Think of the potential - Telstra C/review.pdfTelecard™,Phoneaway® ... with more than one million online users •650,000 Big Pond® subscribers •Nearly 400,000 directories customers

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TEL0011 Cover 14/9/00 4:03 PM Page 1

CONTENTS Financial highlightsStrong earnings creatingshareholder value.See page 2

How we are drivinggrowth. A clear overviewof Telstra. See page 3

Chairman and CEO’s letter A year of changeand challenge.See page 5

Voice Services andbroad customerdemand. See page 12

Wireless An excitingfuture.See page 14

Data and internetShaping the future of this high potentialmarket. See page 16

...that broad

The Annual Review is a ‘short form’ overview only. It isdesigned to give a concise summary of Telstra’s activitiesand financial position for the year ended 30 June 2000.

The Annual Review does not represent or summarise all publicly available information in relation to Telstra.There is other publicly available information in relation to Telstra in both Telstra’s full Annual Report and information that has been notified to the ASX and theASIC. To obtain a free copy of the Annual Report, pleasecall FREECALL™ 1800 06 06 08.*

If you prefer, you can access both the Annual Report and the Annual Review through the Internet athttp://www.telstra.com.au/investor/

Nothing in this Annual Review is or should be taken to be an invitation or application or offer to subscribe for or buy securities in Telstra.

Telstra Corporation Limited ABN 33 051 775 556

*A free call unless from a mobile phone which will becharged at the applicable mobile rate.

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Make a call. View an image. Accessdata. Share an idea. At home.In the car. Across town and country.Around the world.

This year’s Annual Review is focusedon faster services, newer technologiesand greater convenience.

Any device. Any access. Any service.

And the potential that it offers our company, our customers and our shareholders.

Networks Importantsteps to expand onnetwork capabilities.See page 18

Broadband Speed... it’sjust faster. See page 20

Pan-Asian Growth A shared vision and ahigh growth industry.See page 22

Community Reachinginto the life of everyAustralian. See page 24

Board of Directors.See page 26

Corporate Governance.See page 28

Directors’ Report.See page 30

Concise FinancialReport. See page 38

Emoluments. See page 51

Investor Information.See page 54

Harnessing the powerof the internet.See page 56

Five year financialsummary. See page 58

Financial Calendar and Contact details.See inside back cover

band will deliver.

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Strong earnings creating shareholder value.

Financial Highlights

The strong performance of the company in the past 12 months is reflected in the following:• Earnings per share before abnormals: Increased by 16 per cent to 31.4 cents.• Total revenue: Increased by 8.9 per cent to $19.8 billion.• Operating profit after tax: Grew by 5.5 per cent to $3.7 billion.

cents cents

Earnings per share (before abnormals)

Consolidated Profit and Loss 2000 1999 change$m $m %

Total revenue 19,840 18,218 8.9

Operating expenses 13,919 12,898 7.9

Operating profit before income tax expense 5,921 5,320 11.3

Profit after tax and minority interest before abnormals 4,043 3,486 16.0

Abnormal items (net of tax) 366 – –

Operating profit after tax and minority interests 3,677 3,486 5.5

Retained profits 5,170 3,809 35.7

Earnings per share 28.6¢ 27.1¢ 5.5

Normal dividends per share 18.0¢ 17.0¢ 5.9

Special dividend – 16.0¢ –

Return on average assets 23.2% 22.5% 3.1

Number of full-time employees 50,761 52,840 (3.9)

18

17*

14

9*1997

1998

1999

2000 31.4

27.1

23.3

20.01997

1998

1999

2000

Ordinary dividends per share

* excludes special dividend.

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How we are driving growth

Key growth strategies

• Implement programs to use our assets more efficiently

• Enhance our extensive distribution capabilities• Improve productivity in the delivery

of our traditional telephony services • Improve our marketing and sales activities,

control our costs and improve our customerservice

• Reorganised our business units to serve our customer segments more effectively

• Created a new business unit dedicated to the needs of our remote and rural customers

• Created a distinct infrastructure services business with a focus on providing our domestic wholesaleinfrastructure customers with world-class technology, unit cost and service delivery

• Expanded the use of internet-based tools andtechnologies (e-enabling) throughout the company

• Continued to offer a broad range of customer focusedproduct packages that will increasingly be mixes oftraditional products with newer products, such ashigh speed internet access and mobile and wirelesstelecommunications

How we will implement the strategy Some of our initiatives

Optimise returnsfrom traditional

telecommunicationsproducts and

services in Australia

Focus on key growthopportunities in mobile

telecommunications

Focus on key growthopportunities in data,

broadband and the internet

• Continue to be the market leader in mobiletelecommunications in Australia

• Grow our revenues and earnings in this market

• Expand our GSM coverage, particularly highway and in-building coverage, and use additionalspectrum to enhance capacity

• Introduce innovative products and services,including a range of data and information services,such as GPRS (higher speed packet data), SMS(short messaging service) and WAP (internet relatedapplications) on GSM

• Extend our new CDMA network to provide additional digital coverage, particularly in rural and regional Australia, and to complement our GSM network in urban areas

Not all of our businesses, products, services and activities can be shown.

As telecommunications, computing and mediatechnologies converge, we intend to focus on enhancing our capabilities to:• provide services more efficiently• develop new and innovative products • expand further into these markets by internal

growth and, where appropriate, invest insynergistic businesses

• position ourselves to take advantage of thisrapidly changing business environment

• Completed the Data Mode of Operation project to ensure that our networks and systems areappropriately conditioned to cope with exponential growth in data traffic

• Enhanced our ability to offer an expanded range of data, internet, e-commerce and content-basedproducts and services through strategic partnerships,investments and acquisitions and development of our own products and platforms

• Used our broadband capabilities to develop and market additional affordable and widely availablebroadband applications

• Further penetrated the pay television and broadband internet market in Australia

Explore growthopportunities in other

areas of our business

• Optimise our wholesale earnings by improvingand expanding our product and service offerings,both in Australia and internationally

• Offer commercially attractive terms andconditions and value-added wholesale services,such as managed network services on a globalnetwork

• Undertake activities aimed at increasing ourrevenues and earnings from outside Australia,especially throughout Asia

• Our alliance with PCCW will focus on wireless servicesin the pan-Asian region, a global backbone networkfor wholesale services and for linking our own points-of-presence, and in the provision of informationtechnology and telecommunications services tobusiness customers

• Explore other selected international investment,acquisition and alliance opportunities generally and, in particular, with enterprises engaged in mobile telecommunications, data, the internet or content-based businesses

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MessageBank®Easycall® Calling Number DisplayEasycall® Call Waiting, Call ReturnCall Forward, Call ManagerTelecard™, Phoneaway®Information Services, Freecall™ 1800Priority® One 3, Yellow Pages® directory (printed)White Pages® directory (printed),0018 Easy 1/2 hours®International Direct®, FacsimileQantas Telstra Visa Card/Telstra Visa Card

• Approximately 8.4 million residential and small business customers

• Business customers• Approximately 78,300 public

and leased payphones• Services to more than 230 countries

and territories worldwide• Flexible billing• Almost 100 Telstra shops• Approximately 52 information and

connection call centres responding to more than 476 million calls during fiscal 2000

12 and 18

14 and 18

16 and 20

Our business products and branding Our customers and our contact with them More details and performancemeasures on page

MobileNet®, MessageBank®Easycall® Call Waiting, Call ForwardFacsimile and data servicesOperator assisted pagingOperator through connectShort message servicesInformation services

• 8.5 million Australians have mobile phones• 4.1 million Telstra mobile telephone customers• GSM covering over 95 per cent of Australian

population• International Roaming in more than

75 countries• CDMA network covers over 95 per cent

of the Australian population• 4,000 retail outlets • 480,000 prepaid customers

(1) KAHooTZ is a trade mark of Telstra Corporation Limited,Australian Children’s Television Foundation and Hewlett Packard Australia Limited.

