge Telstra is facing is the rapidly accelerating rollout of the National Broadband Network. Shareholders will recall, the NBN is expected to have around a $3 billion negative impact on our earnings when it is fully rolled out. And put that number into context, that's the equivalent to the annual earnings of a major ASX company. The size of origin energy, or a CSL, or even a Qantas. It can take decades to build a business that size. But we don't have decades. The NBN rollout began to gather pace in 2013.

And over the past four years, about 30% of homes have been connected. But while it's taken four years to connect 30%, the NBN is expected to reach 85% connection in only the next two years. And that means in just two years, we expect to be facing the loss of 85% of the $3 billion of our earnings, and that is obviously very significant. Another additional fact that shareholders may not be aware of is that there are now 180 registered resellers of the NBN, of which Telstra is just one. So, competition levels have also increased exponentially. We currently enjoy a 52% market share, excluding satellite. But this gives you an indication of just how competitive the market has become and how profoundly the landscape is changing. The third challenge that Telstra is facing is the imminent entry of a fourth mobile network operator into the Australian market. TPG is and will be a formidable competitor, and that, there is absolutely no doubt. We do not underestimate the impact that this may have the effect on pricing, nor the fact that we must and most certainly will continue to invest heavily to maintain our mobile network superiority.

And continue to improve the experience that we offer our customers. To reiterate then, in an environment where competitive pressures are already intense, Telstra also faces unprecedented growth in capacity demand, an acceleration in the rollout of the NBN, with its implications on our earnings, and the imminent launch of a fourth mobile network in Australia. Any one of these issues on its own would be a significant challenge to any company, but all of them together represent a really unique challenge. That, then, is the context for the important changes that we have made to our dividend policy this year. So, with that background, let me just explain now, the new dividend policy itself. So, our new policy moves us away from a historical practice of paying out almost 100% of net profits, ie, returning everything that we earn to shareholders and not giving anything back for reserves against the future or for new growth opportunities. From the 2018 financial year, we will adopt an ordinary dividend payout ratio of 70 to 90% of underlying earnings, which is in line with global peers and is in line with other large local companies.

In addition to the ordinary dividend, we intend to return in the order of 75% of the net one-off NBN receipts to shareholders over time, through fully franked special dividends. These are the one-off receipts relating to the transition of our customers to the NBN. With the implementation of this new dividend policy, we expect the total dividend in fiscal year 18 to be 22 cents per share, fully franked. Then, while we cannot predict earnings out into the future, as a consequence of our new dividend policy in FY 18, the dividend has been reduced to a level where we would be disappointed if we were not able to maintain or even again, increase the total dividend over time as we seek to grow underlying earnings and the special dividends decline. This, of course, will depend on economic conditions at the time and on our ability to grow underlying earnings in order to support the ordinary dividend. Any decision about future dividends will, of course, always be contingent on our underlying earnings and will be made in accordance with our capital management framework.

Now, I'd like to say that changing the dividend policy was one of the toughest decisions the board has ever had to make. We spent many long hours debating it, many sleepless nights working through it in our minds, knowing full well, the impact that it would have on shareholders, and trying to arrive at the best balance between providing consistent shareholder returns and the strategic direction that the company must take. To have continued on the same course would also have put at real risk, or other great strength, which is our balance sheet and A bank credit rating. We believe it is absolutely fundamental to maintain our balance sheet strength in this challenging environment, so as to manage the business efficiently, effectively and invest for growth. And we must do that because of our potential competitors of the future. And not just the traditional Optus and Vodafone, but are also likely to be dynamic newer companies like Amazon, which does not pay a dividend at all, and which reinvest an evergreen cash flow in cheaper and better products.

Lastly, despite the dividend and policy change, I'd like to point out that Telstra's payout ratio and yields still remain at the higher end of ASX companies. And because we absolutely understand and appreciate the impact this policy change has had on our shareholders, we took the decision to maintain the 31 cent dividend for this full year and give advance warning of the changes, rather than just cutting the dividend overnight, as is usually the case. So, I don't like it. I know that you don't like it. But the world has changed, and it would have been irresponsible of the board not to take this tough but correct decision for the future. And it is then the future, in particular Telstra's future growth opportunities I'd now likely to focus on. I've had shareholders ask, why can't we just go out and find growth businesses to replace the $3 billion in earnings that we're losing because of the NBN, so we can maintain the dividend at previous levels? Well, firstly, that's very easy to say, and very hard to do.

As I mentioned earlier, the earnings that we are losing are more than very few ASX companies achieve in total, even after decades of existence. And to expect that we can suddenly just go out and create another $3 billion EBITDA business overnight is simply just not realistic. Secondly, I do not think that shareholders would appreciate our going out and spending billions of dollars to buy a business or businesses that would replace the lost earnings through acquisition just for the sake of making up the numbers. This would be very expensive. This could take us away from our core competencies, and a whole new areas of risk. And this could jeopardise the strength of our balance sheet. Instead, therefore, our strategy to grow the business, position it to meet the challenges and opportunities ahead, and to create long term shareholder value, is built on three strong pillars. Firstly, delivering much better customer experiences than we do now. Secondly, driving further value and growth from our core business.

And lastly, building new growth businesses close to the core. Now, this may sound a bit boring, but it is not. It is prudent, is well thought through, and it best leverages our strengths. Delivering brilliant customer experiences means offering customers simple, intuitive and increasingly digital ways to interact with us. And while our customer experience scores are excellent with big enterprise customers, we know that we fall down too often with consumers. And that's significant because one way or another, virtually everyone in Australia is a Telstra customer, whether directly as Telstra mobile user, fixed or broadband customer or indirectly through our wholesale relationships with other providers. And as I said, just now, despite our world-class networks and coverage, too many customers will have had a bad experience with Telstra or will know someone who's had a bad experience with Telstra. This has to be once and for all eliminated, and we are doing everything that we possibly can, to fix it.

If we do do this well, we will win more market share from our competitors, which will mean more revenue and more earnings should follow. Then driving value and growth from the core is about leveraging our strengths and networks and connectivity and making the best use of our skills, expertise and experience to deliver additional value. And if we do this well, our customers will be willing to pay more for better and better products and services. And lastly, building new growth businesses close to the core recognizes the opportunities that we have to expand with new products and new services in new markets. And if we do this well, we will increase our revenue and earnings from new but related areas and improve the retention of existing customers. Everywhere we look, there are these growth opportunities. 5G is coming with a huge range of new and upgraded opportunities. The Internet of Things, where there are nearly one billion intelligent sensors today in Australia and the market is forecast to be worth $5 billion in five years.

Driverless cars, drones, connected homes, artificial intelligence, machine learning, smart cities, smart agriculture and many, many more. And these are the opportunities that represent our future. But of course, as fast as these new technologies are developing, it's still going to take a few years before they are scale businesses that can replace the old legacy businesses that we are losing. So despite today's challenges, we are in a strong position as we look to grow our business. We have one of the best overall management teams in the industry and certainly the best that I have seen in my time on the board. We have an incredible mobiles business, which is, of course, built around the best network in the land. We deliver great earnings, have a strong market share and are counted as a world leader in our industry. We are the largest reseller of the NBN. Our network applications and services businesses grew income this year by 30% and has become a $3.3 billion business from a standing start just five years ago.

