Telstra
Annual
Report
2022
We believe it’s people who give
purpose to our technology
So we’re committed to staying
close to our customers and providing
them the best experience
And delivering the best tech
On the best network
Because our purpose is to build a
connected future so everyone can thrive
Our values
Together with our purpose, our values express what we stand for and guide the way we do things.
They are core to who we are and we align everything we do with them. Here at Telstra, we have four values.
We are changemakers
We are better together
We care
We make it simple
We think big, set ambitious
goals and deliver them – for our
customers, shareholders and
communities. By speaking up,
being curious to learn and valuing
different perspectives we
challenge the status quo and
make change.
We’re one team and embrace the
value each of us bring. Our (super)
power lies in working together to
deliver for our customers. We’re
each accountable for our actions
and do what we say we’re going
to do.
We show care in all that we
do. We do the right thing
for our customers, our
communities, the planet,
ourselves and each other –
even when no one’s watching.
What we do is complex, but we
always make things simple for our
customers and each other. Simple
doesn’t necessarily mean quick.
We keep the simple, simple.
These are the values we stand for - the values by which we measure all of our actions.
Putting these values into action will help us to build a connected future so everyone can thrive.
Front cover image: Jane, Telstra team member, Bathurst Call Centre, NSW
Telstra Corporation Limited
ABN 33 051 775 556
Our 2022 reporting suite
Our FY22 reporting suite includes:
Our 2022 Telstra Annual Report (this report)
which describes our strategy, financial performance and
remuneration practices for FY22.
Our 2022 Corporate Governance Statement
which provides you with information about governance
at Telstra.
Our 2022 Bigger Picture Sustainability Report
which provides an in-depth look at our approach and
performance in relation to our most material social
and environmental topics during FY22.
Our 2022 Climate Change Report
which summarises our climate-related governance,
strategy, risks, targets and activities aligned with the
recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD).
Our 2022 Human Rights and Modern Slavery Act
Statement
which provides an overview of how we identify, manage
and mitigate the specific risks of modern slavery in our
operations and supply chains.
These reports are all available on our governance website
at telstra.com/governance.
The sections of our Annual
Report titled Chairman and
CEO message, Strategy and
performance, Our material risks,
Outlook, and Full year results
and operations review comprise
our operating and financial
review (OFR) and form part of
the Directors’ report. Our OFR,
Directors’ report and Financial
report were released to the
ASX on 11 August 2022 in the
document titled ‘Financial
results for the year ended
30 June 2022’ which is available
at telstra.com/investor.
Contents
Chairman and CEO message
• CEO transition
• FY22/T22 achievements
Strategy and performance
• FY22 financial performance
Our material risks
Outlook
Full year results and operations review
Board of Directors
Senior management team
Sustainability
Governance at Telstra
Directors’ Report
• Message from the People and Remuneration Committee Chair
• Remuneration Report
Financial Report
• Financial statements
• Notes to the financial statements
• Directors’ declaration
Shareholder information
Reference tables
Glossary
Indicative financial calendar
Contact details
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176
Chairman
and CEO
message
Dear Shareholders,
Thank you for your
continued support and
investment in Telstra during
the 2022 financial year.
Four years ago, your company embarked
on a bold transformation strategy to
fundamentally change Telstra for the
better and this year, we are delighted to
report, those four years of discipline,
focus and hard work under our T22
strategy have paid off and your company
is now positioned for continued growth.
Our investments in innovation and
technology, in digitisation and networks,
in improving our customer experiences
and ways of working, and our disciplined
approach to capital management mean
Telstra today is a fundamentally different
company with an incredibly bright future.
A summary of our many
achievements under
T22 is included and
more information is
available on these
and many other key
initiatives in the Strategy
and Performance section
of this report.
Importantly, and even while the business
was being transformed, we maintained
a disciplined approach to our capital
management, and this year our financial
performance enabled the Board to
resolve to pay a final dividend for FY22 of
8.5 cents per share, returning $1.9 billion
to shareholders. An additional $1.35
billion was also returned to shareholders
via an on-market share buy-back
following the sale of a non-controlling
interest in our Amplitel towers business
for $2.8 billion.
Work is also well progressed on our
proposed restructure. The Corporate
Restructure is a legal re-organisation of
the Telstra Group. Under the Corporate
Restructure, a new structure will be
established with New Telstra Corp as
the head entity of the Telstra Group.
Four key subsidiaries will sit under
New Telstra Corp:
• ServeCo – which will own and operate
the ServeCo Business;
• InfraCo Fixed – which will own and
operate the InfraCo Fixed Business;
• Amplitel – which owns and operates
the Amplitel Business. The Telstra
Group’s 51% interest in Amplitel is held
by Amplitel HoldCo; and
• Telstra International – which will own
and operate the International Business.
All of these businesses will continue to
focus on creating innovative products
and services, supporting customers and
delivering an exceptional customer
experience. Intercompany Agreements
(ICAs) have been or will be established
between the entities to help ensure they
each have the infrastructure access,
services and support required to enable
them to achieve this.
The Corporate Restructure is a key
component of the T25 strategy Telstra
announced last year. It is an important
next step in Telstra’s drive to increase
focus on its customer and infrastructure
businesses, increase transparency of the
assets in these businesses, and create
greater flexibility and optionality to
realise value from the Telstra Group’s
fixed infrastructure assets over time.
The Corporate Restructure is an internal
legal re-organisation and will not, in
itself, result in any immediate change
to the underlying assets and business
activity of the Telstra Group as a whole.
At the same time we have also continued
to build on our work as a leading
responsible business. Telstra is a key
contributor to the economy, a major
employer and a significant user of
resources, so we have a responsibility
to make contributions to the betterment
of society.
That means the obligations we have to
our customers are not just defined by the
small print of our contracts but by our
purpose and values as an organisation.
It also means continuing to take a
leading position and acting on key
issues including climate change,
diversity, digital inclusion and human
rights. It also means working to rebuild
trust with First Nations communities and
we were pleased to have launched our
new Reconciliation Action Plan recently
which sets outs our commitments and
actions we will take. We encourage you
to learn more about our response to
these key issues, and our broader
approach to responsible business in
our Bigger Picture 2022 Sustainability
Report, which will be available from
26 August 2022.
2
Chairman and CEO message | Telstra Annual Report 2022
From T22 to T25 – our new strategy for
growth
In FY23 we move from T22 to T25. The move to T25
marks an exciting new era in Telstra’s history, one
that will see us accelerate growth from our core as
well as continuing to scale our successful Health
and International businesses while we invest in
new businesses like Telstra Energy, where we see
opportunities in the future.
We will build on the simpler world we have created for
customers and give them an exceptional experience
with even greater personalisation, more consistency
across our channels, and the products and services
they need to connect as individuals and grow as
businesses.
We will take advantage of the many great strides
made in our 5G rollout and boost capacity, speed and
population coverage of our mobile network. We will
also expand our regional network by an extra 100,000
square kilometres so we can continue to deliver
leading mobile coverage and build on our network
leadership.
We will continue to improve our reputation as a
responsible business, further reducing our carbon
emissions, supporting our most vulnerable customers
and continuing to build fairness, inclusion and
accessibility into all that we do. We know we are
changing the business for the better, but we also
know we need to continue to work hard to convince
customers of the benefits of the changes so they
want to do business with us.
We will continue to evolve how we work so that we
build on what we have created by using Agile which has
completely changed the way we do business, making
us faster to market, more efficient and more customer
focussed. Hybrid ways of working are also enhancing
the flexibility in our workplaces and we continue to
ensure our teams have all the learning opportunities
and tools they need to grow so that we truly become
the best place to work.
And, we will finally leave behind the nbn headwinds
that have impacted our financials and make the most
of the productivity gains we have made across the
business to deliver sustained growth and more value
for our shareholders.
We were successful with T22 because we were bold.
We set ourselves some big, ambitious goals and
executed with discipline and transparency. We will
take this same disciplined approach with T25.
Thriving in a challenging environment
Of course, Telstra doesn’t exist in a vacuum and just
as we have transformed over the past four years,
so too has the world around us. Technology innovation
continues to accelerate, with the metaverse rapidly
taking shape, 5G and 4G near-pervasive, and IoT and
AI reaching real scale.
COVID-19 has turbo-charged the digitisation of
businesses, under-scored the critical importance
of connectivity and transformed education and
healthcare. Norms around how – and where – we work
socialise and educate ourselves have also been turned
on their head. At the same time geopolitics is about as
volatile and uncertain as most of us have seen in our
lifetimes, and that has changed the threat landscape
and the demands on our cyber defences and strategic
supply chains. Inflation and cost of living pressures
also continue to challenge. And all the while the
climate continues to change, with a corresponding
increase in the frequency and severity of natural
disasters.
All of these things will shape our country and our
planet over the next decade, and they will shape
Telstra. But with the transformative changes we have
made through T22, and the changes we will continue
to make through T25, we are in the best possible
shape to deal with them, and to help our customers
do the same.
Our new era of growth will also be led by a new-look
leadership team with Vicki Brady and Michael Ackland
taking on the CEO and CFO roles respectively from
1 September. A new Group Executive of our Consumer
& Small Business unit will also be appointed to drive
our customer focus.
Thank you
The Telstra Board and senior management team
would like to sincerely thank our millions of customers
for their ongoing support during the year, because
ultimately without them, there would be no Telstra.
Thank you also to every Telstra employee for the great
job you have done, often in trying circumstances, and
for your constant willingness to step up and do what
is needed.
The Board would also like to acknowledge and thank
retiring directors Margie Seale and Peter Hearl for
their outstanding contribution over many years.
And most importantly thank you, our shareholders,
for your continued support of Telstra.
John P Mullen
Chairman
Andrew R Penn
Chief Executive Officer and Managing Director
3
Earlier this year I announced Vicki
Brady would be the new Chief Executive
Officer of Telstra from 1 September,
2022, replacing Andrew Penn who is
retiring after more than seven years in
the role.
Andy has led Telstra during a period of
significant change and will be known for
his courage in setting a bold ambition
through the T22 strategy to deliver a
transformed experience for customers,
shareholders and employees.
There is no doubt T22 has delivered
beyond expectations and has laid the
foundations for Telstra’s T25 strategy
and a renewed focus on growth and
innovation. During his time as CEO,
Andy has driven a focus on digitisation
underpinned by a commitment to
simplifying our products and services
for our customers and employees. He
has also maintained our leadership in
mobile and fixed networks, including
recently through our investment to
lead on 5G.
Delivery of the T22 strategy has seen
Telstra return to underlying growth,
achieve significant customer experience
improvements, reduce costs by $2.7
billion and reach high performing
employee engagement levels with more
than 17,000 people in the organisation
now working in Agile.
In recent years, not only has Andy
ensured the successful delivery of our
T22 commitments he has provided
leadership at what has truly been an
extraordinary time as we have navigated
both as a company and a nation through
the challenges of the pandemic.
While in his role Andy made important
contributions to Australian society
including through his role as a Male
Champion of Change advocating for
diversity in the workplace, as Chair of
the Australian Governments Industry
Advisory Committee on Cyber Security
and in the Arts where he received the
2020 Creative Partnerships Australia's
Business Leadership Award for his
exceptional contribution to Australia’s
cultural life.
During his time as CEO, Andy also
developed a strong team to ensure the
ongoing successful leadership of the
company. The greatest testament to
this was the ability to announce an
internal successor to the role of CEO
and I’m thrilled to welcome Vicki Brady
into the role.
Having started her career with KPMG,
Vicki subsequently worked in a range
of finance, commercial and strategy
roles before moving into broader
business leadership positions. Vicki
joined Telstra in 2016 and has held
the role of Group Executive, Consumer
and Small Business in addition to
her current role of CFO and Group
Executive responsible for Strategy and
Finance, which she was appointed to
on 1 July 2019. She is an experienced
executive leader, who has built a
strong and deep understanding of
telecommunications and technology
on top of her financial expertise.
She has a Bachelor of Commerce
from the Australia National University,
a Masters from Stanford University
Graduate School of Business, is a
member of the Institute of Chartered
Accountants Australia and New
Zealand and is a graduate of the
Australian Institute of Company
Directors.
Vicki has made a significant
contribution to Telstra including
her work in developing our new
go-to-market plans as part of the
T22 strategy. She also played a key
leadership role in the development
of the T25 strategy and is well placed
to lead the company through its next
phase. She could not be more qualified
to take over the reins to deliver on our
T25 commitments.
On behalf of the Board, I would like
to thank Andy for his extraordinary
contribution to Telstra and
congratulate Vicki on her appointment.
John P Mullen
Chairman
CEO transition
–
Message from
the Chairman
4
Chairman and CEO message | Telstra Annual Report 2022
FY22/T22
achievements
Our shareholders
16.5 cents per share total dividend
fully franked and $1.9b returned to
shareholders1
$2.7b productivity savings,
further strengthening
balance sheet
Sale of non-controlling 49 per
cent interest of our InfraCo
Towers business for $2.8b,
approx 50% of net proceeds
returned to shareholders via
an on-market share buyback
Proposed restructure to
better realise the value of
our infrastructure assets,
take advantage of potential
monetisation opportunities
and create additional value
for shareholders
Our customers
All Telstra Consumer & Small
Business calls now answered in
Australia – calls also down 71%
Over 4.5m Telstra Plus members,
and 45b points redeemed
We have reduced our TIO
complaints by 44% since FY21
Telstra Group eNPS achieved
+37, a +18 uplift for T22
Our people
Employee engagement at global
high performing norm levels
One of Australia’s largest
Agile workforces – more than
17,000 people
Flexible and hybrid work
leadership – incl. location
agnostic employment contracts
Exceeded our target to recruit
new capabilities in new areas
such as software engineering,
data analytics, cyber security
and artificial intelligence with
more than 1,500 new hires
Our community
Over 17 million free calls made
from Telstra payphones
Our network
We are targeting a 50%
reduction in absolute
greenhouse gas emissions by
2030, from a FY19 baseline.
During FY22 we extended this
target to also include scope 3
emissions
Blocked over 200 million
scam calls from reaching our
customers since introducing
our scam call blocking feature
in mid-2021
Helped more than 745,000
customers in vulnerable
circumstances to stay
connected
Australia’s largest mobile network
covering more than 2.6 million
square kilometres of land
Invested $11b in our mobile
network over the last 7 years,
including $4b regional mobile
network
Telstra 5G now covers 80% of
the Australian population
Own or operate 400,000km of
subsea cables – enough to lap
the world 10 times
1. The statutory financial results for the full year ended 30 June 2022 filed on 11 August 2022 contained a typographical error which has now been corrected.
5
Strategy &
performance
6
6
FY22 financial
performance
Total Income on a reported basis1
Earnings Before Interest, Tax,
Depreciation and Amortisation (EBITDA)
Underlying EBITDA on a guidance basis2
Net Profit After Tax (NPAT)
Strategy and performance | Telstra Annual Report 2022
$22.0 billion
$7.3 billion
$7.3 billion
$1.8 billion
Total FY22 dividends 16.5 cents per share fully franked
$1.9 billion returned to shareholders
Maintained A-band credit ratings
$2.7 billion reduction in underlying fixed costs since FY16
1. Total income excluding financial income.
2. This guidance excludes material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as determined by the Board
and management.
7
Our strategic context and focus
When we launched our T22 transformation strategy in June 2018 we had to act boldly to
fundamentally transform and radically simplify and digitise Telstra. We had to respond to
the reality of the impact of the nbn rollout on Telstra. And we knew we had to transform and
improve the core business, while investing in new technologies, simplifying our systems and
removing customer pain points.
Our T22 Strategy
Launched in 2018 our T22 strategy had four pillars
1
2
3
4
Radically simplify our
product offerings,
eliminate customer pain
points and create all
digital experiences
Establish a standalone
infrastructure business
unit to drive performance
and set up optionality
post the nbn rollout
Greatly simplify our
structure and ways of
working to empower our
people and serve our
customers
Implement an industry
leading cost reduction
program and portfolio
management
The strategy leveraged many of the significant capabilities that had already been built through our strategic investment of up
to $3 billion announced in 2016 in creating the networks for the future and digitising the business.
8
Strategy and performance | Telstra Annual Report 2022
T22 Scorecard
Our T22 program – which concluded in June this year – has been a clear success and Telstra
today is a much simpler, more agile, more customer-focussed and more digitally-enabled
business. Many indicators of the scale of progress made under T22 are evident right across
the business.
s Customers
e
m
o
c
t
u
O
Market leading
customer
experience
Simplification
Network
Employees
Cost reduction
Balance sheet
Simplified
products,
business and
operating model
Extended network
superiority and 5G
leadership
Achieve Global
High Performance
Norm in employee
engagement
Net cost
productivity of
$2.7bn by FY221
ROIC ~8%
by FY231
Lead in all key
industry network
performance
surveys from FY19
Network ready for
5G in H1 FY19
Full commercial
deployment of 5G
in capital cities,
major regional
centres and other
high demand areas
by FY20
Australia’s largest
5G network
Deliver 5x data
growth at flat
costs by FY21
Agile teams at
level 3 of Agile
Maturity:
80% by FY20
>90% by FY22
1 quartile increase
in ease of doing
business
management
practices of
Organisational
Health Index (OHI)
by FY20
Increase employee
engagement score
10 points
Reduce total FTE
by 8,000 net by
FY22
Net cost
productivity –
more than $1.5bn
cumulatively
delivered by FY20
Total costs will be
flat or decline in
each year from
FY18
Absorb nbn CVC/
AVC costs
Labour cost to
sales ratio to
decline ~one third
by FY22
Top quartile cost
metrics for full-
service telco by
FY22
Underlying ROIC to
improve from FY19
to FY22
Monetise assets of
up to $2bn by FY20
Establish
standalone
infrastructure
business unit with
effect from
1 July 2018
High level SLAs for
infrastructure
business to
be defined by
1 October 2018
and segment
reporting by 31
December 2018
Telstra InfraCo
fully operational by
June 19
EBITDA benefits of
>$500m p.a. from
$3bn strategic
investment
realised by FY21
s
e
r
u
s
a
e
M
&
s
c
i
r
t
e
M
Increase NPS 3 to
6 points p.a.
Double active app
users from 4m to
8m by FY22 – 6m
active users by
FY20
Consumer & Small
Business sales
transactions
through the digital
channel:
24% by FY20
45% by FY22
Active Enterprise
customers on
Telstra Connect:
4,000 by FY20
7,100 by FY21
40% of Enterprise
service interactions
through the digital
channel by FY22
Increase average
services per
customer
Eliminate two
thirds of mass
market servicing
calls by FY22 – one
third by FY20
All mass market
incoming calls
answered in
Australia
Telstra Plus
members:
2m by FY20
5m by FY22
Build and launch
new digital
technology stack
in FY19
Complete
Digitisation
program with key
products built on
the new stack
Simplify from
~1800 to ~20
active Consumer &
Small Business
plans
Services on in-
market Consumer
& Small Business
plans:
>3m by FY20
>10m by FY22
Migrate all
Consumer &
Small Business
customers to the
new product range
on the new digital
technology stack
by FY21
Rationalise 50%
of Enterprise
products by FY21
Reduce 2 to 4
management
layers in the
organisation
700 apps
decommissioned
or contained by
FY20
1. Net cost productivity targeted outcome increased from $2.5bn in February 2021. ROIC targeted outcome reduced from >10% in August 2020.
Key
Completed
Significant progress but below target metric
Below target metric
The T22 scorecard released on 11 August 2022 in the Financial Results contained typographical errors.
The corrected version of the T22 scorecard has been included in this Annual Report.
9
Technology leadership
This year Telstra continued to operate
Australia’s best, largest and most reliable
mobile network. We expanded our 5G
footprint so it now covers 80 per cent of
Australians where they live and our total
network grew to cover 99.5 per cent of all
Australians, taking it to over 2.6 million
square kilometres. We also are ranked
number one for Ookla on Overall Mobile
Speeds.
We continue to innovate by trialling new
technologies in our network and in
February 2022, we achieved a record of
5.9 Gbps 5G peak download speed on a
commercial network using mmWave
spectrum. In December 2022, with our
partners Ericsson and Qualcomm
Technologies Inc., we achieved the
highest uplink peak rate ever recorded on
a commercial network during a live demo
in Queensland, Australia, reaching an
uplink data speed of close to 1Gbps.
Customer experience
We continued to take important steps to
improve our customer experience through
FY22. We completed our commitment to
answer all calls from our Consumer &
Small Business customers in Australia
and our licensee stores have all been
brought back in house, with all Telstra
stores now Telstra owned and operated.
Almost half of all sales interactions and
more than three quarters of all service
interactions with Consumer & Small
Business customers are now digital, and
since T22 began the number of calls
coming into Telstra’s consumer and small
business contact centres has fallen by
more than 70 percent. These
improvements are reflected in our
Episode NPS results, which are stronger
than ever, improving five points in the last
12 months and 18 points since the T22
program began.
Balance sheet and financials
FY22 was 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.
Key results include:
• Total income: $22.0 billion (-4.7%)
• EBITDA: $7.3 billion (-5.0%)
• NPAT (Profit): $1.8 billion (-4.6%)
• Earnings per share (EPS): 14.4 cents
(-7.7%)
Transforming our culture and ways
of working
T22 would not have been possible
without radical cultural change inside
Telstra. Our previous challenge to move
more quickly and simply was one of the
10
core internal pain points we faced and so,
through T22, we have fundamentally
changed the way we work.
The introduction of new Agile ways of
working has been the centrepiece of this.
Our adoption of Agile at scale has
transformed our approach to
prioritisation and resource allocation so
that we are faster to market, more
efficient and more customer-focussed.
Other than front-of-house staff, field
technicians and some specialist roles, all
our Australian based staff now work in
Agile. In fact, we have the largest Agile
workforce in the country with more
than17,000 people in the organisation
now working in Agile.
Telstra has long been a leader in flexible
working. It’s a big part of our culture and
this meant that when COVID-19 hit we
could quickly move most of our people to
working from home, something we did
over the course of a single weekend.
From there, we have continued to
embrace hybrid working and giving our
people choice about where they work. In
FY22, Telstra also moved to location
agnostic contracts for many roles,
removing the clause that states where an
employee’s place of work is from
employment contract terms and
conditions.
One of Telstra’s values is “We Care” –
showing care in all that we do for our
people, customers and the community. In
our diverse global operations, Telstra’s
focus is always on ensuring the safety
and wellbeing of our people and those
who have contact with our business
operations. This has never been more
important than over the past two years of
the COVID-19 pandemic where we have
guided and supported frontline and
critical infrastructure people, who come
to work every day for our customers,
while embracing flexible work for the rest
of our workforce.
Alongside this shift to Agile and flexible
working, under T22 we also reduced our
direct and indirect workforce by one
third, in response to the transfer of a
material part of our business to the nbn
and as a result of our digitisation and
efficiency initiatives. At the same time,
we have exceeded our target to recruit
new capabilities in new areas like
software engineering, data analytics,
cyber security and artificial intelligence
with more than 1,500 new hires. On
average four layers of management have
also been removed.
New opportunities and capabilities
We continue to look for opportunities to
grow our business and to unlock the true
value of our infrastructure. 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 per cent interest of our
InfraCo Towers business for $2.8 billion.
We retain 51 per cent ownership and still
own the active parts of our network,
ensuring we can continue to deliver
leading mobile coverage and maintain
our network leadership.
Approximately 50 per cent, or $1.35
billion, of net proceeds of this deal was
returned to shareholders during FY22 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
we maintain balance sheet strength and
flexibility.
In October last year we announced the
acquisition, in partnership with the
Australian Government, of Digicel Pacific
adding leading mobile businesses in
PNG, Fiji, Vanuatu, Tonga, Nauru and
Samoa with 2.8 million customers to our
International business. We completed
this acquisition in July 2022.
Telstra also announced two major
telecommunications infrastructure
projects this year to support the nation’s
digital economy and enable
unprecedented levels of connectivity
across Australia. Telstra will build and
manage the ground infrastructure and
fibre network in Australia for Viasat’s new
series 3 satellite system and construct a
major fibre project to build state-of-the-
art inter-city dual fibre paths across the
country.
This year Telstra Health was selected to
deliver 1800RESPECT for an initial five
years at an estimated contract value of
around $200 million. This adds to
strategic health software company
acquisitions in GP practice management
and specialist billing and clinical coding.
We have also launched our Energy
business where our goal is to grow by
helping Australian families save money,
time and emissions. There are three
building blocks for our ambitions with
Telstra Energy: to launch a simple,
sustainable and integrated energy
proposition, to leverage Telstra’s channels
and relationships to build scale, and to
provide 100 per cent carbon neutral
energy plans to customers. However,
clearly the retail energy market is
currently going through severe
dislocation and given this we will not be
scaling in FY23 as we keep the market
dynamics under review.
This year we also announced a $100
million deal with Intellihub to provide up
to 4.1 million Internet of Things (IoT) SIMs
over the next decade. This is our largest
ever IoT deal in terms of value and the
number of devices. The IoT SIMs will help
deliver real-time monitoring and insights
to help Intellihub and its customers
better manage energy demand.
Strategy and performance | Telstra Annual Report 2022
In November, we announced our intent to
form a new joint venture with Quantium
to bring together Quantium’s market-
leading data science and AI capabilities
with our customer, product and network
data assets. This unique partnership is a
key enabler for our future data and AI
ambitions.
Doing business responsibly
At the same time, we have also continued
to build on our work as a leading
responsible business. Telstra is a key
contributor to the economy, a major
employer, a large procurer of goods and
services, and a significant user of
resources so we have a responsibility to
make contributions for the betterment of
society.
That means the obligations we have to
our customers are not just defined by the
small print of our contracts but by our
purpose and values as an organisation. It
also means continuing to take a leading
position and acting on key social issues
including climate change, diversity, digital
inclusion, human rights and working to
rebuild trust with First Nations
communities following inappropriate
sales practices by a small number of our
partner stores some years ago.
Our commitment takes many forms and
includes significant action on climate
change, where we were certified by the
Australian Government’s Climate Active
program as carbon neutral in 2020 and
continue progressing towards our other
two climate targets – to reduce absolute
emissions from FY19 by at least 50% by
2030 and to enable renewable energy
generation equivalent to 100% of our
consumption by 2025. As well as
optimising our operations to reduce
energy requirements we are also using
our voice and influence to advocate on
climate issues, demonstrate our climate
and environmental leadership through
our actions, and wherever possible
enable and accelerate the action of
others. Addressing climate change
requires innovative thinking and a
determination to act and, as part of this,
Telstra is revegetating 240 hectares of
land acquired at Yarrowyck in northern
New South Wales. The project is expected
to store around 160,000 tonnes of carbon
dioxide over the next 25 years.
We are also focussed on improving our
resource efficiency, through programs to
re-use and recycle devices and the
packaging they come in, reducing waste
going to landfill.
Across our value chain, we aim to ensure
our business and our business partners
operate with respect for human rights.
We have taken a clear and unequivocal
position on modern slavery: we stand
completely opposed to what is an
inhumane, immoral practice and believe
there is absolutely no place for it
anywhere in our operations or supply
chain. We are committed to preventing,
identifying and addressing any instances
of modern slavery in our business or
supply chains in line with international
business and human rights standards.
Telstra is also heavily involved in
programs to build digital inclusion,
because while the digital economy is
generating incredible social, cultural and
economic benefits for many Australians,
these benefits are not being shared
equally. Too many Australians, and
particularly Australians in vulnerable
circumstances, are at risk of being left
behind in the digital age and even more
marginalised. Telstra has a key role to
play to build access, through our network
investment, ensuring products and
services are affordable, and by
supporting a range of programs to build
digital skills. We are focussed on
supporting those on low-incomes, people
with disability, older Australians, regional
and remote communities, First Nations
peoples and individuals who are
experiencing unemployment,
homelessness or family violence.
We are also providing more coverage to
more people in regional and remote
places. Over the 7 years to end FY22
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 FY22,
and an additional $200 million co-
investment fund to improve regional
connectivity over the next four years.
This year we embarked on a journey of
listening, learning and understanding,
and developed a new Stretch
Reconciliation Action Plan. These actions
reflect a new starting point for us as we
rebuild trust and forge a better path
towards reconciliation with First Nations
peoples and communities across
Australia.
We continued to provide ongoing
assistance packages and support
programs during times of critical need,
including during the COVID-19 pandemic,
conflict in Europe and in areas hit by
catastrophic natural weather events
including floods and bushfires. Our
response highlighted the strength of our
values and the resilience of our
organisation in maintaining our
operations, supporting our customers
and keeping our employees safe in times
of dire need.
We are incredibly proud of the advances
we have made this year in continuing to
shape Telstra as a responsible,
sustainable, and community-minded
organisation. As the world continues to
change around us, we remain purpose-
led and values-driven.
Transitioning from T22 to T25
Throughout T22 we have remained
disciplined and focussed, and we have
now delivered one of the largest and
most ambitious transformation programs
for a telecommunications company
globally.
Now we move from a strategy we had to
do to a strategy we want to do – from a
transformation strategy to a strategy
focussed on continued growth. T25 marks
an exciting new era in Telstra’s history,
one that will see us accelerate growth
from our core as well as continuing to
scale our successful Health and
International businesses while we invest
in new businesses like energy, where we
see opportunities in the future.
We will build on the simpler world we
have created for customers and give
them an exceptional experience with
even greater personalisation, more
consistency across our channels, and the
products and services they need to
connect as individuals, and to grow as
businesses.
We will take the great strides we have
made in our 5G rollout and boost
capacity, speed and population coverage
of our mobile network. We will also
expand our regional network by an extra
100,000 square kilometres. We will boost
our reputation and change the way
Australians think about us by doing
what’s right by our customers and
communities – further reducing our
carbon emissions, supporting our most
vulnerable customers and continuing to
build fairness, inclusion and accessibility
into all that we do.
We will continue to evolve how we work
so that we get the most out of Agile and
hybrid working, and make sure our
employees have all the learning
opportunities and tools they need to grow
so that we truly become the best place to
work. And finally we will leave behind the
nbn headwinds that have impacted our
financials and make the most of the
productivity gains we have made across
the business to deliver sustained growth
and more value for our shareholders.