Dedicated data services, LAN/WAN servicesOnRamp®, Frame Relay, FaxStream®Big Pond®, ISDNSureLink® ShopSafeEasymail™Yellow Pages® On-LineWhite Pages® On-LineSelect.netWhereIs™, FOXTEL (50 per cent ownership)KAHooTZ™

• Largest internet service provider in the country,with more than one million online users

• 650,000 Big Pond® subscribers• Nearly 400,000 directories customers• ISDN available to 96 per cent of customers• FOXTEL is the largest pay TV operator in Australia,

with approximately 650,000 subscribers• Broadband cable available to 2.5 million homes

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InterconnectResaleManaged network servicesTailored productsInternational transit trafficGlobal points of presenceSelected international investments in mobiles,data, internet and content-based business

• Other telecommunications companies who purchase our products and services or connect with our networks

• Multinational corporations

(1)

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from our Chairman and CEO

< open for detailedinformation aboutTelstra

Return on average shareholder equity(before abnormals)

% $millions

Once again it has been a year of change andchallenge. But what sets 2000 apart is that it hasbeen a year of enormous achievement. There have been a number of hard won successes requiring significant financial and strategicinvestment. We have implemented a number of strategic initiatives – a new organisationalstructure, new networks, new products, newbusinesses, new partnerships and alliances,new customers and new ways to serve them.

Profit after tax (before abnormals)

37.0

29.9

28.7

20.11997

1998

1999

2000 4,043

3,486

3,004

2,5681997

1998

1999

2000

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Telstra’s profit for the year was a record $4,043 million > 1999: $3,486 million

RESULTS

Financial Results. Before turning to our strategicinitiatives, it’s important to touch on thecompany’s financials.Your company has producedanother record profit in a year best described asincreasingly competitive in a difficult regulatoryenvironment. Operating profit after tax andbefore abnormals attributable to Telstrashareholders was a record $4,043 million (lastyear $3,486 million). In terms of earnings pershare this is equivalent to 31.4 cents per share.Revenue totalled $19,840 million representingan increase of 8.9 per cent. Earnings per sharefor the year was 28.6 cents. This year’s result hasenabled your directors to declare a fully frankeddividend of 10 cents per share taking the totaldividend for the year to 18 cents per share.

Mobiles, data and our wholesale services were the key performers in the result, withinternational calling revenues declining againas the service becomes commoditised afterstrong competition.

Current Business Environment. It isabundantly clear that the old days of Telstrabeing the incumbent and only provider oftelecommunications are well and truly over.Competition has produced changing behaviourin our customers as they exercise more choice in an increasing array of product and serviceofferings. Changing regulation has opened upmuch of Telstra’s infrastructure for use by ourcompetitors, some of whom are going furtherand building their own networks; price

competition is increasingly fierce and there isa very sharp spotlight on rural and regionalcommunications.

Our business is still very much underpinnedby traditional services, particularly voice.However, for the first time at the half year result we announced that revenues fromnon-traditional services, such as data, text,mobiles and internet had exceeded traditionalrevenues, which include basic access and localand distance calls.

Positioning the company for growth. Againstthis background we have set ourselves rigorousgrowth objectives which we intend to achieve in two ways, through new businesses – chieflymobiles, data and internet – and by extendingour footprint internationally, particularly in theAsia-Pacific region. We have also realigned thecompany’s management structure to supportspeed to market of products and services and at the same time eliminated duplicatedactivities in business units.

Broadbanding Australia for Data and InternetGrowth. Broadband is the next exciting wave of technological innovation and it’s all aboutsuperfast internet access. In practical terms thismeans fantastic telecommuting, business dataservices, networked games and video on demand.And the potential doesn’t end there.

Change in revenue (in $millions)1

Revenue drivers +165

-77

-80

-116

-69+355

+321

+44

-32

+202

+32

+52

+241

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Telstra can currently provide broadband service to all Australians

Telstra can currently provide broadband internetservices to all Australians no matter where theylive through either of the following ways:• Cable – State-of-the-art hybrid fibre coax

cable, which currently passes 2.5 millionhomes, or about 40 per cent of Australianhouseholds. It is this cable that carries ourpay TV service;

• ADSL – Asymmetric Digital Subscriber Line,which provides high-speed internet servicesover the copper phone network through anew technology employed by Telstra; and

• Satellite – Our satellite technology can beused across the country, but is perfect forregional and remote areas or where cableand ADSL are not present.

One of the key things we seek to achieve withbroadband is, whatever the delivery technology– ADSL, cable or satellite – that the service willbe transparent to customers. Once people areconnected, there will be little emphasis on the access technology and more on the services provided. Telstra is an early mover inthe broadband area – we have been providingcommercial cable modem services for morethan two years. Our plan is to become themajor broadband supplier in Australia. We have targeted more than 150,000 broadbandconnections over the next 12-18 months and 1 million within five years.

Mobiles Growth. Mobiles will soon overtakefixed line phones in Australia to become themost widely available voice and data capabledevice. Telstra has the leading position in this market. Our two national digital mobilenetworks (GSM and CDMA), with 95 per centpopulation coverage, have attracted more than four million customers.

Wireless Application Protocol (WAP)-enabledphones or ‘internet mobile phones’ are continuingto be supported by improved services. Alreadythere are more than 27 services such as e-mail,news, sports, share prices etc. that can beaccessed using a WAP phone, and we willsoon be rolling out a high speed service to givecustomers instant access to the internet over amobile phone. This will be the first step towardsthe ultimate goal of ‘online all the time’.

There are other data applications utilising themobile network that will have some importancein the future. Already we have mobile EFTPOS in taxis. Not too far down the track we will have even more impressive services, such as:• ‘Micro payments’ where you can purchase

goods via your phone from a locally locatedvending machine;

• Secure Transaction Services where you can similarly make larger payments forproducts/services via your banking service on your phone;

• Corporate intranet and e-mail access; and• Wireless Palm Synchronisation devices with

corporate networks.

Revenue %1

1 Revenue change compared to prior corresponding period (i.e. 30/6/99)

Basic Access

Local Calls

STD Calls

International Calls

Mobiles

Fixed to Mobile

Data, text and internet

Directories

Customer Premises &Equipment

Intercarrier

Inbound calling

Facilities Management

Other Sales

$2,020m 8.9.

$2,650m (2.8)

$1,406m (5.4)

$987m (10.5)

$2,859m 12.6.

$1,220m (5.3)

$2,838m 14.3.

$1,122m 4.1.

$336m (8.7)

$819m 32.7.

$432m 8.0.

$235m 28.4.

$1,685m 16.7.

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International/Pan-Asian Growth. We also seereal opportunities to leverage our strengths and expand into global markets, particularlythe Asia Pacific region and primarily in mobiles/wireless and internet/data/e-commerce. We aimto establish a portfolio of investments in theregion and link them all together with ourregional backbone network. Through thisprocess we aim to be the partner of choice forthe South East Asia region for any individual,company or other telco wishing to do businessin this part of the world. For example, webelieve we can become a major regional cellularoperator. This will allow us to work with othercarriers in the Americas and Europe to provideour combined customers with seamless globalservices while driving down operational costs.

The Pacific Century CyberWorks (PCCW)alliance, which was announced recently, willprovide us with the capability to achieve manyof these objectives. This deal combines theexpertise and resources of two of the largestcommunications and convergence businesses in Asia to create leading pan-Asian businesses in wireless communications and data/InternetProtocol (IP) carriage. It will give us scaleefficiencies to assist in achieving clear marketleadership. It will give us an immediatecustomer base in a growing region, somethingthat would be very slow and expensive to groworganically and, importantly, it gives us aforward thinking partner in PCCW.

Our combined backbone assets will make us a large and dominant player in the region,extremely well placed to tap into the massivegrowth in data traffic into and out of the region.The wireless company places the under-utilisedand highly attractive Cable & Wireless Hong Kong-Telecom mobile business in a vehicle that willallow it, and like investments, to flourish.

We believe the PCCW alliance will create a set of huge businesses for Telstra. Also in the international arena, in Singapore we havejoined forces with Keppel, the intention being to provide corporate and consumer customerswith end-to-end voice, data and InternetProtocol based services.We also announced the pooling of our New Zealand assets withSaturn to create Telstra Saturn, which will be a formidable competitor in that market. We will be rolling out a state-of-the-art broadbandnetwork in New Zealand and are well placed to leverage both the products and relationshipswe already have in Australia.

Telstra and KPN have finalised an agreement to form a joint venture company by mergingtheir respective mobile satellite communicationsbusinesses. The joint venture company istrading worldwide as ‘Station 12’, and enjoys a combined start-up global market share ofsome 24 per cent, making it a major, andarguably the leading, player in the globalsatellite communications industry.

150,000 broadband connections over 12-18 months > 1,000,000 in 5 years

ACCESS SERVICE

$millions $millions

Group assets

18,609

17,571

16,703

15,4301997

1998

1999

2000 30,339

27,682

26,470

25,8581997

1998

1999

2000

Sales revenue

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Controlling our costs and structuring ourbusiness. Growth means nothing withouta corresponding management of costs.Developments in technology, better workpractices and a more streamlined organisationhave allowed us to undertake various costefficiency initiatives – competition hascompelled us to.