Our productivity program to a quarter of a billion dollars of underlying core fixed cost out of the business this year ahead of our target and is on track to deliver 1.5 billion of annual savings. And we continue to make targeted acquisitions in exciting new areas like cloud, workplace mobility, Internet of Things and Cyber Security. These new capabilities leverage our already world-class networks and will help us grow in the markets of the future. One thing we think is critically important, therefore, is that we do not allow a preoccupation with replacing the earnings lost through the NBN to be the defining point in our strategy. Our strategy is about doing what we do now much better to drive value from the businesses that we have, rather than starting from the premise of having to go out and replace the lost earnings overnight. But another way we're not going to do anything foolish just to plug that $3 billion gap. It is critical that Telstra makes bold choices and we will do that. But we have no intention of risking the company.

At the macro level, if we achieved a digital transformation of our company and deliver as good a customer experience as the new first-generation businesses that I've mentioned earlier, then we will transform our customer acquisition and customer retention. We will protect our balance sheet and we will build market share. And over time, these new markets will achieve scale and will be a major player in most of them. All of this, of course, will then lead to materially improved financial outcomes from our core business, as well as growth in the closely related markets of the future. Which should always going to be a better road to follow than starting new businesses and markets we do not know so well. Telstra remains a fantastic company with great people, with great assets and great technologies, and we have many opportunities to grow without taking excessive risk. In conclusion, then 2017 was a year of significant progress for Telstra, but also a year of significant change and challenge, and whether we like it or not, we have to accept that the world around us has changed dramatically and Telstra is having to change just as dramatically as well.

However, over our long history, we've actually used periods of change in technology and challenges in industry structure to grow a company and to move forward. Changing our dividend policy is just one change among the many that we will need to make as we enter the exciting new world of the future. Some we can control and some we cannot. But whatever the future brings, Telstra is an exceptional company with exceptional people and exceptional assets. There is absolutely no reason why we should not do just as well in this unknown world of the future as we have done in the past. And we continue to develop our capabilities, build our resources and make our network stronger, faster and better so we can continue to be at the cutting edge of companies delivering the promise. The digital age and as that digital age unfolds, we will be at the forefront and we will be better positioned than most of our competitors. Lastly, we will not forget who our shareholders are and the responsibility that we have to them.

We will continue to do everything that we can to deliver shareholder value through dividends, capital management, other value-enhancing activities despite the changes that are going on around us. In closing, then I really want to sincerely thank Andy Penn, the senior executives and the entire 32,000 strong Telstra team for their efforts in delivering the many achievements that I have described this morning. They have one of the most difficult tasks in business today, and I think they are doing a fine job. I'd also like to thank my board colleagues for their support and their strategic guidance. All of us feel very privileged to lead this great company. And lastly, I would like to thank you, our shareholders for your patience and support. With that, I'll now hand over to your Chief Executive Officer Andrew Penn to comment on our operations for the year in more detail. Thank you.

ANDREW PENN:

Well, thank you very much, chairman, and good morning, everybody. Can I also add my thanks to Pauline for that wonderful welcome to country and welcome here today? We value this opportunity to meet with you as shareholders to keep you across what we believe is a very exciting future for our company. To hear your thoughts and to address your questions, I would like to cover four things in my presentation this morning. Firstly, I will provide you with an overview of how your company performed in the 2017 financial year. Secondly, I will make some comments on the rollout of the NBN with a particular focus on what I feel are the critically important considerations and priorities for customers. Thirdly, I will comment on the progress that we are making in transforming your company to compete in this increasingly digital world. And finally, I will confirm guidance for the 2018 financial year. Turning then firstly to the financial results for 2017. 2017 was a strong year, and we are pleased to have delivered against their guidance and strategy in the context of a highly competitive and increasingly dynamic market.

Total income on a reported and guidance basis was up 4.3% to 28.2 billion dollars. Excluding the regulatory changes to mobile terminating access service or MTAS and the final access determination, FAD. Total income was up 5.9%. EBITDA was up 2% to 10.7 billion dollars on a reported basis and was up 4.5% to 11.2 billion dollars on a guidance basis. On a guidance basis and excluding the regulatory changes that I mentioned to MTAS and FAD, EBITDA was up 5%. Net profit after tax from continuing operations was up 1.1% to $3.9 billion. Earnings per share was up 2.8 per cent to 32.5 cents per share, and the board declared a final dividend of 15.5 cents per share, which was paid in September. This brought the total dividend for the year to 31 cents per share. Our number one objective, though throughout the year, was to improve the experience we provide to our customers. And while I know that there is still more that we need to do, I am pleased that we are making progress. Both strategic and episode net promoter scores, which we use to measure customer satisfaction, improved in the second half.

Up six points and two points respectively. Our mobile business performed strongly in 2017, and we saw continued strong customer growth across all segments. New mobile services were up 219,00, including 169,000 post-paid handheld customers. Retail fixed broadband services were up 132,000, and retail bundles were up 224,000. Almost 90% of our retail fixed broadband customers are now importantly on a bundle and the proportion of those who are on an entertainment bundle, which is increasing very fast grew more than 50% and now represents one-third of customers that do take a bundle with Telstra. As you heard from the chairman, our network applications and services business grew very strongly, with income up over 30% to $3.3 billion. This was driven by major contract wins and renewals, as well as growth in NBN commercial works. Within NAS, we achieved strong performances from our cyber security products, our unified communication products and from cloud business, where in particular we saw revenue growth of more than 50%.

During the year, we reduced our underlying costs by 3.5% or 244 million, which was ahead of our target. On top of this, we improve productivity in our new businesses, where we reduce costs by a further 68 million. Given this strong performance, we have increased and accelerated our productivity plans. We now intend to deliver our previous $1 billion net productivity target one year early in 2020. And we've also increased the target overall by a further $500 million and in total, therefore, we now plan to deliver more than $1.5 billion in net productivity or net cost out by 2022. The focus of our productivity work is to deliver a better customer outcome, though. And for example, this year we've been working with our assurance partners to increase first call resolution rates and through this achieved a 4% reduction in truck rolls. This year, we also further extended our mobile network with standard 4G coverage to 99% of the population. And many sites further upgraded to the new 4G X, which gives us twice the speed, and this it now extends to 90% of the population.

Finally, we also continue to make very good progress in the NBN market and added 676,000 new NBN connections taking our NBN market share, excluding satellite to 52%. But the rollout of the NBN is projected to now scale up significantly, and it is essential that during this period that the whole industry remains focused on ensuring the customers receive the best possible experience and at an affordable price because four million homes are due to be connected in the next two years alone. In this regard, there are three areas of critical importance for our customers. Firstly, the service experience. Today, the time taken to activate customers on the NBN can be considerably longer than for traditional broadband services that we activate today. This is due to the extra complex, the extra complexity that is involved. We are working closely with the NBN to assist them in streamlining our respective processes to ensure this becomes a more seamless experience for all customers. Secondly, not all customers are receiving the speeds that they were either anticipating or hoping for.