11
Our T25 Strategy
Like T22, T25 is built around four key strategic pillars
1
2
3
4
Provide an exceptional
customer experience you
can count on. Nothing is
more important than
continuing to improve
customer experience
and this sits at the
heart of T25
Provide the leading
network and technology
solutions that deliver
your future
Create sustained
growth and value for
our shareholders
Be the place you want
to work. T25 is a strategy
focussed on growth
by leveraging the
capabilities we have
built under T22
In the same way T22 would not have been
possible without the foundational
investments we announced in 2016, T25
would not be possible without all that we
have accomplished in T22.
We will deliver T25 through our five key
businesses – Consumer and Small
Business, Enterprise, New Markets –
comprising Energy and Health,
International and Infrastructure. The four
pillars of T25 are guiding the strategy for
each of these businesses but each also
has its own ambition reflecting the place
it is at and the opportunities ahead.
In its implementation, we will be using
the same disciplines and governance
that we used for T22 including a T25
scorecard that lays out the key
milestones and metrics that underpin
the strategic pillars.
12
Strategy and performance | Telstra Annual Report 2022
T25 scorecard
Customer
experience
Network &
Technology
Growth
and value
New ways
of working
Digital
leadership
Responsible
business
Remain at 90th
percentile employee
engagement
(equivalent to high-
performance norm)
Improve agile
maturity of teams,
with 70% scoring
above 4 by FY25
Halve our time to
market for products
and services from
FY22 to FY25
50% increase in
representation of
Data & Analytics
workforce by FY25
Direct software
engineering
workforce delivering
~2x the percentage
of strategic
development work
by FY25
All key service
transactions with
customers are
capable of being
conducted digitally
by FY25
100% of key
business processes
enhanced/ improved
using AI by FY25
Reach top 20% in
Digital Capability
Index by FY25
100% API-first
architecture for
customer
management,
product
development, and
external
monetisation
Enable renewable
energy generation
equivalent to 100%
of our consumption
by 2025
Reduce absolute
emissions from FY19
by at least 50% by
2030
Increase digitally
active customers
by 2m, including
building digital skills
for 500k Australians,
by FY25
Help keep 1m
customers in
vulnerable
circumstances
connected each year
from FY22-25
Move ~90% of
applications to the
public cloud by FY25
4-7pt uplift in
RepTrak reputation
score by FY25
Market leading CX
with
• eNPS >40 by FY25
• sNPS uplift of +25
by FY25
Network leadership;
by FY25:
• ~95% pop.
coverage for 5G
• >80% of traffic on
5G
• 3G closed in FY24
Win majority of key
surveys for best
fixed/ mobile
network including
• Coverage, and
• Overall customers
speeds for mobile
FY23-FY25
Double metro cell
sites by FY25 to
densify the network
Expand regional
coverage
• 100,000km2 new
coverage by FY25
s
c
i
r
t
e
m
d
n
a
s
t
n
e
m
e
t
i
m
m
o
c
r
u
O
Getting it right for
customers
• >90% ‘Once and
Done’ by FY25
(C&SB)
• 90% rating in
support and
engagement by
FY25 (TE)
Reduce our
complaints
• One-third by FY23,
50% by FY25
(C&SB)
• >95% of billing
disputes will be
resolved in 1 cycle
by FY25 (TE)
Grow Telstra Plus
members (#) and
engagement (%)
• 5.4m and 70% by
FY23
• 6m and 80% by
FY25
Grow digitally active
users by 2m to 8.5m
FY25 (C&SB)
Improve availability
of infra. assets for
customers, by FY25
• 250 new towers
• 20,000km of fibre
deployed1
Underlying EBITDA
• $7.5-8.0b by FY23
• Mid-single digit
CAGR FY21 to FY25
Underlying ROIC
• ~8% by FY23
• Grow beyond to
FY25
Underlying EPS:
High-teens CAGR
FY21 to FY25
Maximise fully-
franked dividend and
seek to grow over
time
Maintain cost
discipline
• $500m net fixed
cost out from FY23
to FY25 while
investing for
growth
• Maintain leading
operating cost
metrics for full-
service telco
Maximise value from
infra.
• Amplitel EBITDAaL
CAGR –low-to-mid
single digit
• InfraCo Fixed
EBITDAaL CAGR –
low-single digit
Telstra transformed
The many changes we have made through T22, and the changes we will continue to make through T25, mean we are in the best
possible shape to make the most of the many opportunities ahead, and to help our customers do the same. As Australia continues
to develop an ever-increasing reliance on digital connectivity and to deal with challenges including rising cost of living pressures,
geopolitical instability and climate change, we are very well placed to deliver the infrastructure, solutions, products and security
needed by our customers (including our International customers) and to support Australia’s journey toward becoming a world
leading digital economy.
13
Our material risks
The importance of continuing to identify, measure and monitor the most material risks to our
business is more pronounced than ever. We operate under a new normal of greater geopolitical and
economic uncertainty and the continued challenges of the ongoing global pandemic that has
disrupted several key parts of global and local life and commerce.
As a business, we are transitioning to
our T25 strategy, which marks an
exciting new era in Telstra’s history. Our
T25 strategy will see us accelerate
growth from our core as well as scale our
business, and brings several risks which
we must adequately manage.
Managing our material risks well is an
important part of ensuring the success
of our strategy, as well as enhancing
customer experience, our reputation,
financial position and our capacity to
pay dividends.
Below we describe the material risks that
could affect Telstra in this context,
including any material exposure to
environmental or social risks, and how we
seek to manage them. These are not
listed in order of significance, nor are
they all encompassing. They reflect the
most significant risks identified at a
whole-of-entity level through our risk
management process.
Transformation, strategy and
market forces
At the end of FY22, Telstra marked
an important phase in our history with
the conclusion of the T22 strategy.
Telstra today is a simpler, more agile,
collaborative and customer focused
organisation. From this foundation,
we are now transitioning from T22 to
14
14
our T25 strategy, a transition from
transformation to growth.
Our T25 strategy includes a focus on
increasing 5G population coverage,
network capacity and connection speeds,
working to boost our reputation by doing
what is right for our customers and
communities, continuing to evolve by
consolidating our Agile and hybrid ways
of working and utilise productivity gains
to deliver sustained growth and more
value for our shareholders.
We acknowledge that our transition from
transformation to growth poses a level of
inherent risk, including the risk that the
decisions we make lead to the design and
delivery of products and services which
do not sufficiently meet our customers’
needs. We also recognise that Telstra
operates in a competitive environment,
and that despite our transformation,
competitors have also made their own
strides.
To manage these risks, we constantly
monitor business performance and
forecasts against changes in the
external environment, and stress test
our approach against various market
scenarios. Our Agile ways of working,
now at scale across the business, also
allow us to rapidly respond to market
challenges. We also continue to have a
strong focus on maintaining effective
governance and leadership so that we
can identify, escalate, and manage
growth risks, and risks within the market
segments that we operate in.
Group restructure
The Telstra group restructure was a key
component of our T22 transformation
and is also a key component of our new
T25 strategy. Our proposed legal
restructure involves the establishment of
New Telstra Corp as the head entity of
the Telstra Group and four key
subsidiaries which sit beneath New
Telstra Corp: ServeCo, InfraCo Fixed,
Amplitel and Telstra International. The
restructure is an internal legal re-
organisation and will not itself result in
any immediate change to underlying
assets or business activities of the
Telstra Group. It is an important next step
in Telstra’s drive to increase focus on its
customer and infrastructure businesses,
increase transparency of assets in these
businesses, and create greater flexibility
and optionality to realise value from the
Telstra Group’s fixed infrastructure
assets over time.
In FY22, the establishment of Amplitel
was completed, with Telstra retaining
51% (majority ownership) of the
business.
The establishment of a new holding
company and the transfer of assets into
ServeCo are proposed to occur by way of
a scheme of arrangement that we intend
to seek shareholder approval for.
While we continue to work on the
restructure and to engage with
Our material risks | Telstra Annual Report 2022
Government, regulators and other key
stakeholders, there is a risk that the
group restructure may be delayed or not
successfully completed, reducing the
optionality and opportunity we have to
realise additional value from our
infrastructure assets. We also
acknowledge that there are also risks
associated with the implementation of
the scheme and the legal restructure
which we must manage, including that
the scheme may result in higher ongoing
costs than expected, operational
implementation risks and managing
increased regulatory complexity.
To mitigate these risks, we have a
dedicated program and strong
governance focused on addressing these
risks and ensuring successful
implementation of the restructure. We
also have a comprehensive consultation
program to explain the many benefits
this restructure delivers to our
stakeholders, including our
shareholders, the Government,
suppliers, customers, and our people.
gotten this right, but have focused
significant attention and resources on
learning from the past as we head into a
new phase.
The risks associated with not conducting
our business responsibly are extensive.
We risk eroding community and customer
trust in our standing as a responsible
corporate citizen and our losing our
reputation with stakeholders with
potential negative regulatory and
financial implications.
We are committed to conducting our
business responsibly through a range of
measures. These include enabling
renewable energy generation, reducing
absolute emissions, increasing digitally
active customers including by building
digital skills for Australians, focusing on
keeping our customers in vulnerable
circumstances connected, and
embedding a broader culture that
supports our people to act responsibly.
transitioning to Agile at scale in the
calendar year 2021 and early 2022. These
included our Risk and Compliance and
Legal areas. The Agile model delivers
greater opportunities for growth and
development for our teams and allows
our staff to have a greater level of
accountability and ownership over their
work, helping create a more energised
and engaged workforce that is motivated,
impactful and regularly exposed to new
opportunities through the flow to work.
We invest heavily to reskill and upskill
our people, complementing our
comprehensive suite of technical
training with additional micro –
credentials. In February 2022 we
launched our Future Ready Program,
which focuses on developing and
upskilling in seven core capabilities,
helping mitigate the risk that comes with
our workforce not being across the
latest skills and credentials needed to
keep us competitive and effective.
Responsible business
For Telstra, doing business responsibly
means doing the right thing – for our
customers, our people and the
communities in which we operate. We
recognise that there has never been a
more important time for businesses to
think deeply about the role they play in
society, and for this reason doing
business responsibly is one of the key
pillars in our T25 strategy.
The principles of sustainability are
fundamental to us and the way we
operate. Our purpose is to build a
connected future so everyone can thrive.
It’s a powerful purpose, and it underpins
our belief that Telstra has a very real
responsibility to play a positive and
meaningful role in creating a more
sustainable and inclusive world. The
foundational connectivity and digital
solutions we provide create value for our
customers, people, communities and
shareholders.
We continue to work hard to ensure that
our business practices are in line with our
purpose and values and the expectations
of the broader community. We know that
our responsibility to do the right thing
goes all the way to the core of our
operational practices, particularly those
that have the potential to impact
customers in vulnerable circumstances.
We acknowledge that we have not always
People and culture
It is essential we continue to attract,
develop, and retain a skilled and engaged
workforce. We seek to build an agile,
enabled values-driven organisation
focused on simplicity and accountability,
and to build a workforce that can pivot in
response to change.
We are also focused on maintaining a
purpose and values-led culture that
reflects the expectations and standards
of the broader community in line with our
commitment to responsible business
practices, which we have identified as a
priority as part of our T25 and
sustainability strategies. Our corporate
values are integrated across our business
and embedded into our behaviours and
decision-making. Our Appreciate reward
and recognition program recognises our
people who bring these values to life
through their everyday actions.
We have several mechanisms to manage
our people and culture risks, including
employee engagement surveys,
monitoring capability coverage in key
talent segments and ensuring we have
critical role succession coverage. Where
behaviour occurs that is not in keeping
with our values, we have processes in
place to identify and deal with it
appropriately, including through our
whistle-blower process and internal
investigations team.
We continue to evolve our operating
model, with several areas of the business
Health, safety, and wellbeing
The effective management of health,
safety, security, and wellbeing is a
fundamental priority due to the risks they
present our people (both physically and /
or mentally), our assets, the environment
and the communities in which we
operate. The nature of this risk is
continually evolving, as our business and
the environment in which we operate
changes.
We actively monitor and manage a
diverse range of health, safety and
wellbeing outcomes, including the
physical safety in our varied workplaces
(especially as more of our people work
more often from home), the security of
our people and places of work, their
mental health and wellbeing (including
the wellbeing risks associated with
transformation) and the potential for
harm to our environment and the
communities in which we work.
We continue to support the safety and
wellbeing of our people during the
ongoing COVID-19 pandemic in what
remains a challenging and frequently
changing Australian and global
landscape, including by focusing on the
physical and mental health and
wellbeing of those directly impacted by
COVID-19. We have also played an
important leadership role in discussions
about COVID-19 safety, in Government/
Industry forums, in our approach to
mandating vaccination for certain roles,
15
in rewarding our employees for being
vaccinated, and setting up our own
vaccination hub at the Melbourne Office.
Our approach has supported the
wellbeing of our staff and have enabled
business operations to continue
throughout the pandemic.
Climate change
Climate change is a considerable threat
to our economy, our environment, our
health, our way of life and our future. It is
the defining challenge of the 2020s, and
as one of the largest consumers of power
in the country, we have a major role to
play in addressing this. Every year the
consequences of inaction compound,
with increasing threats of worsening
heatwaves, unprecedented flooding and
bushfires, and shifts in rainfall patterns
that will leave some parts of the country
drier and others more flood prone. We
understand the economic and
reputational risks associated with
climate change and transitioning to a
lower-carbon economy. Climate change
also directly impacts our ability to
conduct our operations, as we saw in the
2022 New South Wales flooding and
subsequent localised network outages.
As part of our response, we have been
certified carbon neutral in our operations
since July 2020. We are committed to
enabling renewable energy generation
equivalent to 100 per cent of our energy
consumption by 2025 (against our FY19
baseline) and reducing absolute
greenhouse gas emissions by at least 50
per cent by 2030.
We are assessing the impact of retail
energy growth in relation to our scope 3
emissions profile and will provide an
update once this has been completed. We
are also confirming the implications of
our recently completed Digicel Pacific
acquisition in relation to our carbon
neutral and emissions reduction targets,
and we will provide an update should
there be any material impact once this
analysis has been completed.
We are committed to leading by example
by setting bold and ambitious targets to
reduce greenhouse gas emissions,
investing in renewable energy and to
becoming a certified carbon neutral
organisation. We are also using our scale
and voice to help drive better
environmental outcomes on the pathway
to net zero emissions. Further, in FY22,
we completed the physical climate risk
analysis for our Australian above ground
16
infrastructure and have also developed
and implemented our first formal climate
adaptation plan. While these are
significant steps, we acknowledge that
they are just the start.
Since 2020 we have aligned our reporting
to the Taskforce on Climate-Related
Financial Disclosures (TCFD) framework.
Our 2022 Climate Change Report
summarises our climate-related
governance, planning, strategy and
activities and aligns with the TCFD
framework.
Network IT and resilience
One of Telstra’s competitive advantages
is the quality, scale, speed, and resilience
of our network. The COVID-19 pandemic
highlighted the demand for seamless and
high-quality connectivity for customers
working and studying from home. We
recognise we need to plan our networks
to increasingly cater to the changed
nature of work and education as people
live in a world where hybrid ways of
working are now the norm.
Given so many customers depend on the
quality of our network, we recognise the
potentially significant impacts that flow
from network congestion and outages.
These events are disruptive and
frustrating for customers, and significant
for us in terms of financial loss, potential
regulatory scrutiny, reputational risk and
the trust people have in our brand.
The resilience of our network can be
undermined by natural disasters,
unforeseen spikes in demand, the activity
of malicious actors, human error,
equipment failure, data quality, or failure
in the underlying electricity grid that
powers our network. We raise and assess
such risk scenarios through our mature
risk management approach and respond
to them through a range of strategies and
processes that seek to prevent, respond
to, and recover from service and network
disruptions.
We have several indicators in place to
dynamically monitor network and IT
performance and resilience, and we
proactively track risk remediations and
improvements in our network over time to
progressively reduce our risk exposure.
Further, the end-to-end resilience of our
systems and processes is a key enabler
of our T25 Growth Strategy by enhancing
resilience for our customers through
small impact zones, orchestrated failover
for apps and connectivity.
We continue to implement a cross-
company approach which manages end-
to-end resilience of key products and
services, considering all elements that
can potentially impact customer service,
including disruptions to our network and
IT technology.
Privacy, data and cybersecurity
With the growing demand for, and
dependence on, being able to live, work
and learn online, the information and
cybersecurity threat environment has
increased. This is one of the reasons we
put data privacy, information security and
cybersecurity at the forefront of
everything we do. We understand that the
failure to do so presents a material risk
that has the potential to allow crime,
espionage, and errors to happen at an
unprecedented pace, scale, and reach.
While it is not possible to mitigate all
cyber risks, it is critical that we take
action to help our customers trust in the
connectivity we provide. We use a range
of technologies and security controls to
minimise the likelihood and impact of
unauthorised access to our networks and
systems. These include logging and
monitoring capabilities to pre-empt and
proactively prepare for internal and
external threats, and industry-standard
infrastructure configuration.
We continuously invest in our security
capabilities, including maintaining and
enhancing our existing technologies to
continue to stay ahead of new security
threats. We also deploy new technologies
to ensure we can adapt to the range of
changing security and scamming threats.
Telstra is currently operating in a
heightened threat posture due to the
geopolitical situation and increased risk
stemming from global cybersecurity
threats and events. As part of our
response, we have developed
comprehensive response plans, reviewed
our infrastructure and systems to ensure
the integrity of the Telstra network, and
are working extremely closely with both
Home Affairs and the Australian
Cybersecurity Centre to provide technical
capability to help defend the country
against significant cyber-attacks.
Our approach to cybersecurity risk
management processes ensures
appropriate ownership, oversight and
ongoing risk management is applied to IT
systems, data, and risks. We also have
security processes that include technical
reviews of projects and solutions and due
diligence of third parties, to test the
presence and effectiveness of security
controls at critical points. We deliver
programs designed to foster a strong
cybersecurity culture, including
mandatory annual training for all
employees and contractors and regular
phishing drills. As technology continues
to evolve, we are conscious of emerging
issues in relation to artificial intelligence
and machine learning and have
governance programs in place to monitor
these risks.
We regularly review and update our
privacy statements and procedures so
that we remain compliant with our legal
obligations and consider society’s
expectations in relation to collection,
storage and use of our customers’
personal information. Please refer to the
Corporate Governance Statement for
more detail on how Telstra manages
privacy.
We also continue to work with the
Australian Government as it executes its
2020 Cybersecurity Strategy, with our
CEO chairing the Industry Advisory
Committee.
Geopolitical environment
The current global geopolitical
environment is one of increasing volatility
and uncertainty. With international
political tensions and conflict running
high, there is a risk that we may be
unable to effectively plan for and respond
to significant shifts in the global political
climate.
Geopolitical risks are complex and
unpredictable in nature, and we
recognise that failure to manage these
risks effectively could result in significant
impacts to our people, supply chain and
business, including key material
shortages, increasing economic market
volatility, inflation and price changes of
goods or services. As a leader in
Australia’s technology industry, we are
also on the cyber front line as the current
environment increases risk stemming
from global cyber threats. The global use
of economic and trade sanctions is
changing rapidly, increasing our
compliance risk due to the complexity
and multi-jurisdictional nature of
applying sanctions across our business,
customer, and supplier base. Our
international investment in Digicel Pacific
may also increase the complexity of
issues we face from both a cybersecurity
perspective and the geopolitical risks
extant in the international markets in
which Digicel Pacific operates.
As part of our response, we have
implemented several processes,
including governance structures and
frameworks for geopolitical monitoring,
review of decisions in volatile regions and
engagement of third parties to advise on
the likely geopolitical scenario over the
next three to five years.
We continue to actively monitor the
evolving environment as we navigate
greater international uncertainty, in order
to maintain continuity of our business
operations and to do what we can to keep
our people and customers safe and
informed.
Regulatory change and stakeholder
engagement
Telstra’s products and services and the
way we deliver them are subject to
constant scrutiny from a range of
regulators and agencies.
To ensure we comply with these
regulations, it is essential that we
continue to maintain proactive and
transparent relations with all relevant
regulators, consumer and community
groups and policy makers in an effort to
ensure fair, balanced and socially
appropriate policy and regulatory
decisions are made.
The key regulatory matters currently
relevant to Telstra arise in an
environment of heightened expectations
and relate to regulatory compliance,
responsible business practices,
establishing a new retail energy
business, NBN Co regulation and policy,
consumer safeguards and service
standards, spectrum allocation,
government security and digitisation
policy, connectivity for regional and rural
communities, and universal service
policy.
These and other regulatory and policy
matters may directly impact our
strategy and business model as well as
raise the risk of additional regulatory
cost and complexity being imposed on
our business. We have a strong
framework to manage these risks,
monitor trends, opportunities and
threats to identify relevant government
reform opportunities, and proactively
engage with regulators, government
bodies, industry and customer groups
and other stakeholders.
Our material risks | Telstra Annual Report 2022
Compliance
From how we sell devices to how we
maintain our subsea cables, Telstra must
comply with a broad range of obligations.
As a responsible business, it is up to us
to understand and meet them so that we
are doing the right thing by our people,
our customers, our communities and our
shareholders.
We have several measures in place to
manage our compliance risks, including a
robust framework which sets out a
standardised approach to compliance, a
bi-monthly report on material
compliance issues that do or could lead
to a breach of our obligations to our Audit
& Risk Committee, and a mandatory
compliance training framework which
includes monitoring training completion
across all teams and consequences for
non-completion.
In FY22, we established and progressed
the Compliance Uplift program of work
which was established to support the
need to mitigate risks of non-compliance
across the organisation, focusing on
uplifting our control environment. A
cross-company approach has been
implemented to embed awareness and
ownership of critical compliance
obligations at all levels of the
organisation, improve assurance,
governance and oversight; and more
promptly report and escalate breaches
when identified.
While we acknowledge the need for
continual improvement, we have made
significant progress as an organisation
in becoming more intimate with our
obligations, creating a culture where
acting responsibly is core to decision
making and delivers compliant and
sustainable outcomes.
Further detail on our risk
management framework
and our overall approach to
managing risk is provided in our
2022 Corporate Governance
Statement available at
telstra.com/governance.
Further information about our
sustainability related risks is
provided in our 2022 Bigger
Picture Sustainability Report,
available at telstra.com/
sustainability/report/data.
17
Outlook
As we enter the first year of our T25 strategy we are in a strong position to maintain our
financial momentum and continue to build underlying growth. Our transformation
under the previous T22 strategy means we are well placed to help build the foundation
for, and take advantage of, the growing digital economy and emerging technology
shifts, as well as help the nation respond to the continued disruption caused by the
COVID-19 pandemic as well as respond to an uncertain economic outlook.
For FY231 guidance, we anticipate continued
underlying business growth:
• Total Income of $23.0 billion to $25.0 billion
• Underlying EBITDA2 of $7.8 billion to $8.0 billion
• Capex3 of $3.5 billion to $3.7 billion
• Free cashflow after lease payments (FCFal)4 of $2.6
billion to $3.1 billion.
We are confident our financial momentum will
continue, driven by product growth, productivity
improvements, and the end of the financial headwinds
created by the nbn. We will continue to diversify our
growth opportunities including by continuing to scale
our successful Health and International businesses,
investing in new opportunities like Telstra Energy,
where we see opportunities in the future, and through
our Digicel Pacific acquisition. This will support
delivery of our financial ambitions under our T25
strategy.
In the year ahead our areas of focus will include
improving the experience for our customers by
continuing to build simpler digital experiences. We will
look to achieve this through greater personalisation,
more consistency across our channels and offering the
products and services needed to connect as
individuals and grow as businesses.
We will look to extend our leadership in 5G, boost
capacity, speed and population coverage of our mobile
network, and expand our regional network.
We will enhance our reputation and continue to change
the way Australians think about us by always doing
what’s right by our customers and communities –
further reducing our carbon emissions, supporting our
most vulnerable customers and continuing to build
fairness, inclusion and accessibility into all that we do.
We will continue to evolve how we work so that we get
the most out of Agile and hybrid working, and make
sure our team has all the learning opportunities and
tools they need to grow so that we truly become the
best place to work.
The Corporate Restructure is a key component of the
T25 strategy Telstra announced last year. It is an
important next step in Telstra’s drive to increase focus
on its customer and infrastructure businesses,
increase transparency of the assets in these
businesses, and create greater flexibility and
optionality to realise value from the Telstra Group’s
fixed infrastructure assets over time. The Corporate
Restructure is an internal legal re-organisation and
will not, in itself, result in any immediate change to the
underlying assets and business activities of the Telstra
Group as a whole.
Delivering these priorities and making further
productivity gains will promote sustained growth and
more value for our shareholders.
While our strategic direction is clear, there are a
number of significant factors which bring an element
of unpredictability, and these are detailed in the Risk
section of this report. These include the continued
challenges in the economy including inflation and cost
of living pressures, acceleration of technology
innovation and the growth of the digital economy,
geopolitical volatility and instability which is
heightening demands on our cyber defences and
strategic supply chains and the ever-growing threat of
climate change with corresponding increases in
catastrophic natural disasters. All of these things will
shape our markets, our country and our planet over the
next decade, and they will shape Telstra. But with the
many changes made through T22, and the changes we
will continue to make through T25, we are in the best
possible position to deal with them, and to help our
customers do the same.
Through all of this Telstra will continue to be guided by
our purpose and our values and remain focused on
creating long-term shareholder value. We are excited
by the tech-driven future and the opportunities it
presents us, as a company and a country.
1. This guidance excludes material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and other such items as
determined by the Board and management.
2. Underlying EBITDA excludes net one-off nbn DA receipts less nbn net C2C and guidance adjustments. FY20/21 underlying EBITDA also included depreciation
of mobile lease right-of-use assets.
3. Capex is measured on an accrued basis and excludes spectrum and guidance adjustments, externally funded capex, and capitalised leases.
4. Free cashflow after lease payments (FCFaL) defined as ‘operating cash flows’ less ‘investing cash flows’ less ‘payments for lease liabilities’, and excludes
spectrum and guidance adjustments.
18
Outlook | Telstra Annual Report 2022
19
Full year results and
operations review
FY22
FY21
Change
Summary financial results
$m
$m
Revenue (excluding finance income)
21,277
21,558
Total income (excluding finance income)
22,045
23,132
Operating expenses
14,758
15,470
%
(1.3)
(4.7)
(4.6)
Share of net profit/(loss) from equity
accounted entities
(31)
(24)
(29.2)
EBITDA
Depreciation and amortisation
EBIT
Net finance costs
Income tax expense
Profit for the period
7,256
4,358
2,898
417
667
7,638
4,646
2,992
551
539
1,814
1,902
(5.0)
(6.2)
(3.1)
(24.3)
23.7
(4.6)
Profit attributable to equity holders of
Telstra Entity
1,688
1,857
(9.1)
Capex1
Free cashflow
Earnings per share (cents)
3,042
3,854
14.4
3,020
0.8
4,887
(21.1)
15.6
(7.7)
1. Capex is defined as additions to property, plant and equipment and intangible assets, excluding
expenditure on spectrum and guidance adjustments, externally funded capex, and capitalised leases.
Capex is measured on an accrued basis.
Reported results
Telstra delivered FY22 results with an
increase to our total dividend for the first
time in seven years following the
successful completion of T22 and strong
momentum in our underlying business.
On a reported basis, total income
decreased 4.7 per cent to $22.0 billion.
Reported EBITDA was $7.3 billion, down
5.0 per cent. NPAT decreased by 4.6 per
cent to $1.8 billion, while earnings per
share was down 7.7 per cent to 14.4
cents. Underlying EBITDA grew by 8.4 per
cent to $7.3 billion demonstrating
strength in the core business. Underlying
EPS1 was up 48.5 per cent to 14.4 cents.
We also continued to take cost out of the
business. Underlying fixed costs
decreased 8.1 per cent or $454 million
and total operating expenses on a
reported lease adjusted basis were down
5.8 per cent or $906 million.
Our continued mobile network leadership
led to a strong performance in our
mobiles business with $700 million
EBITDA growth (+21.2 per cent), 2.9 per
cent postpaid handheld ARPU growth
and 6.4 per cent mobile services revenue
growth. 155,000 net retail postpaid
handheld services were added, including
121,000 branded with a strong
contribution from Enterprise.
1. Calculated as Profit After Tax after Minority Interests (PATMI) attributable to each share, excluding net one-off nbn receipts and guidance adjustments (guidance
adjustments defined in footnote 2).
20
Full year results and operations review | Telstra Annual Report 2022
Consumer & Small Business Fixed grew
sequentially in the second half and our
Enterprise business returned to growth.
We realised benefits from our
infrastructure assets with InfraCo Fixed
core access revenues up 3.1 per cent,
including nbn recurring receipts up 3.3
per cent, and Amplitel revenue increased
by 8.9 per cent. Amplitel was established
as a standalone business with the sale of
a non-controlling 49 per cent interest
delivering net cash proceeds after
transaction costs of $2.8 billion.
Our FY22 results also mark the
completion of our T22 strategy which has
been a clear success with Telstra
delivering a better experience for its
customers and employees. We also
reached our T22 productivity target of
$2.7 billion. FY22 also included several
strategic announcements and early
progress against some aspects of our T25
strategy. These included the landmark
network sharing agreement with TPG
Telecom, which is subject to ACCC
clearance, and major infrastructure
announcements through our partnership
with Viasat and the upgrade of our inter-
city fibre network. We also extended our
50 per cent emissions reduction target to
cover scope 3 emissions and reached a
number of new Enterprise Agreements
with a large proportion of employees.
The Telstra Board resolved to pay a fully-
franked dividend of 8.5 cents per share,
bringing the total dividend for the year to
16.5 cents per share. This included an
increase in the ordinary dividend from 10
to 13.5 cents per share, and will see
around $1.9 billion returned to
shareholders, on top of the successful
$1.35 billion share buyback completed in
May 2022. Telstra also provided financial
guidance2 including assumptions on a
range of metrics for FY23, showing the
continuation of growth in the underlying
business.
Other information
Consistent with information presented
for internal management reporting
purposes, the result of each segment is
measured based on its EBITDA
contribution. Refer to Note 2.1.1 in the
Financial Report for further detail.
Commentary provided for statutory and
management financial results.