This time of change in the organisation is difficult for all staff and we are greatlyencouraged by their understanding of thereasons for our actions and their continuedprofessional commitment to the job at hand.To meet the change head on we havedeveloped The Data Skills Academy to re-skilltechnical staff. At the same time a focus on staff safety has produced a 30 per cent fall in lost time injury frequency rate; this means that 452 fewer people were injured this yearthan last year as a result of better health and safety practices.

As part of our commitment to continuedimprovements in service, speed to market and cost reduction, we intend to sell our wholly owned construction subsidiary,Network Design and Construction Limited.

Closing remarks. Throughout the year, butparticularly at the end of the financial year,shareholders judge the performance of theBoard and management. We value the supportof our shareholders and believe that yourcompany is in tremendous shape. Our neweconomy initiatives, particularly broadbanding,and data over mobile devices, are stronglysupported by our work on achieving a bestpractice cost structure. Your company is aleaner, hungrier company, experienced withcompetition and strategically well placed tounlock enormous value from the new ageeconomy in Australia and throughout theAsia Pacific Region.

The potential is there to make a very goodcompany a great one.

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Productivity > 30 per cent fall in lost time injury frequency rate

To enhance our positioning as the leading full-service

telecommunications and information services company

in Australia and to expand our presence internationally.

Our Vision

Robert MansfieldChairman

Ziggy SwitkowskiChief Executive Officer and Managing Director

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We’ve made it easier for you to understand how yourcompany works by presenting information in a waycustomers think about our services in voice, wireless,data/internet and networks.

Dick SimpsonTelstra OnAir

Before joining Telstra,Mr Simpson served as ChiefOperating Officer at NRMA.He was previously the Director,Residential Division at Cable &Wireless Optus and prior to that the Managing Director for Unisys Australia and NewZealand,having started hiscareer at IBM.The OnAir Divisionwas initially responsible for themobile and wireless operations,but has now been expanded to include most of theinternational operations.

Doug Campbell BEngTelstra Country Wide

Mr Campbell was formerlyGroup Managing Director,Wholesale & International and Group Managing Director,Network and Technology of Telstra. He has also been the Deputy Managing Directorof Telecom and President of Canadian NationalCommunications. He is a Fellowof the Australian Institute ofCompany Directors and of theInstitute of Engineers, Australia.

Gerry Moriarty BEng (Hons)Infrastructure Services &Wholesale

Mr Moriarty has 30 years experience in thetelecommunications andbroadcasting industries inbusiness leadership, strategicbusiness development,content venture management,major project management,engineering management and technical operations with Telstra, the ABC, TVNZ,Broadcast CommunicationsLtd and NZBC.

Ted Pretty BA LLB (Hons)Telstra Retail

Prior to joining Telstra,Mr Pretty was a director of Optus Communications and an adviser to BellSouthCorporation.Mr Pretty waspreviously a partner of one of Australia’s leading telecom-munications,regulatory andmedia law firms.Mr Pretty was initially appointed to theposition of Managing Director of the International Division ofTelstra,responsible for Telstra’sinvestments and operationsworldwide and then GroupManaging Director,Convergent Business.

e

Group Managing Directors

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voice,wireless,

data/internet,and networks.

Robert Cartwright BA (Hons),MBA, FAIMEmployee Relations

Mr Cartwright worked in theCRA Group of Companies forover 15 years, predominantly in manufacturing with aspecial focus on changemanagement, operations,finance and strategy. He wasformerly President, An MauSteel, Taiwan and ManagingDirector, Comalco RolledProducts. Mr Cartwright is a director of the AustralianGraduate School ofManagement.

Bruce Akhurst BEc (Hons) LLB Barrister & SolicitorLegal & Regulatory

Mr Akhurst joined Telstra in 1996 as General Counsel.Prior to joining Telstra he was a partner and managingpartner of a leadingAustralian law firm.

Paul Rizzo BCom, MBACorporate Centre FunctionsFinance & Administration

Before joining Telstra,Mr Rizzo was Chief GeneralManager, Retail Banking, ofthe Commonwealth Bank ofAustralia. He was previouslyCEO of the State Bank ofVictoria, and prior to that,a member of the ExecutiveCommittee of Australia andNew Zealand Banking GroupLimited where he held anumber of senior positions over a period of about 25 years.

Telstra Retail is responsiblefor more than 8.8 millionAustralian customers.This covers all residential,business and governmentcustomers including thecustomers of Telstra CountryWide, who receive ourservices other than:• wholesale services –

which are provided byInfrastructure Services and Wholesale and

• mobile services – which areprovided by Telstra OnAir.

This business unit’s primaryactivities are sales andbilling. Telstra Retail alsomanages our information,connection and payphoneservices, as well as ourdirectories business. Inaddition, it sells and providescustomer services for acomprehensive range ofproducts, services andcustomer-driven solutions,ranging from basic telephonyservices to complex voice anddata networks.

Infrastructure Services &Wholesale is responsible forplanning,design,constructionand operation of ourinternational and domesticfixed telecommunicationsnetworks and associatedsystems to delivertechnology solutions, ourproducts, services andcustomer support. It also hasresponsibility for customerservice installation andrepairs and provides wholesaleproducts and services toother carriers, and carriageservice providers.

Employee Relationsmanages personnel,organisation effectiveness,health and safety,remuneration, training andleadership developmentprograms.

Telstra OnAir is responsiblefor our mobile and wirelessnetworks and associatedsystems within Australia,aswell as most of our offshoreinvestments. This willinclude the responsibility forthe proposed alliance withPCCW. It is also responsiblefor all mobile retail salesand after sales support,customer service, productdevelopment and pricing.

Telstra Country Wide operatesspecifically to address thetelecommunications needs of around three millionconsumers and businessesthat reside and operateoutside the mainland statecapital cities and in Tasmaniaand the Northern Territory.Its aim is to accelerateimprovements in service andsales performance outsidemajor metropolitan areas.Through 29 regionally locatedmanagers supported by smallstaffing levels,the sales,marketing,customer service,installation and repairrequirements of ruraland remote customers areaddressed at the local level.

Corporate Centre FunctionsFinance & Administrationis responsible for strategicplanning and investmentopportunities,and providescorporate policy and supportfunctions, including finance,risk management and audit,shared services for processingfunctions, treasury, investorrelations, corporatesecretarial functions andother corporate services.

Legal & Regulatory provideslegal services, and hasresponsibility for regulatorypositioning and negotiation,including assessment ofregulatory decisions andpreparation of submissions to industry regulators.

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Local calls. Telstra isparticipating in anincreasingly competitivemarket, not just for longdistance calls, but also local calls. During the year,Telstra decreased the priceof its local call to 22 cents*and introduced its 16.5 cent*Neighbourhood Call™ forcalls made within a localexchange area. The excellentvalue afforded by Telstra’suntimed Local andNeighbourhood Call™ priceshas contributed to the hightake-up rates for internetusage in Australia. Increaseduse of the internet hasgenerated positive resultsfor local call revenue.(Ten per cent of residentialcustomers now have two or more lines – driven byinternet growth).

Value-added services.Our residential customersare enjoying increasinglysophisticated telephoneservices in their homes,with significant up-take of such products, includingEasyCall® Call Waiting and Call Forwarding,MessageBank® (now morethan 1 million customers)and Calling Number Display(now more than 503,000customers).

Packaging activities.EasySaver®Plus is a totalcalling package whichrewards loyal Telstraresidential customers withlower local call rates,ourgreat Neighbourhood Call™rate,capped STD® and fixedto mobile calling between7pm and midnight any nightof the week,all over Australia.For $17.60* monthly access,this total package providesexcellent value for moneyand is the reason more than one million residentialcustomers are usingEasySaver®Plus.

National Long Distance andFixed Telephone to Mobilecapped rate offers havebecome increasingly popularas customers enjoy theconfidence of talking for upto five hours at night, butwith the certainty of a fixedcost. Capped STD® and fixed to mobile call rateswere extended from fivedays per week to seven daysper week and were also addedto EasySaver®Plus.