Now, this can be for a number of reasons. Critically available speeds are first determined by the underlying technology that NBN chooses to roll out. Whether this is fibre, whether it is HFC cable, whether it is ADSL and therefore copper or indeed other forms of technology. This choice has a material impact on the maximum speed ultimately, that will be available to customers, and it is a function of the rollout that the NBN determines. Once the maximum speed available, though, is determined by NBN's choice of technology in their area, the customer then chooses the appropriate plan from their retail service provider like Telstra. We call this person the RSP. The RSP must then make sure that they purchase the right amount of capacity from NBN, and this capacity is delivered through something known as CVCs. Now, the ACCC has recently issued guidelines to all our RSPs to ensure that they purchase sufficient CVCs, such that customers can expect that at least 60% of the maximum speed in their plan is available during the peak times of 7 to 10 pm.

At Telstra, our position has always been to provide the best possible network experience on the NBN. That is why we continually monitor the traffic and adjust our CVCs to meet demand. In fact, we installed robotic testers in our network some time ago to measure customer speeds to ensure that we are buying enough CVCs. There are, of course, other factors that can affect the speed that customer's experience. For example, in-home wiring and Wi-Fi configuration. Customers can find lots of tips on our website on how to optimise their broadband experience at home. We're also continuing to develop products and tools to help our customers. These include the latest gateways or modems with superior Wi-Fi performance. The Telstra home dashboard, which helps customers diagnose their own issues in the home. And we have an upcoming Wi-Fi solution that will help detect and automate, automatically optimise Wi-Fi performance for customers in the home. All of these, combined with Telstra's platinum service, are targeted to deliver the best possible experience for customers in an NBN world.

And if customers are still not experiencing what they anticipated, it is quite likely to be a fault in the NBN network or some other factor in which case they should contact us so that we can investigate and advise the NBN accordingly. The third and final factor affecting customers in the migration to NBN is affordability due to the significant costs associated with the rollout of the NBN, wholesale broadband prices in Australia from NBN are increasing by almost 100 per cent in the migration. This will increase by a further 20 to 25% over the next three to four years under NBN's plans. Now, NBN are currently conducting a review of its prices and it will be important in the long term that wholesale prices are set at a level which ensures affordability of broadband for all Australians. Let me now turn to the progress that we have made on our broader strategic direction. Telstra is a telecommunications company, a telecommunications company with more than 100 years of history, a history of connecting people and businesses in Australia and around the world.

We have always been a leader in innovation. We have always believed that technology can bring tremendous benefits for businesses, society and the nation. That is why we are always investing and always innovating. In the 1900s, Telstra built the first trunk telephone connections between Sydney and Melbourne. It was the end of the age of the Telegram. In the 1960s, Telstra late the first coaxial cables carrying telephone and TV, as well as satellite telecommunications and transmissions. In the 1980s, Telstra launched the first mobile phones in Australia, and in the 2000s we were the first to launch 3G and then again, the first to launch 4G. Many of these investments marked major transformational periods in technology innovation. We see another one now as the right and pace of change and the way in which the world is digitizing increases. In recognition of this, two years ago, we launched our vision, our vision to become a world-class technology company that empowers people to connect. There were two reasons for this change of emphasis.

Firstly, it is often said that today every business in every industry needs to be a technology company. But this concept has special meaning for us. It has special meaning for us at Telstra, and that is because the traditional worlds of telecommunications and computing are converging. What I mean by this is that there is no technology innovation that is happening today that is not intended to be connected. From drones to driverless cars, cloud computing to online banking, e-commerce to the Internet of Things. All of these applications have one thing in common they rely on high quality, fast, reliable and increasingly secure telecommunications networks. We are an organisation with a long history and deep skills in network and electrical engineering. A world leader, we have applied these skills to build the best telecommunications network in Australia. But to support these technology innovations, these new applications and services, we need to build new skills in new areas, in software engineering, in data science, in artificial intelligence and in quantum computing.

And that is what we are doing. The second reason for this change of emphasis is that these applications and services are driving significant data growth on our network. For example, streaming services such as Netflix, as the chairman referenced earlier. Telecommunications globally, telecommunications companies globally have been investing tens of billions of dollars over recent years so customers can enjoy downloading high definition movies and TV shows from streaming services like Netflix. Today, Netflix has a market capitalization and is worth more than $100 billion. However, the telecommunication companies around the world who make this experience possible have not captured value to anywhere near the same extent, and this has reduced returns on invested capital across the telecommunications industry globally. But we should not see this as a threat. We should see it as an opportunity. That is why we are technology optimists. But if we're going to take advantage of this opportunity, we must lead in the future, not only in our network, but also in offering the best applications and services on our network.

That is why our vision is to become a world-class technology company that empowers people to connect. As you heard from the chairman, though, we also need to move fast. We need to accelerate our change. Our world is not standing still. We are seeing increased competition. We are seeing increased digital disruption and we are experiencing the unique dynamic of the NBN, which has the impact of reducing our EBITDA by approximately $3 billion. It is against this background that we made two critical decisions. Firstly, we have increased our level of investment by $3 billion over the next three years, which I will talk about more in a moment. And secondly, as you heard from the chairman, we are implementing a new dividend policy where we will retain some capital to invest in the future and maintain balance sheet strength and flexibility. It was a tough decision, and we do not underestimate the impact on you as shareholders. But it's an important decision. It's about setting up the business for success in the future.

It's about giving ourselves the flexibility to invest and to compete effectively.

ANDY:

In our history, it is is pivotal moments like this that we have made important decisions to invest in our differentiation and move to the next technology first and fast. We did this with 3G. We did it with our next gen IP network. We did it with 4G and we're doing it again now with the $3 billion of incremental investment we are making and it is targeted at achieving a step change in our customer experience. We're investing in the network of the future. With data on the network growing at around 40% per annum, we will need five times the capacity of today's traffic by the early 2020s. This is about building the foundations for the next generation of the network. It's about 5G. It's about the platform for the Internet of Things, and it's about new standards in redundancy and resiliency. The second area of major investment under the program is in digitization. New companies are changing the nature of experiences that our customers are experiencing, and we need to improve ours. We also need to improve the digitization of our core operating environment.

Through these investments, we expect to deliver a step change in our customer experience, an incremental EBITDA of $500 million dollars per annum from 2021 and we have made good progress on achieving this and achieving our vision. While I know we have more to do, I would like to take a moment to step back and recognize some of the progress that we have made. Firstly, we have simplified our business and our strategy, and we are aligning our new investments much more closely to the core as we did with our acquisition of Pacnet, Readify and Kloud. We're also investing in continuing to lead with the best network and in the applications and services on the network for our customers. Secondly, we're accelerating innovation in the company through Telstra Ventures, through Moradi, through Telstra Labs, which now includes hardware and software labs, Australia's first open IoT lab, a 3D printing lab and collaboration areas for our partners and our customers. This year, we were ranked number one in the ASX 50 for innovation in the Australian Corporate Innovation Index.