Results on a guidance basis1
FY22
FY22 Guidance
Total income
$22.0b
$21.6b to $23.6b
Underlying EBITDA
$7.3b
$7.0b to $7.3b
Capex
$3.0b
$2.8b to $3.0b
Free cash flow after payments for lease liabilities
$4.0b
$3.5b to $3.9b
FY22
FY22
FY22
FY21
Guidance versus
reported results1
Reported
results $m
Adjustments
$m
Guidance
basis $m
Guidance
basis $m
Total income
Underlying EBITDA
Free cashflow
22,045
7,256
3,854
(87)
(5)
107
21,958
22,924
7,251
3,961
6,689
3,740
1. These tables detail adjustments made to the reported results for the current and comparative periods to
reflect the performance of the business on the basis on which we provided guidance to the market, which
excludes material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum,
restructuring costs and such other items as determined by the Board and management. A detailed
reconciliation of our reported results to guidance can be found in the guidance versus reported results
schedule . Underlying EBITDA excludes net one-off nbn DA receipts less nbn net C2C and guidance
adjustments. FY21 underlying EBITDA also includes depreciation of mobile lease right-of-use assets. Capex
is measured on an accrued basis and excludes spectrum and guidance adjustments, externally funded
capex, and capitalised leases. Free cash flow after lease payments (FCFaL) is defined as ‘operating cash
flows’ less ‘investing cash flows’ less ‘payments for lease liabilities, and excludes spectrum and guidance
adjustments. Refer to the Guidance versus reported results schedule. The adjustments within the tables in
this schedule have been reviewed by our auditors.
On 11 August 2022, the Directors of
Telstra Corporation Limited resolved to
pay a final fully franked dividend of 8.5
cents per ordinary share, comprising a
final ordinary dividend of 7.5 cents per
share and a final special dividend of 1
cent per share. Shares will trade
excluding entitlement to the final
dividend from 24 August 2022 with
payment to be made on 22 September
2022. The total dividend for FY22 is 16.5
cents per share, fully franked, including
13.5 cents ordinary and 3 cents special,
representing a total dividend payout of
$1,919 million. This is in line with our
Capital Management Framework, which
was updated at the September 2021
Investor Day.
The FY22 special dividend will be the
final special dividend linked to one-off
nbn receipts. We returned 79% of
cumulative net one-off nbn receipts to
shareholders via fully franked special
dividends to the end of FY22. This was
consistent with our commitment to
return in the order of 75 per cent of net
one-off nbn receipts to shareholders over
time via fully franked special dividends.
Principle 2 of our updated Capital
Management Framework is to ‘maximise
fully franked dividend and seek to grow
over time’.
The final dividend represents a 115 per
cent payout ratio on FY22 reported
earnings per share and is well supported
by free cash flow.
2. This guidance excludes material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as
determined by the Board and management. Refer to guidance vs reported results schedule which details the adjustments made for the current and comparative period
to reflect performance on the basis on which we provided guidance to the market for FY22.
21
Segment performance
We report segment information on the same basis as our internal management reporting structure as at the reporting date. Segment
comparatives reflect organisational changes that have occurred since the prior reporting period to present a like-for-like view.
Segment total income (including internal charges)
15%
16%
3%
1%
30%
5%
1%
28%
Total external income
$m
$m
%
51%
Telstra Consumer and Small Business1
11,978
12,330
(2.9)
FY22
FY21
Change
Telstra Enterprise
Networks and IT2
Telstra InfraCo2
All Other2
7,132
6,985
248
244
2.1
1.6
3,638
3,790
(4.0)
624
1,295
(51.8)
Total management reported income
23,620
24,644
50%
Transactions between segments
Total external income
1. Includes one-off nbn DA and Connection
2. Includes internal charges
(1,575)
(1,512)
22,045
23,132
(4.2)
(4.2)
(4.7)
Telstra Consumer and Small Business
Telstra Enterprise
Networks and IT
All Other
Telstra InfraCo
On a reported basis, total income
(excluding finance income) declined by
4.7 per cent to $22,045 million. On a
guidance basis, total income (excluding
finance income) was $21,958 million. The
decline was primarily due to a reduction
in low margin hardware revenues, one-off
nbn income, on-net fixed income and nbn
commercial works income. This was
partly offset by growth in mobile service
revenue. Segment performance is on a
reported basis unless otherwise stated.
Telstra Consumer and Small Business
Telstra Consumer and Small Business
provides telecommunications, media and
technology products and services to
Consumer and Small Business customers
in Australia using mobile and fixed
network technologies. It also operates
call centres, retail stores, a dealership
network, digital channels, distribution
systems and a loyalty program in
Australia.
Income decreased by 2.9 per cent to
$11,978 million impacted by a 5.3 per
cent decline across fixed products
including a 40.2 per cent decline in on-
net revenue due to nbn migration and a
0.6 per cent decline in mobile income
with higher mobile service revenues
offset by lower hardware revenue.
Telstra Enterprise
Telstra Enterprise is responsible for
providing telecommunications and
technology services and solutions for
government and large enterprise
customers in Australia and globally. It
also provides product management for
advanced technology solutions through
Data and Connectivity and Network
Applications and Services (NAS) products
such as unified communications, cloud,
industry solutions and integrated
services.
Income increased by 2.1 per cent to
$7,132 million driven by a 10.8 per cent
increase in mobile income. Fixed revenue
rose 0.1 per cent, with NAS revenue gains
offset by declines in Data & Connectivity.
NAS income growth of 5.8 per cent was
due to growth in strategic areas as we
execute our strategy, partly offset by
calling applications legacy decline.
Networks and IT
Networks and IT is responsible for the
overall planning, engineering architecture,
construction and maintenance of Telstra
networks, technology and information
technology solutions. It primarily
supports the revenue generating
activities of other segments.
22
Full year results and operations review | Telstra Annual Report 2022
Telstra InfraCo
Telstra InfraCo is a standalone
infrastructure business unit within
Telstra. It owns and operates key passive
network assets including data centres,
exchanges, our fibre network, our
physical mobile tower assets owned or
operated by the Amplitel business, ducts
and pipes. It also provides active mobile
and fixed wholesale telecommunication
products and services to other carriers
and internet service providers.
Telstra InfraCo income, including internal
charges, decreased by 4.0 per cent to
$3,638 million due to expected declines
from Fixed – Active Wholesale legacy
products and commercial works
supporting the nbn. This was partly offset
by disposal of legacy network assets not
in use, growth in income from our core
passive infrastructure with increased
recurring nbn DA receipts in line with CPI
and other external access charges and an
increase in wholesale mobility. Excluding
internal access charges, income
decreased by 8.1 per cent to $2,354
million, which includes the decline in
commercial works.
All Other
Certain items of income and expense
relating to multiple reportable segments
are recorded by our corporate areas and
included in the All Other category. This
category also includes Product and
Technology Group, Global Business
Services (GBS) and Telstra Health.
Income decreased by 51.8 per cent to
$624 million, $549 million excluding
internal charges, mainly due to declines
in Per Subscriber Address Amount (PSAA)
receipts in line with the progress of the
nbn network rollout.
Product performance
Product revenue breakdown (including internal charges)
2% 3%
6%
19%
3%
4%
6%
2%
2%
10%
16%
3%
1%
11%
15%
19%
Mobile
Fixed – C&SB
Fixed – Enterprise
InfraCo – Fixed
Amplitel (Towers)
Fixed – Wholesale
International
One-off nbn DA & connection
Other
Product income
40%
Mobile
Fixed – C&SB
Fixed – Enterprise
Fixed – Active Wholesale
International
InfraCo Fixed
Amplitel
One-off nbn DA & connection
38%
Other
Total management reported income
Eliminations
Total external income
FY22
$m
9,470
4,486
3,729
477
1,501
2,456
368
378
755
23,620
(1,575)
22,045
FY21
Change
$m
9,310
4,736
3,724
591
1,496
2,569
338
1,050
830
24,644
(1,512)
23,132
%
1.7
(5.3)
0.1
(19.3)
0.3
(4.4)
8.9
(64.0)
(9.0)
(4.2)
(4.2)
(4.7)
EBITDA
contribution margins1
Mobile
Fixed – C&SB
Fixed – Enterprise
Fixed – Active Wholesale
International
InfraCo – Fixed
Amplitel
Other
Net one-off nbn DA less nbn
net cost to connect
FY22 %
2H22 %
1H22 %
FY21 %
42.2
1.2
17.9
33.3
25.8
67.4
79.9
6.3
61.6
42.6
1.4
19.1
30.7
26.0
68.3
75.1
12.7
61.7
41.8
1.0
16.5
35.7
25.6
66.4
84.9
-2.0
61.6
35.4
2.9
17.3
39.1
22.5
65.1
88.8
10.9
76.4
1. The data in this table includes adjustments to historical numbers to reflect changes in product hierarchy.
23
Detail on each of the products are
outlined below on a reported basis unless
otherwise stated, presented in
accordance with our product reporting
framework which was announced to the
market on 13 January 2022. The restated
product reporting framework aligns with
our T25 strategy and includes:
• More transparency across our
infrastructure business with InfraCo
Fixed and Amplitel (Towers) on a
standalone basis
• Mobile and Fixed product EBITDA
margins inclusive of internal charges
Mobile
Mobile services revenue growth of 6.4 per
cent strongly supported growth in overall
Mobile product income, despite declines
in hardware income. Overall Mobile
income increased by 1.7 per cent to
$9,470 million. Growth in mobile services
revenue was realised across all sub-
products.
Retail services in operation (SIOs)
increased by 1.3 million bringing the total
to 20.8 million. We now have 8.7 million
postpaid handheld retail SIOs, an
increase of 155,000.
Postpaid handheld services revenue
increased by 4.5 per cent to $5,045
million as a 1.8 per cent uplift in SIOs
was complemented by a 1.2 per cent
ARPU increase from $48.16 to $48.74.
Prepaid handheld revenue increased by
14.2 per cent to $924 million due to a
215,000 increase in unique users, higher
ARPU and lower dormancy.
Mobile broadband revenue increased by
7.0 per cent to $655 million, driven by a
14.0 per cent uplift in ARPU from $16.20
to $18.46 and a 0.4 per cent increase in
SIOs.
Internet of Things (IoT) revenue increased
by 8.9 per cent to $268 million with SIOs
increasing by over 1 million in the year.
Growth was predominantly driven by SIO
additions and value-add applications for
Enterprise customers.
Wholesale revenue increased 15.4 per
cent to $308 million. Wholesale revenue
growth was also supported by 218,000
net adds, bringing the total to 2.0 million,
and ARPU growth, indicating continued
growth in popularity of our Mobile Virtual
Network Operator’s (MVNO) plans on the
Telstra mobile network.
Hardware, interconnect and other
revenue decreased by 11.0 cent to $2,252
million largely due to lower hardware
volumes impacted by supply constraints.
Mobile EBITDA contribution margin
increased by 6.8 percentage points to
42.2 per cent due to increased high-
margin service revenue, transitioning our
customers off subsidy and lease plans,
reduction in low margin hardware sales
and cost-out.
Fixed – Consumer and Small Business
(C&SB)
Fixed – C&SB income declined by 5.3 per
cent to $4,486 million impacted by nbn
migration along with declines in legacy
voice and SIOs. C&SB bundles and
standalone data SIOs declined by 87,000
bringing the total to 3.5 million.
On-net fixed revenue, which is revenue
from services on the Telstra network,
decreased by 40.2 per cent to $469
million while off-net fixed revenue, which
is revenue from services for which we are
a reseller, increased by 5.0 per cent to
$3,150 million as customers continue to
migrate onto the nbn network. Off-net
nbn resale margin was unchanged at 5.0
per cent.
Consumer content and services revenue
declined by 9.1 per cent to $601 million
due to lower Foxtel from Telstra SIOs
despite increases of 4 per cent year on
year growth in SVOD (subscription video
on demand) with closing SIOs of 669,000
and a 35% increase in gaming SIOs to
84,000.
Business apps and services revenue
declined by 8.2 per cent to $168 million
due to legacy product decline.
Fixed – C&SB EBITDA contribution
margin declined by 1.7 percentage points
to 1.2 per cent due to a reduction in high
margin revenue and growing nbn network
payments, partly offset by cost-out.
Fixed – Enterprise
Fixed – Enterprise income grew by 0.1
per cent to $3,729 million supported by
gains in NAS income which offset
declines in data and connectivity.
Data and connectivity income declined by
13.3 per cent to $956 million. Declines
were from ARPU compression caused by
competition and technology change. Our
T-Fibre customer base declined
marginally, with churn confined largely to
mid market and business segments.
NAS income increased by 5.8 per cent to
$2,773 million largely due to growth in
strategic areas such as managed
services, professional services, cloud
applications and equipment sales,
however this was partially offset by
decreases in calling applications.
Calling applications revenue declined by
10.0 per cent to $637 million due to ISDN
and legacy fixed line calling products, in
line with planned exit. This was partly
offset by SIO growth and increased
customer usage of collaboration
communication software particularly in
the first half.
Managed services and maintenance
revenue increased by 10.0 per cent to
$738 million as more network customers
attached cyber security services,
managed data network and service
management in strategic accounts.
Professional services revenue increased
by 16.8 per cent to $439 million driven by
one-off infrastructure builds in large
strategic contracts and digital
transformation engagements by Telstra
Purple.
Cloud applications revenue increased by
8.6 per cent to $279 million from demand
for public cloud.
Equipment sales revenue grew by 15.7
per cent to $397 million as hardware
spend rebounded following the COVID-19
market downturn.
Fixed – Enterprise EBITDA contribution
margin grew by 0.6 percentage points to
17.9 per cent. Data and connectivity
EBITDA contribution margin declined by
7.6 percentage points to 36.2 per cent
due to revenue reduction. NAS EBITDA
contribution margin grew by 5.3
percentage points to 11.5 per cent due to
revenue growth in strategic areas and
cost-out.
Fixed – Active Wholesale
Fixed – Active Wholesale income
declined by 19.3 per cent to $477 million
impacted by ongoing migration to the nbn
and legacy product decline.
Data and connectivity revenue decreased
by 11.1 per cent to $303 million reflecting
an ongoing SIO reduction in largely low-
end enterprise grade legacy products,
price competition in wideband fibre
products and migration of legacy
services.
Legacy calling and fixed revenue declined
by 30.4 per cent to $174 million as nbn
migration nears completion, with growth
in nbn reseller.
24
Full year results and operations review | Telstra Annual Report 2022
Fixed – Wholesale EBITDA contribution
margin decreased by 5.8 percentage
points to 33.3 per cent due to continued
legacy and nbn revenue decline offset
partly by cost-out.
International
Income from our International business
increased by 0.3 per cent to $1,501
million (-1.3 per cent in constant
currency (CC)). A strong performance in
wholesale with continued investment in
infrastructure was offset by declines in
low margin legacy voice.
Fixed legacy voice revenue declined by
12.2 per cent (CC) in line with market
trends.
Data and connectivity revenue increased
by 1.2 per cent (CC) with wholesale
growth offsetting enterprise decline.
NAS and other revenue decreased by 2.3
per cent (CC) but grew 1.6 per cent (CC)
excluding the exit of TelkomTelstra, with
growth from new managed services deals
as well as managed networks and
equipment.
International EBITDA contribution margin
increased by 3.3 percentage points to
25.8 per cent with margin expansion from
low margin fixed voice reduction and
higher data and connectivity and NAS
contribution as well as cost-out.
InfraCo Fixed
InfraCo Fixed income declined by 4.4 per
cent to $2,456 million. Our world class
fixed passive infrastructure assets,
across fibre, ducts and fixed network
sites delivered stable growth in
infrastructure access revenues.
Recurring nbn income, disposal of legacy
network copper assets which we expect
to be ongoing, and sale of exchange air
rights in the second half supported
income. These positives were offset by a
decline in nbn commercial works
revenue, which is rolling off as the nbn
rollout nears completion and contracts
end.
Commercial and recoverable works
revenue declined by 49.7 per cent to $294
million. Excluding commercial and
recoverable works and legacy network
disposals, InfraCo Fixed income grew 3.1
per cent.
Recurring nbn DA income includes
infrastructure services across ducts,
racks and fibre provided to nbn Co.
Income increased by 3.3 per cent to $930
million reflecting CPI price increases.
InfraCo Fixed EBITDA contribution margin
increased by 2.3 percentage points to
67.4 per cent. EBITDA contribution
however declined by $18 million due to
lower commercial and recoverable works
and additional investment in asset
maintenance and growth opportunities,
partly offset by positive contribution
from legacy network asset disposals.
Amplitel (Towers)
Amplitel achieved income growth of 8.9
per cent to $368 million, including
internal charges, from continued demand
for new tower builds and 5G upgrades.
External revenue also increased due to
demand from new non-mobile network
operator (MNO) customers offset by one-
off commercial works decline. We
completed the disposal of a 49 per cent
interest in our Towers business, valuing
the business at $5.9 billion, in September
2021.
One-off nbn DA & connection
One-off nbn DA & connection income
includes receipts from nbn Co for
disconnecting customers from our legacy
network, and one-off income we receive
from customers to connect to the nbn
network. Income decreased by 64.0 per
cent to $378 million as migration to the
nbn nears completion.
Other
Other product income includes Telstra
Health and corporate adjustments.
Telstra Health income increased 13 per
cent organically, or 51 per cent to $243m
after including acquisitions of
MedicalDirector and PowerHealth.
Income in this category decreased by $75
million to $755 million, including internal
charges, mainly due to bond rate
movements and gains on sale and lease
back of the Pitt Street exchange property
and other M&A transactions in FY21 not
repeated in FY22.
Other EBITDA contribution included
positives of around $80 million from the
impact of bond rate changes on employee
liabilities, and around $50 million from
cumulative catch-up adjustments to
revenue recognised in the prior reporting
periods.
Elimination
Elimination represents internal revenue
with $976 million in InfraCo Fixed, $308
million in Amplitel and $291 million in
Other.
Expense performance
Total operating expenses declined by 4.6
per cent to $14,758 million on a reported
basis. On a reported lease adjusted basis
total operating expenses declined by 5.8
per cent to $14,758 million largely due to
a $863 million reduction in total
underlying operating expenses, which are
reported costs adjusted for one-off nbn
and restructuring costs and other
guidance adjustments. Underlying
operating expenses on an underlying
basis declined by 5.7 per cent.
Sales costs, which are direct costs
associated with revenue and customer
growth, decreased by 0.8 per cent to
$8,120 million. This was due to a $170
million decline in other sales costs as a
result of lower hardware costs and Foxtel
service fees, partly offset by a $106
million increase in nbn access payments.
Underlying fixed costs declined 8.1 per
cent or $454 million enabled by our
ongoing drive to digitise and simplify our
processes, as well as our move to an agile
workforce. The continued migration of our
fixed customers to the nbn network as
well as our focus on rationalising 3rd
party vendors and services have also
contributed to cost reduction. Other fixed
costs decreased by 24.9 per cent from
cessation of mobile leases in FY21 and
reduced commercial works costs.
One-off nbn DA and nbn cost to connect
declined by 41.5 per cent as the nbn
network rollout nears completion.
Operating expenses for other guidance
adjustments rose by $200 million largely
due to $125 million in transaction costs
related to InfraCo Towers (now Amplitel)
and $58 million of transaction and
integration costs related to our
MedicalDirector and PowerHealth
acquisitions.
In June 2018, we announced we would
target a $2.5 billion annual reduction in
underlying fixed costs by FY22 compared
with restated underlying fixed costs of
~$7.9 billion in base year FY16. We
subsequently increased our FY22 target
by $200 million to $2.7 billion. We
achieved our goal with approximately
$2.73 billion of annual cost-out since
FY16. The $2.7b of cost reduction has
been achieved by simplifying product
offerings, increasing digital experiences,
reducing layers of management and
moving to an agile workforce, optimising
3rd party spend and also due to the
migration of customers to the nbn.
25
Operating expenses1
Sales costs
– nbn payments
– other
Fixed costs
– underlying
– other1
Underlying
One-off nbn DA and nbn cost to connect
Restructuring
Other guidance adjustments2
Reported lease adjusted3
Lease adjustments4
Reported
FY22
$m
8,120
2,081
6,039
6,178
5,139
1,039
FY21
$m
8,184
1,975
6,209
6,977
5,593
1,384
14,298
15,161
145
71
244
14,758
0
14,758
248
211
44
15,664
(194)
15,470
Change
%
(0.8)
5.4
(2.7)
(11.5)
(8.1)
(24.9)
(5.7)
(41.5)
(66.4)
n/m
(5.8)
n/m
(4.6)
$m
(64)
106
(170)
(799)
(454)
(345)
(863)
(103)
(140)
200
(906)
194
(712)
1. Fixed costs – other includes items supporting revenue growth including relevant NAS costs, mobile handset leases, and product impairment, and additional costs
from insourcing retail channel from FY22.
2. Guidance adjustments include material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum and such other items as determined by the
Board and management
3. ‘Reported lease adjusted’ includes all mobile handset leases as operating expenses, and all rent/other leases below EBITDA. There were no lease adjustments in FY22
due to immateriality.
4. Refer to note 7 of the Guidance versus reported results schedule.
Our progress on achieving our productivity target is reported through the above operating expenses table. The detail below
provides commentary on the operating expenses as disclosed in our statutory accounts.
+$106m
$15,161m
-$170m
+$244m
$14,758m
-$454m
+$71m
+$145m
$14,298m
-$345m
FY21
underlying
Sales costs
– nbn
payments
Sales costs
– other
Fixed costs
– underlying
Fixed costs
– other
FY22
underlying
One-off nbn
DA and nbn
cost to
connect
Restructuring
Other
guidance
adjustments
FY22
Reported
26
Full year results and operations review | Telstra Annual Report 2022
Operating expenses on a reported basis
Labour
Goods and services purchased
Net impairment losses on financial assets
Other expenses
Total
FY22
$m
3,620
8,228
98
2,812
14,758
FY21
$m
4,012
8,318
160
2,980
15,470
Change
%
(9.8)
(1.1)
(38.8)
(5.6)
(4.6)
Foreign currency impacts
For the purposes of reporting our
consolidated results, the translation of
foreign operations denominated in
foreign currency to Australian dollars
(AUD) increased our sales revenue by $34
million. This foreign exchange impact was
partly offset by an increase in expenses
by $21 million across labour, goods and
services purchased, and other expenses
resulting in a favourable EBITDA
contribution of $13 million.
Net finance costs
Net finance costs decreased by 24.3 per
cent or $134 million to $417 million. This
decrease reflects a reduction in interest
on borrowings of $74 million and other
financing items as set out in note 4.4.3 in
the financial report. The reduction in
interest on borrowings is primarily due to
lower debt on issue and also reflects a
marginal decline in our average gross
borrowing cost from 3.8 per cent to 3.7
per cent.
Labour
Total labour expenses decreased by 9.8
per cent or $392 million to $3,620 million.
Salary and associated costs decreased
by $76 million due to workforce
optimisation and process simplification
as Telstra moves to agile, as well as lower
field services support through field
optimisation programs and the continued
decline in legacy services post NBN
migration. Labour substitution costs
declined by $83 million. Employee
redundancy costs also decreased by
$173 million as our T22 commitment to
deliver approximately 8,000 in workforce
optimisation was achieved largely in
FY21. Total full time staff equivalents
(FTE) increased by 6.9 per cent or 1,874
to 28,889 largely due to the insourcing of
our retail channel and onshoring of call
centres.
Goods and services purchased
Total goods and services purchased
decreased by 1.1 per cent or $90 million
to $8,228 million.
Cost of goods sold, which includes
mobile handsets and accessories,
tablets, mobile broadband hardware,
modems and other fixed hardware,
decreased by 5.3 per cent or $149 million
to $2,648 million mainly due to lower
C&SB postpaid mobile hardware volumes
and lower modem costs in our Fixed
business.
Network payments increased by 2.2 per
cent or $70 million to $3,223 million
largely due to higher nbn payments which
were driven by speed tier mix changes,
higher volumes and higher Connectivity
Virtual Circuit charges.
Other goods and services purchased
declined by 0.5 per cent or $11 million to
$2,357 million as a result of decreased
service fees through lower Foxtel from
Telstra volumes. This was offset by
increased managed cost of sales due to
an increase in NAS revenue in cloud
applications and managed services.
Other expenses
Total Other expenses decreased by 5.6
per cent or $168 million to $2,812 million.
The decline in Other expenses is primarily
due to the termination of handset leases
and associated termination fees, and a
reduction in IT costs through cost
rationalisation and vendor negotiations.
These were offset by Amplitel stamp duty
expenses. Service contracts and other
agreements expenses increased by 2.0
per cent or $23 million to $1,167 million.
Impairment losses (excluding net losses
on financial assets) decreased by 11.1
per cent or $18 million to $144 million
due to impairment losses for our Sensis
investment classified as held for sale in
FY21 not repeated in FY22.
Depreciation and amortisation
Depreciation and amortisation decreased
by 6.2 per cent or $288 million to $4,358
million mainly driven by reduction in
right-of-use assets and network and IT
applications assets fully depreciating in
FY21. The reduction included a $139
million decrease in depreciation of right-
of-use assets largely resulting from our
exit of swap handset leases, a $34 million
decrease in depreciation of property,
plant and equipment, and a $115 million
decline in amortisation of intangible
assets.
27
Financial position
Summary statement of cash flows
Net cash provided by operating activities
Net cash used in investing activities
– Capital expenditure (before investments)
– Other investing cash flows
Free cashflow
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
FY22
FY21
Change
$m
$m
7,249
7,231
%
0.2
(3,395)
(2,344)
(44.8)
(3,094)
(3,140)
(301)
3,854
796
4,887
(3,971)
(4,236)
(117)
1,125
32
651
499
(25)
1.5
n/m
(21.1)
6.3
n/m
n/m
n/m
(7.6)
Cash and cash equivalents at the end of the period
1,040
1,125
Net cash used in financing activities decreased by 6.3 per cent or $265 million to
$3,971 million. This was largely due to $2,883 million in proceeds received from the 49
per cent disposal of our interest in InfraCo Towers’ (now Amplitel). This was partly
offset by $1,350 million spent on our share buy-back, a $838 million decrease in
proceeds from borrowings and a $490 million increase in repayment of borrowings.
Our accrued capital expenditure for the year on a guidance basis was $3,042 million
or 14.5 per cent of sales revenue.
On a guidance basis free cashflow after operating lease payments was $3,961 million.
Performance against guidance has been adjusted for free cashflow associated with
lease payments (-$775 million), M&A (+$841 million) including the Telstra Health and
retail store acquisitions described above and spectrum ($41 million).
Debt issuance
$m
Debt repayments
Drawings
(bilateral loan facilities)
Revolving bank facilities
Other loans
Total
901
14
15
930
Euro bond
USD bond
Private placements
Bilateral loan facilities
Commercial paper (net)
Other loans
Total
$m
(1,002)
(956)
(140)
(602)
(415)
(95)
(3,210)
Capital expenditure and cash flow
Free cashflow generated from operating
and investing activities was $3,854
million representing a decrease of $1,033
million or 21.1 per cent due to increase in
net cash used in investing activities.
Net cash provided by operating activities
increased by 0.2 per cent or $18 million
to $7,249 million mainly due to a $2,914
million decrease in payments to suppliers
and employees, partly offset by a $2,851
million decline in receipts from
customers. Net cash provided by
operating activities was positively
impacted by a $923 million improvement
in working capital driven by reduced
receivables including from lower
hardware sales, strong collections and
lower bad debt. These working capital
benefits were largely offset by a decline
in reported EBITDA.
Net cash used in investing activities
increased by 44.8 per cent or $1,051
million to $3,395 million primarily due to
a $745 million increase in payments for
shares in controlled entities including our
health acquisitions and insourcing of
retail stores, a $279 million decrease in
proceeds from sale and leaseback, where
FY21 included the sale and lease back of
Pitt St exchange, and a $214 million
decrease in proceeds from sale of
businesses, where FY21 included the
sale of Velocity fibre assets.
28
Full year results and operations review | Telstra Annual Report 2022
Debt position
Our gross debt position was $13,760
million comprising borrowings of $10,982
million less $509 million in net derivative
assets plus lease liabilities of $3,287
million. Gross debt decreased by 16.0 per
cent or $2,628 million due to debt
repayments exceeding new debt
issuance. Also, non-cash impacts and
movement in lease liabilities also
resulted in a net reduction to debt of
$348 million. Net debt decreased by 16.7
per cent or $2,543 million to $12,720
million reflecting the decrease in gross
debt partially offset by a reduction in
cash holdings of $85 million.
Financial
settings
Debt
servicing1
Gearing2
Interest
cover3
FY22
Actual
FY22
Comfort
zone
1.8x
1.5x to 2.0x
43.0% 50% to 70%
14.5x
>7x
1. Debt servicing ratio is calculated as net debt/
EBITDA.
2. Gearing ratio is calculated as net debt/total net
debt plus equity.
3. Interest cover is calculated as EBITDA/net interest
on debt (excluding capitalised interest and non-
cash accounting impacts within net finance costs).
We remain within our comfort zones for
our credit metrics. Our debt servicing is
1.8 times (2021: 2.0 times), gearing ratio
is 43.0 per cent (2021: 50.0 per cent) and
interest cover is 14.5 times (2021: 13.2
times).
declined by $378 million mainly due to
depreciation expenses exceeding
additions, while trade and other
receivables and contract assets
decreased by $307 million consistent
with current trade and other receivables.
Statement of financial position
Our balance sheet remains in a strong
position with net assets of $16,837
million. Current assets decreased by 12.0
per cent to $6,260 million. Cash and cash
equivalents decreased by $85 million.
Derivative financial assets decreased by
$322 million largely from instruments
maturing within the period and foreign
currency and other valuation impacts,
while a $503 million decline in trade and
other receivables and contract assets
reflects deferred debt unwind, lower
revenue and better collections. This was
partly offset by a $91 million rise in
inventories largely due to the insourcing
of Telstra-branded retail stores.
Non-current assets decreased by 0.1 per
cent to $35,368 million. Intangible assets
increased by $1,024 million due to
acquisitions of controlled entities. This
was offset by derivative financial assets
decreasing by $274 million due to
instruments maturing in the next 12
months. Property, plant and equipment
Current liabilities decreased by 5.4 per
cent to $9,860 million. Borrowings
decreased by $941 million as maturities
became due. Trade and other payables
increased by $423 million due to a $101m
increase in carrier network payables and
$76m in stamp duty payable on
establishment of the Amplitel business,
while current tax payables decreased by
$82 million mainly due to higher pay as
you go income tax instalments.