By simplifying and reducinga range of STD® per minuterates Telstra delivered$52 million in savings forcustomers in December 1999.This was on top of reductionsin STD® per minute chargesof 45 per cent since June1992. Increased competitionin the international callingmarket has meant moreattractive prices forcustomers. The 0018Easy1/2Hours® to allinternational destinationsserved by Telstra has alsobeen very popular.

communic8™ Pre-paid HomeIn May 2000, Telstralaunched a new pre-paid home telephone service – an Australian first in thefixed phone market. Theservice replaces a standardhome telephone service and eliminates the need for household phone bills,providing the user with theirown phone number, ownMessageBank®and ownaccount number and PIN, sothey have full control overtheir telecommunicationsspend.

voicemore than 1

Growth is driven by new services and broadcustomer demand

➞

*Includes GST

>>

>>

>>

>>

>>

>>

Opening Australia’s ‘LittleBlack Book’ – it’s as easy as12 452. Easy Info is a newcontact information service(launched February 2000),providing cost-effective andcomprehensive information.It includes street addresses,fixed phone numbers,postcodes,time zones,areacodes and country codes.Inaddition,fax numbers,mobiletelephone numbers and emailaddresses will be provided,where available. Internetaddresses will be added to theservice in the near future.Upto five pieces of informationcan be requested for a flat fee of $2.50* per call.

Highlights of operations during the year

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cen 11 billion local calls

Growth indicators (approximate): 2000 1999 % change

Local Calls (number of calls) 11,346,000,000 11,190,000,000 1.4

National Long Distance Minutes 12,513,000,000 12,329,000,000 1.5

International Outgoing Minutes 893,000,000 725,000,000 23.2

International Incoming Minutes 1,033,000,000 787,000,000 31.3

Easycall Call Waiting (per cent penetration) 56% 56% –

13

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The new Code DivisionMultiple Access (CDMA)mobile phone network hasbeen rolled out in recordtime, with 1,827 of the 2,100base stations in operationand 280,000 customers,just eight months after itslaunch. Telstra now has twodigital networks (the otherbeing GSM).

In December alone weachieved our best monthlyresult ever, with a total of280,000 new mobileconnections across both ourCDMA and GSM networks.

By October this year, CDMAFreedom® will easily be thelargest single land-basedcellular network in Australiaand quite possibly theworld. We estimate thatmore than 95 per cent of theAustralian population willbe covered with CDMA, andthe network will cover over78 per cent more area thanthe analogue network at its peak. This means morethan 500,000 Australianswho previously did not have analogue coveragecan now access a mobile phone service.

Pre-paid mobile phoneproducts experiencedsubstantial growth in the past year, with about500,000 services now inoperation. This reflects thesuccess of our new youthfocus, with pre-paidactivations now contributingmore than 35 per cent of theGSM growth and 16 per centof CDMA.

The Telstra Shop® Networkimproved its customerservice rating from 55 percent to 80 per cent. Thisnetwork comprises almost100 stores, including 27‘New Format’ Stores openedin the 1999/2000 financialyear. A change in storedesign meant a 40 per centreduction in shop fittingcosts. The new LicensedStore Program, launched inDecember 1999, which allowsindependent operators toleverage off the successfulTelstra Shop® Network, nowhas 14 Telstra licensed stores.


➞ ➞➞5.6

MILLIONphone short messages

weekly

wireleTelstra’s position in this fast evolvingmarket is large and growing.It is an exciting future

more than 4 million

>>

>>

Mobile telephone minutes 4,464,000,000 3,221,000,000 38.6

Mobile telephone customersDigital 4,046,000 2,762,000 46.5Analogue 80,000 673,000 (88.1)Total 4,126,000 3,435,000 20.1

Mobile MessageBank® (% penetration) 77% 62%

TEL0011 Text 14/9/00 2:52 PM Page 14

ss

Our SMS (Short MessageService) service enjoyed hugegrowth, with approximately 5.6 million digital GSM mobileoriginating messages sentweekly by MobileNet®customers.

We exceeded our goal of4 million Services In Operation(SIOs), maintaining almost half the country’s 8.5 millionmobile phone customers, andeasily surpassing our target of 3 million MessageBank®services, which equates to apenetration rate of 77 per centof our digital customer base.

An important measure ofsuccess is our mobile phonechurn (disconnection) rate,which is currently the lowestin the industry at less than1.3 per cent per month,reflecting our customers’appreciation of MobileNet’ssuperior network coverage and service.

Our ‘Far and Away Australia’sBest™’ advertising campaign,with Australian personalitiesJohn Farnham and GlennWheatley, was extremelyeffective, increasing customeracquisitions during thecampaign. Their popularityand likeability, Australian-ness, trustworthiness andsense of humour appealedto the consumer.

➞Internet access usingWebMode (WAP enabledmobile phones) was launchedin December and providesaccess to a wide range ofinformation services andpersonal applications. Thereare currently more than 27applications with the top fiveTelstra sites, including e-mail,Inspirit, TV guide, Blackjackand the Surf n’ Ski report.Telstra was first to market with wishlist.com, Surf n’ Skireports, wireless games, WAPbanking, and online sharetrading. New applications andcontent are continually beingdeveloped. For example,a Mobile EFTPOS pilot wascompleted in July and willbe commercially launchedlater this year.

services in operation

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15

TEL0011 Text 14/9/00 2:52 PM Page 15


FaxStream® services access lines 426,800 407,100 4.8

Internet subscribers 1,079,000 >400,000 169.8

Pay TV services in operation 637,000 496,100 28.4

16

Consistently collectingmore than $1 million worthof bill payments via onlinechannel per week. The totalnumber of billing transactionsthat have occurred onlinehas tripled in the periodJanuary 2000 to June 2000,from 100,000 per week to300,000, reflecting internetgrowth rates and customers’receptiveness to the newfunctionality being offered.

Having 1 million onlinerelationships opens up greatpotential for e-commercesolutions. It also provides a major step on the way toallowing Telstra to reducecosts by using services suchas online bill payment.While Telstra is the largestonline service provider, it isalso consistently rated as the best Internet ServiceProvider (ISP) by computermagazines with its TelstraBig Pond® internet service.

Telstra achieved its goal of reaching 1 million onlineusers by the end of fiscal2000. The total consists ofmore than 650,000 TelstraBig Pond® customers with a significant contribution from telstra.com™ and Telstra Easymail™.This confirmed Telstra’splace as Australia’s leadingonline service provider.Telstra has more thandoubled the number ofonline users and Telstra BigPond® customers during the last financial year. Thismakes it four successiveyears in which Telstra hasdoubled the customer base.

data

more than 650,000 Big Pond®customers

1,000,000ONLINE

SUBSCRIBERS

➞ ➞

>>

>>

Dial Telstra’s new ISP HelpLine or click on the Net.Telstra has established a one-stop sales and servicehelp line and a web site forAustralian Internet ServiceProviders (ISPs). The TelstraISP Sales and Services Centreis staffed by a national teamof specialised sales andtechnical staff whounderstand the specificissues and challenges of ISPs.Telstra’s ISP Help Line isFREECALL 1800 624 512.*

A Small Business Speakerseries has been introducedcalled ‘Networked’. Thesefree seminars are broadcaston telstra.com™ and providehelp on a range of topics,including the effective use of new technology,understanding the impact of the GST and evensurviving the OlympicGames. Along similar lines,Your Business magazine hasbeen introduced and is mailedregularly to more than200,000 Small and MediumEnterprise customers.The magazine providesinformation and new ideasto help growing companies.*A free call unless from a mobile phone, which will be charged at the applicable mobile rate.

➞

Rapid growth in data and internet is transforming communications.Telstra is shaping the future of this high potential market

TEL0011 Text 14/9/00 2:55 PM Page 16

& internet

17

you’re connected

➞telstra.com™ was introducedin December 1999.telstra.com™ has quicklybecome one of Australia’sleading portals since itsofficial launch in March2000. It is rapidly moving to fulfil its objective ofbecoming an onlinecommunications hub for individuals, who canpersonalise the site tobecome ‘your dot com™ ’.

Some exciting newdevelopments includeWebNotes™ where, fromyour computer, you cansend a short message service to any TelstraMobileNet® mobile phone; faster download of the home page; betterpersonalisation optionsand improved content.

>>

TEL0011 Text 14/9/00 2:56 PM Page 17

50LICENSED OPERATORS Wholesale – Australia

To speed growth we havetaken important steps toexpand on networkcapabilities

18

Telstra’s DomesticWholesale group hasplayed a big part inworking with the industryto build Australia’scommunications future.Discrete wholesale billingarrangements, discretewholesale products andinnovative resale offeringsand a track record ofdelivering to our wholesalecustomers has helpedcreate a thrivingcommunications sector.