Thirdly, we're making progress in building the capabilities that we will need for the future. For example, we are working to meet the ever growing, ever changing risks associated with cybersecurity. In Australia, the rate of cyber crime has doubled over the last 12 months. This year, we've added significantly to our existing capabilities through the establishment of new security operation centers, and they support our global network of more than 500 cyber security experts that work within the company today. Fourthly, we are delivering new market leading, digitally enabled applications and services. In addition to monitoring our own network and our own operations, these new security centers work in junction with our digitally enabled managed security services, enable us to monitor, detect and respond to security incidents for our enterprise customers, and our future plans are to bring new products to market, which will further extend these capabilities to consumers and small businesses with enterprise grade cyber security protection from unwanted and malicious online traffic for everybody.

We've also launched the Telstra program or network to our enterprise customers, which enables them to dynamically manage their network and their cloud requirements digitally. Where it used to take six months to stand up a very complex set of services for enterprise customers to achieve this, customers can now do it for themselves digitally in a matter of minutes. We're also launching new offers for consumers. Telstra TV provides a fantastic, digitally enabled media service for customers. With almost 1 million services already in the market, we will be launching Telstra TV2 next week with an extensive new format, including the integration of free to air and universal searching. Last month, we also launched Mobile Belong, this builds on the success of belong in the fixed market in attracting new broadband customers with simple, no frills offers. And to support all of these digital enabled offers, we are leveraging our global relationships with world leading technology companies. We have important partnerships with Google, Facebook, Apple, Microsoft, IBM, Cisco, Ericsson, Tesla and many others, bringing the best technology globally and combining it with the best network in Australia for our customers.

The fifth area that we're making very significant progress is in exactly that, the network where we are improving resiliency and redundancy and building some of the critical platforms for the future. We are well progressed in building the foundations for the next generation of mobile technology, 5G. And what sets 5G apart from earlier generations is its extremely low latency, enabling the time between a request for data being sent and that data and that message being received to be in the single milliseconds. As a consequence, 5G will enable revolutionary new automaton technologies, including autonomous driving. As a leader in setting telco standards globally, Telstra will be hosting 3GPP, which is the global standard setting body on the Gold Coast next year. At this meeting, we expect many of the global standards for 5G to be discussed and progressed. We have also commenced the transmission or rather the rollout of our optical transmission capability. This is the backbone of the network around the country that carries the consolidated data from all of our networks.

These investments will give us the capability to increase speeds to up to more than 100 terabytes per second in our call for both undersea and oversea cables. And finally, on the network, we recently launched Cadmium one. This is the network platform for the Internet of things that you heard the chairman talk about. It enables millions of low power devices and sensors to be connected. And it's important because in the future, everything that can be connected will be connected. We have now extended this platform across our 4G network with more than 3 million square kilometers of coverage across the country. It will support applications in logistics, agritech, mining and resources, retail, health care and many other sectors. Through these investments, therefore, not only do we have the largest, the most reliable and the fastest network in Australia. We also now have the smartest network in Australia. In summary, this is a very significant program of investment. The positions are strongly for the future.

And while the operating environment will no doubt be tough over the next two to three years, for the reasons that both the chairman and I have already highlighted, these investments will support our core business and open up valuable new opportunities for growth in the future. Before concluding, let me reconfirm guidance for the 2018 year. In 2018, we expect income to be in the range of 28.3 billion to 30.2 billion and EBITDA to be in the range of 10.7 billion to 11.2 billion. Guidance for EBITDA is after absorbing incremental restructuring costs of 200 to 300 million, which are associated with the increase in our productivity targets. We expect net one-off nbn DA receipts less than net costs to connect for customers to be in the range of two to $2.5 billion. We expect to spend capex in the range of 4.4 to 4.8 billion, or approximately 18% of sales. Finally, we expect free cash flow to be in the range of 4.4 to 4.9 billion. And of course, as is usually the case, the basis on which we provide guidance is detailed in the footnotes to the documents that were lodged with the ASX this morning.

So let me summarize before I hand back to the chairman. In 2017, we demonstrated strong financial performance and delivered against our guidance. We continue to grow our customer numbers and deliver strong performances in mobiles ness and productivity. We are on track in our transformation, and whilst we have more to do, we have delivered important new capabilities creating the network of the future. We made an incredibly important but difficult decision to introduce a new dividend policy. And finally, we lift our level of aspiration in relation to productivity and we will deliver more productivity and we will deliver it sooner. There is no doubt that the operating environment has become more challenging, with significant data growth, increased competition, digital disruption and the migration to the NBN over the next two to three years. Against this background, the decisions and the investments we are making are critical to ensure our success in the future. We are confident that we will not only strengthen and differentiate our core business, but they will also open up new opportunities for growth for us in the future.

The ultimate mark of success, however, will be the quality of experiences that we provide our customers and above all else, that is what underpins our strategy, guides our actions, directs our investments and defines our future. We are working to take Telstra to the next level to set a new standard for excellence, to become a world class technology company that empowers people to connect. I would like to finish by thanking the whole of the Telstra team for their hard work. I would also like to thank the chairman and the board for their support and guidance. Thank you again for your time this morning and I will now hand back to the chairman. Thank you.

JOHN MULLEN:

Great. Thank you very much, Andy. So there are four remaining items of business in front of us, and I will shortly introduce and invite questions on these items, but before I do, I'll outline the question of voting procedures for today's meeting. When you registered this morning, you would have been given a card. Yellow cards are for shareholders who may speak and vote. Blue cards offer shareholders who may speak but not vote. You will need your card to ask a question or to re-enter the meeting. We're pleased to offer shareholders who are attending the meeting in person here today a new way to lodge their vote using their mobile phone or tablet device. And if you've registered to use the new Link Vote app at the meeting today, your yellow card will have a green stripe across it as you will be logging your vote directly by using the app. If you have any questions about how to use the Link Vote app during the meeting, please speak with one of our staff located in the room here and the shareholder registration area outside wearing large Telstra voting badges who will be happy to assist you.

I will introduce each item and then invite questions from the floor. There are several microphones located in the room that side and that side. If you'd like to ask a question, please move to the reserve seating area behind one of the microphones. Please show your card to the microphone attendant and give your name. As a courtesy to all shareholders, please also state your affiliation if you are not here today in your personal capacity. The microphone attendant will invite you to the microphone when your turn comes. In the interest of all shareholders present, though, please, please ask only one question at a time. Keep your questions and comments to no more than two minutes to allow as many shareholders as possible to speak. If your question relates to director re-election or to the allocation of equity, to the CEO or remuneration that Telstra, please ask your question when we come to those items of business later in the program and please ensure that your questions are relevant to shareholders as a whole.