Non-current liabilities decreased by 11.3
per cent to $14,931 million. The reduction
was primarily due to borrowings
decreasing by $2,213 million largely from
reclassification to current liabilities of
debt maturing within the next 12 months.
This was partly offset by a $224 million
increase in other payables mainly due to
spectrum, a $75 million increase in
deferred tax liabilities and $47 million of
cumulative catch-up adjustments to
revenue recognised in the prior reporting
periods.
Summary statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Total equity
Return on invested capital (%)
Return on average equity (%)
30 Jun 2022
30 Jun 2021
Change
$m
6,260
35,368
41,628
9,860
14,931
24,791
16,837
16,837
7.1
11.3
$m
7,114
35,411
42,525
10,424
16,826
27,250
15,275
15,275
7.5
12.8
%
(12.0)
(0.1)
(2.1)
(5.4)
(11.3)
(9.0)
10.2
10.2
(0.4)pp
(1.5)pp
29
Board of Directors
John P Mullen
Age 67, BSc
Andrew R Penn
Age 59, MBA (Kingston), AMP (Harvard),
FCCA, HFAIPM
Eelco Blok
Age 65, MS, BBA
Non-executive Director since July 2008,
Chairman effective 27 April 2016 and last
re-elected in 2020. Chairman of the
Nomination Committee and previously
Chairman of the Remuneration
Committee (2009-2016).
John has extensive experience in
international transportation and logistics,
with more than two decades in senior
positions with some of the world’s largest
transport and infrastructure companies.
He has lived or worked in 13 countries
over this time. From 2011 to 2017 John
was Chief Executive Officer of Asciano,
Australia’s largest ports and rail operator.
Prior to this, John spent 15 years with
DHL Express, a US$20b company
employing over 140,000 people in 220
countries, serving as the global Chief
Executive Officer from 2005 to 2009.
Prior to DHL, John spent ten years with
the TNT Group, with four years from 1991
to 1994 as Chief Executive Officer of TNT
Express Worldwide based in the
Netherlands.
Other listed company directorships
(past three years)
Chairman, Brambles Limited (Joined
2019, Chair from 2020) and Director,
Brookfield Infrastructure Partners L.P
(from 2021 and previously 2017-2020).
Other directorships and appointments
Chair, Australian National Maritime
Museum (Joined 2016 and Chair from
2019). Senior Advisor – Toll Holdings
Pty Ltd (from July 2022). UNSW Business
School Advisory Council Member (from
2005). Former – Chairman, Toll Holdings
Pty Ltd (2017-2022) and the US National
Foreign Trade Council in Washington
(2008 – 2010). Member, UNICEF
Task Force on Workplace Gender
Discrimination and Harassment
(2018-2019).
Chief Executive Officer and Managing
Director since 1 May 2015.
Andy Penn became the CEO and
Managing Director of Telstra, Australia’s
largest telecommunications company, on
1 May 2015. At Telstra Andy has led an
ambitious change program transforming
Telstra to be positioned to compete in the
radically changing technology world of
the future with 5G at its core.
Andy has had an extensive career
spanning 40 years across 3 different
industries – telecommunications,
financial services and shipping. He joined
Telstra in 2012 as Chief Financial Officer.
In 2014 he took on the additional
responsibilities as Group Executive
International.
Prior to Telstra, Andy spent 23 years with
the AXA Group, one of the world’s largest
insurance and investment groups. His
time at AXA included the roles of Chief
Executive Officer 2006-2011 AXA Asia
Pacific Holdings, Chief Financial Officer,
Chief Executive Asia and Chief Executive
Australia and New Zealand. At AXA, Andy
was instrumental in building one of the
most successful Asian businesses by an
Australian company that was sold to its
parent in 2011 for more than A$10bn.
Other directorships and appointments
Member of the Council of Trustees of
the National Gallery of Victoria; Board
Director of the Groupe Speciale Mobile
Association (GSMA) (from 2018),
Chairman of the Australian Government’s
Cyber Security Industry Advisory
Committee; Patron, on behalf of Telstra,
of the National and Torres Strait
Islanders Arts Awards (NATSIAA), Life
Governor of Very Special Kids (from 2003)
and an Ambassador for the Amy Gillet
Foundation. He serves on the advisory
boards of both The Big Issue Homes
for Homes and Juvenile Diabetes
Research Foundation.
Non-executive Director appointed on 15
February 2019 and elected on 15 October
2019. Member of the Nomination
Committee.
Eelco has almost 35 years of
telecommunications experience at
Dutch-based landline and mobile
telecommunications company, KPN,
where he was CEO for seven years until
April 2018.
Eelco started his career in Finance at
KPN before becoming responsible for
several businesses including Carrier
Services, Corporate Networks and
Network Operations. In 2006 he was
appointed a member of the KPN Board of
Management, where he was
consecutively responsible for the Fixed
Division, Business Market – Wholesale –
Operations and Mobile International. He
was appointed CEO in April 2011.
From 2011 to 2017 Eelco was co-
chairman of the Dutch National Cyber
Security Council an advisory body of the
Dutch government. He was also a
Director for the international association
GSMA from 2017 to April 2018.
Other listed company directorships
(past three years)
Director, OTE Group (from 2019).
Former – Member of the Supervisory
Board of Post NL (2017-2021) and Signify
NV (2017 – 2022).
Other directorships and appointments
Member of the Supervisory Boards of
Koninklijke VolkerWessels N.V (from
2019) and Fairphone (from 2020). Board
Advisor, Glasfaser Plus (from April 2022)
and Glow Financial Services (from June
2022). Advisor, Reggeborgh Groep BV
(from 2018).
30
Board of Directors | Telstra Annual Report 2022
Roy H Chestnutt
Age 63, BSc, BA, MBA
Craig W Dunn
Age 58, BCom, FCA
Bridget Loudon
Age 34, BCom (University College Galway)
Non-executive Director appointed on 11
May 2018, last re-elected on 12 October
2021. Member of the Audit & Risk
Committee and the Nomination
Committee.
Non-executive Director appointed on 12
April 2016 and last re-elected in October
2019. Chairman of the Audit & Risk
Committee and member of the
Nomination Committee.
Roy has more than 30 years of direct
telecommunications experience. Most
recently he was Executive Vice President,
Chief Strategy Officer for Verizon
Communications and has held leadership
positions with other leading firms
including Motorola, Grande
Communications, Sprint-Nextel and
AirTouch. Roy’s last six years with Verizon
included almost five as head of strategy
responsible for the development and
implementation of Verizon’s overall
corporate strategy, including business
development, joint ventures, strategic
investments, acquisitions and
divestitures.
Roy has been a Director for international
industry association GSMA and is a
former chair of the Chief Strategy
Officers Group including 25 global
strategists from the world’s leading
wireless carriers.
Other listed company directorships
(past three years)
Director, Intelsat (from March 2022) and
Digital Turbine Inc (from 2018). Board of
Advisors, Accenture Luminary (from
2021). Former – Director, Saudi Telecom
(2018 – 2021) and Boingo Wireless, Inc
(2019 – 2021).
Other directorships and appointments
Non-executive Partner, FTI Consulting
Group/Delta Partners. Senior advisor,
VMware Inc and Tillman Global Holdings
LLC. Board Advisor, LotusFlare (from
2019).
Craig is a highly regarded business leader
with more than 20 years’ experience in
financial services, pan-Asian business
activities and strategic advice for
government and major companies. Craig
was Chief Executive Officer and
Managing Director of AMP from 2008 to
2013 and held various roles at AMP in a
13-year career including Managing
Director of AMP Financial Services,
Managing Director for AMP Bank and
head of Corporate Strategy and M&A.
Previously he was at Colonial Mutual
Group from 1991 to 2000, including
Managing Director for EON CMB Life
Insurance in Malaysia and senior roles in
Group Strategy, M&A and Finance. He has
also served as a member of the Federal
Government’s Financial System Inquiry
in 2014 and the Consumer and Financial
Literacy Taskforce.
Other listed company directorships
(past three years)
Director, Westpac (2015-2021).
Other directorships and appointments
Chair, ISO Blockchain Standards
Committee (from 2017) and The
Australian Ballet (Joined 2014, Chair
from 2015). Director, Lion Pty Limited and
Lion Global Craft Beverages Pty Limited
(from 2021).
Non-executive Director appointed on 14
August 2020 and elected on 13 October
2020. Member of the Nomination
Committee.
Bridget is Founder and Chief Executive
Officer of Expert360. Expert360 is
Australia’s number one skilled talent
platform, using sophisticated vetting and
matching technology to connect more
than 1000 companies with more than
30,000 elite consultants, project
managers, data analysts and developers.
Expert360 has been recognised as a
game-changing platform by, among
others, Harvard Business Review and the
Economist.
Prior to founding Expert360 in 2013,
Bridget worked as a management
consultant for Bain & Co in Sydney. At
Bain, Bridget was part of teams that
advised ASX 50 leaders on strategy and
transformation across a range of
industries such as Retail, Consumer,
Mining and Education.
Bridget is a leader in how organisations
transform themselves to capture the
opportunities presented by
developments in technology. She has
passion for solving customer problems
and an impressive desire to create
positive outcomes for society using
technology.
Other directorships and appointments
Director, Expert 360 Pty Ltd (from 2013)
and E360 Holdings Pty Ltd (from 2019).
31
Elana Rubin
Age 64, AM, BA (Hons), MA, SF Fin,
FAICDLife
Nora L Scheinkestel
Age 62, LLB (Hons), PhD, FAICD
Niek Jan van Damme
Age 61, Drs.
Non-executive Director appointed on 14
February 2020 and elected on 13 October
2020. Chair of the People & Remuneration
Committee and member of the
Nomination Committee.
Elana has more than 20 years Board
experience across the financial service
sector, including superannuation and
funds management as well as the
fintech, property, infrastructure and
government sectors. Her executive career
spanned industrial relations, social and
economic policy and superannuation.
Elana is adept at working in consumer
facing organisations with a strong
customer focus and can balance
commercial interests with the complex
requirements of regulated sectors.
Elana has strong risk management and
regulatory experience, having worked in
highly regulated sectors including as
Chair of AustralianSuper, one of
Australia’s largest and innovative super
funds, and Chair of Victorian WorkCover
Authority, a highly regarded regulator and
workplace injury insurer.
Other listed company directorships
(past three years)
Director, Slater and Gordon Limited
(from 2018. Acting Chair from August
– November 2021). Former – Director,
Afterpay Limited (2017-2022, Chair 2020-
2022) and Mirvac Limited (2010-2019).
Other directorships and appointments
Chair, Victorian Managed Insurance
Authority (from 2016).
Non-executive Director since August
2010 and last re-elected in October 2019.
Member of the Audit & Risk Committee
(previously Chairman Audit & Risk
Committee 2012-2019), the Nomination
Committee and the People &
Remuneration Committee.
Nora is an experienced company director
with almost 30 years’ experience as a
non-executive Chairman and Director of
companies in a wide range of industry
sectors including the public, government
and private sectors. Dr Scheinkestel has
a long track record in highly regulated
sectors such as infrastructure and
financial services and in industries facing
significant disruption from technology
and market changes.
Nora is a former banking executive and
has significant experience in
international and project financing. She
has extensive financial and risk
management expertise, which includes
having chaired the audit and risk
committees of a number of listed
companies.
She is a published author, has worked as
an Associate Professor in the Melbourne
Business School at Melbourne University
and a former member of the Takeovers
Panel and was awarded a Centenary
Medal for services to Australian society
in business leadership.
Other listed company directorships
(past three years)
Director, Origin Energy Limited (from
March 2022), Brambles Limited (from
2020), Westpac Banking Corporation
(from 2021). Former – Director, AusNet
Services Ltd (2016-2022), Atlas Arteria
Limited (2014-2020), Atlas Arteria
International Limited (2015-2020) and
OceanaGold Corporation (2018-2019).
Non-executive Director elected on 16
October 2018, last re-elected on 12
October 2021. Member of the People &
Remuneration Committee and the
Nomination Committee.
Niek Jan has almost 20 years direct
telecommunications experience, with the
first part of his career focusing on brand
and category management in a range of
businesses including consumer goods
and retail. Most recently he was a
member of the Deutsche Telekom Board
of Management, where he was
responsible for fixed line and mobile
communications in Germany. Niek Jan
has held leadership positions with other
leading firms including Ben Nederland,
later T-Mobile Netherlands, a challenger
mobile brand, where he was the
Chairman of the Managing Board.
At Deutsche Telekom he led the merger of
mobile and fixed line business, laying the
foundation for making Deutsche Telekom
the leading operator in converged
services. He also led a major network
modernisation program with the
establishment of a new IP core, and high
4G network investments.
Other directorships and appointments
Chairman of the Supervisory Board,
NGN Fiber Network (from February
2022). Board member, Infrafibre Germany
GmbH (from November 2021). Board
Advisor, Glow Financial Services Ltd
(from May 2022) and LotusFlare (from
November 2020).
32
Senior
management
team
Andrew Penn
Chief Executive Officer
Kim Krogh Andersen
Group Executive, Product & Technology
Brendon Riley
CEO, Telstra InfraCo
Andy has led an ambitious change
program to transform Telstra to be
positioned to compete in the radically
changing technology world of the future,
with 5G at its core. He has had an
extensive career spanning 40 years
across three different industries –
telecommunications, financial services
and shipping. Andy joined Telstra in 2012
as Chief Financial Officer and in 2014
took on the additional responsibilities as
Group Executive International. Andy
became the CEO and Managing Director
of Telstra on 1 May 2015. Further detail
about Andy can be found in the Board of
Directors section. Andy will retire on 1
September 2022.
Vicki Brady
Chief Financial Officer and Group
Executive, Strategy & Finance
The Strategy and Finance team guides
the company’s financial performance
and reporting, leads the development
of and progress against its corporate
strategy, and oversees its internal audit
capabilities, with the aim of delivering
shareholder value over the long term.
Vicki will become Telstra’s CEO on
1 September 2022.
Michael Ackland
Group Executive, Consumer & Small
Business
Consumer and Small Business works to
create and deliver the best experiences
possible for consumers and small
business customers through radically
simplifying our products and services,
while also working to transform the
experience customers have with us.
Michael will become Telstra’s CFO on
1 September 2022.
Product and Technology (P&T)
drives Telstra’s end-to-end product
accountability, profitability, and
experience. The team oversees Telstra’s
overall product and technology roadmap
and strategy and manages the lifecycle
and economics of these products.
Through Telstra Labs, P&T is also the
thought-leader and incubator of
emerging technologies.
Telstra InfraCo is responsible for
efficiently leveraging Telstra’s significant
portfolio of assets, ensuring it maintains
and monetises these assets and meets
its obligations to wholesale customers.
This includes Amplitel, our mobile tower
infrastructure entity. Brendon Riley is
also responsible for the Telstra Health
business, which is separate to Telstra
InfraCo.
Alex Badenoch
Group Executive, Transformation,
Communications & People
Dean Salter
Group Executive, Global Business
Services
Global Business Services (GBS) brings
together shared services such as
Assurance, Activation, Billing, Property,
Procurement and People Services to
improve customer service, efficiency and
service levels across the company.
Lyndall Stoyles
Group General Counsel and Group
Executive, Sustainability, External
Affairs & Legal
The Sustainability, External Affairs and
Legal team is responsible for providing
advice to Telstra’s Board and CEO as well
as providing legal counsel, policy advice,
stakeholder management and
community programs across government
relations, regulatory, risk compliance,
sustainability and regional affairs.
The Transformation, Communications
and People team leads the delivery of
key initiatives to create the place you
want to work under our T25 strategy.
This includes Telstra’s Human Resources
function, and Telstra’s Communications
function responsible for keeping our
employees informed and engaged and
maintaining and improving Telstra’s
reputation.
David Burns
Group Executive, Enterprise
Enterprise is responsible for revenues
in excess of $8 billion from delivering
connectivity, platforms, applications
and tailored industry solutions to
Telstra’s enterprise and government
customers. It is also responsible for
Telstra’s international operations and
the largest subsea cable network in
the Asia Pacific region.
Nikos Katinakis
Group Executive, Networks & IT
Networks & IT is responsible for ensuring
Telstra delivers next generation network
technologies to create the largest,
smartest, safest and most reliable
networks in the world. This includes
rolling out new technology developments,
such as those related to 5G, as well as
maintaining and enhancing Telstra’s IT
platforms.
33
Sustainability
Our goal is to embed social and environmental considerations into our business
in ways that create value for the company and our stakeholders.
Our approach
We launched our Responsible Business
Strategy and supporting Responsible
Business Framework in 2021 as part of
our T22 ambition to embed responsible
business principles and practices across
Telstra. The Responsible Business
Strategy was developed in consultation
with key stakeholders and informed by
international instruments and
frameworks. This included the United
Nations (UN) Sustainable Development
Goals (SDGs), the UN Guiding Principles
for Business and Human Rights, the
OECD Due Diligence Guidance for
Responsible Business and the Principles
of the UN Global Compact.
This responsible business approach is
also a key part of our T25 Strategy, and
we are working to embed a deeper
understanding of what this means
through all levels of the organisation.
The Strategy includes three pillars:
The Responsible Business Strategy and
Framework bring responsible business to
life for our people and stakeholders and
enable us to maintain cross-company
oversight of key sustainability issues,
risks and opportunities. Our
Sustainability Centre of Expertise (CoE) is
responsible for planning, executing and
reporting on progress towards delivering
on the objectives of the Responsible
Business Strategy, including the work we
do on climate and resource efficiency,
digital inclusion and governance.
This is a holistic approach to
sustainability that is informed by, and
integrated with, our core business
activities. It guides the way we interact
with our customers, suppliers and
people, the role we play in increasing the
number of Australians who benefit from
the digital economy and how we manage
and minimise the impact we have on our
planet. Through our Responsible
Business Strategy, we are demonstrating
that we understand the expectations on
us and are working to contribute to
solutions to meet the environmental and
societal challenges facing the
communities in which we operate.
Our Responsible Business Strategy
reflects our most material topics, our
SDG priorities, the areas in which we
have the expertise to make a meaningful
impact, and where we see opportunities
to use innovative, tech-based solutions
to help address major societal challenges
and opportunities. Through the
Responsible Business Strategy we will
build on our reputation as a trusted,
sustainable business and draw on our
tech expertise to play a leadership role in
promoting digital inclusion and
environmental action.
Trusted operations
Digital inclusion
Environmental action
We will operate as a globally
trusted company that people want
to work for and with.
We will help our customers
and communities to thrive
in a digital world.
We will use technology to address
environmental challenges and help
others to do the same.
For detailed overview of our approach
and progress in relation to each of
these three strategic pillars, please see
our 2022 Bigger Picture Sustainability
Report, available online at telstra.com/
sustainability/report/data.
Our commitment to respect and
support human rights is aligned to the
UN Guiding Principles on Business and
Human Rights and detailed information
regarding how we manage human rights
risk is contained in our annual 2022
Human Rights and Modern Slavery Act
Statement, available online at telstra.
com/sustainability/report/data.
We have aligned our reporting with the
recommendations of the TCFD and will
continue to enhance our climate-
related disclosures to reflect our
response to the impacts of climate
change. For more information see our
dedicated 2022 Climate Change Report,
available online at telstra.com/
sustainability/report/data.
34
Governance at Telstra
We are committed to excellence in corporate governance, transparency and accountability.
This is essential for the long-term performance and sustainability of our company, and to
protect and enhance the interests of our shareholders and other stakeholders
Our governance arrangements and
practices play an integral role in
supporting our business and helping us
deliver on our strategy.
They provide the structure through which
our strategy and business objectives are
set, our performance is monitored, and
the risks we face are managed.
They include a clear framework for
decision making and accountability
across our business and provide
guidance on the standards of behaviour
we expect of each other.
Telstra complies with the fourth edition
of the ASX Corporate Governance
Council’s Corporate Governance
Principles and Recommendations, and
we review our governance practices in
light of current and emerging corporate
governance developments of relevance
to our company, and to reflect market
practice, expectations and regulatory
changes as appropriate.
Our 2022 Corporate Governance
Statement, which provides more
information about governance at Telstra
and summarises our governance
arrangements and practices during
FY22, can be found on our website at
telstra.com/governance.
t
n
e
d
n
e
p
e
d
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i
v
d
a
d
n
a
e
c
n
a
r
u
s
s
a
t
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e
m
e
g
a
n
a
m
k
s
i
r
d
n
a
y
g
e
t
a
r
t
S
Shareholders and stakeholders
Audit & Risk
Committee
Telstra Board
People &
Remuneration
Committee
CEO
Nomination
Committee
CEO Leadership Team
Our People
Policies, systems and processes
Key
Delegation, oversight
Accountability, reporting
P
u
r
p
o
s
e
,
v
a
l
u
e
s
a
n
d
c
u
l
t
u
r
e
Our governance
framework includes:
• open, clear and timely
communications with our
shareholders
• a skilled, experienced,
diverse and independent
Board, with a Board
Committee structure suited
to our needs
• clear delegation, decision
making and accountability
frameworks
• robust systems of risk
management and assurance
• Telstra Values, Code of
Conduct and policy
framework which explain
what we stand for as an
organisation and how we
will conduct ourselves as
we work together to deliver
our strategy.
35
36
Directors’
Report
Directors’ Report
In accordance with a resolution of the Board, the Directors present their
report on the consolidated entity (Telstra Group) consisting of Telstra
Corporation Limited (Telstra) and the entities it controlled at the end of,
or during, the year ended, 30 June 2022. Financial comparisons used in
this report are of results for the year ended 30 June 2022 compared with
the results for the year ended 30 June 2021.
The historical financial information included in this Directors’ Report
has been extracted from the audited Financial Report accompanying
this Directors’ Report.
Principal activity
Our principal activity during the financial year was to provide
telecommunications and information services for domestic and
international customers. There has been no significant change
in the nature of this activity during the year.
Review and results of operations
Information on the operations and financial position for the
Telstra Group is set out in the Operating and Financial Review
(OFR), comprising the Chairman and CEO’s message, Strategy
and performance, Our material risks, Outlook and Full year
results and operations review sections accompanying this
Directors’ Report.
Dividend
The objectives of our Capital Management Framework are to
maximise returns for shareholders, maintain financial strength
and retain financial flexibility. The objectives of our Capital
Management Framework are supported by the following
principles:
• Committed to balance sheet settings consistent with an A
band credit rating
Further information regarding the financial year 2022 dividends
is set out in the Full year results and operations review
accompanying this Directors’ Report.
The Board determined that the Dividend Reinvestment Plan
(DRP) will continue to operate for the final dividend for the
financial year 2022. The election date for participation in the
DRP is 26 August 2022.
Dividends paid during the year were as follows:
Date
resolved
Date
paid
Fully
franked
dividend
per share
Total
dividend
($ million)
12 Aug
2021
23 Sept
2021
8 cents
951
17 Feb
2022
1 April
2022
8 cents
937
Dividend
Total final
dividend for the
year ended 30
June 2021
Total interim
dividend for the
year ended 30
June 2022
• Maximise fully franked dividend and seek to grow over time
On-market share buy-back
On 12 August 2021, we announced that during the financial year
2022 we intended to return up to $1.35 billion of net proceeds
from the towers business transaction to shareholders via an
on-market share buy-back. During the financial year ended 30
June 2022, we completed the buy-back and purchased 338.9
million shares for the total amount of $1.35 billion. The shares
were subsequently cancelled.
Significant changes in the state of affairs
There were no significant changes in the state of affairs of our
company during the financial year 2022.
• Ongoing business-as-usual capex of circa $3 billion per
annum excluding spectrum
• Invest for growth and return excess cash to shareholders.
On 17 February 2022, the Directors resolved to pay an interim
fully franked dividend for the financial year 2022 of 8 cents
per ordinary share, comprising an interim ordinary dividend
of 6 cents per share and an interim special dividend of 2 cents
per share.
On 11 August 2022, the Directors resolved to pay a final fully
franked dividend of 8.5 cents per ordinary share ($982 million),
comprising a final ordinary dividend of 7.5 cents per share and
a final special dividend of 1.0 cent per share. The financial year
2022 special dividend will be the final special dividend linked to
one-off nbn receipts. The record date for the final dividend will
be 25 August 2022, with payment to be made on 22 September
2022. Shares will trade excluding entitlement to the final
dividend on 24 August 2022.
38
Directors’ Report | Telstra Annual Report 2022
Business strategies, prospects and likely developments
Details of Directors and executives
The OFR sets out information on Telstra’s business strategies
and prospects for future financial years, and refers to likely
developments in Telstra's operations and the expected results
of those operations in future financial years. Information in the
OFR is provided to enable shareholders to make an informed
assessment of the business strategies and prospects for future
financial years of the Telstra Group. Detail that could give rise to
likely material detriment to Telstra (for example, information
that is commercially sensitive, is confidential or could give a
third party a commercial advantage) has not been included.
Other than the information set out in the OFR, information
about other likely developments in Telstra's operations and the
expected results of those operations in future financial years
has not been included.
Events occurring after the end of the financial year
The Directors are not aware of any matter or circumstance that
has arisen since the end of the financial year that, in their
opinion, has significantly affected, or may significantly affect in
future years, Telstra’s operations, the results of those
operations or the state of Telstra’s affairs, other than:
• the final dividend for the financial year 2022 and that the DRP
will operate in respect of that dividend
• the acquisition of Digicel Pacific
• the acquisition of Fetch TV.
Refer to note 7.4, Events after reporting date, of the 2022
Financial Report for details.
Changes to the Directors of Telstra Corporation Limited during
the financial year and up to the date of this report were:
• Margaret L Seale retired as a non-executive Director on 12
October 2021. Ms Seale (BA, FAICD) joined the Board in May
2012 and was a member of the Audit & Risk Committee and
the Nomination Committee.
• Peter R Hearl retired as a non-executive Director on 31
December 2021. Mr Hearl (B Com (UNSW), MIML ANZ, FAICD,
Member – AMA) joined the Board in August 2014 and was
Chairman of the People & Remuneration Committee and was
a member of the Nomination Committee.
Information about our Directors and Senior Executives is
provided as follows:
• names of our current Directors and details of their
qualifications, experience, special responsibilities, periods of
service and directorships of other listed companies are set
out in the Board of Directors section accompanying this
Directors’ Report
• details of Director and Senior Executive remuneration are set
out in the Remuneration Report, which forms part of the
Directors’ Report.
Board and Committee meeting attendance
Details of the number of meetings held by the Board and its
Committees during financial year 2022, and attendance by
Board members, are set out below:
Board
Audit and Risk
Nomination
People and
Remuneration
Committees1
John P Mullen
Andrew R Penn
Eelco Blok
Roy H Chestnutt
Craig W Dunn
Peter R Hearl2
Bridget Loudon
Elana Rubin
Nora L Scheinkestel
Margaret L Seale2
Niek Jan van Damme
a
18
18
18
18
18
10
18
18
18
7
18
b
18
17
18
18
18
10
18
18
18
7
18
a
–
–
–
6
6
–
–
–
6
2
–
b
(3)
(6)
–
6
6
–
(1)
(1)
6
2
(1)
a
6
–
6
6
6
3
6
6
6
1
6
b
6
(4)
6
6
6
3
6
6
6
1
6
a
–
–
–
–
–
2
–
5
5
–
5
Total number of meetings held
18
6
6
5
Column a: number of meetings held while a member. Column b: number of meetings attended.
1. Committee meetings are open to all Directors to attend. Where a Director has attended a meeting of a Committee of which he or she was not a member,
this is indicated by ( ).
2. Margaret L Seale retired as a non-executive Director on 12 October 2021. Peter R Hearl retired as a non-executive Director on 31 December 2021.
b
(2)
(4)
(1)
(1)
(1)
2
(1)
5
5
–
5
39
Director shareholdings in Telstra
Directors’ and officers’ indemnity and insurance
Details of Directors’ shareholdings in Telstra as at 11 August
2022 are shown in the table below:
Director
John P Mullen
Andrew R Penn2
Eelco Blok
Roy H Chestnutt
Craig W Dunn
Bridget Loudon
Elana Rubin
Nora L Scheinkestel
Niek Jan van Damme
Number of shares held1
126,159
2,556,435
75,000
70,000
70,073
2,500
67,961
151,101
77,000
1. The number of shares held refers to shares held either directly or indirectly by
Directors as at 11 August 2022 or, if earlier, as at the date of cessation as a
Director. Shares in which the Director does not have a relevant interest, including
shares held by the Directors’ related parties (including relatives), are excluded.
Refer to the Remuneration Report tables for total shares held by Directors and
their related parties directly, indirectly or beneficially as at 30 June 2022.
2. Andrew Penn also holds 1,471,653 Performance Rights.
Company Secretary
Sue Laver BA, LLB (Hons) (Monash), GAICD, FGIA
Sue was appointed Company Secretary of Telstra Corporation
Limited effective 1 February 2018.
Sue is a senior legal and governance professional with over 20
years’ experience advising senior management and boards. Sue
reports to the board and her duties include continuous
disclosure compliance, corporate governance and
communication with Telstra’s 1.2 million shareholders.
Sue joined Telstra in 1997 and has served in senior legal roles
throughout the company including as Deputy Group General
Counsel, and General Counsel roles across the company
including: Dispute Resolution, HR, Finance, Risk and
Compliance, Media and Telstra Country Wide.
She holds a Bachelor of Laws (Hons) and a Bachelor of Arts
from Monash University.
(a) Constitution
Telstra’s constitution contains permissive provisions allowing it
to indemnify, to the maximum extent permitted by law:
• certain officers of Telstra and its related bodies corporate
(Telstra Officers), for any liability and legal costs which they
may incur in that capacity;
• certain employees of Telstra and its related bodies corporate
(Telstra Employees), for any liability which they may incur in
that capacity; and
• Telstra Officers and Telstra Employees, for any liability which
they may incur as a director or other officer of a company that
is not related to Telstra.
(b) Deeds of indemnity
Telstra has also executed deeds of indemnity in favour of
(amongst others):
• Directors and secretaries of Telstra (past and present);
• certain senior managers and employees of Telstra and its
wholly-owned subsidiaries and partly-owned companies
(including, for example, in relation to particular projects); and
• certain Telstra Group senior managers, employees and other
persons that act as nominee directors or secretaries, or in
other positions (at Telstra’s request) for entities or industry
associations, including wholly-owned subsidiaries and partly-
owned companies of Telstra,
in each case as permitted under Telstra’s constitution and the
Corporations Act 2001 (the Act).