There are now nearly50 licensed operators inAustralia. Those operatorscan access Telstra’s networkfacilities and as customersof Telstra Wholesale arecontributing to Telstra’srevenue growth andshareholder value. Tofurther assist the growth of the industry, Telstra hasintroduced Local NumberPortability, special on-linebilling capabilities andproducts tailored specificallyfor the wholesale industry.

MobileNet’s networkcapacity for Olympicvenues was at least tripledduring the Games. Capacitywas also increased toimprove coverage for theexpected 600,000 people inthe Sydney area. Projectsprepared for the SydneyOlympic Games includeWebmode sports servicesfor WAP phones,PocketNewssports services for ShortMessage Service (SMS)phones, SMS welcomemessages for InternationalRoamers connecting to theMobileNet® network and freePocketNews sports results.Fax and data capabilitieswere made available on the CDMA (Code DivisionMultiple Access) network in January. CDMA’s firstinternational roamingservice was also madeavailable in time for theOlympic Games.

➞ ➞

>>

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net>> Data Mode of Operation

(DMO) – Work on makingTelstra’s networks ‘internetready’ continues (seeBroadband feature on page 20). In addition to theextensive copper networkthat services most of urbanand rural Australia, Telstrahas 3.1 million kilometresof optic fibre. The veryhigh carrying capacityof this fibre lends itself tointerconnecting the capitalcities and servicing around14,500 commercial buildingsaround Australia.

During the year wecontinued installing ‘Pointsof Presence’ or PoPs, wherewe interconnect with othercountries’ networks andconduct wholesale andretail business activities.Telstra’s PoPs network now includes UK, Germany,Japan, Hong Kong, SouthKorea and the USA. In total,Telstra has businessoperations in 19 countriesin Asia, North America and Europe.

In preparation for theexpected high number of international phone calls, faxes and emails atChristmas, Telstra negotiated8,960 temporary circuitswhich, together with itspermanent circuits, resultedin more than 33,600 circuitsbeing ready for service overthe Christmas peak period.These circuits supportedmore than 1.4 millioninternational calls made toand from Telstra customerson Christmas Day, producing14 million conversationminutes – a big increase on the previous year.

approx.

TEL0011 Text 14/9/00 3:14 PM Page 18

workswith a presence in 19 countries

19

Basic access linesResidential 6,510,000 6,930,000 (6.1)Business 2,360,000 2,440,000 (3.3)

Total retail customers 8,870,000 9,370,000 (5.3)Domestic wholesale 1,170,000 390,000 200.0Total basic access lines in service 10,040,000 9,760,000 2.9

ISDN access lines (equivalents) 1,049,000 722,000 45.3


TEL0011 Text 14/9/00 3:16 PM Page 19

20

broadSpeed…it’s just faster.E-mails arrive in real time,games really kick and you can still use the phone!§

20

‘Broadband’is one of thehottest buzzwords associatedwith the internet.

But what does it really mean?

Put simply, broadband is aterm to describe superfast,‘always on’ internet accessto the majority of Australians.

But this simple descriptionbelies what broadband reallyis…broadband is the key tounlocking the potential thatthe internet and the world ofcommunications has to offer.All of the things we’ve dreamtabout become reality.

Just imagine downloadingCD quality music, playinggames in real time anddownloading and transferringlarge files or multi-media in the blink of an eye. Orimagine soon being able to have interactive video or even video-on-demandwithout even needing toleave your home!

For many young ruralAustralians, distancelearning will be like being inthe classroom,with the abilityto see and be seen by theirteachers and classmates.

For businesses, thepermanent connection andhigh speed of broadbandinternet provides greaterefficiency and costeffectiveness. Efficienttelecommuting will becomea reality, with employeesbeing able to access thecompany’s network fromhome, without sacrificingsecurity or speed.Collaborative computing will provide the ability for a work team to create aproject in unison, whatevertheir location. Telstra’sbroadband technology willmake all this a reality…andthis reality starts right now!Telstra is already a world-

class leader in broadbandwith its cable and satelliteinternet services. Now Telstramakes it easier for even more Australians across thecountry to enjoy the benefitsof broadband,with its latesttechnology,ADSL (AsymmetricDigital Subscriber Line).This leading-edge ADSLtechnology is not just fast,it’s superfast, giving access to the internet up to 50 timesfaster than regular dial-upinternet services throughnormal phone lines, whilststill being able to use aphone or fax.

Telstra is delivering thebenefits of ADSL technologywith its award-winninginternet service TelstraBigPond™. Both residentialand business customers can now get Telstra Big Pond®ADSL for a superfast,‘alwayson’ internet connection. Formore information or to applyfor any of Telstra BigPond’sbroadband internet services,including cable, satellite and ADSL, simply visithttp://www.bigpond.com or call 131 282.

ADSL technology alsounderpins Telstra Hyper-Connect™, a new remoteconnectivity option forcorporations who wish to provide teleworkingcapability to staff andbranch offices access to thecorporate network. For moreinformation or to apply forTelstra HyperConnect™, visithttp://www.telstra.com.au/adslor call 1800 150 506.

➞Broadband internet with ADSLtechnology is provided over yourstandard telephone line. Currently,a standard phone line can receive up to 56 kilobits of information persecond, but with ADSL you cansubscribe to a service with datadownload speed of up to 1.5 megabitsper second. ADSL means all 857 pagesof the classic novel Moby Dick couldbe downloaded in just a few seconds– at current phone line speeds you’donly get 3 pages in the same time!ºº

Telstra’s rollout of ADSL started inlate August 2000. Interest in ADSL is running hot with more than 2.3 million hits or requests forinformation captured at telstra.com™on http://www.telstra.com.au/adslin a twelve week period from Mayto July. We aim to make broadbandavailable to all Australians, as shownin the map above.

More and more customers will progressively have access tohigh speed service via ADSL from 21 August 2000. Commencing withall capital cities, Toowoomba,Launceston and Bunbury, Telstrahas embarked on an ambitious 2 year program to deploy ADSLcapability to about 1300 exchangesacross Australia bringing high speed services to about 90 per centof homes and businesses.Telstra’sexchange rollout progress can be tracked by visitinghttp://www.telstra.com.au/adsl or by calling 1800 151 454.§Refers to ADSL connection with Telstra Big Pond® .ººThese times are for indicative purposes only. Dependingon internet network routing and ISPtransmission overheads, which aredynamic variables and cannot bepredicted; the actual length of time may be slightly longer.

ADSL indicative urban and majorrural centres, including HFC areas

HFC existing cable modem service2 million homes

Satellite elsewhere

TEL0011 Text 14/9/00 3:19 PM Page 20

2121

bandingAustralia

Broadband is not just the future of the internet,it’s the future of all communications. Telstra iscommitted to bringing broadband technologywithin reach of all Australians.

TEL0011 Text 14/9/00 3:22 PM Page 21

Telstra’s alliance with HongKong-based Pacific CenturyCyberWorks (PCCW) will putTelstra firmly on the map in Asia and will establish apowerful new force in Asian,and global communications.

Because Asia offers suchsubstantial opportunities –rapidly growing marketsand a hunger for newgeneration products likewireless and internet – thisalliance with PCCW whichrecently purchased HongKong Telecom (C&W HKT),is a major step for thecompany’s future and apivotal advance in theexecution of Telstra’sinternational growthstrategy.

The alliance will create threenew joint venture companiesin the areas of internationalglobal wholesale mobiles/wireless, internet and datacentres. Once operational,the combined strength ofthe partners will make theglobal wholesale company(IP Backbone Co) the numberone operator in voice, dataand internet traffic in theAsia/Pacific outside Japan,and in the top echelon inthe world.

Importantly, this initiativeallows Telstra to aggressivelypursue the offshore growthit needs outside its traditionalAustralian markets whilstmaintaining the scope ofthe domestic business.

Telstra is in good company,partnering with one of theAsia-Pacific’s most dynamicorganisations. PCCW hasgrown to become Asia’sbiggest internet groupoutside Japan throughinvestments in more than40 content, technology and e-commerce providers.PCCW has completed itsacquisition of Cable &Wireless Hong KongTelecom, one of Asia’s mostsuccessful and respectedcommunications companies.

In addition to its impressivetrack record,PCCW also sharesTelstra’s vision for long-term growth in Asia and,importantly, already hassignificant links to the highpotential markets in China.