If we can't answer your question fully here today, we will aim to provide you with a response after the meeting. Also, if you have an individual, customer or shareholder issue, please speak with one of our customer service staff who will be able to assist you. They, too, are located in the room here and in the customer service area outside wearing Telstra shirts. There are then three items requiring a shareholder vote today. Shareholders who are using the app to lodge their votes electronically, Please follow the prompts on your device to log your vote. For shareholders voting with the yellow card, the voting boxes are on the back of your card. Please complete these boxes on your card to log your vote. We have received proxies from approximately 31,060 shareholders and direct votes from approximately 15,790 shareholders. The votes recorded for and against each item will be shown on the slide behind me at the conclusion of the discussion of that item. The four numbers displayed will include proxies received and available to be voted by the chairman of the meeting.

Telstra Share Registrar was Fran Kelly of Link Market Services Ltd will act as returning officer in relation to the poll and the results of the poll will be available later today on the ASX and on our websites. A light lunch will be served at approximately 12 noon. However, if the meeting is still underway at that time, we will not be adjourning the meeting for lunch. So I now turn to Item two on today's agenda, which is to discuss the company's financial statements and reports for the year ended 30th June 2017. Now, this item provides shareholders with the opportunity to comment on and ask questions about our financial statements, reports, as well as the business operations and management of Telstra. You may also ask questions of our auditor. If you have a question about the 2017 results or any general questions about your company, including the outcomes of our Capital Allocation Strategy Review and our new dividend policy, this is the time to ask your question. So I now invite shareholders to move to the microphone and to ask any questions you may have on this item.

I think we're just getting a question coming over here. Microphone one.

SPEAKER:

Chairman, I would like to introduce Michael Ordinaria.

MICHAEL:

Good morning, Mr Chairman. I've got a very simple question. Is there any chance that we can have quarterly updates of our financial results rather than six monthly updates?

JOHN MULLEN:

The reporting standard in Australia is six monthly, and that's what we will continue to do. However, the company does issue from time to time updates on matters of importance or where disclosure is required. So there will never be a period where we're keeping back information that is not disclosed to the market.

MICHAEL:

Some of the banks offer quarterly results. I mean, I wouldn't expect like a full annual report, but it's nearly seven months before we know what's going on at the moment with just about four months into a half year. And as far as I'm concerned, we don't get told enough. There's very few updates during the six monthly period, and I was wondering whether we can get a sales update or just some general notification every three months. It's not too hard or a difficult task.

JOHN MULLEN:

Well, the beginning of each year we issue guidance which tells the market what we expect to happen. If there's any deviation from that substantial material deviation, then we make a further announcement to the market and disclosure. So if we're not tracking, as we've said we are, then you will know. So I don't agree that there can be a period, a long period where you just don't know what's happening in the company. It's either proceeding as per our guidance or if it isn't, then we will make a disclosure to that effect to the market. Thank you. Microphone three.

SPEAKER:

Chairman, I would like to introduce (UNKNOWN) from Melbourne. Mr Chairman, I want to ask you a question if you permit me to, but one of the (INAUDIBLE) regarding the financial statements. Telstra used to be a good company but is not as good as used to be. So you never justify how you manage to get from five point plus per share to three plus at the moment. Next, the report you presented to us was more wish than a play on how to improve things which will result in financial results. And the next one is the problem with Telstra, which people they go away from here is the training of the base of Telstra. If you go to one shop and Telstra to pay a single bill takes you up to one hour. And if you have a problem like I used to have just to be alright, my bill, my phone bill took me nine months going everywhere and no one to fix it. So how can you be a good company? The same attitude in its outside. I tried to talk to two of your employees, which they told me very arrogant one of them that they are an IT and show me because I told them something regarding the communication and efficiency of Telstra, and one of them make a indecent, I would say, just to go in and that's it.

We work somewhere. The problem is with Telstra is you have no service which people like to have. If you have a problem, you get nowhere, nowhere, where to do, how to solve it. There is no plan, but looks like you are more than the central committee of the Chinese Communist Party over there. Doing what? All nicely coming to work, getting the money, but no results. And if you are keep blaming that Australia, it's a big country and it's very hard to be competitive, I don't think it is still valid today because the signals and all digital doesn't come by donkey, come by network, which you may not have it. Thank you.

JOHN MULLEN:

Thank you. It's the first time that I've been likened to a member of the Chinese politburo, but my education continues. So a number of points in your question, I think. Firstly, the share price. Look, obviously we don't control a share price. The share price is impacted by lots of factors outside our control. What we can control is the business itself day to day, and then we have to let the share market make its own evaluation as to how we're going and...

SPEAKER:

As to the future. We have a very clear strategy of what we want to do with a company, where we're going. We've got a number of big initiatives, important initiatives that we've announced today, to offset that three billion, which is causing a lot of concern, the productivity program, one and a half billion of savings, that will come from that, the strategic CapEx program should deliver another 500 million of EBITDA by FY21 and a whole lot of activity going on every day in mobiles and other areas. So I think all we can do, is management team and the board is to ensure that we have the right strategy, stick to it and measure the delivery of the company against those objectives. Your second point about service. Look, we are acutely aware and I think I tried to spend some time on that in my speech, and I know Andrew Power, chief executive officer, did the same. We are acutely aware that particularly in the consumer area, we do not yet meet expectations of where we would like to be and where our market would like to be.

In the enterprise area, where we create the experience where we we have people on hand to manage a customer's issues. We actually do extremely well. So clearly, our systems, our networks of technologies can do the job where we're dealing with our some 17 and a half million mobile customers. It is difficult to get that right every time, every day, but that we absolutely understand is the key to success. If we are gonna succeed as a company in the years to come, we have to become like these new companies. We mentioned the Amazons and Apples and Ubers where customer service is just a byword for their existence. We are absolutely committed to that. Andy and the management team spending $3 billion extra of capital to try to deliver those service improvements and digitise our network. So Sir, I hear you loud and clear. We are embarrassed. I don't like standing up in front of you knowing that there are service issues out there. We are working on them. We are making progress, but it's gonna take a bit of time yet.

As to your particular issue, if somebody didn't give you the answers that you wanted outside, please see one of the other representatives or even myself afterwards, and we will address your question. Thank you. With your permission. One quick one, you don't have to answer. How much cost a glass of water for us to have outside? How much we're gonna charge you for the glass of water? Or how much (CROSSTALK). I didn't know we don't have any water, but I'm sure that can be rectified. (INAUDIBLE)` Sorry. (INAUDIBLE) Yeah. There are a number of water stations in this room. Actually, it's just been pointed out to me. So over there. I can see one another, one over there, quite close to you. Microphone four. Chairman. I would like to introduce Scott Hunter.