The deeds in favour of Directors of Telstra also give Directors
certain rights of access to Telstra’s books and require Telstra to
maintain insurance cover for the Directors.
(c) Directors’ and officers’ insurance
Telstra maintains directors' and officers' insurance policies
that, subject to some exceptions, provide worldwide insurance
cover to past, present and future directors, secretaries and
officers and certain employees of Telstra and its subsidiaries
and, in certain limited circumstances, other entities. Telstra has
paid the premiums for these policies. The directors' and
officers' insurance policies prohibit disclosure of the premiums
payable under the policies and the nature of the liabilities
insured.
40
Environmental regulation and performance
Non-audit services
During the financial year 2022, Telstra’s auditor, Ernst & Young
(EY), has been engaged on assignments additional to its
statutory audit duties. Details of the amounts paid or payable
to EY for audit and non-audit services provided during the
financial year are detailed in note 7.1 to the financial
statements in our 2022 Financial Report.
The Directors are satisfied, based on advice provided by the
Audit & Risk Committee, that the provision of non-audit
services during the financial year 2022 is consistent with the
general standard of independence for auditors imposed by the
Act and that the nature and scope of each type of non-audit
service provided did not compromise the auditor independence
requirements of the Act for the following reasons:
• all EY engagements, including non-audit services, were
approved in accordance with the external auditor services
policy adopted by Telstra and subject to confirmation by both
management and EY that the provision of these services does
not compromise auditor independence;
• the external auditor services policy clearly identifies
prohibited services, which include reviewing or auditing the
auditor’s own work or EY partners or staff acting in a
managerial or decision-making capacity for Telstra; and
• the provision of non-audit services by EY is monitored by the
Audit & Risk Committee via periodic reporting to the Audit &
Risk Committee.
A copy of the auditor’s independence declaration is set out in
the Auditor’s Independence Declaration to the Directors of
Telstra Corporation Limited and forms part of this report.
Telstra, as a minimum, seeks to be compliant with all applicable
environmental laws and regulatory obligations relevant to its
operations. Where instances of non-compliance may occur,
Telstra has procedures requiring that internal investigations are
conducted to determine the cause of the non-compliance and
to ensure that any risk of recurrence is minimised. Telstra’s
procedures further require that the relevant government
authorities are notified of any environmental incidents (where
applicable) in compliance with statutory requirements. Telstra
complies with notices issued by government authorities and
regulators.
(a) Prosecutions or convictions
Telstra has not been prosecuted for, or convicted of, any
significant breaches of environmental regulation during the
financial year.
(b) Energy and greenhouse emissions
In Australia, Telstra is subject to the reporting requirements of
the National Greenhouse and Energy Reporting Act 2007, which
requires Telstra to report its annual Australian greenhouse gas
emissions, energy consumption and energy production. Telstra
has implemented systems and processes for the collection and
reporting of data and has, in accordance with our obligations,
reported to the Clean Energy Regulator on an annual basis. The
next report is due on 31 October 2022 and will again be
supported with an independent assurance report.
In the United Kingdom, Telstra is subject to the Energy Savings
Opportunity Scheme (ESOS) Regulations 2014. Telstra qualifies
for ESOS and must carry out energy savings assessments every
four years. These assessments are audits of the energy used by
our buildings, network facilities and transport to identify cost-
effective energy saving measures. Telstra has met its
obligations under ESOS for all compliance periods to date,
being those first two compliance periods ended 5 December
2015 and 5 December 2019.
For more information on environmental performance, including
environmental regulation, refer to the 2022 Bigger Picture
Sustainability Report, which is available from 26 August 2022
online at telstra.com/sustainability/report.
41
Message from the
People and Remuneration
Committee Chair
Dear fellow shareholders,
On behalf of your company’s People and Remuneration Committee, I am pleased to present Telstra’s
FY22 Remuneration Report.
Our bold T22 transformation program over the last four years has fundamentally changed Telstra for
the better and positioned your company for growth. As the business has transformed, the Board has
continued to focus on getting the balance right of protecting shareholders’ interests while driving
change and motivating and retaining the best management talent that we can attract.
FY22 executive remuneration outcomes
Telstra’s Executive Variable Remuneration Plan (EVP) is
designed to ensure a significant portion of remuneration is
variable and at-risk. Performance is assessed against both
primary performance measures (comprising financial, strategic,
customer and transformation measures) and a secondary
performance measure (being the Relative Total Shareholder
Return performance condition on any Performance Rights
awarded).
The FY22 primary performance measures and targets were
selected by the Board to ensure that the CEO and Group
Executives (GEs) continue to deliver against our T22 strategy,
and their rewards are directly linked to their individual
contribution, company performance and long-term shareholder
value creation. The key remuneration outcomes under the FY22
EVP include:
• The CEO’s Individual EVP Outcome was 62.1% of the maximum
opportunity
• The average Individual EVP Outcome for all other Senior
Executives (i.e. excluding the CEO) was 58.0% of the maximum
opportunity.
Positive outcomes were achieved across many of the financial
and non-financial primary performance measures for FY22
demonstrating strong delivery against our FY22 Corporate Plan
and T22 strategy. The Board determined that the primary
performance measure outcomes and the EVP Scorecard
Outcome would be driven by the results achieved. No
adjustments were made for the ongoing impact of the COVID-19
pandemic.
Further detail regarding the key FY22 remuneration outcomes
for the CEO and other Senior Executives and our non-executive
director fees is provided in our Remuneration Report that
follows this letter.
Looking ahead
Now we move from a strategy we had to do to a strategy we
want to do – from a transformation strategy to a strategy
focused on continued growth. T25 marks an exciting new era in
Telstra’s history, one that will see us accelerate growth from our
core as well as continuing to scale our successful health and
international businesses while we invest in new businesses
where we see opportunities in the future.
During the year we announced significant changes to our Senior
Executive team that will take effect in FY23, with the CEO
announcing his retirement, and the appointment of a new CEO
and CFO. Further details on these changes are provided in
Section 4.1 of our Remuneration Report.
42
The Board is taking this opportunity to address a difference in
the pay-for-performance curve between the CEO and the Group
Executives (with no change for the CEO). Individual EVP
Outcomes for the CEO and Group Executives will all be
determined by multiplying the EVP Scorecard Outcome by a
percentage, based on the participant’s individual performance.
These changes better align the design of the EVP with market
practice and with Telstra’s Short-Term Incentive plan design
and drive a greater differential in performance outcomes across
plan participants. Of course, the Board will continue to have
complete discretion in determining any final incentive payment
outcomes. Further details are provided in Section 4.2 of our
Remuneration Report.
As part of our commitment to provide market leading
transparency and disclosure, we again provide detail on our
remuneration framework and targets for the coming year. These
are disclosed in Section 4.3 of our Remuneration Report. This
provides our shareholders with meaningful information to
assess the suitability of our remuneration targets and
outcomes. In setting performance measures for FY23, the Board
sought to ensure the targets were robust and sufficiently
demanding, considering the key deliverables and milestones
outlined in our T25 strategy, planned financial outcomes
contained within our FY23 Corporate Plan and FY23 guidance
(as announced on 11 August 2022).
On an annual basis the Board conducts a market review of
Board fees. The Chair fee and non-executive Director annual
base fee have not changed since 2014 and 2012 respectively
and, from 1 October 2022, will increase by 1.9% and 2.1%
respectively. The People and Remuneration Committee member
fee had not changed since 2017 and, from 1 October 2022, will
increase by 1.8% Further details are provided in Section 3.1 of
our Remuneration Report.
I want to take this opportunity to thank the Telstra team for
navigating the many complexities of the T22 strategy and
working so hard to position us for future growth.
On behalf of the People and Remuneration Committee, I would
also like to thank you for your support as a Telstra shareholder
and invite you to read the full report in detail.
Elana Rubin
People and Remuneration Committee Chair
Remuneration
Report
43
Remuneration Report
This audited report details the remuneration framework and outcomes for
Key Management Personnel (KMP) of the Telstra Group for the year ended
30 June 2022 (FY22).
Remuneration at Telstra and FY22 Remuneration Outcomes – Key Highlights
The following table includes the key highlights and remuneration outcomes for FY22.
Key area of focus
Highlights / Details
The overall structure and approach to remuneration at Telstra remained unchanged from FY21.
Remuneration
Structure, fixed
remuneration and
non-executive
director fees
There have been no Fixed Remuneration increases for Senior Executives during FY22, other than for the Group Executive –
Product & Technology, Kim Krogh Andersen, whose remuneration was adjusted to reflect his growing experience,
contribution and leadership since his commencement in the role and having regard to the fixed remuneration of
executives holding similar roles in other ASX20 entities (refer to Section 2.1(b) for further information).
There were no changes to the variable remuneration opportunity levels during FY22 or the Executive Variable
Remuneration Plan (EVP) structure other than redistributing the 5% weighting for the TE Product Portfolio Simplification
metric to the Episode NPS metric (as described in our FY21 Remuneration Report).
With regard to non-executive Director remuneration, there have been no changes to the Chair’s fee, non-executive Director
annual base fee or any standing committee fees during FY22. Certain directors received remuneration for additional or
special duties they performed in connection with the proposed corporate restructure of the Telstra Group announced on
12 November 2020 (Corporate Restructure). Refer to Section 3 for information regarding remuneration paid to non-
executive Directors in FY22 and planned fee increases for FY23.
The Individual EVP Outcomes for FY22 were as follows:
FY22 performance
and EVP outcomes
CEO
Other Senior Executives (average)
Individual EVP Outcomes (% of maximum)
62.1%
58.0%
Each Senior Executive’s Individual EVP Outcome for FY22 was determined having regard to the EVP Scorecard Outcome
(previously referred to as the Base EVP Outcome), their target EVP opportunity and their individual performance, and was
ultimately at the discretion of the Board.
The Board determined the EVP Scorecard Outcome following an assessment of Telstra’s performance against the primary
performance measures under the FY22 EVP. Positive outcomes were achieved across many of the financial and non-
financial measures demonstrating strong delivery against our FY22 Corporate Plan and T22 strategy. Further details on
the EVP Scorecard Outcomes can be found in Section 2.2.
The form in which Senior Executives receive their Individual EVP Outcome for FY22 is:
Award
25% Cash
Timing and conditions
Payable in September 2022.
35% Restricted Shares
25% eligible to vest each year over 4 years through to 30 June 2026, subject to a
continuing employment condition.
40% Performance Rights
Only vest at the end of FY26 if a Relative Total Shareholder Return (RTSR) performance
condition and continuing employment condition are achieved.
Refer to Section 2.1 for further information.
The RTSR performance condition for the second tranche of Performance Rights awarded under the FY18 EVP was tested
following the end of the performance period on 30 June 2022. The results and vesting outcomes are detailed below and no
Performance Rights vested. Refer to Section 2.4 for further information.
Performance Condition
RTSR – ASX100 (excluding resource companies)
as at 1 July 2017
Telstra’s
Percentile Rank
% of Performance
Rights vested
42nd percentile
0%
FY18 EVP
Performance
Rights (Tranche 2)
RTSR outcome
44
Remuneration Report | Telstra Annual Report 2022
Key Management Personnel (KMP) covered in this report
Telstra’s KMP are assessed each year and comprise the Directors of Telstra and the Senior Executives. The term “Senior
Executives” refers to the CEO and those executives with authority and responsibility for planning, directing and controlling the
activities of Telstra and the Group, directly or indirectly. Each KMP held their position for the whole of FY22, unless stated
otherwise.
Non-executive Directors
Senior Executives
Current
John P Mullen
Eelco Blok
Roy H Chestnutt
Craig W Dunn
Bridget Loudon
Elana Rubin
Current
KMP Position
Andrew Penn
Chief Executive Officer & Managing Director (CEO)
Michael Ackland
Group Executive (GE) Telstra Consumer & Small Business (C&SB)
Kim Krogh Andersen
GE Product & Technology (P&T)
Alex Badenoch
GE Transformation, Communications & People (TC&P)
Vicki Brady
David Burns
Chief Financial Officer and GE Strategy and Finance (CFO)
GE Telstra Enterprise (TE)
Nora L Scheinkestel
Niek Jan van Damme
Nikos Katinakis
GE Networks & IT (N&IT)
Brendon Riley
GE and CEO Telstra InfraCo
Dean Salter
GE Global Business Services (GBS)
Former
Peter Hearl (retired 31 Dec 2021)
Margaret L Seale (retired 12 Oct 2021)
Table of contents
1.0
1.1
2.0
2.1
2.2
2.3
2.4
2.5
3.0
3.1
3.2
4.0
4.1
4.2
4.3
5.0
Policy
Remuneration policy, strategy and governance
Senior Executive remuneration
FY22 Remuneration structure
FY22 EVP Scorecard Outcome
Individual performance and the exercise of Board discretion in
determining Individual EVP Outcomes
FY18 EVP Performance Rights RTSR Outcome
Detailed remuneration and interests in Telstra shares
Non-executive Director remuneration
FY22 Fee structure
Detailed remuneration and interests in Telstra shares
Looking forward to FY23
Senior Executive Leadership Changes
FY23 Senior Executive Remuneration Framework
FY23 EVP Performance Measures and Targets
Glossary
45
1.0 Policy
1.1 Remuneration policy, strategy and governance
Our remuneration policy and framework is designed to support our strategy and reinforce our culture and values. Further detail on
our strategy is provided in Section C of this report under Strategy & Performance.
Our governance framework for determining Senior Executive remuneration includes the aspects outlined below.
(a) The People and Remuneration Committee
Audit & Risk
Committee
Telstra Board
People &
Remuneration
Committee
Nomination
Committee
The People and Remuneration Committee
assists the Board in discharging its
responsibilities on matters relating to
remuneration, people, culture, conduct and
diversity and consists only of independent
non-executive Directors.
Our People
Among other things, the Committee:
Reviews Telstra’s
overall remuneration
framework and makes
recommendations to
the Board on non-
executive Director and
Senior Executive
remuneration
Monitors that Telstra’s
remuneration
arrangements and
outcomes encourage
employees to pursue
Telstra’s strategy
without rewarding
conduct that is
contrary to Telstra’s
values or risk appetite
Reviews selected
people related risks
and the risk
management plans in
place and monitors
whether Telstra is
operating within its
risk appetite
Monitors the culture
within Telstra and the
effectiveness of
management’s
initiatives to instil and
reinforce Telstra’s
Values and compliance
with Telstra’s Code of
Conduct
Reviews Senior
Executive succession
plans and talent
development plans
The Chair of the Audit and Risk Committee attends certain
People and Remuneration Committee meetings. This provides
an overview of the key issues considered by the Audit and Risk
Committee that are likely to be relevant to the People and
Remuneration Committee in assessing the remuneration
outcomes for the CEO and the performance and remuneration
outcomes for other Senior Executives. Information and papers
considered by a Committee are also provided to other
Committees and the Board as relevant.
Further detail about the People and Remuneration Committee
and its responsibilities is provided in our Corporate Governance
Statement and in the People and Remuneration Committee
Charter, both of which are available at telstra.com/governance.
(b) Remuneration reviews
As part of its role, the People and Remuneration Committee
reviews that CEO and other Senior Executive remuneration
packages involve a balance between fixed and incentive pay,
reflecting appropriate short and long-term performance
objectives.
The People and Remuneration Committee has an established
set of principles it follows in making recommendations on
Senior Executive remuneration. Either at the time of a Senior
Executive’s appointment or as a part of an annual or ad-hoc
remuneration review, the People and Remuneration Committee
will consider a range of factors in making remuneration
recommendations. Those considerations include, both internal
and external relativity for roles of a similar size and complexity,
any proven and persistent high performance and/or a notable
increase in experience and contribution.
The People and Remuneration Committee reviews and makes
recommendations to the Board (for final approval) on:
• the CEO’s fixed and variable remuneration (having regard to
the Board’s assessment of the CEO’s performance); and
• the fixed and variable remuneration and performance
outcomes of other Senior Executives (having regard to the
CEO’s assessment of their performance).
(c) Incentive design and performance assessment
The People and Remuneration Committee oversees the setting
of robust measures and targets to encourage performance and
behaviour that is aligned to Telstra’s values, including the
primary performance measures for the EVP. The Board
determines the EVP Scorecard Outcome by assessing
performance against each primary performance measure. The
EVP Scorecard Outcome is an input into the assessment of
each Senior Executive’s Individual EVP Outcome. The Board also
has discretion to adjust an outcome to ensure there are no
windfall gains or losses. Refer to Section 2.1(c) for further
information.
(d) Board decision framework
The Board has a decision framework to provide guidance in
exercising its discretion on variable remuneration outcomes
and to provide greater consistency in remuneration
adjustments. The framework was considered in determining the
Individual EVP Outcomes under the FY22 EVP.
(e) Engagement with consultants
During FY22, Telstra did not seek a remuneration
recommendation from a remuneration consultant in relation to
any of our KMP.
46
Remuneration Report | Telstra Annual Report 2022
(f) Engagement with shareholders and stakeholders
The Chair of the Board and the Chair of the People and Remuneration Committee engage throughout the year with stakeholders to
seek feedback and consider opportunities to further enhance the effectiveness of our reward structure with a commitment to the
alignment of the interests of all executives with the generation of long-term shareholder value. During FY22, numerous meetings
were held with shareholders and shareholder advisory organisations.
(g) Share ownership policies
Telstra has in place share ownership policies which apply to the Senior Executives and non-executive Directors. The intent of
these policies is to align the interests of the CEO, Group Executives and non-executive Directors with the interests of our
shareholders.
As at 30 June 2022, the CEO held Telstra shares to the value of 470% of his Fixed Remuneration as recognised under the policy.
Those Senior Executives who have held a Group Executive position for at least five years have met the shareholding requirement
as at 30 June 2022. For information on Senior Executives’ interests in Telstra shares refer to Section 2.5(e).
All non-executive Directors who have been on the Board for 2 years or more have met their minimum shareholding requirement.
Directors' shareholdings as at 11 August 2022 are set out in the Directors' Report.
The requirements of our share ownership policies are summarised below:
Summary of requirements under the share ownership policies
Position
CEO
Group Executives
Chair of the Board
Minimum holding requirement within 5 years of appointment to the position
200% of Fixed Remuneration
100% of Fixed Remuneration
200% of the annual non-executive Director base fee
Non-executive Directors
100% of the annual non-executive Director base fee
The following outlines how various Telstra securities are valued in calculating a person’s shareholding for the purpose of the policies:
How Telstra securities are valued under the policies
Position
Securities
Basis of valuation under the policies
CEO and Group Executives
Ordinary shares purchased on-market
Acquisition price
Restricted Shares
The volume weighted average price of Telstra shares used
to determine the number of Restricted Shares granted
under the relevant employee equity plan
Performance Rights
Not included
Any shares granted upon vesting of
Performance Rights
Telstra’s closing share price on the date that the
Performance Right vests
Chair and Non-executive Directors
Ordinary shares purchased on-market
Acquisition price
Senior Executives must obtain Board or, in certain
circumstances, CEO or Chair approval before they sell Telstra
shares if they have not yet met their minimum holding
requirement. Progress towards the minimum holding
requirement is monitored on an ongoing basis.
(h) Securities Trading Policy
All KMP must comply with Telstra’s Securities Trading Policy,
which includes a requirement that Telstra securities can only
be traded during specified trading windows and with prior
approval. KMP must also consider how any proposed dealing in
Telstra securities could be perceived by the market and must
not deal if the proposed dealing could be perceived as taking
advantage of their position in an inappropriate way. They are
also prohibited from entering into any hedging arrangement
that limits the economic risk of holding Telstra securities
(including those held under Telstra equity plans). This helps
align our KMP’s interests with shareholders’ interests. KMP are
required to confirm on an annual basis that they comply with
our Securities Trading Policy, which assists in monitoring and
enforcing our policy. Our Securities Trading Policy is available
at telstra.com/governance.
(i) Clawback (Malus) Policy
A Clawback Committee oversees the application of the
Clawback (Malus) policy. This policy applies to all employees at
Telstra and sets out the process that is followed to put the
Board in a position to determine, before securities vest,
whether a clawback event has occurred and whether to lapse
or forfeit unvested Performance Rights, Restricted Shares and
Cash Rights. The Clawback Committee meets quarterly and
reports to the People and Remuneration Committee twice a
year. The Clawback Committee is comprised of the GE
Transformation, Communications & People (TC&P), the CFO,
the GE Sustainability, External Affairs and Legal (SEAL) and the
Chief Risk Officer. The People and Remuneration Committee
subsequently makes recommendations to the Board as to
whether to exercise its discretion to claw back any unvested
equity. A member of the Clawback Committee is prohibited from
being involved in a Clawback Committee recommendation in
connection with any awards they hold.
Following the Clawback Committee’s review and
recommendations, no clawback of unvested securities held by
Senior Executives was recommended or approved during FY22.
47
2.0 Senior Executive remuneration
2.1 FY22 Remuneration Structure
The following diagram illustrates the remuneration framework that applied to our Senior Executives during FY22. This framework
was unchanged from FY21.
Attract, motivate
and retain highly
skilled people
Support our strategy
and reinforce our culture
and values
Link financial reward
outcomes to employee
contribution and company
performance
Align to long term
shareholder value creation
Fixed Remuneration
EVP
Cash
Equity
Base salary
+
Superannuation
Each Senior Executive’s Individual EVP Outcome was determined having regard to the EVP Scorecard
Outcome (based on Telstra’s performance against financial, strategic, customer and transformation
priorities), their target EVP opportunity and their individual performance, and was ultimately at the
discretion of the Board
25% of the FY22 Individual EVP
Outcome is provided in cash
Set taking into account both
internal and external relativity
for roles of a similar size and
complexity, any proven and
persistent high performance
and/or a notable increase in
experience and contribution
35% of the FY22 Individual EVP
Outcome is deferred as
Restricted Shares over four
years with 25% eligible to vest
each year following the end of
the Initial Performance Period
40% of the FY22 Individual EVP
Outcome is allocated in
Performance Rights, which are
subject to a 5-year Relative
Total Shareholder Return
(RTSR) performance condition
May be forfeited or lapsed if employment ceases other than for a
Permitted Reason or a clawback (malus) event occurs
Internally consistent and
market competitive
base reward
Recognises sustainable performance in the medium to longer term
Rewards annual
performance, providing
specific focus on strategic
priorities
Recognises the criticality of
strategic non-financial
measures as drivers of
longer-term value creation
Focuses on achieving
longer-term superior
performance for
stakeholders
(a) FY22 Remuneration mix for Senior Executives
The graph below shows the FY22 remuneration mix for Senior Executives expressed as a percentage of Fixed Remuneration (FR).
CEO1
100%
Fixed Remuneration
50%
EVP Cash2
70%
EVP Restricted Shares2
80%
EVP Performance Rights2
Individual EVP Outcome at Target = 200% of Fixed Remuneration comprised of:
Total Equity = 150% of Fixed Remuneration
Other Senior
Executives
100%
Fixed Remuneration
45%
EVP Cash2
63%
EVP Restricted Shares2
72%
EVP Performance Rights2
Individual EVP Outcome at Target = 180% of Fixed Remuneration comprised of:
Total Equity = 135% of Fixed Remuneration
1. As the CEO will cease employment for a Permitted Reason before the allocation of his FY22 Restricted Shares and Performance Rights under the EVP, he will be
granted Cash Rights in lieu of those Restricted Shares and Performance Rights. For further information on Cash Rights for Leavers, refer to the table in Section 2.1(c).
2. The percentages shown are calculated from the 25% Cash, 35% Restricted Share and 40% Performance Right components of the FY22 EVP multiplied by the FY22 EVP
target opportunity for the CEO (200% of FR) and other Senior Executives (180% of FR).
48
Remuneration Report | Telstra Annual Report 2022
(b) Current Senior Executive Fixed Remuneration and contract details
The following table summarises the Fixed Remuneration and notice and termination payment provisions that apply under the
ongoing service contracts for current Senior Executives as at 11 August 2022.
Name
Andrew Penn
Title
CEO
Fixed
Remuneration
Notice
period
Termination
payment
$2,390,000
6 months
6 months
Michael Ackland
GE Consumer & Small Business
$1,150,000
6 months
6 months
Kim Krogh Andersen
GE Product & Technology
$1,100,000*
6 months
6 months
Alex Badenoch
GE Transformation,
Communications & People
$930,000
6 months
6 months
Vicki Brady
CFO & GE Strategy and Finance
$1,200,000
6 months
6 months
David Burns
GE Telstra Enterprise
$1,150,000
6 months
6 months
Nikos Katinakis
GE Networks & IT
$1,100,000
6 months
6 months
Brendon Riley
GE & CEO Telstra InfraCo
$1,400,000
6 months
12 months**
Dean Salter
GE Global Business Services
$950,000
6 months
6 months
* Kim Krogh Andersen’s fixed remuneration was increased by 10% to reflect his growing experience, contribution and leadership since his commencement in the role and
having regard to the fixed remuneration of executives holding similar roles in other ASX20 entities. This change took effect from 6 January 2022.
** Brendon Riley has a 12-month termination payment clause in his contract that was negotiated upon commencing employment at Telstra in February 2011. Telstra’s
current policy is to provide for a six-month termination payment in executive contracts.
Upon notice being given, Telstra can require a Senior Executive to work through the notice period or may terminate employment
immediately by providing payment in lieu of notice, or a combination of both. Any payment in lieu of notice is calculated based on
the Senior Executive’s Fixed Remuneration as at the date of termination.
There is no termination payment if termination is for serious misconduct or redundancy (unless the severance payment under
Telstra’s redundancy policy would be less than the termination payment, in which case the termination payment applies instead).
(c) FY22 Executive Variable Remuneration Plan (EVP) structure
The Senior Executives participated in the FY22 EVP. The construct of the FY22 EVP is illustrated in the diagram below:
EVP Equity Allocated (75%)
EVP Cash Paid (25%)
FY22
Results
Release
2022
AGM
Restricted Shares
(1st tranche)
End of restriction
30 June 2023
Restricted Shares
(2nd tranche)
End of restriction
30 June 2024
Restricted Shares
(3rd tranche)
End of restriction
30 June 2025
Restricted Shares
(4th tranche)
End of restriction
30 June 2026
Restricted
Shares – T1
Restricted
Shares – T2
Restricted
Shares – T3
Restricted
Shares –T4
Performance Rights
FY22 EVP Performance Rights RTSR Performance Period
1 July 2021 to 30 June 2026
FY22 EVP Initial
Performance
Period
1 July 2021 to
30 June 2022
FY22
FY23
FY24
FY25
FY26
FY27
Jul
Jun
Aug
Oct
Nov
Jun
Jul
Jun
Jul
Jun
Jul
Jun
Jul
As announced on 30 March 2022, Vicki Brady will take over as CEO on 1 September 2022. At the 2022 AGM to be held on
11 October 2022, we will seek shareholder approval for the Restricted Shares and Performance Rights to be allocated to
Vicki Brady under the FY22 EVP.
49
The table below outlines the key features of the FY22 EVP.
Detail
FY22 EVP
design
attributes
EVP
Reward
opportunity
Threshold
Target
Maximum
FY22 Reward opportunity as a % of Fixed Remuneration
CEO
100%
200%
300%
Group Executives
90%
180%
300%
Initial
Performance
Period
Calculation
of Individual
EVP Outcomes
1 year (1 July 2021 to 30 June 2022)
Overview
Each Senior Executive’s Individual EVP Outcome for FY22 is set out in Section 2.5(c).
The CEO and each Group Executive’s Individual EVP Outcome was determined by the Board taking into consideration their ‘at target’
EVP reward opportunity, the EVP Scorecard Outcome, their individual performance (in the case of the Group Executives including
their performance relative to each other) and other factors in accordance with its decision framework including any material risk
events identified, the severity of their impact, and the executive’s accountability for the matter.
At Target EVP Reward Opportunity
Calculating Individual EVP Outcome
FR
$
X
Target
EVP
Opportunity
%
=
Target
EVP
Opportunity
$
X
Primary Performance
Measures
Financial
Customer
Strategic
Transformation
Each primary
performance
measure
outcome and
total scorecard
outcome
subject to
Board
discretion
=
EVP
Scorecard
Outcome
%
Differentiated
for individual
performance
and subject
to Board
discretion
=
Individual
EVP
Outcome
EVP Scorecard Outcome
The EVP Scorecard Outcome was determined by the Board following an assessment of Telstra’s performance against the primary
performance measures (described in detail below) during the 2022 financial year (referred to as the Initial Performance Period).
The primary performance measures operated independently, and each measure was given a weighting and defined threshold,
target and maximum performance level. If performance fell between any of those levels, the outcome was determined
proportionately for the CEO and the other Senior Executives commensurate with the following ranges.
Metric Performance Range
Threshold
Target
Max
CEO Performance Outcome
50%
100%
150%
Group Executive Performance Outcome
50%
100%
167%
The Board had discretion to adjust the outcome against each primary performance measure to ensure there were no windfall gains
or losses. Details of the adjustments approved by the Board for FY22 are outlined in Section 2.2.
The Board also had discretion to adjust the overall EVP Scorecard Outcome if it was considered to be appropriate when taking into
account matters including Telstra’s performance, customer experience and shareholder expectations. Such adjustment was not
considered appropriate for FY22.
The EVP Scorecard Outcome was an input for determining each Senior Executive’s Individual EVP Outcome. Refer to Section 2.3 for
further information on discretion exercised in determining FY22 Individual EVP Outcomes.
50
Remuneration Report | Telstra Annual Report 2022
FY22 EVP
design
attributes
Primary
performance
measures
Detail
The primary performance measures outlined below were selected for FY22 because they provide the critical link between delivering
Telstra’s T22 strategy and Telstra’s Corporate Plan and increasing shareholder value. The Board believes that the strategic, customer
and transformation non-financial measures directly demonstrate the delivery of critical components of the T22 strategy and are
fundamental key drivers of long-term value creation.
To assist shareholders understanding of these measures and their relevance to Telstra’s performance, further information on each
measure is provided below.
Refer to Section 2.2 for the threshold, target and maximum for each measure and their weightings.