The new global wholesalecompany (IP Backbone Co)to be formed under Telstra’salliance with PCCW willfrom day one be the numberone carrier of voice anddata/internet traffic in Asiaoutside Japan and will beamong the top globalwholesale carriers in theworld. It will tap into thestrong global demand forbandwidth, driven largelyby the internet, and will fill a gap in Asia which iscurrently under-served with capacity.

The partners bring to thejoint venture substantialcomplementary assets,including submarine cableinvestments;satellite,gatewayand network infrastructurePoPs (points of presence);and solid IP/bandwidth and traffic volumes.

Pan-Asian

Complementary businesses, a shared vision and accessto high growth markets are what Telstra’s alliancewith Pacific Century CyberWorks is all about

>>

>>

>> >>

Pan-Asian Business Structure 2000

Telstra PoP HKT PoP (PoP: point of presence)

IP Backbone Company number one in Asia outside Japan

Wireless Company creating a Pan-Asian presence

Internet Data Centre Company substantial business opportunities

Telstra

PCCW/C&W HKT

three jointventures 40/60

50/50

50/50

22

TEL0011 Text 14/9/00 3:18 PM Page 22

growth

The new mobiles/wirelessjoint venture aims to establisha pan-Asian presence tocapitalise on one of theregion’s fastest growingtechnologies.

In the first instance, however,the partners will concentrateon cementing their relationshipin Hong Kong Telecom’s mobilesbusiness of which Telstra willbe a major shareholder.Telstra has a wealth of skillsand experience to offer thisventure gained throughoperating Australia’s leadingmobiles network.

The third component ofTelstra’s new alliance withPCCW – an internet datacentres greenfields jointventure – will establish andoperate a network of centresthroughout the Asia/Pacific to provide internet and e-enabled service offerings,initially focusing on hostingservices.

Telstra is confident that thisbold initiative with PCCW will brighten the company’sfuture and deliver substantialbenefits,not only to employeesand shareholders, but also tothe nation generally.

>>

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23

TEL0011 Text 14/9/00 3:19 PM Page 23

24

Telstra is a major sponsor ofthe Olympic Landcare projectand the Telstra Landcare LocalGovernment Award. LandcareAustralia is a non-profit entityformed in 1989 to raisecommunity awareness aboutland care and preserve andprotect our unique Australianlandscape. Telstra has been asponsor of Landcare Australiasince 1990, when the firstNational Landcare Awardswere held. This year’s winner of the Telstra Landcare LocalGovernment Award was Yugul Mangi Council from the Northern Territory.Telstraalso sponsors Clean UpAustralia Day and The BanksiaEnvironmental Foundation.Telstra maintains anenvironmental managementsystem across the company to continually improve itsown environmentalperformance and movetowards sustainability.

Telstra is proud of the partit has played in supportingThe Australian Ballet asPrincipal Sponsor for thepast fifteen years. We believethe arts should be availableto all Australians, just as we believe the benefits oftechnology are. Telstra iscommitted to focusing on its customers and puttingthem first. Our associationhas continued to grow withTelstra’s principal sponsorshipthis year of The Dancer’sCompany 21st anniversarytour, performing throughoutregional Australia from Darwinto Warragul via Albury.The tour highlighted Telstra’scommitment to the Australiancommunity, particularly tothose who live in regionalAustralia. In charting ourdestiny, we believe TheAustralian Ballet eloquentlydemonstrates that innovationand integrity are truecompanions. (The abovephoto of Kirsty Martin of The Australian Ballet wastaken by Branco Gaica).

As a company, Telstra reaches into the lives of most Australians every day

com

Telstra’s commitment toregional and rural Australia is absolute. This year thecompany formed the TelstraCountry Wide business unit.In addition to this structuralsupport,Telstra has developedrural traineeships to encourageyoung people to join theindustry, and live and work in their local community.Trainees are currentlyemployed in Alice Springs,Katherine, Tennant Creek andNhulunbuy. Telstra supportsthe ‘Pass the Hat’ concerts inregional Australia,which raisemoney for five differentcommunities each year.

Indigenous artist Long Tom Tjapanangka’s image of Ulampuwarra (HaastsBluff Mountain) won theNational Aboriginal & TorresStrait Islander Art Awards(NATSIAA). Since 1992, Telstrahas been the principalsponsor of this premier artevent that celebrates theextraordinary talent of ourcontemporary indigenousartists. Each piece created by this year’s entrants is anexpression of their individualcultural and regional identity.Telstra’s sponsorship includesacquisition of works for theTelstra collection owned bythe Museum and Art Galleryof the Northern Territory.(The artist is represented by the Ikuntji Arts Centre atHaasts Bluff, one of the 39Desart member art centres in Central Australia.)

➞ ➞ ➞ ➞

2525

Sport is more than a businessinvestment for Telstra. A greatbeliever in teamwork, thecompany sponsors three ofour most successful nationalteams: the Telstra Dolphinsswim squad, TelstraHockeyroos women’s hockeyplayers and Telstra Titansweightlifters. Swimming isthe highest participationsport in Australia and themost watched event duringOlympic and CommonwealthGames. More than 40 per centof Olympic medals won byAustralians have been forswimming, and Telstra’scontribution ranges fromproviding children with theopportunity to be coached in swim clinics by Olympicstars, such as Susie O’Neill,to the sponsorship of theAustralian swim team as a whole.

This year the companyinitiated an office wastemanagement and recyclingprogram to divert recyclablewastes produced in offices,such as paper, toner cartridgesand milk cartons, from landfill.This program is an integralpart of Telstra’s national wastemanagement system. Anenergy management programis also underway to maximisethe efficiency of energy useand minimise greenhouse gasemissions, enabling Telstra to actively contribute toAustralia’s targets to reducegreenhouse gas emissions.Telstra’s telecommunicationproducts also provideopportunities to improveenvironmental performanceby replacing paper-basedinformation transfer serviceswith electronic voice, videoand data links.

➞

munity

TEL0011 Text 14/9/00 3:21 PM Page 25

26

Elizabeth A NOSWORTHYBA, LLB, LLM Age: 54

Director since December1991. Chairman, Port ofBrisbane Corporation;Director, David Jones Ltd,GPT Management Ltd,RP Data Ltd, BrisbaneAirport Corporation Ltd,Queensland TreasuryCorporation, City ofBrisbane Arts andEnvironment Ltd andFoundation for Devel-opment CooperationLtd; Councillor, NationalCompetition Council;Member, AustralianGreenhouse OfficeExperts Group onEmissions Trading.

e

Board of DirectorsDonald G McGAUCHIEAge: 50

Director since September1998. Senior Partner, C&EMcGauchie – Terrick West;Chairman, WoolStockAustralia Ltd; Director,Australian Wool TestingAuthority Ltd, Farm PlanPty Ltd, Ridley CorporationLtd, Australian Centre forInternational AgriculturalResearch, Vicgrain Ltd,Victorian Grain ServicesLtd; Member, ForeignAffairs Council, TradePolicy Advisory Council,International PolicyCouncil Agriculture Foodand Trade; Immediate Past President NationalFarmers Federation.

John W STOCKER AO, MB,BS, BMedSc, PhD, FRACP, FTSE Age: 55

Director since October1996. Chairman, Grapeand Wine Research andDevelopment Corporationand Sigma Company Ltd.Director, CambridgeAntibody TechnologyGroup plc, CircadianTechnologies Ltd andNufarm Ltd; Principal,Foursight Associates Pty Ltd; former ChiefScientist, Commonwealthof Australia.

Robert C MANSFIELDAO, BCom, FASA, CPA Chairman Age: 49

Director since November 1999Chairman since January 2000.Chairman, CDS TechnologiesPty Ltd and StarlightChildren’s FoundationAustralia; Director, McDonald’sAustralia Ltd, Datacraft AsiaLtd and Dimensions DataHoldings plc; formerly Chief Executive Officer ofMcDonald’s Australia Ltd,Wormald International Ltd,Optus Communications Ltdand John Fairfax Holdings.

John T RALPH AC, FCPA, FTSE,FAICD, FAIM, FAusIMM, Hon LLD (Melbourne and Queensland)Deputy ChairmanAge: 67

Director and DeputyChairman since October1996. Chairman,Commonwealth Bank of Australia and PacificDunlop Ltd; Director, BHPLtd; Chairman, AustralianFoundation for Science;Deputy National Chairman,Foundation for YoungAustralians; Member,Board of MelbourneBusiness School, Board of Advisers of theConstitutional CentenaryFoundation, AdvisoryCouncil of the GlobalFoundation and GlobalCorporate GovernanceAdvisory Board EgonZehnder International.