SCOTT HUNTER:

Good morning. I've got a few points to make. With Telstra's financial performance, $28,000 million in income reduces to $4,000 million in profit, so 28 becomes four. Telstra has the worst share price performance in the past three months on the stock exchange, in terms of pricing calls from home or public phones to mobiles or (UNKNOWN) a $1 a minute, including an 80 cent connection fee. This is far too high. However, unlimited data fee of $30 per month, or $1 a day, is far too low. In fact, some people give their children a fine, and they just make unlimited data calls as a child mining service for $1 a day, I don't think children should be playing around with an adult communication services as a form of playtime. Seven out of every 10 people seems to be using their phones, all their waking hours, making calls or text messages or whatever. However, this doesn't seem to be converting into revenue for Telstra, particularly other companies that their entire business is based around the internet and they're making substantial profits.

Telstra doesn't seem to be getting a big enough slice of the profit. Public phone boxes seem to be disappearing and vanishing quickly. These are needed for emergency calls, and if they're not there no one can make them. Your staff don't seem to understand Telstra's fees, practices and policies. Two examples of this is, to get a home phone service reconnected, I ask the price of that at three separate Telstra shops and was given three separate quotes, $30, $50 and $80. Either two or three of them are completely wrong and they should be able to get the exact price right. And I would consider even $5 would be a substantial fee just to flick a switch and get the phone put back on when the wiring's still there. Second example is, when I was handling a (UNKNOWN) estate, the phone bill came coming out in the dead person's name, even though it had been changed half a year ago, the staff said when I rang up to complain, the staff said that they can only talk to the account holder. When I said they deceased, they said, sorry, I can't help you.

Was there anything else and hang up? Your foreign staff can't comprehend Secondary school Australian English, especially words such as pro rata or backdated? I don't know what they mean. Not only that, these staff have Australian people's jobs, and if there's 2,000 staff overseas, that means there's 2,000 Australians who never get the opportunity to work for Telstra to gain employment income that they can use on mobile phone services or whatever else often, which is about on a monthly basis, there are people ringing up claiming to be Telstra's staff. They're obviously not. They've got a foreign accent and they're trying to gain access to one's computer. This is attempted fraud on the company and should be investigated thoroughly, and there should be a number that a member of the Telstra customer can ring, and say that I've just had a call I don't believe is from your staff. Are you able to trace it? And you should be able to track down these people and get it stopped. And in terms of Foxtel, nine out of 10 people don't watch it, you own a broadcasting company and you need to broadcast programs people wanna watch, not just reruns of rerun reruns.

You can get them on the TV you don't have to pay for, just buy them from a library.

SPEAKER:

How many Foxtel's (INAUDIBLE)

SCOTT HUNTER:

Until. (APPLAUSE)

SPEAKER:

Well, Mr. Hunter, a lot of data there. I'm not quite sure what all the questions were, but let me try and take two or three of the things that you mentioned and respond to them. Firstly, the flow through from 28 billion of revenue to net profit of four, that in that order of magnitude, I don't actually see whether, I understand the criticism of that. That's quite a strong performance. That's very much in line with what we committed to the markets to deliver. Share price performance itself, I think I've already answered to the previous questionnaire. It's not in our control. What we do is manage the things that are in our control as best as we can. You mentioned about core costs being too high, I think in data costs being too low. This is an extremely competitive market. We have some very capable and able pricing teams who are continually adjusting prices to ensure the maximum return for the company balance with competitiveness in the market. And we do remain competitive. You mentioned the lack of conversion of volume to returns, and that's a very good point.

That is something I think the chief executive Andy referred to, the Netflix is of the world and the over the top, companies have benefited far more than the telecommunications providers who are actually providing the bandwidth to deliver these services. And we are continually offering more and more data and more and more services to people for the same price or only a slightly increased price. So that is a concern for the whole industry. And that's why, again, we have to put our maximum effort into reducing our cost and into improving our customer service so we can charge for the work that we carry. You mentioned there were 2,000 staff overseas. We actually have a lot more than that overseas. Remember we also have, we're in 20 countries, we have large overseas businesses and those people work in those countries running those businesses. So yes, we have some call centers offshore, but to think that we could just relocate everybody who's running an international business to Australia is just not practical.

You mentioned fraud calls. Yes, that's a concern to us. Every company goes through it. I get those calls myself so does every one of my colleagues and pretty well, everybody in an industry gets calls and phishing emails and the like. It's a constant battle for the whole world community, certainly Australian community. It's not peculiar just to Telstra, but if you are receiving things on a repetitive basis, then please do alert us. We will do our best to help. But these people are extremely adept at using millions of phone numbers that are recycled all the time. So tracking them down is actually very difficult. And lastly, you said, I think of Foxtel nine out of 10 people don't watch it. I'm not quite sure why you'd say that, there are two and a half million active users of Foxtel and it's by far the largest cable provider in Australia. So I hope that touched on the majority of your points. Thank you again for the question. Microphone three. (INAUDIBLE) I'm sorry, I can't hear. (INAUDIBLE) The question was about the deceased state.

Obviously, it's extremely embarrassing when something like that does happen. It's very rare, but yes, we do make mistakes. When that happens, we go out of our way. Obviously, if it's brought to our attention to try to address it and you'd like to give us more information on that particular matter, we can try to follow through on it. So I apologize on behalf of the company for the sort of errors. Microphone three, please. Thank you, chairman. I'd like to introduce Bala Krishna from Brisbane.

BALA KRISHNA:

Good morning Mr. Chairman and hello to your Board members. I'm 81, 82 years of age, I reside in Brisbane, but I decided to make this long trip in order, I think I feel what I need the board members to know and be aware of because half the problem is that, you don't give us Telstra bills on time. And I'll come to that later on. Is not delivered at my house, and now Telstra tells me that I'm going to get into the computer and I'm going to print it out. I mean, that's the joke. Every other company sends me bills home, you're asking me to get into my email computer and ask me to print my own statements, how? All you got to do is have a good look at myself and you think I can do all those things? No, I can't. I'm speaking on behalf of 151,76 shareholders, because that's the holding I now hold in my hand. (INAUDIBLE) holdings and I hold 151,576 shares. That's my confidence in Telstra. Telstra is a fantastic company. There are no two questions about it. I know you have your hard moments, but at the same time, I just wonder now you're talking in terms of cutting down the dividends and so on and so forth.

How much do y'all actually cut down on your, your payments? So it's good to bring that out for the change. I'm not trying to be funny, or I'm trying to pick on you, but listen, we own the company. So we also want something in return and we have the confidence. So changes are happening and we need to have a look at it. And some of the problems that I have personally have, except is that for (INAUDIBLE) chairman, I accept your exceptional people, is an exceptional company and I think you have my support all the same. As I mentioned to you, they then started asking me to pay my own bills. No, sir, I'm not going to do that. If the bill is not delivered at my post box, I'm not going to pay you, I pay it when it arrives. I got into the internet, I mentioned that several times, but nobody's paying any attention to it. Now you're asking senior citizens like myself who are 81 years of age to do my own troubleshooting and solve problems. Is that a joke? How do you expect me at, did my age go into a computer and start troubleshooting and trying to solve those problems?