Measure and metric
Rationale for why chosen
Primary Performance Measures
Total Income
Telstra External Income
(excluding finance income)
Underlying EBITDA
Underlying EBITDA is
Earnings Before Interest, Tax,
Depreciation & Amortisation, and
excludes net one-off nbn DA
receipts less nbn net C2C, one-off
restructuring costs and guidance
adjustments
• Key indicator of financial performance
• Ensures continued focus on customer retention and growth
• Aligns to Pillar 1 of the T22 strategy
• Key indicator of financial performance
• Ensures appropriate focus on profit and cost to deliver
• A strong indicator of underlying company profitability
• Aligns to Pillar 4 of our T22 strategy
Free Cash Flow (FCF)
Free Cash flow after lease payments
and excluding M&A and spectrum
• Key indicator of financial performance
• Appropriate for a capital-intensive business and critical in managing the
company’s ability to pay a dividend and maintain balance sheet strength
• Aligns to Pillar 4 of our T22 strategy
Net Opex Reduction
Year-on-year reduction in operating
non-Direct Variable Cost (DVC)
expenses
Episode NPS
Improvement in our Episode Net
Promoter Score
C&SB Product Portfolio
Simplification
Consumer & Small Business Fixed
and Postpaid Mobile services on
in-market plans
C&SB Digital Engagement
Consumer & Small Business digital
sales interactions
TE Digital Engagement
Telstra Enterprise Digital Service
Interactions
People, Capability &
Engagement
Top-line sustainable employee
engagement score
• Active reduction of our costs is key to competing and delivering strong financial
performance in an increasingly competitive market
• Delivering significant absolute cost reduction aligns with intent to drive
productivity and reduce costs
• Aligns to Pillar 4 of our T22 strategy
• It is in our shareholders’ interests to have the executive team specifically
focused on continuously improving the customer service experience, driving
both customer attraction and retention
• Underpins company-wide programs focused on improving our operational
excellence by identifying and eliminating the causes of unnecessary customer
effort and pain points.
• Aligns to Pillar 1 of our T22 Strategy
• Simplifying our products and services increases the simplicity, transparency
and satisfaction that our customers experience and enables the delivery of
material cost reductions
• Moving customers to our 20 simplified connectivity plans supports the delivery
of improved customer experiences, offers our customers simplicity and ease of
dealing with Telstra, and supports readiness for future delivery of digitised
experiences for customers
• Aligns to Pillar 1 of our T22 strategy
• Enhancing our digital engagement with our customers improves customer
experience whilst supporting our cost reduction focus
• Increasing engagement of our mass market customers through digital sales
channels remains a strong focus, targeting just under half of sales to occur
through digital channels.
• Key to achieving this is maximising the value and ease for our customers in
using our digital channels
• Aligns to Pillar 1 of our T22 Strategy
• Intended to provide customer choice and reduce our servicing costs.
• Aligns to Pillar 1 of our T22 strategy
• Focusses on our employee engagement.
• Supports our ability to both attract and retain the key leadership and technical
talent required to deliver on our ambitious strategy
• Aligns to Pillar 3 of our T22 strategy
)
%
0
6
(
l
a
i
c
n
a
n
F
i
)
%
0
4
(
n
o
i
t
a
m
r
o
f
s
n
a
r
T
d
n
a
r
e
m
o
t
s
u
C
,
c
i
g
e
t
a
r
t
S
To assess the primary performance measures, the Board reviewed the Group’s results, including the financial statements which
are audited by Ernst & Young (EY), our external auditor. It also reviewed other work undertaken by EY on performance against the
primary performance measures. Refer to Section 2.2 for further information.
51
FY22 EVP
design
attributes
Detail
EVP outcome
– cash vs
equity balance
A Senior Executive’s Individual EVP Outcome is provided as a combination of cash (25%), Restricted Shares (35%) and
Performance Rights (40%) which are subject to a Relative Total Shareholder Return (RTSR) performance condition. This results in
a 25:75 ratio of cash to equity. On vesting of a Performance Right, the holder receives a share or, at Telstra’s discretion, a cash
amount equivalent to the value of a share at vesting.
Equity
allocation
methodology
Individual EVP Outcome Components
25% Cash
Equity Allocation Calculation
(face value methodology)
35% Restricted Shares (pro-rata vesting over 4 years)
40% Performance Rights (subject to 5 year RSTR)
÷
5 Day
VWAP
=
No. of Restricted Shares allocated
No. of Performance Rights allocated
The number of Restricted Shares and Performance Rights to be allocated to a Senior Executive is based on the dollar value of
their Individual EVP Outcome, multiplied by 35% for Restricted Shares and 40% for Performance Rights, and then divided by the
five day volume weighted average price (VWAP) of Telstra shares commencing on the day after the FY22 results announcement
(i.e. a face value allocation methodology).
Issue/exercise
price
As the Restricted Shares and Performance Rights form part of a Senior Executive’s variable remuneration, no amount is payable
by the Senior Executive on grant of the Restricted Shares or on grant or vesting of the Performance Rights. Both the Restricted
Shares and any shares to be provided on the vesting of Performance Rights will be purchased on-market.
Restriction and
performance
periods for
equity
Restricted Shares
Restricted Shares will be eligible to vest in four equal tranches, with 25% eligible to vest each year for the four years following 30
June 2022 (being the end of the Initial Performance Period). i.e. on 30 June 2023, 30 June 2024, 30 June 2025, and 30 June 2026.
Performance Rights
The Performance Rights are subject to an RTSR performance condition, tested over a five-year performance period from 1 July
2021 to 30 June 2026. Refer to the secondary performance measures section outlined below for further information.
In certain limited circumstances, such as a takeover event where 50% or more of shares of the Telstra group’s head entity are
acquired, the Board may exercise discretion to accelerate vesting of the Performance Rights and accelerate the end of the
Restriction Periods for the Restricted Shares.
Secondary
performance
measures
In addition to the primary performance measures (which are assessed over the one year period to 30 June 2022) the Performance
Rights component of each Senior Executive’s Individual EVP Outcome only vests if, and to the extent that, the RTSR performance
condition is satisfied at the end of the five year performance period on 30 June 2026. Any Performance Rights that vest following
the testing of the RTSR performance condition will be automatically exercised following the release of Telstra’s annual results for
FY26 and any Performance Rights that do not vest following the testing will lapse (and expire) at that time. This means Senior
Executives have a double hurdle in relation to the Performance Right component of their Individual EVP Outcome, with
performance measured over both the Initial Performance Period and the five-year RTSR Performance Period.
RTSR measures the performance of a Telstra share (including the value of any cash dividends and other shareholder benefits paid
during the RTSR Performance Period) relative to the performance of ordinary securities issued by the other entities in the
comparator group (being entities in the S&P / ASX100 index as at 1 July 2021 (excluding resources companies)) over the RTSR
Performance Period.
The Board believes that RTSR is an appropriate secondary performance measure because it links executive reward to Telstra’s
share price and dividend performance relative to entities in the comparator group over the long-term. This reinforces the ultimate
focus on shareholder value creation and helps align actual pay outcomes with returns delivered to long-term shareholders.
Under the RTSR performance condition, the number of Performance Rights that vest will be determined as follows:
RTSR Ranking
Below the 50th percentile
At the 50th percentile
Vesting
0%
50%
Between 50th and 75th percentiles
Straight-line vesting from 50% to 100%
At the 75th percentile or above
100%
Both the starting price and end price for the purpose of calculating Telstra’s RTSR are the average of Telstra’s daily closing share
price over the 30 day period to 30 June of the relevant year. The starting price that will be used to determine Telstra’s RTSR at the
end of the RTSR Performance Period for the FY22 EVP is $3.57.
52
Remuneration Report | Telstra Annual Report 2022
FY22 EVP
design
attributes
Dividends
Leavers
Detail
Restricted Shares
Participants receive dividends on Restricted Shares during the Restriction Periods consistent with other Telstra shareholders.
This is appropriate because these Restricted Shares do not have any further performance conditions. The intent is to mirror the
experience of shareholders while deferring the remuneration so that it can be more easily subject to forfeiture if the Participant
ceases employment other than for a Permitted Reason or clawback.
Performance Rights
No dividends are paid on Performance Rights prior to vesting. For any Performance Rights that ultimately vest following
satisfaction of the RTSR performance condition, a cash payment equivalent to the dividends paid by Telstra during the period
between allocation of the Performance Rights and vesting will be made at or around the time of vesting, subject to applicable
taxation (Dividend Equivalent Payment).
Before the Restricted Shares and Performance Rights are allocated
If a Senior Executive ceases employment for a Permitted Reason, the Senior Executive is eligible for a pro-rata Individual EVP
Outcome based on the proportion of time they were employed during FY22. The Senior Executive will receive the cash component
of their pro-rata Individual EVP Outcome. The Senior Executive will receive a grant of Cash Rights (or, at the Board’s discretion,
cash, if the Senior Executive ceases employment due to death, total and permanent disablement or certain medical conditions) in
lieu of Performance Rights and Restricted Shares. On vesting, a Cash Right entitles the executive to a cash payment equivalent to
the value of a Telstra share at the end of the applicable Restriction Period or the RTSR Performance Period (as applicable). A Cash
Right granted in lieu of a Restricted Share also entitles the Senior Executive to receive an amount equal to dividends paid on
Telstra shares between the date the Cash Right is allocated and the end of the applicable Restriction Period, at or around the
same time that Telstra pays the dividend. A Cash Right granted in lieu of a Performance Right entitles the Senior Executive, if the
Cash Right vests, to receive an amount equivalent to dividends paid on Telstra shares between allocation and vesting of the Cash
Right after the end of the RTSR Performance Period. Where the Senior Executive receives Cash Rights, there is no change to the
Restriction Periods, the RTSR Performance Period or the RTSR performance condition. If the Senior Executive ceases employment
for any other reason, their EVP entitlement is forfeited. This ensures equal treatment for all executives and that departing
executives continue to make decisions that are aligned to the long-term interests of our shareholders.
After the Restricted Shares and Performance Rights are allocated
If a Senior Executive ceases employment for a Permitted Reason after the Restricted Shares and Performance Rights have been
allocated, those Restricted Shares and Performance Rights will remain on foot. There is no change to the Restriction Periods, the
RTSR Performance Period, or the RTSR performance condition. If the Senior Executive ceases employment for any other reason,
their Restricted Shares and Performance Rights are forfeited.
Clawback
(malus)
The Board has discretion to clawback Performance Rights and Restricted Shares if certain clawback events occur before the
Performance Rights vest or the Restricted Shares are transferred to the Senior Executive following the end of the applicable
Restriction Period. Clawback events include fraud, dishonesty, gross misconduct or material breach of obligations by the Senior
Executive or behaviour that brings Telstra into disrepute or may negatively impact Telstra’s long-term financial strength. It also
includes where the Senior Executive causes a significant deterioration in Telstra’s financial performance or negatively impacts
Telstra’s standing, reputation or relationship with its key regulators, where the financial results that led to the Performance Rights
or Restricted Shares being granted are subsequently shown to be materially misstated, where the Senior Executive fails to fulfil
responsibilities under Telstra’s risk management framework resulting in a material breach of Telstra’s risk management
framework, or where the Board determines that the Performance Rights or Restricted Shares are an inappropriate benefit.
Corporate
Restructure
As part of the broader Corporate Restructure, Telstra is proposing a scheme of arrangement that will result in Telstra Group
Limited (New Telstra Corp) becoming the new head entity of the Telstra Group (Scheme).
If the Scheme is implemented: (i) Performance Rights and Restricted Shares under the FY22 EVP will be granted after
implementation of the Scheme and will be granted by New Telstra Corp; (ii) the Restricted Shares will be fully paid New Telstra
Corp shares; (iii) Senior Executives will be provided with one fully paid ordinary New Telstra Corp share or, at New Telstra Corp’s
discretion, a cash amount equivalent to the value of a New Telstra Corp share for each Performance Right that vests; (iv) Telstra’s
RTSR performance over the RTSR Performance Period will take into account Telstra Corporation Limited’s performance up to
implementation of the Scheme and New Telstra Corp’s performance after that time; and (v) New Telstra Corp will make decisions
in connection with the Restricted Shares and Performance Rights.
The same changes will also be made to other Restricted Shares and Performance Rights on issue at the time the Scheme is
implemented.
If the Scheme is not implemented, the Performance Rights and Restricted Shares under the FY22 EVP will continue to be issued
by Telstra Corporation Limited.
The Corporate Restructure will have no impact on the EVP structure other than as set out above.
53
(d) Financial performance
The table below provides a summary of Telstra’s key financial results over the past five financial years.
Financial performance1
Earnings
Total Income
EBITDA
Net Profit2
Shareholder Value
Share Price ($)3
Total Dividend Paid Per Share (cents)4
FY22
$m
FY21
$m
FY20
$m
FY19
$m
22,045
23,132
26,161
27,807
7,256
1,688
3.85
16.0
7,638
1,857
3.76
16.0
8,905
1,819
3.13
16.0
7,984
2,154
3.85
19.0
FY18
$m
28,841
10,197
3,591
2.62
26.5
1. These results are not fully comparable due to changes in the accountings standards over the periods. For more details, refer to Note 1.5 to the financial statements in
the 2020 Annual Report in relation to the adoption of AASB16: ‘Leases’ and Note 1.5 to the financial statements in 2019 Annual Report in relation to the adoption of
AASB15: ‘Revenue from Contracts with Customers’.
2. Net Profit attributable to equity holders of the Telstra entity includes results from continuing and discontinued operations.
3. Share prices are as at 30 June for the respective year. The closing share price for FY17 was $4.30.
4. We paid dividends to holders of Telstra’s ordinary shares twice each year over the past five financial years, an interim and a final dividend. The amounts included in this
table relate to dividends paid during the financial year. Therefore, for each respective year, the amount includes the dividend paid for the previous year final dividend
and the current year interim dividend. Refer to Note 4.2 to the financial statements in the Financial Report for further information about dividends paid in FY22.
54
Remuneration Report | Telstra Annual Report 2022
(e) Historical Individual EVP Outcomes relative to the Telstra share price
The graph below provides a useful comparison of performance and shows the average Individual EVP Outcomes for FY18 through
to FY22 as a percentage of the target opportunity, relative to the performance of Telstra’s share price over the past five years.
)
$
(
e
c
i
r
P
e
r
a
h
S
a
r
t
s
l
e
T
7.00
6.00
5.00
4.00
3.00
2.00
1.00
43.6%
29.1%
39.1%
70.6%
27.5%
18.4%
24.7%
111.8%
120%
96.6%
96.2%
100.%
81.9%
32.8%
28.7%
20.4%
38.6%
38.5%
33.8%
33.7%
24.2%
24.0%
1
t
e
g
r
a
T
f
o
%
P
V
E
80%
60%
40%
20%
0%
FY18 EVP
30/06/2018
FY19 EVP
30/06/2019
FY20 EVP
30/06/2022
FY21 EVP
30/06/2022
FY22 EVP
30/06/2022
Telstra Share Price
Cash
Restricted Shares
Performance Rights (RTSR)
1. The average Individual EVP outcomes as a percentage of target is shown for all Senior Executives (including the CEO) for the relevant period. There have been changes
to the EVP structure over this period including to the relative proportions of cash, Restricted Shares and Performance Rights.
55
2.2 FY22 EVP Scorecard Outcome
The Board evaluated Telstra’s performance against the primary performance measures. The threshold, target and maximum levels
for each measure (as outlined in our 2021 Remuneration Report) were set to be robust and appropriately demanding, taking into
account the key deliverables and milestones outlined in our T22 strategy, planned financial outcomes contained within our
Corporate Plan and FY22 guidance as announced on 12 August 2021. There were no changes to the EVP structure in FY22 other
than redistributing the 5% weighting for the TE Product Portfolio Simplification metric to the Episode NPS metric (as described in
our FY21 Remuneration Report). The levels for all financial measures (with the exception of Net Opex Reduction) were determined
in line with market guidance, with each target level approximating the midpoint of that guidance and each maximum level equal to
or above the maximum guidance range. It remains the Board’s view that the levels were robust and demanding in the face of an
exceptionally challenging market.
Measures
Weighting
Targets and Performance Outcomes
Additional information
15%
15%
15%
15%
15%
Total Income ($m)
is Telstra External Income excluding
finance income
Underlying EBITDA ($m)
is Earnings Before Interest, Tax, Depreciation
& Amortisation, and excludes net one-off nbn DA
receipts less nbn net C2C, one-off restructuring costs
and guidance adjustments
Free Cash Flow ($m)
Free Cash flow after lease payments and
excluding M&A and spectrum
Net Opex Reduction ($m)
Year-on-year reduction in operating
non-Direct Variable Cost (DVC) expenses
Episode NPS
Improvement in our Episode NPS
56
$22,077m
$22,577m
$23,577m
Threshold
Target
Max
$21,920m
CEO
GE
50%
0%
50%
0%
100%
150%
100%
167%
$6,982m
$7,182m
$7,482m
Threshold
50%
50%
Target
$7,214m
100%
105%
100%
107%
Max
150%
167%
$3,629m
$3,829m
$4,229m
Threshold
Target
Max
$3,938m
50%
50%
100%
113%
100%
118%
$380m
$430m
150%
167%
$530m
Max
150%
167%
+38
Max
Target
$435m
100%
103%
100%
103%
+36
Target
CEO
GE
CEO
GE
CEO
GE
CEO
GE
Threshold
50%
50%
+34
Threshold
50%
50%
+37
result was reperformed by our external auditor, EY.
100%
150%
125%
100%
167%
133%
18.8% 20.0%
Despite continuing challenges during this year with severe weather events and the ongoing effects of the COVID-19 pandemic,
this outcome reflected strong results across both Consumer & Small Business and Telstra Enterprise. Our ongoing focus on
digitisation as well as people and process initiatives have contributed to historically high results in Sales & Activation.
Overall under T22, over the 4 years from FY18 to FY22, Episode NPS has improved by +18 points against our T22 ambition of
+12 to +24 uplift. The result has been delivered during the unprecedented times of a global pandemic and transformation. Our
focus on the customer, resolution right first time, proactive resolution, reduction in cycle times, reduction in call volume,
complaints management, digitisation, onshoring and many other people and process initiatives have all played a role.
Weighted Result
(% of Target)
CEO
GE
EY.
Transaction.
auditor, EY.
Transaction
Total Income of $22,045m was reported by Telstra for FY22. The calculation of this result was audited by our external auditor,
0%
0%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $125m. This ensured no windfall gains or losses relative to how the target was set including the NBN
Assessed performance on this measure was therefore $21,920, which was below the FY22 EVP threshold.
Underlying EBITDA of $7,251m was reported by Telstra for FY22. The calculation of this result was reviewed by our external
15.7% 16.1%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $37m to ensure no windfall gains or losses relative to how the target was set including the NBN
Assessed performance on this measure was therefore $7,214m, which was between the FY22 EVP target and maximum.
FCF on a guidance basis of $3,961m was reported by Telstra for FY22. The calculation of this result was reviewed by our
external auditor, EY.
Transaction.
17.0% 17.7%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $23m to ensure no windfall gains or losses relative to how the target was set including the NBN
Assessed performance on this measure was therefore $3,938m, which was between the FY22 EVP target and maximum.
As outlined in the FY22 Full Year Results and Operations Review, underlying fixed cost reduction (which is referred to as Net
Opex Reduction for the purpose of the EVP) was $454m. The Net Opex Reduction calculation was reperformed by our
external auditor, EY.
15.4% 15.5%
negative adjustment of $19m to ensure no windfall gains or losses relative to how the target was set.
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
Assessed performance on this measure was therefore $435m, which was between the FY22 EVP target and maximum.
Through strong fiscal discipline and delivering significant cost reduction across the organisation, we have achieved our $2.7
billion total net cost reduction target set at the start of our T22 strategy.
The overall Episode NPS is a weighted calculation of survey results from Telstra business segments – 65% Consumer and
Small Business (combined calculation) and 35% Enterprise (Telstra Enterprise Australia only).
At the end of FY22 our Episode NPS was +37, which was between the FY22 EVP target and maximum. The calculation of this
Remuneration Report | Telstra Annual Report 2022
The Board maintained absolute discretion to ensure the EVP Scorecard Outcome was appropriate, taking into account matters
which may include Telstra’s performance, customer experience and shareholder expectations. The Board determined that the
primary performance measure outcomes and the EVP Scorecard Outcome for FY22 would be driven by the results achieved. No
adjustments were made for the ongoing impact of the COVID-19 pandemic.
The EVP Scorecard Outcome for FY22 was 93.1% of the target opportunity (62.1% of maximum) for the CEO and 96.6% of the
target opportunity (58.0% of maximum) for the other Senior Executives.
Measures
Weighting
Targets and Performance Outcomes
Weighted Result
(% of Target)
CEO
GE
Additional information
Total Income ($m)
is Telstra External Income excluding
finance income
Underlying EBITDA ($m)
is Earnings Before Interest, Tax, Depreciation
& Amortisation, and excludes net one-off nbn DA
receipts less nbn net C2C, one-off restructuring costs
and guidance adjustments
Free Cash Flow ($m)
Free Cash flow after lease payments and
excluding M&A and spectrum
Net Opex Reduction ($m)
Year-on-year reduction in operating
non-Direct Variable Cost (DVC) expenses
Episode NPS
Improvement in our Episode NPS
15%
15%
15%
15%
15%
$22,077m
$22,577m
$23,577m
Threshold
Target
Max
100%
150%
100%
167%
$6,982m
$7,182m
$7,482m
$3,629m
$3,829m
$4,229m
Threshold
Target
Max
$3,938m
$380m
$430m
Threshold
Target
$7,214m
100%
105%
100%
107%
100%
113%
100%
118%
Target
$435m
100%
103%
100%
103%
+36
Target
Max
150%
167%
150%
167%
$530m
Max
150%
167%
+38
Max
+37
125%
133%
100%
150%
100%
167%
$21,920m
CEO
GE
50%
0%
50%
0%
Threshold
CEO
GE
CEO
GE
CEO
GE
CEO
GE
50%
50%
50%
50%
50%
50%
+34
50%
50%
Threshold
Total Income of $22,045m was reported by Telstra for FY22. The calculation of this result was audited by our external auditor,
EY.
0%
0%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $125m. This ensured no windfall gains or losses relative to how the target was set including the NBN
Transaction.
Assessed performance on this measure was therefore $21,920, which was below the FY22 EVP threshold.
Underlying EBITDA of $7,251m was reported by Telstra for FY22. The calculation of this result was reviewed by our external
auditor, EY.
15.7% 16.1%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $37m to ensure no windfall gains or losses relative to how the target was set including the NBN
Transaction
Assessed performance on this measure was therefore $7,214m, which was between the FY22 EVP target and maximum.
FCF on a guidance basis of $3,961m was reported by Telstra for FY22. The calculation of this result was reviewed by our
external auditor, EY.
17.0% 17.7%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $23m to ensure no windfall gains or losses relative to how the target was set including the NBN
Transaction.
Assessed performance on this measure was therefore $3,938m, which was between the FY22 EVP target and maximum.
As outlined in the FY22 Full Year Results and Operations Review, underlying fixed cost reduction (which is referred to as Net
Opex Reduction for the purpose of the EVP) was $454m. The Net Opex Reduction calculation was reperformed by our
external auditor, EY.
15.4% 15.5%
To ensure the FY22 EVP Scorecard Outcome appropriately reflected the performance of executives, the Board approved a
negative adjustment of $19m to ensure no windfall gains or losses relative to how the target was set.
Assessed performance on this measure was therefore $435m, which was between the FY22 EVP target and maximum.
Through strong fiscal discipline and delivering significant cost reduction across the organisation, we have achieved our $2.7
billion total net cost reduction target set at the start of our T22 strategy.
The overall Episode NPS is a weighted calculation of survey results from Telstra business segments – 65% Consumer and
Small Business (combined calculation) and 35% Enterprise (Telstra Enterprise Australia only).
At the end of FY22 our Episode NPS was +37, which was between the FY22 EVP target and maximum. The calculation of this
result was reperformed by our external auditor, EY.
18.8% 20.0%
Despite continuing challenges during this year with severe weather events and the ongoing effects of the COVID-19 pandemic,
this outcome reflected strong results across both Consumer & Small Business and Telstra Enterprise. Our ongoing focus on
digitisation as well as people and process initiatives have contributed to historically high results in Sales & Activation.
Overall under T22, over the 4 years from FY18 to FY22, Episode NPS has improved by +18 points against our T22 ambition of
+12 to +24 uplift. The result has been delivered during the unprecedented times of a global pandemic and transformation. Our
focus on the customer, resolution right first time, proactive resolution, reduction in cycle times, reduction in call volume,
complaints management, digitisation, onshoring and many other people and process initiatives have all played a role.
57
Measures
Weighting
Targets and Performance Outcomes
Additional information
Weighted Result
(% of Target)
CEO
GE
C&SB Product
Portfolio
Simplification
Number of Consumer
& Small Business Fixed
and Postpaid Mobile Services
on in-market plans
5%
C&SB digital sales interactions
5%
Digital
Engagement
TE Digital Service Interactions
5%
People Capability
& Engagement
Top-line sustainable employee
engagement score
10%
9.7m
Threshold
50%
50%
43%
Threshold
50%
50%
38.5%
Threshold
50%
50%
80
Threshold
50%
50%
CEO
GE
CEO
GE
CEO
GE
CEO
GE
82
75%
75%
10m
Target
100%
100%
45%
Target
48.1%
100%
116%
100%
120%
40.0%
Target
40.7%
100%
108%
100%
110%
84
Target
10.2m
Max
10.2
150%
150%
167%
167%
55%
Max
150%
167%
45.0%
Max
150%
167%
85
Max
100%
150%
100%
167%
communications, and
As part of our T22 transformation we launched our radically simplified product proposition and have 20
core connectivity plans in market for our Consumer and Small Business customers (compared to the
7.5%
8.3%
1,800 plans we had prior to the launch of our T22 transformation).
By the end of FY22 we had 10.2 million services on fixed and post-paid mobile in-market plans, which
was at the FY22 EVP maximum. The calculation of this result was reperformed by our external auditor, EY.
The new core capabilities we established as part of T22 enabled us to fast-track the digitisation and
automation of our tools during COVID-19 and to move more customer enquiries online quickly, removing
the need for many customers to call us at all.
5.8%
6.0%
personalisation, and proactive web messaging.
Digital sales interactions were also driven by new sales features including device selectors,
By the end of the financial year, 48.1% of all Consumer & Small Business sales transactions took place
digitally, which was between the FY22 EVP target and maximum. The calculation of this result was
reperformed by our external auditor, EY.
By the end of the financial year, 40.7% of Telstra Enterprise service interactions were conducted online,
which was between the FY22 EVP target and maximum. The calculation of this result was reperformed by
5.4%
5.5%
our external auditor, EY.
This result was driven by a coordinated customer engagement and education drive across our teams in
Telstra Enterprise, Group Business Services, Purple and Digitisation.
The employee engagement result for the last quarter of FY22 was 82, which was between the FY22 EVP
threshold and target. The calculation was reperformed by our external auditor, EY.
This outcome places us among the top global high performing organisations.
Throughout FY22, we have seen employee engagement improving by one point per quarter. This FY22
result is five points (rounded up) above our FY21 score and eight points above our pre-T22 (pre-FY18)
engagement score.
7.5%
7.5%
The overall increase in our employee engagement has shown that a holistic approach to addressing
employee engagement works whereby we both:
• Promoted and grew on our existing cultural strengths through programs and initiatives around flexible
ways of working, diversity and inclusion, responsible business, employee wellbeing and leadership
• Provided a dedicated level of resourcing, effort and commitment to work on improving the identified
employee “pain points” around processes, tools, resourcing and workload.
Total
% of Target 93.1%
96.6%
% of Max 62.1%
58.0%
58
Measures
Weighting
Targets and Performance Outcomes
Weighted Result
(% of Target)
CEO
GE
Additional information
Remuneration Report | Telstra Annual Report 2022
9.7m
Threshold
Threshold
38.5%
Threshold
50%
50%
43%
50%
50%
50%
50%
50%
50%
80
Threshold
CEO
GE
CEO
GE
CEO
GE
CEO
GE
10m
Target
100%
100%
45%
Target
48.1%
100%
116%
100%
120%
40.0%
Target
40.7%
100%
108%
100%
110%
84
Target
10.2m
Max
10.2
150%
150%
167%
167%
55%
Max
150%
167%
45.0%
Max
150%
167%
85
Max
82
75%
75%
100%
167%
C&SB Product
Portfolio
Simplification
Number of Consumer
& Small Business Fixed
and Postpaid Mobile Services
on in-market plans
5%
C&SB digital sales interactions
5%
Digital
Engagement
TE Digital Service Interactions
5%
People Capability
& Engagement
Top-line sustainable employee
engagement score
Total
7.5%
8.3%
As part of our T22 transformation we launched our radically simplified product proposition and have 20
core connectivity plans in market for our Consumer and Small Business customers (compared to the
1,800 plans we had prior to the launch of our T22 transformation).
By the end of FY22 we had 10.2 million services on fixed and post-paid mobile in-market plans, which
was at the FY22 EVP maximum. The calculation of this result was reperformed by our external auditor, EY.
The new core capabilities we established as part of T22 enabled us to fast-track the digitisation and
automation of our tools during COVID-19 and to move more customer enquiries online quickly, removing
the need for many customers to call us at all.
5.8%
6.0%
Digital sales interactions were also driven by new sales features including device selectors,
personalisation, and proactive web messaging.
By the end of the financial year, 48.1% of all Consumer & Small Business sales transactions took place
digitally, which was between the FY22 EVP target and maximum. The calculation of this result was
reperformed by our external auditor, EY.
5.4%
5.5%
By the end of the financial year, 40.7% of Telstra Enterprise service interactions were conducted online,
which was between the FY22 EVP target and maximum. The calculation of this result was reperformed by
our external auditor, EY.
This result was driven by a coordinated customer engagement and education drive across our teams in
Telstra Enterprise, Group Business Services, Purple and Digitisation.
The employee engagement result for the last quarter of FY22 was 82, which was between the FY22 EVP
threshold and target. The calculation was reperformed by our external auditor, EY.
This outcome places us among the top global high performing organisations.
Throughout FY22, we have seen employee engagement improving by one point per quarter. This FY22
result is five points (rounded up) above our FY21 score and eight points above our pre-T22 (pre-FY18)
engagement score.