Zygmunt E SWITKOWSKIBSc (Hons), PhDChief Executive OfficerAge: 52

Director and Chief ExecutiveOfficer since March 1999.Dr Switkowski has beenChief Executive Officer ofOptus Communications Ltdand Chairman and ManagingDirector of Kodak (Australasia)Pty Ltd. He is a Member of the Australian InformationEconomy Advisory Counciland the Business Council of Australia.

23

Front row (left to right): Robert MANSFIELD, John RALPH, Ziggy SWITKOWSKI. Back row (left to right): Donald McGAUCHIE, John STOCKER,

TEL0011 Text 14/9/00 3:22 PM Page 26

27

Malcolm G IRVINGAM, BCom, Hon DLit Age: 70

Director since July 1997.Chairman,Caltex Australia Ltd, ADI Ltd andWillis Australia Ltd Group;Director, Cabonne Ltd.

Stephen W VIZARDAM, LLB, BA, FAICD Age: 44

Director since October1996. Chairman, GranadaMedia Australia, Councilof Trustees of the NationalGallery of Victoria, OaktonComputing Ltd and RedHeart Productions;Director, MultiEmedia.comLtd; Board Member,Australian CommercialTelevision Fund; Memberof the Committee,Melbourne Cricket Club;Governor,Sony Foundation.

Cecilia A MOAR Dip T Age: 41

Director since September1998. Partner, cerealgrower near Swan Hill inVictoria; Member, MalleeCatchment ManagementAuthority Board andTelstra Country WideAdvisory Board; Graduateof the Australian RuralLeadership Program.

N Ross ADLERAO, BCom., MBAAge: 55

Director since October 1996.Chief Executive Officer and Managing Director,Santos Ltd (due to retire 30 September 2000);Chairman of the Board ofthe Art Gallery of SouthAustralia; Director, SantosGroup Companies,Commonwealth Bank of Australia and QCTResources Ltd; Member,Business Council ofAustralia; Council Member,The University of Adelaide.

Christopher I ROBERTSBCom Age: 55

Director since December1991. Chairman, Email Ltd;Director and ChairmanElect, Amcor Ltd; Director,Petaluma Ltd,TransparencyInternational Australia,Griffin Theatre Companyand Juvenile DiabetesFoundation Inc; Member ofthe Board of Governors,Winifred West SchoolsLimited (Frensham).

Anthony J CLARKAM, FCA, FCPA, FAICDAge: 61

Director since October1996. CharteredAccountant; formerlyManaging PartnerKPMG NSW 1992-1998;Chairman, MaritimeIndustry Finance CompanyLtd; Deputy Chairman,Australian TouristCommission; Director,Amalgamated HoldingsLtd Group, Ramsay HealthCare Ltd and CarltonInvestments Ltd.

Elizabeth NOSWORTHY, Anthony CLARK, Ross ADLER, Stephen VIZARD, Cecilia MOAR, Christopher ROBERTS, Malcolm IRVING.

TEL0011 Text 14/9/00 3:23 PM Page 27

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Annual General MeetingTelstra’s 2000 Annual General Meeting will be held at 1.30pm (Melbourne time) on Friday,17 November 2000 at the Melbourne Exhibitionand Convention Centre. The meeting will betransmitted live to information meetings at othervenues around Australia, details of which will bemailed directly to shareholders during October.

Dividend PaymentA final fully franked dividend of 10 cents per share will be paid on 27 October 2000 tosecurityholders registered on the Telstra Shareand IR Register on 22 September 2000. ForAustralian tax purposes, the dividend will be fully franked at the 34 per cent companytax rate.

Dividend PolicyIt is our current policy to declare ordinarydividends of at least 60 per cent of operatingprofit attributable to shareholders, subject totaking into consideration a number of commercialfactors, including the interests of shareholders,cash requirements for future capital expendituresand investments, as well as relevant industrypractice. However, in determining the dividendsdeclared from earnings for the year ending 30 June 2001, we will exclude the ‘once off’book profits that will arise from:• any profit recorded in the proposed sale

of our global wholesale assets to the IPBackbone joint venture company to beestablished with PCCW; and

• any profit resulting from the release from our obligations under the Telstra AdditionalContributions agreement.

However, for dividends declared from earningsin fiscal 2002 and future years, it is our currentintention that the dividends per share will notreduce on a year on year basis as a result of the alliance with PCCW, subject to continuingcommercial considerations.

Foreign ownership restrictionsThe Telstra Corporation Act restricts foreignownership. Foreign persons collectivelycannot control more than 35 per cent of thenon-Commonwealth owned Telstra shares, andindividual foreign persons cannot control morethan 5 per cent of them. Telstra will divest sharesif an unacceptable foreign ownership situationarises. Telstra will also keep relevant stockexchanges advised of foreign ownership levels.

Shareholding information and changeof addressQuestions relating to your shareholding,including share transfer, dividends or changingyour mailing address, should be directed to the Telstra Share Registrar on FREECALL™ 1800 06 06 08* or visit their website atwww.registrars.aprl.com.au

Removal from the Annual Report and Annual Review Mailing ListsShareholders who no longer want to receive the Annual Report or the Annual Review shouldadvise the Share Registrar in writing or visitwww.registrars.perpetual.com.au/scripts/iws.dll

Investor Information

Final fully franked dividend of 10 cents per share

DIVIDENDS

When Shares Acquired Tax TreatmentHow does tax reformaffect my shares?

The introduction of thenew tax system maychange the capital gaintax (CGT) treatment ofyour shares if they aredisposed of on or after21 September 1999.

Shares acquired before 21 September 1999 You have a choice of being taxed under either the old CGT rules and held for at least 12 months (with increase in cost base for inflation being frozen as at 30 September

1999) or the new CGT rules where only 50 per cent (or two thirds for super funds) of the gain will be taxable at marginal tax rates

Shares acquired on or after 21 September 1999 50 per cent (or two thirds for super funds) of the gain will be taxable at and held for at least 12 months marginal tax rates (without allowance for inflation)

Shares disposed of within 12 months The full gain will be taxable at marginal tax ratesof acquisition (regardless of when they were acquired)

From 1 July 2000, a refund for excess franking credits is available to Australian individual shareholders and complyingsuperannuation funds.

It is important that you seek professional tax advice in relation to your shares to take into account your particular circumstances.

*A free call unless from a mobile phone, which will be charged at the applicablemobile rate.

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Shareholders choosing not to receive thesereports will continue to receive all othershareholder information, including notice of theAnnual General Meeting. It should be noted that these reports are also available on our website at www.telstra.com.au/investor/as downloadable files.

Products mentioned in the reportFor more information about any of the productsmentioned in this report, contact our customerservice centre on 132 000.

When do I have to make the final payment on my T2 Instalment Receipts?✝

The Telstra Instalment Receipts Trustee (The Trustee) will have to receive your paymentby 5.00 pm on Thursday, 2 November 2000.

A Notice of Final Instalment Payment wouldhave been sent to all Instalment Receipt holdersin September.

To ensure that your payment is processed in time:• follow the directions for paying on the

Notice of Final Instalment Payment; and• pay your final instalment as soon as possible.

The Trustee will not be issuing any receipts oracknowledgements, but will post you a statementof your shareholding on 20 November 2000.

How much do I have to pay on my T2 Instalment Receipts?✝

You must pay the total amount shown on theNotice of Final Instalment Payment. The amountis calculated as follows:

• If you are entitled to the loyalty discount,the final payment is A$2.90 on each Instalment Receipt;

• For all other Instalment Receipts, the finalpayment is A$3.05 per Instalment Receipt.

What happens if I do not pay the finalT2 instalment on time?✝

If the Trustee does not receive the total amountdue by 2 November 2000, it can sell some or allof the underlying Telstra shares to recover thetotal amount you owe. You will lose yourentitlement to any loyalty discount. You willalso have to pay administrative fees of A$55(including GST) for each notice, share sale fees of A$50 (including GST), brokerage and interest.You could also have to pay any outstandingamount if there is not enough to cover the totalamount after selling your shares.

When I make the final instalment, what actuallyhappens to my holding of Instalment Receipts?✝

If you pay the final instalment as shown on the Notice on time, the Trustee will transfer your shares to you on 18 November 2000 andmail you a statement of your shareholding on 20 November 2000.