I ring and ask you all for help, because I believe that's one of your functions to do that. So I think you must really look at the point where you really help some of the older people, as against the younger people who can do things like that. Now, we had a wonderful guy at the Stafford City Shopping Centre. He was a very dedicated man, he was a Telstra shop owner, and I watched there how often he helps people. He spends a lot of time, he's a dedicated Telstra supporter. And all of a sudden the shop has been closed down. And he a man who really spent a lot of his time to help Telstra customers. He's the other day, he was in tears unable to explain why that has happened, and he's now being thrown out. And so now they're still asking me to go all the way to (UNKNOWN). (UNKNOWN) is so far away, but I managed to drag myself into Brookside, there my mobile phone was not working. I make a call and as I'm speaking, get cut off. So I went and told that guy say OK. He took that. He made a call here and there, it worked.

And say no, it's working, it's fine. I said, now, listen, I won't come all this way if my phone is actually working. I've come here. He said, No, I'm sorry. I can't do anything more than that. If you want, I'll take the phone and I send it to the company. Let them investigate that. Surely, Mr Chairman, that's not what you do. It's your problem. Please try to help us too. And the dividends, I hope that there is a fair, fair look at that before somebody talks about cutting down dividends. Dividends are for all the people, not myself, something that is very important and I'm prepared. I'm not joking here. I'm giving all my dividends and all of my income to poor people who really can't have food. So I hope that you will also try to do, remember that we are all young. We make a whole heap of money and you come to an old state like myself where money is meaningless to me. I got plenty of money, and I'm honest in saying that I want to now share the money with poor people. And I feel that I really, by coming here, I sincerely feel that I hope you'll do something about what's happening about Telstra bills, about the older generation, please.

Thank you, chairman. (APPLAUSE)

SPEAKER:

Thank you. Thank you very much. Thank you for making the effort and taking the trouble to come here. We appreciate it and thank you also for the courtesy of your question. Now there are a number of points, which I hope I've noted. I will try and respond to them. Firstly, regarding your bill, it's my understanding that as a pensioner, you can request a paper bill free of charge and the company will do that. So if that's not happening for you, we have some reason it hasn't worked. Again, please see one of the Telstra staff here today and we will get that fixed for you today. That should not be an issue. (INAUDIBLE) I'm afraid I can't hear anything. And you then talked about reductions, I guess, in board and management fees. So the board fees are set benchmarked across the ASX 20 companies and they are fixed. Management fees very much move with performance. And as you will have seen, the aggregate pay of our senior management team fell by 27% this year. The other thing we're doing, is we're also seeing as we're moving to a new remuneration scheme, which the chairman of the remuneration committee will outline to you shortly, where 65% of senior management's earnings will be in shares, much higher percentage than before, and also over a longer vesting period, which really aligns, we believe, management with shareholders as go shareholders fortunes go management.

You mentioned then around having to do your own troubleshooting and no, you shouldn't have to do your own troubleshooting. Of course, that is our responsibility. And again, if you would see one of our representatives and explain what your particular issue is, we will do our very best to fix it now here, while you are here today. And lastly, the dividend, obviously, we absolutely understand and empathize with the concern that you have over dividend. As I try to explain in my speech, we spent a very long time researching it. We did analyse it to your question and every which way to try to land on what we thought was the best balance between shareholder returns and maintaining the financial integrity of the company. And that's why we made the decision that we did. But thank you again for your question and thank you for coming. Microphone three again, I think. Chairman, I'd like to introduce Lynne, (UNKNOWN) from Melbourne.

LYNNE:

Good morning, Mr. Chairman and Mr. CEO and members of board. I was listening to your presentation about, you know, managing Telstra, and I will try to understand perhaps the complexity of managing cooperation of telecommunication corporation, that is not easy to do so. With, as a shareholder, with prices of Telstra shares down, with dividends being cut and with the, as issues that have been brought up by other Telstra shareholders just a while ago. And also with, you know, the costs and expensive, it being very expensive to use Telstra products and services, I'm just wondering if you would seriously consider offering Telstra shareholders a discount to be able to, you know, for using the mobile and internet services because I'm sure that there's a lot of us who are here who feel that, you know, we may not be able to afford it. And I'm sure that there's a lot who are actually using the competitor's service instead of being retained as a Telstra customer. So I think that if you are able to offer some discount for Telstra shareholders, and I think that may be able to help to have a customer retention as well for Telstra.

Thank you.

SPEAKER:

Thank you for that question, too. We do not offer a discount to shareholders in general, but we do offer quite extensive discounts to pensioners. I believe some 700 and or nearly 800,000 people do benefit from discounts off our services and for those in hardship, or just simply a pensioner status. So we do make a serious effort to help those who find it difficult to use or pay for our services. Thank you. Microphone four. Thank you, Chairman. I would like to introduce Sam Bonica.

SAM BONICA:

Good morning, Mr. Chairman. My question is around the share buyback that was conducted. Today, this morning, you mentioned that it was one of the largest share buybacks in ASX history. I question the value of that because normally when a company does a share buyback, the dividend actually goes up.

SPEAKER:

So for the future, perhaps the board could consider paying out a special dividend instead and forget about share buybacks in the future. Thank you. Thank you, Mr.(UNKNOWN). This one obviously is always a topic of debate when we engage in capital management programs. Not everyone has the same view, but we do, we believe, respond to the overwhelming majority of views, which is that share buybacks are advantageous both for those who take advantage of the franking and the tax credits at the time of the actual buyback and those who don't because the number of shares obviously on issue are reduced and therefore ultimately it pushes up earnings per share and hopefully share value. So every time we do it, we analyze those different options very carefully and depends on the balance of things, franking credit balance, the ATO rulings and the like. But I do believe that on the whole off market share buybacks are the best way to proceed. Thank you. Microphone three. Chairman, I'd like to introduce Eric Platt from Melbourne.

Good morning, Mr Chairman, CEO and board members. There's been quite a bit of mention about the NBN. Unfortunately, it seems to be in a bit of a political football, and I think we've got some answers in terms of the micro-level where Telstra are trying to better manage it. Just wondering if there's a more macro type considerations out there? Question one. Do you want to give me a follow one or do you want me to answer that first? Yes, if I could. Now, it might be dirty washing from well in the past, but PCCW Hong Kong and I'm talking on the acquisition side of things. Is there any remaining involvement and secondly, have the lessons have been learned from that unfortunate venture? Thank you. OK, so thank you. Firstly, on the NBN, on the macro, as you termed it, obviously that is not in our control. The NBN is a matter of the national government of the day. What we certainly stand for and try to ensure is, as the CEO said in his speech that it's critical that broadband access at affordable prices are available to all Australians.

And we would hope that whatever the play out of the political football as you term it, whatever that ends up with that, the end result is indeed that affordable broadband access is available to all Australians. Regarding PCCW Hong Kong, I just checked with Andy, as I understand we don't have a formal shareholding, but we still do have some relationships with them. If you need more detail and you can perhaps just explain what that is. Do you have a particular concern or a particular issue? Only the fact I believe that there were lessons to be learned from that venture, and I'm wondering whether those lessons have been suitably appreciated and leveraged, leveraged to a good point. Yeah, no. Well, certainly. Obviously, big companies make lots of acquisitions and they don't always go well. But the challenge for the board, I think, is to make sure that, as you say, we certainly learn from the ones that don't go well. We try not to make the mistakes twice but equally, we do have to take risks.