10%
100%
150%
7.5%
7.5%
The overall increase in our employee engagement has shown that a holistic approach to addressing
employee engagement works whereby we both:
• Promoted and grew on our existing cultural strengths through programs and initiatives around flexible
ways of working, diversity and inclusion, responsible business, employee wellbeing and leadership
communications, and
• Provided a dedicated level of resourcing, effort and commitment to work on improving the identified
employee “pain points” around processes, tools, resourcing and workload.
% of Target 93.1%
96.6%
% of Max 62.1%
58.0%
59
2.3 Individual performance and the exercise of Board
discretion in determining Individual EVP Outcomes
The EVP Scorecard Outcome (outlined above) was an input into
each Senior Executive’s Individual EVP Outcome. As outlined in
Section 2.1, each Senior Executive’s Individual EVP Outcome
was determined taking into consideration the EVP Scorecard
Outcome, their “at target” EVP reward opportunity and their
performance (including, in the case of the Group Executives,
their performance relative to each other). The Board also had
discretion, in determining a Senior Executive’s Individual EVP
Outcome, to take into account factors in accordance with its
decision framework such as any material risk events identified,
the severity of their impact and the executive’s accountability
for the matter.
At the end of the 2022 financial year:
• the CEO’s individual performance was assessed by the Board
in accordance with the annual performance evaluation
process for the CEO, taking into account a range of
considerations including his individual scorecard
performance, leadership behaviour and conduct and effective
application of risk management practices; and
• each Group Executive’s individual performance was assessed
by the CEO in accordance with an annual performance
evaluation process, taking into account a range of
considerations including the Group Executive’s individual
scorecard performance, leadership behaviour and conduct,
effective application of risk management practices and
performance relative to the other Group Executives. The CEO’s
recommended assessment for each Group Executive was
provided to the People and Remuneration Committee for
endorsement, and then to the Board for approval.
Please refer to Table 2.5(c) for the FY22 Individual EVP
Outcomes.
2.4 FY18 EVP Performance Rights RTSR Outcome
Two tranches of Performance Rights were awarded under the
FY18 EVP and allocated in November 2018. The first tranche
was subject to an RTSR performance condition measured over
the four year performance period from 1 July 2017 to 30 June
2021. The second tranche was subject to a RTSR performance
condition over a five year performance period from 1 July 2017
to 30 June 2022. The Performance Rights in each tranche only
vest if Telstra’s RTSR ranks at the 50th percentile or greater
against a comparator group comprising the ASX100 (excluding
resource companies) as at 1 July 2017 over the relevant
performance period. Each Performance Right that vests
following testing of the performance condition entitles a Senior
Executive to one Telstra share (or, at Telstra’s discretion, a cash
amount equal to the value of one Telstra share).
The RTSR performance condition for the first tranche of
Performance Rights was tested following the conclusion of the
performance period on 30 June 2021 and no Performance
Rights vested. Refer to the 2021 Remuneration Report for
further details.
The RTSR performance condition for the second tranche of
Performance Rights was tested following the conclusion of the
performance period on 30 June 2022 and the results and
vesting outcome are detailed below. The results were
calculated by an external provider.
60
FY18 EVP (Tranche 2) Vesting Outcome
Test
date
30 June
2022
Performance
Condition
Percentile
Rank
Vesting
RTSR measured against
the ASX100 (excluding
resource companies) as at
1 July 2017
42nd
Percentile
0%
The Board has discretion to remove companies from the
comparator group in circumstances such as acquisitions,
insolvency and de-listings. The Board exercised its discretion
under the FY18 EVP terms to remove the following companies
from the comparator group prior to the calculation of the Tranche
2 results.
FY18 EVP (Tranche 2) Peer Group Removals
Company removed
from the Peer Group
Tatts Group
Reason
for removal
Acquisition
Westfield Corporation
Acquisition
Investa Office Fund
Acquisition
Fairfax Media
Healthscope
Duluxgroup
Merger
Acquisition
Acquisition
TPG Telecom Limited
Merger
Coca-Cola Group Limited
Acquisition
Vocus Group
Acquisition
Ausnet Services Limited
Sydney Airport
Merger
Merger
Cimic Group Limited
Acquisition
2.5 Detailed remuneration and interests in Telstra shares
The tables in this section disclose Senior Executive information
and only represent their time as Senior Executives.
(a) Actual pay which crystallised in FY22 for Senior Executives
As a general principle, the Australian Accounting Standards
require the value of share-based payments to be calculated at
the time of grant and to be expensed over the performance
period and applicable service period. This may not reflect what
Senior Executives actually received or became entitled to
during the year.
The tables in this section are voluntary disclosures and are not
prepared in accordance with Australian Accounting Standards.
They are designed to provide greater transparency for
shareholders on the pay and benefits the Senior Executives
actually received, or became entitled to receive, during FY22
while they were a Senior Executive.
Senior Executives receive a significant portion of their variable
remuneration in the form of equity. The value they actually
receive from that variable remuneration is tied directly to
Telstra’s share price performance and whether the variable
remuneration vests. We believe this demonstrates that our
reward framework effectively aligns with our shareholders’
interests and demonstrates the linkage between pay and
performance.
Remuneration Report | Telstra Annual Report 2022
The statutory tables for Senior Executive remuneration can be found in Sections 2.5(b) to (e).
The following table details the actual remuneration Andrew Penn (the CEO during FY22) received, or became entitled to receive,
during FY22 in comparison to FY21. The 19.5% decrease in actual remuneration received by Andrew Penn reflects the fact that
less Restricted Shares (relating to variable remuneration earned in prior financial years) became unrestricted in FY22 relative to
FY21. All restricted shares under the FY19 EVP as well as the first tranche (one quarter) of the Restricted Shares under the FY20
EVP became unrestricted on 30 June 2021. From the FY20 EVP onwards, Restricted Shares vest progressively over four years.
Name
Andrew Penn
Year
2022
20211
Fixed
Remuneration
($000)
Individual EVP
Outcome
payable as
cash
($000)2
Value of EVP
Restricted
Shares that
became
unrestricted
($000)3,4
Value of EVP
Performance
Rights and
other rights
that vested
($000)5
Total
($000)
% change
from prior
year
2,390
1,113
769
2,390
1,144
1,771
–
–
4,272
5,305
-19.5%
1. As reported in our 2021 Remuneration Report.
2. For FY22, amount relates to the cash component of the FY22 EVP, earned in FY22 and payable in September 2022. For FY21, the amount relates to the cash component
of the FY21 EVP, earned in FY21 and paid in September 2021.
3. Equity in this table has been valued based on Telstra’s share price at 30 June for each respective year. For FY22 this price is $3.85 and for FY21 this price is $3.76.
4. Amount relates to the value of variable remuneration earned in prior financial years which was provided as Restricted Shares. For the amount reported for FY22, the
Restriction Period for these shares ended on 30 June 2022 and relates to Tranche 2 of the FY20 EVP and Tranche 1 of the FY21 EVP. For the amount reported for FY21,
the Restriction Period for these shares ended on 30 June 2021 and relates to the FY19 EVP and Tranche 1 of the FY20 EVP.
5. The outcome of the FY18 (Tranche 2) EVP was that none of the Performance Rights vested.
The following table details the actual remuneration Senior Executives (other than the CEO) received or became entitled to receive
during FY22.
Fixed
Remuneration
($000)
Individual EVP
Outcome payable
as cash
($000)1
Value of EVP
Restricted Shares
that became
unrestricted
($000)2,3
Value of EVP
Performance
Rights that vested
($000)2,4
1,124
1,049
930
1,200
1,150
1,100
1,400
950
600
431
495
570
440
410
553
375
342
253
329
381
363
348
471
51
–
–
–
–
–
–
–
–
Name
Michael Ackland
Kim Krogh Andersen
Alex Badenoch
Vicki Brady
David Burns
Nikos Katinakis
Brendon Riley
Dean Salter
Total
($000)
2,066
1,733
1,754
2,151
1,953
1,858
2,424
1,376
The table only includes Senior Executives (other than the CEO) who held that position as at 30 June 2022.
1. Amount relates to the cash component of the FY22 EVP, earned in FY22 and payable in September 2022.
2. Equity in this table has been valued based on the Telstra closing share price on 30 June 2022 of $3.85.
3. Amount relates to the value of Restricted Shares awarded under the FY20 (Tranche 2) and FY21 (Tranche 1) EVPs which were earned in a previous year, but subject to a
Restriction Period ending 30 June 2022.
4. The outcome of the FY18 (Tranche 2) EVP was that none of the Performance Rights vested.
61
(b) Senior Executive remuneration (main table)
The table below has been prepared in accordance with the requirements of the Corporations Act and the relevant Australian
Accounting Standards and relates only to the periods that the person was a Senior Executive. The figures provided under the
equity settled share-based payments columns are based on accounting values and do not reflect actual payments received by
Senior Executives. As continuing employment conditions and/or performance conditions apply, not all Restricted Shares,
Performance Rights and Cash Rights may vest.
Name and title
Andrew Penn
CEO11
Michael Ackland
GE C&SB
Kim Krogh
Andersen
GE P&T
Alex Badenoch
GE TC&P
Vicki Brady
CFO
David Burns
GE TE
Nikos Katinakis
GE N&IT
Brendon Riley
GE & CEO InfraCo
Dean Salter
GE GBS
Total KMP
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Short term
employee benefits
Post–
employment
benefits
Other long term benefits
Share–based payments
Accounting value (at risk)($)7
Salary & fees
($000)1
EVP cash
($000)2
Non–monetary
benefits
($000)3
Other
($000)4
Superannuation
($000)5
Accrued
leave benefits
($000)6
Payment Accrual
($000)8
($000)9
Restricted shares
Performance rights
Cash Rights
($000)
Total
($000)10
2,366
2,368
1,100
1,122
1,025
978
906
908
1,176
1,178
1,126
1,080
1,076
1,078
1,376
1,378
926
336
11,077
10,426
1,113
1,144
600
516
431
518
495
443
570
525
440
505
410
500
553
723
375
151
4,987
5,025
43
12
1
–
120
20
2
2
33
4
3
12
31
20
38
16
1
–
272
86
(26)
20
54
(21)
15
(5)
(5)
3
(20)
(5)
(19)
35
0
(1)
(46)
(38)
21
11
(26)
(1)
24
22
24
22
24
22
24
22
24
22
24
22
24
22
24
22
24
8
216
184
Dividend
Equivalent
($000)
198
156
81
48
31
7
84
62
69
43
85
51
76
43
110
81
5
–
739
491
59
59
28
28
27
25
23
23
30
30
28
28
27
27
35
35
23
8
280
263
1,220
1,338
605
559
482
330
532
529
618
498
544
597
520
526
713
734
258
32
5,492
5,143
1,439
1,965
662
309
428
169
119
313
278
321
251
296
253
274
234
411
387
76
10
3,608
2,622
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,965
8,401
5,781
2,802
2,702
2,324
2,014
2,374
2,270
2,821
2,546
2,527
2,583
2,438
2,449
3,214
3,338
1,709
556
28,610
24,239
In the table above, EVP Cash, Restricted Shares, Performance Rights and Cash Rights are dependent on the satisfaction of performance conditions (an overview of those
performance conditions is included above in Section 2.1(c)). All other items are not related to performance. The termination benefits column was removed as no
termination benefits were paid in FY22.
1.
2.
3.
4.
5.
Includes salary and salary sacrifice benefits (excluding salary sacrifice superannuation which is included under Superannuation), and where applicable is adjusted for
leave without pay.
For FY22, the amounts relate to performance in FY22 under the FY22 EVP, which will be paid in September 2022. For FY21, the amounts relate to cash amounts paid for
performance in FY21 under the FY21 EVP. Those cash amounts were paid in September 2021.
Includes the cost of personal use of Telstra products and services, the provision of car parking and where applicable, benefits in accordance with Telstra’s relocation
policy for those executives who were repatriated or relocated to Australia in recent years. Where applicable, the value of non-monetary benefits has been grossed up
for FBT by the relevant FBT rates.
Includes the net movement of annual leave entitlement balance.
Represents company contributions to superannuation. Telstra does not provide any other post-employment benefits. Includes an increase in super contributions for
FY22, partially funded from salary and fees, due to indexation of the Maximum Superannuation Contribution Base.
6. Includes the net movement of long service leave entitlement balances.
62
Name and title
Andrew Penn
CEO11
Michael Ackland
GE C&SB
Kim Krogh
Andersen
GE P&T
Alex Badenoch
GE TC&P
Vicki Brady
CFO
David Burns
GE TE
Nikos Katinakis
GE N&IT
Brendon Riley
GE & CEO InfraCo
Dean Salter
GE GBS
Total KMP
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2,366
2,368
1,100
1,122
1,025
978
906
908
1,176
1,178
1,126
1,080
1,076
1,078
1,376
1,378
926
336
11,077
10,426
1,113
1,144
600
516
431
518
495
443
570
525
440
505
410
500
553
723
375
151
4,987
5,025
43
12
1
–
120
20
2
2
33
4
3
12
31
20
38
16
1
–
272
86
(26)
20
54
(21)
15
(5)
(5)
3
(20)
(5)
(19)
35
0
(1)
(46)
(38)
21
11
(26)
(1)
24
22
24
22
24
22
24
22
24
22
24
22
24
22
24
22
24
8
216
184
Remuneration Report | Telstra Annual Report 2022
Short term
employee benefits
Post–
employment
benefits
Salary & fees
($000)1
EVP cash
($000)2
Non–monetary
benefits
($000)3
Other
($000)4
Superannuation
($000)5
Other long term benefits
Accrued
leave benefits
($000)6
Dividend
Equivalent
Payment Accrual
($000)
Share–based payments
Accounting value (at risk)($)7
Restricted shares
($000)8
Performance rights
($000)9
Cash Rights
($000)
Total
($000)10
59
59
28
28
27
25
23
23
30
30
28
28
27
27
35
35
23
8
280
263
198
156
81
48
31
7
84
62
69
43
85
51
76
43
110
81
5
–
739
491
1,220
1,338
605
559
482
330
532
529
618
498
544
597
520
526
713
734
258
32
5,492
5,143
1,439
1,965
662
309
428
169
119
313
278
321
251
296
253
274
234
411
387
76
10
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3,608
2,622
1,965
–
8,401
5,781
2,802
2,702
2,324
2,014
2,374
2,270
2,821
2,546
2,527
2,583
2,438
2,449
3,214
3,338
1,709
556
28,610
24,239
7.
The accounting values included in the table relate to the current year amortised value of all Restricted Shares, Performance Rights and Cash Rights that had not yet
fully vested at the commencement of the financial year. The value of each equity instrument is calculated by applying valuation methodologies or is based on the
market value of Telstra shares at the grant date as described in note 5.2 to the financial statements and is then amortised, based on the maximum achievable
allocation, over the relevant vesting period. This value includes an assumption that the instruments will vest at the end of the vesting period unless forfeited during the
financial year.
8. This includes the amortised value of the Restricted Share component of the FY22, FY21 and FY20 EVPs. As the Board exercised discretion to permit Andrew Penn to
retain his 404,414 FY21 EVP Restricted Shares, these shares have been accounted under AASB 2 as a forfeiture and replacement award and their fair value has been
remeasured totalling $1.465 million. The original fair value was $1.602 million.
9. This includes the amortised value of the Performance Right component of the FY22, FY21, FY20, FY19 and FY18 Tranche 2 EVPs.
10. The total for FY21 of $24,239 million in this table is different to the total for FY21 in the FY21 Remuneration Report of $26,636 million as it does not include $2.397
million for Michael Ebeid AM (former GE Telstra Enterprise), reported in last year’s report. Michael Ebeid’s remuneration included $1.154 million termination benefits.
11. As required under AASB 2, the accounting expense for the FY22 Cash Rights that will be awarded to Andrew Penn in lieu of Restricted Shares and Performance Rights
will be amortised over the period 1 July 2021 to 30 September 2022 even though the EVP Cash Rights will not be eligible to vest until the end of their respective
restriction and performance periods. The Cash Rights are subject to the same time conditions and performance measures as those applying to FY22 Restricted Shares
and Performance Rights to be allocated to other Senior Executives.
63
(c) FY22 EVP Payments (cash and equity)
Breakdown of FY22 Individual EVP Outcomes1
25% Cash
component
($000)
Maximum
potential
EVP
opportunity
($000)2
35%
Restricted
Shares
component
($000)3
40%
Performance
Rights
component
($000)3
Individual
EVP
Outcome
($000)
% of
maximum
opportunity
earned
% of
maximum
opportunity
forfeited
7,170
3,374
3,300
2,790
3,600
3,450
3,300
4,200
2,850
1,113
1,558
1,779
600
431
495
570
440
410
553
375
840
604
693
798
616
574
774
525
960
690
792
912
704
656
883
600
4,450
2,400
1,725
1,980
2,280
1,760
1,640
2,210
1,500
62.1%
71.1%
52.3%
71.0%
63.3%
51.0%
49.7%
52.6%
52.6%
37.9%
28.9%
47.7%
29.0%
36.7%
49.0%
50.3%
47.4%
47.4%
Name
Andrew Penn4
Michael Ackland
Kim Krogh Andersen
Alex Badenoch
Vicki Brady
David Burns
Nikos Katinakis
Brendon Riley
Dean Salter
1. The FY22 Individual EVP Outcomes were approved by the Board on 10 August 2022.
2. Represents the maximum potential EVP opportunity specific to their time as Senior Executives for FY22, adjusted for any variation in Fixed Remuneration or any leave
without pay taken throughout FY22 that impacts the maximum potential EVP opportunity available. If the minimum threshold performance is not met, the minimum
possible EVP payment is nil. Michael Ackland’s maximum opportunity was reduced by 6 days leave without pay.
3. The Restricted Shares and Performance Rights awarded are expected to be allocated shortly after Telstra’s 2022 Annual General Meeting and are subject to Restriction
Periods and performance periods (as set out in Section 2.1(c)) and the Senior Executive's continued employment.
4. As Andrew Penn will cease employment for a Permitted Reason before the allocation of his FY22 Restricted Shares and Performance Rights under the EVP, he will be
granted Cash Rights in lieu of those Restricted Shares and Performance Rights. Refer to Section 4.1 for further information.
(d) Number and value of rights over equity instruments allocated, vested and exercised during FY22
Equity Movements
Total
rights held
at 1 July
2021
Rights
allocated
during
FY221
Value of
rights
allocated
($000)2
Rights
vested /
exercised
during FY22
Value of
rights
vested/
exercised
($000)3
1,201,242
399,757
91,175
494,273
389,760
429,766
375,101
641,839
–
462,188
208,575
209,080
178,778
212,110
204,030
202,009
291,904
61,108
947
371
372
318
378
363
360
520
109
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Other
changes
(lapsed
rights)4
Total
rights held
at 30 June
2022
(191,777)
1,471,653
–
–
(57,774)
(65,886)
–
–
(101,104)
–
608,332
300,255
615,277
535,984
633,796
577,110
832,639
61,108
Name
Andrew Penn
Michael Ackland
Kim Krogh Andersen
Alex Badenoch
Vicki Brady
David Burns
Nikos Katinakis
Brendon Riley
Dean Salter
All service and performance conditions for rights granted in previous financial years are summarised in the Remuneration Report for each relevant year of grant. Each
equity instrument granted, vested or exercised in FY22 (where applicable) in the table above was issued by Telstra and resulted or will result (on vesting and exercise) in
one ordinary Telstra share (or, at Telstra’s discretion, a cash amount equal to the value one ordinary Telstra share) being provided to the holder per equity instrument. No
amount is payable by the KMP on grant, vesting or exercise of their rights. Restricted Shares are excluded from this table. Refer to Sections 2.5(c) and (e) for further
information.
If the Scheme is implemented, equity instruments issued by Telstra that vest and are exercised following the Scheme will result in one ordinary New Telstra Corp share
(or, at New Telstra Corp’s discretion, a cash amount equal to the value of one ordinary New Telstra Corp share) being provided to the holder per equity instrument. Refer to
Section 2.1 for further information.
1. Rights allocated during FY22 were the FY21 EVP Performance Rights allocated on 8 November 2021. Approval for the issue of FY21 EVP Performance Rights allocated
to Andrew Penn was obtained from shareholders at our 2021 AGM, and as a result the grant date of those awards for accounting purposes is considered to be the date
of that AGM as described in note 2 below. The FY22 EVP Performance Rights will be allocated shortly after Telstra’s 2022 AGM, refer to Section 2.1 for more information.
Approval for the issue of FY22 EVP Performance Rights to be allocated to Vicki Brady will be sought from shareholders at our 2022 AGM, and as a result the grant date
of those awards for accounting purposes will be considered to be the date of the 2022 AGM (rather than 11 August 2021).
2. The fair value reflects the valuation approach required by AASB 2 using an option pricing model for Performance Rights granted. The fair value of the Performance
Rights allocated in FY22 under the FY21 EVP are based on the grant dates of 12 October 2021 for the CEO and 12 August 2020 for all other Senior Executives,
respectively. The fair value of Performance Rights granted under the FY21 EVP are $2.05 for the CEO, and $1.78 for Senior Executives.
3. The value of the Performance Rights vested/exercised reflects the market value share price at the date the instruments vested.
4. Relates to rights that lapsed due to the specified performance measures or service conditions not being achieved. Rights lapsed in this column relate to the second
tranche of Performance Rights awarded under the FY18 EVP that was performance tested following the conclusion of the performance period on 30 June 2022 and
resulted in 100% of the Performance Rights lapsing.
There are no Performance Rights or options held by any KMP’s related parties and no Performance Rights or options held indirectly or beneficially by our KMP. As at
30 June 2022, there were no options or Performance Rights vested, or vested and exercisable or vested and unexercisable.
64
Remuneration Report | Telstra Annual Report 2022
(e) Senior Executive interests in Telstra Shares
During FY22, our Senior Executives and their related parties held Telstra shares directly, indirectly or beneficially as follows:
Name
Andrew Penn
Michael Ackland
Kim Krogh Andersen
Alex Badenoch
Vicki Brady
David Burns
Nikos Katinakis
Brendon Riley
Dean Salter
Total
Total shares
held at
1 July 20211
Restricted
Shares
allocated2
Net shares
acquired or
disposed of and
other changes3
Total shares
held at
30 June 20224
Number of shares
held nominally at
30 June 20225
2,152,021
500,322
79,778
441,549
389,489
561,492
354,027
1,252,190
5,500
5,736,368
404,414
182,503
182,945
156,431
185,596
178,526
176,758
255,416
53,469
–
203,688
–
–
–
–
–
–
–
1,776,058
203,688
2,556,435
886,513
262,723
597,980
575,085
740,018
530,785
1,507,606
58,969
7,716,114
759,304
317,129
242,779
295,331
343,301
327,256
315,231
1,266,717
58,969
3,926,017
1. Total shareholdings include shares held by our Senior Executives and their related parties. Unless related to our employee share plans, shares acquired or disposed of
by our Senior Executives and their related parties during FY22 were on an arm's length basis at market price.
2. Restricted Shares in this column were allocated on 8 November 2021 and relate to the FY21 EVP. The approval for the issue of Restricted Shares allocated to Andrew
Penn was obtained from shareholders at our 2021 Annual General Meeting. The allocation of Restricted Shares under the FY22 EVP will be made after the reporting
date of 30 June 2022, therefore they have not been included in the table above.
3. For Michael Ackland, the movement relates to Retention Rights that vested as shares in FY22.
4. The balance reflects the number of shares held at 30 June 2022.
5. Nominally refers to shares held either indirectly or beneficially by Senior Executives and shares held by their related parties including certain Restricted Shares held
beneficially by Senior Executives. These shares are subject to a Restriction Period, such that the Senior Executive is restricted from dealing with the shares until the
Restriction Period ends. Refer to note 5.2 to the financial statements for further details.
3.0 Non-executive Director remuneration
3.1 FY22 Fee structure
Overview
Our non-executive Directors are remunerated with set fees and
do not receive any performance-based pay. This enables non-
executive Directors to maintain independence and impartiality
when making decisions affecting the future direction of the
Company.
Superannuation contributions are included within each non-
executive Director's total remuneration, in accordance with the
ASX Listing Rules and Telstra policy. Non-executive Directors
may choose to increase the proportion of their remuneration
taken as superannuation, subject to legislative requirements.
Telstra does not provide retirement benefits for non-executive
Directors other than the superannuation contributions noted
above.
Sections 1.1(g) and (h) of this report provide details of the share
ownership policy and securities trading restrictions that apply
to our non-executive Directors. Section 3.2 provides full details
of non-executive Director remuneration for FY22.
Non-executive Directors are remunerated in accordance with
Telstra's Constitution, which provides for an aggregate fee pool
that is set, and varied, only by approval of a resolution of
shareholders at the AGM. The current annual fee pool of $3.5
million was approved by shareholders at Telstra's 2012 AGM.
The total of Board and Committee fees, including
superannuation, paid to non-executive Directors in FY22
remained within the approved fee pool.
(a) FY22 Board and standing Committee fees
There were no increases in Board or standing Committee fees
during the year. The Board and standing Committee fee
structure (inclusive of superannuation) during FY22 was:
FY22
Board Fees
Board
FY22
Committee Fee
Audit & Risk
Committee
People and
Remuneration
Committee
Nomination
Committee*
Non-executive
Director (annual
base fee)
$235,000
Committee
Member
$35,000
Chair
$775,000
Chair
$70,000
$56,000
$28,000
–
–
* All non-executive Directors are members of the Nomination Committee and do
not receive a fee for this Committee.
The Board Chair does not receive Committee fees if he is a
Member of a Board Committee.
On an annual basis the Board conducts a market review of
Board fees. The Chair fee and non-executive Director annual
base fee have not changed since 2014 and 2012 respectively.
From 1 October 2022, the Board has determined to increase the
Board Chair fee from $775,000 to $790,000 (1.9% increase) and
the non-executive director Board fee from $235,000 to
$240,000 (2.1% increase). The People and Remuneration
Committee member fee had not changed since 2017 and, from
1 October 2022, will increase by 1.8% from $28,000 to $28,500.
The total of Board and Committee fees will remain within the
approved fee pool.
65
(b) Remuneration for additional or special duties in relation to Telstra’s proposed Corporate Restructure
Under our Constitution if a Director, at the request of the Board, performs additional or special duties for the Company, Telstra may
remunerate that Director as determined by the Board.
During FY22 Craig Dunn and Nora Scheinkestel received remuneration for additional or special duties they performed. These
duties were as members of a committee established with the approval of the Board regarding the due diligence process for the
scheme booklet in connection with Telstra’s proposed Corporate Restructure.
Section 3.2 provides further details on the remuneration for additional or special duties received by Craig Dunn and Nora
Scheinkestel.
(c) Changes to the Board and Committee composition
During the year, Margaret Seale and Peter Hearl retired from the Board effective 12 October 2021 and 31 December 2021,
respectively. There were no other changes to Board and Committee composition during FY22.
3.2 Detailed remuneration and interests in Telstra shares
(a) Non-executive Director remuneration
Name and title
John P Mullen
Chairman
Eelco Blok4
Director
Roy H Chestnutt4
Director
Craig W Dunn
Director
Peter R Hearl5
Director
Bridget Loudon
Director
Elana Rubin6
Director
Nora L Scheinkestel
Director
Margaret L Seale5
Director
Niek Jan van Damme4
Director
Total
Year
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Short term employee benefits
Post–employment
benefits
Salary and fees
($000)1
Non-monetary
benefits ($000)2
Superannuation
($000)3
Total
($000)
751
753
231
231
265
265
292
296
135
291
214
189
253
268
283
284
71
248
258
258
2,753
3,083
11
7
–
–
–
–
1
–
–
–
1
–
1
–
1
–
2
–
–
–
17
7
24
22
4
4
5
5
24
22
12
–
21
18
6
–
24
22
7
22
5
5
132
120
786
782
235
235
270
270
317
318
147
291
236
207
260
268
308
306
80
270
263
263
2,902
3,210
1. Includes fees for membership on Board standing committees and remuneration for additional or special duties (where applicable). In FY22, the following non-
executive Directors received remuneration for additional or special duties: Craig Dunn ($11,000) and Nora Scheinkestel ($9,000).
2. Includes the provision of car parking as well as the value of Telstra products and services provided to non-executive directors. The value of non-monetary benefits
has been grossed up where required for FBT by the relevant FBT rates.
3. Includes an increase in super contributions for FY22, funded from salary and fees, due to indexation of the Maximum Superannuation Contribution Base.
4. As Eelco Blok, Niek Jan van Damme and Roy Chestnutt are overseas residents, their superannuation contributions for FY22 and FY21 are less than the contributions
for Australian resident non-executive Directors.
5. Margaret L Seale (Director since 7 May 2012) and Peter R Hearl (Director since 15 August 2014) retired from the Board of Directors on 12 October 2021 and 31
December 2021, respectively.
6. An employer superannuation guarantee shortfall exemption certificate has been granted by the ATO for part of the 2022 financial year. Based on the exemption
approval Telstra has met the required Superannuation Guarantee obligation.
66
Remuneration Report | Telstra Annual Report 2022
(b) Non-executive Directors’ interests in Telstra shares
During FY22, our non-executive Directors and their related parties held Telstra shares directly, indirectly or beneficially as follows:
Name
John P Mullen
Eelco Blok
Roy H Chestnutt
Craig W Dunn
Peter R Hearl
Bridget Loudon
Elana Rubin
Nora L Scheinkestel
Margaret L Seale
Niek Jan van Damme
Total
Total shares held at
1 July 20211,2
101,159
75,000
70,000
73,173
100,000
–
67,961
158,407
310,540
77,000
1,033,240
Net shares acquired
or disposed of and
other changes1
25,000
–
–
–
–
2,500
–
3,278
–
–
30,778
Total shares held at
30 June 20221
Shares held
nominally at
30 June 20223
126,159
75,000
70,000
73,173
100,000
2,500
67,961
161,685
310,540
77,000
1,064,018
100,000
–
70,000
72,473
–
–
–
128,458
310,540
–
681,471
1. Total shareholdings include shares held by our non-executive Directors and their related parties. Shares acquired or disposed of by our non-executive Directors and
their related parties during FY22 were on an arm's length basis at market price.
2. For Margaret Seale and Peter Hearl, the balance as at 30 June 2022 represents shares held as at the date on which they ceased to be KMP.
3. Nominally refers to shares held either indirectly or beneficially by non-executive Directors including those shares held by their related parties.