I have some more questions about myInstalment Receipts.✝In the first instance, please refer to yourprospectus or, if necessary, call the Telstra 2Share Offer – Final Payment Inquiry Line onFREECALL™ 1800 18 18 18.*

For more information about products > contact customer service on 132 000

Telstra

All Ords

Note: Telstra’s share price and the All Ordinaries Indexhave been indexed at 100 asfrom 30 June 1999 to allow a meaningful comparison.

J A S O N D J F M A M JJ

113

78

100

1999

2000

2000

✝ Applicable to Australian retail instalment receipt holders.Refer to the prospectus for detailed conditions.

*A free call unless from a mobile phone, which will be chargedat the applicable mobile rate.

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Telstra is the largest online service provider in Australia > 1 million online relationships

INTERNET

Go online for all your shareholder information. As a valuedshareholder, we are committed to improving the way wecommunicate with you. We view the use of the internet as a key driver for Telstra to provide relevant information,efficiently and economically.

Going online cuts costs AND improves communication.Each year Telstra publishes a range of printed material to keep its shareholders well informed about the company’sperformance. The cost of printing and distributing this material is significant.

By going online, shareholders will not only help Telstra manage costs, they will also gain access to more information,more often. The Interactive Annual Review, share prices, mediareleases and shareholder details direct from the share registryare available online 24 hours a day.

Become an online shareholder now, it’s easy.Just follow the 2 simple steps set out below.

Investor Information Harnessing the power of the

Step 1: Go to http://www.registrars.perpetual.com.au/scripts/iws.dll toaccess the registration area allocated to register your request to nolonger receive the Annual Review and Half-year Report in hard copy.

Step 2: Go to Telstra Investor Relations at www.telstra.com.au/investor/ to access the Interactive Annual Review and other documents.

If you wish to speak to one of our helpful staff regarding your internet connection please call 131 282.

2 easy steps to joining online:

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telstra.com objective > to become an online communications hub for individuals

Features of the Interactive Telstra Annual Review 2000

internetclick to Telstra’s online Annual Review

<<http://www.telstra.com.au/investor/ >>

Growth indicators.Click to reveal

interactive graphswith historical

comparative figures.

Includes fullcontextual help

and otherinteractive

tools.

Text and imagesare activated

by selecting aheading.

Text is hotlinked throughoutto telstra.com™ products andservices.

Zoom symbolenlarges theview of all textand charts

Print symbol for outputtinghard copies from yourprinter. Selecting the quitsymbol will take you backto telstra.com™

Contents symbols indicate main sectionsin Review. Click on these to navigate.

• easy navigation – a help tool has been developed providinginstructions to help you through the site

• key facts – detailed information about Telstra’s performance• more financial information – the interactive review allows us

to provide you not only the latest results, but the opportunity to compare historical figures

• connect to product information sites• print copies – all information can be printed if you require

a hard copy.

TEL0011 Text 14/9/00 3:47 PM Page 57

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Investor Information cont.

2000 1999 1998 1997 1996A$m A$m A$m A$m A$m

Sales revenue 18,609 17,571 16,703 15,430 14,716

Operating revenue 19,840 18,218 17,302 15,983 15,239

EBITDA(1) – before abnormals 9,135 8,351 7,375 6,597 6,021

– after abnormals 8,563 8,351 7,375 4,793 6,226

EBIT(2) – before abnormals 6,489 5,849 5,053 4,244 3,670

– after abnormals 5,917 5,849 5,053 2,406 3,875

Profit before tax – before abnormals 5,921 5,320 4,468 3,805 3,242

– after abnormals 5,349 5,320 4,468 2,073 3,447

Profit after tax and minorities – before abnormals 4,043 3,486 3,004 2,568 2,174

– after abnormals 3,677 3,486 3,004 1,617 2,305

Dividend 2,316 4,247 1,802 4,146 1,368

Total Assets 30,339 27,682 26,470 25,858 24,362

Gross Debt 9,821 7,211 7,722 7,981 5,143

Net Debt 8,531 5,769 6,458 7,036 3,739

Shareholders’ equity 11,602 10,294 11,079 9,938 12,668

Operating cashflow 6,547 6,574 5,635 5,254 4,478

Cash used in investing (4,896) (4,064) (3,609) (4,171) (3,870)

Cash used in financing (1,881) (2,484) (1,808) (1,572) (1,659)

Net movement (230) 26 218 (489) (1,051)

Capital expenditure and investments 5,428 4,478 3,973 4,504 4,071

Financial Ratios % % % % %

Return on average assets – before abnormals 23.2 22.7 20.1 17.7 16.6

– after abnormals 21.2 22.7 20.1 10.1 17.5

Return on average equity(3) – before abnormals 37.0 29.9 28.7 20.1 17.9

– after abnormals 33.7 29.9 28.7 12.7 18.9

Interest cover (times) – before abnormals 9.4 9.4 7.6 9.7 8.6

– after abnormals 8.5 9.4 7.6 5.5 9.0

Gross debt to capitalisation(3) (4) 45.8 36.9 41.1 44.5 28.9

Net debt to capitalisation(3) (5) 42.4 31.8 36.8 41.5 22.8

(1) Operating profit before interest received/receivable, interest expense (borrowing costs), depreciation and amortisation and income tax expense.EBITDA before abnormals is used as a measure of financial performance by excluding certain variables that affect operating profit but, which may not directly relate to all financial aspects of the operations of the company. EBITDA before abnormals is not a measure of operating income,operating performance or liquidity under Australian GAAP.

(2) EBIT before abnormals less depreciation and amortisation.(3) Excludes the effect of the special dividend of A$2,059 million provided for in the financial statements as at 30 June 1999.(4) Based on gross debt (total current and non-current borrowings) as a percentage of gross debt plus the shareholders’ equity.(5) Based on net debt (gross debt less interest bearing assets and loans to employees) as a percentage of net debt plus shareholders’ equity.

Five year financial summary:

Operating revenue totalled $19,840 million > an increase of 8.9%

FINANCIALS

TEL0011 Text 14/9/00 3:47 PM Page 58

Financial Calendar 2001

Half-year result announced Wednesday 7 March

Ex-dividend share trading starts Monday 19 March

Record date for interim dividend Friday 23 March

Interim dividend paid Friday 27 April

Annual result announced Wednesday 29 August

Ex-dividend share trading starts Monday 17 September

Record date for final dividend Friday 21 September

Final dividend paid Friday 26 October

Annual General Meeting Friday 16 November

Note: Timing of events can be subject to change

Contact details

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Telstra Corporation LimitedIncorporated in the Australian Capital Territory

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

Registered OfficeLevel 41, 242 Exhibition Street Melbourne Victoria 3000 Australia

Michael MontaltoCompany SecretaryPh: (03) 9634 6400

Principal Australian Offices242 Exhibition Street Melbourne Victoria 3000 Australia

231 Elizabeth Street Sydney New South Wales 2000 Australia

Investor Relations UnitLevel 36, 242 Exhibition Street Melbourne Victoria 3000 Australia

Wayne TreebyGeneral Manager

The Telstra Share Registrar ASX Perpetual Registrars LimitedPO Box 14300 MELBOURNE CITY MC Victoria 8001Australia: FREECALL™ 1800 06 06 08*All other: (613) 9615 9999Facsimile: (613) 9615 9911

Annual Report HotlineTo receive further copies of the Annual Reviewor copies of the detailed Annual Report,please call FREECALL™ 1800 06 06 08*

WebsiteThis review and the Annual Report may also be found via Telstra’s InvestorRelations home page at:http://www.telstra.com.au/investor/

Depositary for American Depositary Receiptsand Interim American Depositary Receipts The Bank of New YorkLevel 22, W101 Barclay StreetNew York, New York 10286Ph: (212) 815 5838Facsimile: (212) 571 3050

*A free call unless from a mobile phone, which will be chargedat the applicable mobile rate.

TEL0011 Cover 14/9/00 4:04 PM Page 3

Everyone, everywhere,needs to communicate,

everyday.™

© Telstra Corporation Limited (ABN 33 051 775 556) 2000.™Trade mark of Telstra Corporation Limited.

®Registered trade mark of Telstra Corporation Limited.

Making life easier™

TEL0011 Cover 14/9/00 4:04 PM Page 4

Documents

Think of the potential - Telstra C/review.pdfTelecard™,Phoneaway® ... with more than one million online users •650,000 Big Pond® subscribers •Nearly 400,000 directories customers