In building businesses, we have to make some punts. We have, I think, some $300 million invested in venture capital startups in the United States, which we, we hope will ultimately bring some value to Telstra. We don't expect to necessarily back the next Facebook, but we would hope that some of those technologies being developed will benefit Telstra in the future. Now, a lot of those companies won't. But it's really like research and development I guess. PCCW it before, I think virtually all our time here, but that was more than research and development. That was a very major issue and certainly, I think I tried to allude to in my speech, well, we will take risks and we will buy companies if they make sense. But we're not going to buy companies that risk the future of the company. We're not going to take bets of that magnitude that we would jeopardise Telstra. Thank you. Microphone one please. Chairman, I would like to introduce Colin (UNKNOWN) area. Thank you. Good morning, Mr Chairman, everyone on the board.

If you'd allow me, I'd like to say a few words. I've been a member of Telstra since they started. I was down for the Melbourne Marathon weekend and I thought I'd try and kill two birds with one stone, come to my first Telstra meeting. I took me an hour to try and find this place being a country bumpkin but I just like to congratulate you for yourself and your board. I've got complete confidence in what you do. You might get the knocks but I just want to give you some credit for the whole lot, what Telstra does. Thank you. Thank you very much for those generous words. It is our job as a board and management to listen to the issues and the complaints and to try to deal with those things. But it's very nice to hear from time to time that we have that level of support. I can assure you, the board and management try extremely hard to deliver value for shareholders and do the right thing with the company. Thank you again. Microphone number four, please. Thank you, Chairman. I would like to introduce Roman North.

Good morning, Mr. Chairman, I spend a lot of time up in the country doing farm work, and I stay with my brother. I have a mobile phone and often I leave it in the hallway and some of the calls take two or three hours to come through. Now there's a lot of towers going up in the country, are they Telstra towers or not? It's up in the up on the Murray River. And the other question I'd like to know, he tells me that he's fixed lines going to close in a couple of years, so what kind of fine is he going to end up with from Telstra? And how is he going to be assured that he will get a call coming through to him, I don't know whether those mobile towers are working, but you know, in the future for those country people, how are they going to come? Thank you. Thank you for that question. Our mobile coverage is by far the most extensive in Australia. We cover some 99.4% of the population and nearly two and a half million square kilometres. Now, that doesn't mean we cover absolutely everybody, of course, but we certainly do cover the vast majority with over eight and a half thousand base stations across Australia.

There's a particular program with a government partnership called Blackspot Program, where we and others, but we're by far the largest participant in that program. But together with the government to put mobile towers into areas that would otherwise be uneconomic. We have a plan of, I think, some 577 new mobile base stations being rolled out under that program. So I can't tell you standing here whether that particular attire you saw was a Telstra one or not, but it's certainly more likely to be one of ours than anyone else's. We have by far the most extensive coverage across Australia as as I mentioned. You also said something about your fixed line going to be closed. I'm not quite sure what that would mean, perhaps the NBN is passing. I don't know why. I don't think we would cut off a fixed-line. It's our obligation to provide a fixed-line to every person who wants one in Australia. So again, if you'd like to see one of our staff or any of us afterwards, we can investigate that for you and answer that question for you.

Thank you. Microphone one, please. Chairman, I would like to introduce Hans Witteveen from Seymour. Thank you. Good morning, Mr. Chairman, ladies and gentlemen. I have to declare a personal interest. I'm a 58'er. That means I've worked since 1958 till retirement for PMG Telecom Telstra. I understand the report that you've made and that finances have to be used wisely, and I can see that some of this is going into new technology. What I'd like to talk about is Telstra points of presence. In the days of Frank Blount, there's a senior manager who just about cut down all the points of presence. So if you wanted to find Telstra, where do you find him? A couple of years later, the pendulum swung the other way and Doug Campbell moved to Aubery to set up countrywide. I see you're nodding here, do you remember this? What I'd like to talk to you about now is that recently I too have become a country bumpkin. I've moved from the metro area to Seymour. And here this bill, I want to support a previous speaker in how Telstra deliver service.

This also was organized from an overseas call center and they tried hard, but it was a shemozzle not to put too fine a point on it. So, OK. I went to a Telstra point of presence, except it's not a Telstra point of presence anymore. It's now a franchise I believe. But I had a problem and I stalled and joined a queue and it would be about a half-hour. At this point I probably got a bit snarly. Is this how you treat customers? Shit. All of a sudden I've got a queue jump. Yeah, a bloke came to look after my problem and found that it was in fact, a problem that he couldn't fix on the spot, but he was knowledgeable and an expert. Still alone he couldn't fix it, so I appealed to the director and the problem is in hand. In fact, contrary to someone else's experience, I shook the hand of the guy, the Mr Fix-It, who sat side here. So but, the point is that if we're are saving money by cutting out points of presence and we deal with customers by sending them overseas, and I know it sounds racist, but some of these people, their accents are worse than mine.

They're hard to understand. Then if the problem has to come back to Australia to be fixed, it's a question, are we really saving money here? And if I can fire the second bell, I'd also like to support another playful speaker on the subject of paper ills. I paid two bucks for a paper bill. It's Mickey Mouse money to me, it's Mickey Mouse money to this company. I've spoken at the previous Telstra AGM in Melbourne on the same subject. Rendering a bill is part of the operational cost of any commercial enterprise., doesn't matter what it is. And to charge a surcharge for that, even as little as two bucks, it's unconscionable. The previous chairman didn't agree with me, so be it. This one's on your neck, Mr Chairman, sorry. Thanks very much, and thank you also for your continued and long term loyalty, that's wonderful. I think I mentioned earlier the coverage we have across Australia is second to none. Does that mean that we have a point of presence everywhere where you'd like there to be one?

No, we don't but we do still have Telstra countrywide that you referred to very much active. We have area general managers, so there should be a support structure to address issues that you have wherever you are based in Australia. You also mentioned offshore. We use a mix of onshore-offshore franchises owned premises, staff, etc. and that provides flexibility to meet changing call volumes and needs across the business. But we hold all of our call centres to the same high standards of customer service, privacy and the like, the same with franchisees in the country. They held to exactly the same standard, so it shouldn't make any difference where that person is from, what language they speak, what nationality they are. We hold everybody accountable the same. The paper bill issue, yes, I know that comes up regularly. It's something we continually review. It is an industry-standard not that that helps, I'm sure with you but everybody in the industry does charge that. Clearly, in today's electronic age, there is a lot of benefit to the customer, but also to the company by transacting online electronically.

And ultimately, most businesses, I think, will end there and we would certainly like to get there, too. In the meantime, if you still require a paper bill, we wi