4.0 Looking forward to FY23
4.1 Senior Executive Leadership Changes
During the year we announced significant changes to our Senior Executive team, with the CEO announcing his retirement, and the
appointment of a new CEO and CFO. The remuneration implications of these changes are as follows:
Andrew Penn
retiring as CEO on
31 August 2022
Andrew Penn announced his retirement on 30 March 2022. He will work his notice period until 30 September
2022, continuing as CEO until 31 August 2022 after which he will remain available to advise and assist Telstra
with transition.
Upon ceasing employment, Andrew Penn will receive his accrued statutory entitlements and his entitlements
under the EVP will be determined in accordance with the EVP terms. He will receive an FY22 Individual EVP
Outcome of $4,450,180 calculated as set out in Section 2.5, with 25% paid in cash and the remainder to be
awarded in Cash Rights (in lieu of equity). For FY23, he will receive a prorated Individual EVP Outcome (based
on the proportion of the time he is employed during FY23) with 25% to be paid in cash and the remainder to
be awarded in Cash Rights (in lieu of equity). The Cash Rights granted to Andrew Penn will be subject to the
same time conditions and performance measures as those applying to the Restricted Shares and
Performance Rights that Andrew Penn would otherwise have been granted.
In view of Andrew Penn’s exemplary service to Telstra over the past 11 years, the Board exercised discretion
to permit Andrew Penn to retain his 404,414 FY21 EVP Restricted Shares. In accordance with the plan terms,
he will retain all his Restricted Shares under the FY20 and FY19 EVPs and his Performance Rights under the
FY21, FY20 and FY19 EVPs. There will be no change to the Restriction Periods, the RTSR Performance Period
or the RTSR performance condition applying to them as a result of Andrew Penn’s retirement.
To ensure a smooth transition, Andrew Penn has also entered into a consultancy agreement to provide
ongoing advice and guidance to Telstra for up to 6 months following his retirement (until 30 March 2023
unless terminated earlier by Telstra). He will receive fees of $10,000 per month for up to 10 hours of
consulting services per week, and thereafter additional fees at a rate of $1,200 per hour.
Vicki Brady
CEO from
1 September 2022
Vicki Brady will commence in the role of CEO on 1 September 2022. As announced on 30 March 2022, Vicki
Brady’s fixed remuneration will increase to $2,390,000 on commencement in the role. The Board set Vicki
Brady’s fixed remuneration taking into consideration the incumbent CEO’s current fixed remuneration and
market positioning relative to the ASX20. Her EVP reward opportunity levels as a percentage of Fixed
Remuneration will be set at 200% (target) and 300% (maximum).
Michael Ackland
CFO from
1 September 2022
Michael Ackland will commence in the role of CFO on 1 September 2022 as announced on 2 May 2022.
Michael Ackland’s fixed remuneration will increase to $1,250,000 on commencement in the role. The Board
set Michael Ackland’s fixed remuneration taking into consideration his experience, capability and market
positioning relative to the ASX20.
67
4.2 FY23 Senior Executive Remuneration Framework
As we transition to our T25 strategy for growth, the Board has taken the opportunity to review our variable remuneration structures
across the entire company to ensure our remuneration framework remains appropriate and relevant to our strategy. The review
covered both the EVP that applies to our Senior Executives and the Short-Term Incentive (STI) plan that applies to the majority of our
employees.
Following that review, the Board believes the EVP remains an appropriate mechanism to reward the CEO and Group Executives and
continues to drive appropriate performance and remuneration outcomes and to create long-term shareholder value. Therefore, we
have not made any material changes to the Senior Executive framework. However, several refinements will be implemented from
FY23 to reflect feedback provided by our stakeholders and to strengthen the alignment between the EVP and STI at Telstra.
These refinements are in addition to the normal annual changes in the EVP (and STI) performance metrics and targets for FY23 as set
out in this Section 4.2.
The refinements being made to the EVP are summarised below:
Change 1: Align the pay-for-performance opportunity for the CEO and Group Executives (with no change for the CEO)
For the Group Executives, the EVP threshold and target opportunity as a percentage of fixed remuneration (FR) will increase as
shown in the table below. There is no change to their maximum EVP opportunity. There is also no change to the threshold, target or
maximum EVP opportunity for the CEO role.
FY23 Reward opportunity as a % of Fixed Remuneration
CEO
Group Executives
Rationale for change
Threshold
Target
100%
(no change)
200%
(no change)
100%
(previously 90%)
200%
(previously 180%)
Maximum
300%
(no change)
300%
(no change)
• Consistent with the EVP’s key design principle of being a
simplified incentive structure
• Ensures our disclosures and messaging of executive
remuneration outcomes are easier to understand for our key
stakeholders
• Harmonised incentive structures across all disclosed
executives is common market practice across the ASX20
• A target opportunity of 200% for the CEOs and Group
Executives is in line with market practice across the ASX20
Change 2: Enhancing the way individual performance determines the calculation of the Individual EVP Outcome
From FY23, we are adjusting the way in which the Individual EVP Outcome is determined – to better reflect market practice and
using an approach that is more consistent with how we will determine variable remuneration for other employees under our Short-
Term Incentive (STI) plan.
The Individual EVP Outcome for each Senior Executive will be determined by multiplying the EVP Scorecard Outcome by a
percentage reflecting each participant’s individual performance relative to their peers in the executive team.
For a Senior Executive who has been assessed with a performance rating of 3 (on our 1 to 5 scale), this percentage will be in the
range 90% to 110%. For those with a performance rating of 4 or 5, the percentage used would be higher – as is appropriate to
reflect their relative individual performance.
In all cases the maximum possible Individual EVP Outcome, including both company performance (the EVP Scorecard Outcome)
and individual performance (from the multiplier percentage), will be 150% of the individual’s target EVP opportunity.
The Board will continue to have complete discretion over determining the EVP Scorecard Outcome, approving the multiplier for
each Individual EVP Outcome and determining any appropriate adjustments in accordance with its decision framework, including
to reflect any material risk events identified, the severity of their impact, and the executive’s accountability for the matter.
Refer to the EVP structure diagram below for an illustration of the calculation.
At Target EVP Reward Opportunity
Calculating Individual EVP Outcome
FR
$
X
Target EVP
Opportunity
of 200%
=
Target EVP
Opportunity
$
X
Scorecard
Performance Measures
Financial
Customer
Strategic
Each primary
performance
measure outcome
and the total EVP
Scorecard
Outcome is
subject to Board
discretion
=
EVP
Scorecard
Outcome
%
Multiplier
used to
differentiate
individual
performance
and subject to
Board
discretion
=
Individual
EVP
Outcome
Other than the two changes outlined above, the EVP structure remains unchanged for FY23. Further information on the FY23 EVP
structure will be provided in our 2023 Remuneration Report.
68
Remuneration Report | Telstra Annual Report 2022
4.3 FY23 EVP Performance Measures and Targets
It is our intention to continue to provide meaningful information
to enable shareholders to assess the appropriateness of our
remuneration targets and provide transparency over
remuneration outcomes. The Board considers this an
imperative as our operating environment requires careful
shareholder consideration of the need to appropriately
recognise and reward strong management performance for
the value created for the company and its shareholders.
In FY23, as we move from a transformation strategy to a
strategy focussed on growth, we plan to accelerate growth from
our core as well as scale new businesses. We will build on the
flexibility and simplicity we created for customers through T22,
and give them an exceptional experience with even greater
personalisation, more consistency across our channels, and the
products and services they need to connect as individuals, and
to grow as businesses.
This is reflected in the performance measures and targets in
the table below that will apply to the FY23 EVP. These
performance measures and targets have been selected by the
Board to focus the Senior Executives on delivering against the
first year of our T25 strategy, and to help ensure that financial
rewards are linked directly to their contributions, to company
performance and to long-term shareholder value creation.
In setting the primary performance measures and targets for
the FY23 EVP, the Board sought to ensure they were robust and
sufficiently demanding, taking into account the key deliverables
and milestones outlined in our T25 strategy and scorecard,
planned financial outcomes contained within our FY23
Corporate Plan and FY23 guidance (as announced on 11 August
2022).
The targets that apply to the FY23 EVP do not constitute market
guidance. Subsequent adjustments to guidance throughout the
year (for example unplanned one-off events) and their impact
on EVP outcomes will be considered both during the financial
year as those events may occur and also at the end of the
financial year, in accordance with established principles to
ensure that outcomes appropriately reflect the performance of
Senior Executives. Any adjustments that the Board makes will
be fully disclosed to shareholders in next year’s Remuneration
Report. The Board also has the ability to amend the
performance measures themselves if it considers it appropriate
having regard to Telstra’s business circumstances and
priorities.
All of the following measures have been selected on the basis
that they are directly linked to our T25 strategy.
69
FY23 EVP Performance Measures and Targets
Performance
Measure
Metric
Weighting
FY22 EVP
Baseline^
Threshold
Max
FY23
Target
Rationale for
why chosen
l
a
i
c
n
a
n
F
i
g
n
i
t
h
g
i
e
w
l
a
t
o
t
f
o
%
0
6
r
e
m
o
t
s
u
C
g
n
i
t
h
g
i
e
w
l
a
t
o
t
f
o
%
5
2
c
i
g
e
t
a
r
t
S
g
n
i
t
h
g
i
e
w
l
a
t
o
t
f
o
%
5
1
Total Income
Underlying
EBITDA
Telstra External Income (excluding finance income)
15%
$21,920m
Underlying EBITDA is Earnings Before Interest, Tax,
Depreciation & Amortisation, excludes net one-off nbn DA
receipts less nbn net C2C, one-off restructuring costs and
guidance adjustments
15%
$7,214m
Free Cash Flow (FCF)
Free Cashflow after lease payments defined as ‘operating
cash flows’ less ‘investing cash flows’, less ‘payments for lease
liabilities’, and excludes spectrum and guidance adjustments
15%
$3,938m
Underlying Return On
Invested Capital (ROIC)
Underlying ROIC is Total NOPAT less guidance adjustments
after tax, less net nbn one-off earnings after tax, divided by
Average Invested Capital
15%
7%
At or above bottom
Approx. Midpoint
end of Market
Guidance*
of Market
Guidance*
At or above top
end of Market
Guidance*
• Key indicator of financial performance.
• Appropriate for a capital-intensive business and critical in managing
the company’s ability to pay a dividend and maintain balance sheet
Episode NPS
RepTrak
Measures our customer experience from their feedback on
each transaction using a Net Promoter Score (NPS)
15%
+37
+38
+40
+42
Measures our reputation score on the RepTrak index
10%
62.2
63.6
63.8
64.5
Responsible Business
Our % reduction in absolute scope 1 + 2 greenhouse gas
emissions from our FY19 baseline.
5%
14%#
17%
20%
23%
% achievement of our target build of Application Programming
Interfaces (APIs)
5%
n/a
88% of FY23 target
build achieved
100% of FY23
target build
achieved
100% of FY23
target build
achieved, and first
product using
those APIs being in
market
• This measure focuses our executives on enablers of Digital
Leadership that will halve our new product time to market by
building a 100% API-first architecture for customer management
and product development.
• It will drive fundamental and significant change in the way we work,
improving offerings to customers whilst reducing cost.
• Aligns to the digital leadership pillar of our T25 scorecard.
Maintain employee engagement in the high performing norm
(90th percentile)
5%
n/a
80
82
84
Digital
Leadership
People Capability
& Engagement
• Key indicator of financial performance.
• Ensures continued focus on income and customer retention and
growth.
• Aligns to the growth and value pillar of our T25 scorecard.
• Key indicator of financial performance.
• Ensures appropriate focus on profit and cost to deliver.
• A strong indicator of underlying company profitability.
• Aligns to the growth and value pillar of our T25 scorecard.
strength.
• Aligns to the growth and value pillar of our T25 scorecard.
• Key indicator of financial performance.
• The introduction of this metric in FY23 reflects our T25 strategy
focus on growth and financial returns.
• Threshold, target and maximum levels for ROIC align to the
corresponding threshold, target and maximum for Underlying
EBITDA (which align to Market Guidance as described above).
• Aligns to the growth and value pillar of our T25 scorecard.
• Focusses leaders on continuously improving the customer service
experience, driving both customer attraction and retention.
• Underpins companywide improvement programs focused on
improving our operational excellence by identifying and eliminating
the causes of unnecessary customer effort and pain points.
• Aligns to the customer experience pillar of our T25 scorecard.
• Includes the sentiment of customers and non-customers, but also
provides a broader, more holistic measure which picks up on all the
key drivers of company reputation.
• Focusses leaders on the Company’s reputation in the community,
with customers and prospective customers, and with prospective
employees, driving both customer and employee attraction and
retention.
• Aligns to the responsible business pillar of our T25 scorecard.
• These are reductions in the emissions caused by the fossil fuels and
grid electricity we use. Inclusion of this metric in our scorecard leans
into Telstra’s contribution to addressing this pressing issue and
specifically recognises broad community concern on our changing
environment.
• Aligns to the responsible business pillar of our T25 scorecard.
• Focusses leaders on our employee engagement and the importance
of our employees as stakeholders.
• Supports our ability to have both the key leadership and technical
talent required to deliver on our ambitious strategy.
• The measurement of employee engagement is changing to a new
benchmark in FY23. Previous FY22 performance may therefore not
be a valid baseline and so has not been included here.
• Aligns to the new ways of working pillar of our T25 scorecard.
^ For FY23 targets, for metrics continuing from FY22 the baseline refers to the FY22 EVP performance outcomes as outlined in Section 2.2. For metrics that are new in
FY23, the baseline (where available) is our current internal measurement to the end of June 2022 where this provides relevant context to the determination of Threshold,
Target and Maximum for FY23.
# This figure has been corrected from the figure of 13% included in our Remuneration Report that was lodged with the ASX on 11 August 2022.
70
Remuneration Report | Telstra Annual Report 2022
FY23 EVP Performance Measures and Targets
Performance
Measure
Metric
Weighting
FY22 EVP
Baseline^
Threshold
FY23
Target
Max
Rationale for
why chosen
Total Income
Underlying
EBITDA
Episode NPS
RepTrak
Digital
Leadership
l
a
i
c
n
a
n
i
F
g
n
i
t
h
g
i
e
w
l
a
t
o
t
f
o
%
0
6
r
e
m
o
t
s
u
C
g
n
i
t
h
g
i
e
w
l
a
t
o
t
f
o
%
5
2
c
i
g
e
t
a
r
t
S
g
n
i
t
h
g
i
e
w
l
a
t
o
t
f
o
%
5
1
Telstra External Income (excluding finance income)
15%
$21,920m
Underlying EBITDA is Earnings Before Interest, Tax,
Depreciation & Amortisation, excludes net one-off nbn DA
receipts less nbn net C2C, one-off restructuring costs and
guidance adjustments
15%
$7,214m
Free Cash Flow (FCF)
liabilities’, and excludes spectrum and guidance adjustments
Free Cashflow after lease payments defined as ‘operating
cash flows’ less ‘investing cash flows’, less ‘payments for lease
15%
$3,938m
At or above bottom
end of Market
Guidance*
Approx. Midpoint
of Market
Guidance*
At or above top
end of Market
Guidance*
Underlying Return On
Invested Capital (ROIC)
Average Invested Capital
Underlying ROIC is Total NOPAT less guidance adjustments
after tax, less net nbn one-off earnings after tax, divided by
15%
7%
Measures our customer experience from their feedback on
each transaction using a Net Promoter Score (NPS)
15%
+37
+38
+40
+42
Measures our reputation score on the RepTrak index
10%
62.2
63.6
63.8
64.5
Responsible Business
Our % reduction in absolute scope 1 + 2 greenhouse gas
emissions from our FY19 baseline.
5%
14%#
17%
20%
23%
• Key indicator of financial performance.
• Ensures continued focus on income and customer retention and
growth.
• Aligns to the growth and value pillar of our T25 scorecard.
• Key indicator of financial performance.
• Ensures appropriate focus on profit and cost to deliver.
• A strong indicator of underlying company profitability.
• Aligns to the growth and value pillar of our T25 scorecard.
• Key indicator of financial performance.
• Appropriate for a capital-intensive business and critical in managing
the company’s ability to pay a dividend and maintain balance sheet
strength.
• Aligns to the growth and value pillar of our T25 scorecard.
• Key indicator of financial performance.
• The introduction of this metric in FY23 reflects our T25 strategy
focus on growth and financial returns.
• Threshold, target and maximum levels for ROIC align to the
corresponding threshold, target and maximum for Underlying
EBITDA (which align to Market Guidance as described above).
• Aligns to the growth and value pillar of our T25 scorecard.
• Focusses leaders on continuously improving the customer service
experience, driving both customer attraction and retention.
• Underpins companywide improvement programs focused on
improving our operational excellence by identifying and eliminating
the causes of unnecessary customer effort and pain points.
• Aligns to the customer experience pillar of our T25 scorecard.
• Includes the sentiment of customers and non-customers, but also
provides a broader, more holistic measure which picks up on all the
key drivers of company reputation.
• Focusses leaders on the Company’s reputation in the community,
with customers and prospective customers, and with prospective
employees, driving both customer and employee attraction and
retention.
• Aligns to the responsible business pillar of our T25 scorecard.
• These are reductions in the emissions caused by the fossil fuels and
grid electricity we use. Inclusion of this metric in our scorecard leans
into Telstra’s contribution to addressing this pressing issue and
specifically recognises broad community concern on our changing
environment.
• Aligns to the responsible business pillar of our T25 scorecard.
% achievement of our target build of Application Programming
Interfaces (APIs)
5%
n/a
88% of FY23 target
build achieved
100% of FY23
target build
achieved
100% of FY23
target build
achieved, and first
product using
those APIs being in
market
• This measure focuses our executives on enablers of Digital
Leadership that will halve our new product time to market by
building a 100% API-first architecture for customer management
and product development.
• It will drive fundamental and significant change in the way we work,
improving offerings to customers whilst reducing cost.
• Aligns to the digital leadership pillar of our T25 scorecard.
People Capability
& Engagement
Maintain employee engagement in the high performing norm
(90th percentile)
5%
n/a
80
82
84
• Focusses leaders on our employee engagement and the importance
of our employees as stakeholders.
• Supports our ability to have both the key leadership and technical
talent required to deliver on our ambitious strategy.
• The measurement of employee engagement is changing to a new
benchmark in FY23. Previous FY22 performance may therefore not
be a valid baseline and so has not been included here.
• Aligns to the new ways of working pillar of our T25 scorecard.
* Market Guidance means guidance for FY23 as set out in Telstra’s ASX announcement dated 11 August 2022.
71
5.0 Glossary
Cash Rights
Rights granted to a Senior Executive who ceases employment for a Permitted Reason before the
Restricted Shares and Performance Rights are granted in respect of the EVP in lieu of those Restricted
Shares and Performance Rights. The Cash Rights are subject to the same time conditions and
performance measures as those applying to those Restricted Shares and Performance Rights. On
vesting, a Cash Right will entitle the Senior Executive to a cash payment equivalent to the value of a
Telstra share at the end of the applicable Restriction Period or performance period. A Cash Right granted
in lieu of a Restricted Share also entitles the Senior Executive to receive an amount equal to dividends
paid on Telstra shares between the date the Cash Right is allocated and the end of the applicable
Restriction Period, at or around the same time that Telstra pays the dividend. A Cash Right granted in lieu
of a Performance Right entitles the Senior Executive, if the Cash Right vests, to receive an amount
equivalent to dividends paid between allocation and vesting of the Cash Right after the end of the
applicable performance period.
Corporate Restructure The proposed restructure of the Telstra Group announced on 12 November 2020
EBITDA
EVP
EVP Scorecard
Outcome
Earnings Before Interest, Tax, Depreciation and Amortisation
Executive Variable Remuneration Plan
The outcome determined by the Board following an assessment of Telstra’s performance against the
primary performance measures under the EVP during the Initial Performance Period and making such
adjustments as it considers necessary to ensure the outcome is appropriate, that is then used as an
input for determining each Senior Executive’s Individual EVP Outcome.
Fixed Remuneration
or FR
Base salary plus company and private salary sacrificed superannuation contributions
FY
Financial year
Individual EVP
Outcome
The individual award earned by a Senior Executive under the EVP taking into consideration their
performance, the EVP Scorecard Outcome, their ‘at target’ EVP reward opportunity and other factors in
accordance with the Board’s decision framework such as any material risk events identified, the severity
of their impact and the Senior Executive’s accountability for the matter.
Initial Performance
Period
1 year (1 July 2021 – 30 June 2022)
KMP
Key Management Personnel
NBN Transaction
Agreements with nbn co and the Government in relation to Telstra's participation in the rollout of the nbn
access network. This includes the entire Definitive Agreement receipts and the net negative recurring
nbn headwinds on our business.
72
Remuneration Report | Telstra Annual Report 2022
NPS
Net Promoter Score is a non-financial performance metric that we use to measure customer experience
at Telstra. The Episode NPS performance measure is based on responses to internal surveys following
actual service experiences customers had with Telstra. The overall Episode NPS result for Telstra is a
weighted average calculation of the survey results from Telstra business segments – Consumer & Small
Business contribute collectively at 65% and Telstra Enterprise at 35%
Performance Right
A right to a share or, at Telstra’s discretion, a cash amount equivalent to the value of a share, at the end of
a performance period, subject to the satisfaction of certain performance measures and continuing
employment conditions
Permitted Reason
Permitted Reason under the EVP, means death, total and permanent disablement, certain medical
conditions, company initiated separation for a reason unrelated to performance or conduct, redundancy
or retirement. Permitted Reason under the EVP Performance Rights and Restricted Share terms also
includes mutual separation
Related parties
of a person means:
• a close member of the person’s family; and/or
• an entity over which the person or close family member has, directly or indirectly, control, joint control
or significant influence
Restricted Share
A Telstra share that is subject to a Restriction Period
Restriction Period
A period during which a Telstra share is subject to a continuing employment condition and cannot be
traded. Restricted Shares are transferred to a Senior Executive on the first day after the end of the
Restriction Period that Senior Executives are able to deal in shares under Telstra's Securities Trading
Policy
RTSR
Relative Total Shareholder Return (RTSR) measures the performance of an ordinary Telstra share
(including the value of any cash dividend and other shareholder benefits paid during the period) relative
to the performance of ordinary securities issued by the other companies in a comparator group over the
same period
RTSR Performance
Period
The five-year performance period ending on 30 June 2026 over which the RTSR performance condition
for the FY22 EVP Performance Rights will be measured.
Scheme
The scheme of arrangement that Telstra is proposing as part of the broader Corporate Restructure that
will result in Telstra Group Limited (New Telstra Corp) becoming the new head entity of the Telstra Group
Senior Executive
Refers to the CEO and those Group Executives who are KMP with authority and responsibility for
planning, directing and controlling the activities of Telstra and the Group, directly or indirectly
Underlying EBITDA
Underlying EBITDA is Earnings Before Interest, Tax, Depreciation & Amortisation. It excludes net one-off
nbn DA receipts less nbn net C2C, one-off restructuring costs and guidance adjustments.
73
Directors’
Report
Rounding
The Telstra Entity is a company of the kind referred to in the
Australian Securities and Investments Commission
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016 and issued
pursuant to section 341(1) of the Corporations Act 2001. Except
where otherwise indicated, the amounts in this Directors’
Report and the accompanying financial report have been
rounded to the nearest million dollars ($m) and amounts in the
Remuneration Report have been rounded to the nearest
thousand dollars ($000).
This report is made on 11 August 2022 in accordance with a
resolution of the Directors.
John P Mullen
Chairman
11 August 2022
Andrew R Penn
Chief Executive Officer and Managing Director
11 August 2022
2022.Financial Report.book Page 89 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 89 Thursday, August 11, 2022 7:54 AM
Auditor’s responsibilities for the audit of the financial report (continued)
Auditor’s responsibilities for the audit of the financial report (continued)
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
scepticism throughout the audit. We also:
2022.Financial Report.book Page 86 Thursday, August 11, 2022 7:54 AM
• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit
• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the directors.
made by the directors.
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
to continue as a going concern.
report represents the underlying transactions and events in a manner that achieves fair presentation.
report represents the underlying transactions and events in a manner that achieves fair presentation.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial
Independent Auditor’s Report to the Shareholders of Telstra Corporation Limited
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We
Report on the audit of the financial report
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
remain solely responsible for our audit opinion.
Opinion
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We have audited the financial report of Telstra Corporation Limited (the Company) and its subsidiaries (collectively the Group), which
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated income statement, the consolidated
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
Auditor’s Independence Declaration to the
the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the Directors'
applicable, actions taken to eliminate threats or safeguards applied.
Directors of Telstra Corporation Limited
Declaration.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial
report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
As lead auditor for the audit of the financial report of
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
Telstra Corporation Limited for the financial year ended
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
30 June 2022, I declare to the best of my knowledge and
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
performance for the year ended on that date; and
interest benefits of such communication.
belief, there have been:
interest benefits of such communication.
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
(a) No contraventions of the auditor independence
Report on the audit of the Remuneration Report
requirements of the Corporations Act 2001 in relation to
Report on the audit of the Remuneration Report
Basis for opinion
the audit;
Opinion on the Remuneration Report
Opinion on the Remuneration Report
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
(b) No contraventions of any applicable code of professional
We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June 2022.
described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in
We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Telstra Corporation Limited for the year ended 30 June 2022, complies with section 300A of
accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
In our opinion, the Remuneration Report of Telstra Corporation Limited for the year ended 30 June 2022, complies with section 300A of
(c) No non-audit services provided that contravene any
the Corporations Act 2001.
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards)
the Corporations Act 2001.
applicable code of professional conduct in relation to
(the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
Responsibilities
the audit.
accordance with the Code.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
This declaration is in respect of Telstra Corporation Limited
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
and the entities it controlled during the financial year.
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Key audit matters
conducted in accordance with Australian Auditing Standards.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of
the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
conduct in relation to the audit; and
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report,
Ernst & Young
Ernst & Young
including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our
Ernst & Young
assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.
Revenue recognition
Why significant
Sarah Lowe
Sarah Lowe
Sarah Lowe
The Group exercises significant judgement relating to revenue
Partner
Partner
Partner
recognition in the following areas:
Melbourne
11 August 2022
Melbourne
11 August 2022
11 August 2022
• accounting for new products and plans including bundles of
products and/or services;
contracts; and
• accounting for large Network Application Services (NAS)
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under
A member firm of Ernst & Young Global Limited
Professional Standards Legislation
• accounting for NBN revenue under the revised Definitive
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
Agreements (DAs) with nbn co and the Commonwealth
Government.
The accuracy of amounts recorded as revenue is an inherent
industry risk due to the complexity of billing systems, the
complexity of products and services, the distribution channels and
the combination of products sold and price changes in the year.
The complexity of the billing systems was also considered as part
of the reliance on automated processes and controls Key Audit
Matter outlined below.
Disclosures relating to revenue recognition can be found at Section
2.2 Income.
How our audit addressed the key audit matter
We evaluated the design and operating effectiveness of key
controls over the capture and measurement of revenue
transactions across all significant revenue streams, including
evaluating the relevant IT systems.
We examined the processes and controls over the capture and
assessment of the timing of revenue recognised for new products
and plans.
We assessed the Group accounting policies as set out in Section
2.2, and the adequacy of disclosures for compliance with the
revenue recognition requirements of Australian Accounting
Standards. For all significant revenue streams, for a sample of
revenue transactions recorded during the year, we obtained
supporting evidence such as customer contracts, statements of
work, other contractual agreements, service detail records and
evidence of customer payment.
F89
F89
For customer contracts that include NAS revenues, we focused our
work on those which we regarded as higher risk because of the
nature of the contract, its stage of delivery and those which were
significant by size.
74
F86
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Financial
Report
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 1 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 2 Thursday, August 11, 2022 7:54 AM
Telstra Corporation Limited
and controlled entities
Australian Business Number (ABN): 33 051 775 556
Telstra Financial Report 2022
Financial report: introduction and contents
As at 30 June 2022
About this report
This is the financial report for Telstra Corporation Limited (referred
to as the Company or Telstra Entity) and its controlled entities
(together referred to as we, us, our, Telstra, the Telstra Group or the
Group) for the year ended 30 June 2022.
Telstra Corporation Limited is a ‘for profit’ company limited by
shares incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange (ASX).
This financial report was authorised for issue in accordance with a
resolution of the Telstra Board of Directors on 11 August 2022. The
Directors have the power to amend and reissue the financial report.
Reading the financials
Section introduction
The introduction at the start of each section outlines the focus of
the section and explains the purpose and content of that section.
Note and topic summary
A summary at the start of certain notes explains the objectives and
content of that note, or at the start of certain specific topics
clarifies complex concepts, which users may not be familiar with.
Narrative table
Some narrative disclosures are presented in a tabular format to
provide readers with a clearer understanding of the information
being presented.
Information panel
The information panel describes our key accounting estimates and
judgements applied in the preparation of the financial report, which
are relevant to that section or note.
Contents
Financial Statements
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
F2
F3
F4
F6
F7
F8
87
77
F8
87
78
F8
87
79
F8
87
81
F9
82
88
F10
94
F15
100
F25
108
F26
109
F29
112
F29
112
83
83
83
83
84
Contents
Notes to the Financial Statements
Financial Statements
Section 1: Basis of preparation
1.1
Basis of preparation of the financial report
Income Statement
Terminology used in our income statement
1.2
Statement of Comprehensive Income
1.3
Principles of consolidation
Statement of Financial Position
1.4
Key accounting estimates and judgements
Statement of Cash Flows
Other accounting policies
1.5
Statement of Changes in Equity
85
90
100
101
104
104
Net contract assets and contract liabilities
F31
114
116
F37
119
F42
126
F44
129
129
F44
130
F45
F46
130
F46
131
132
Section 2: Our performance
Notes to the Financial Statements
2.1
Segment information
2.2
Income
Section 1: Basis of preparation
1.1 Basis of preparation of the financial report
2.3
Expenses
1.2 Terminology used in our income statement
2.4
Income taxes
1.3 Principles of consolidation
Earnings per share
2.5
1.4 Key accounting estimates and judgements
2.6
Notes to the statement of cash flows
1.5 Other accounting policies
Section 3: Our core assets, lease arrangements and
Section 2: Our performance
working capital
2.1 Segment information
3.1
2.2
2.3 Expenses
3.2
Income taxes
2.4
3.3
2.5 Earnings per share
3.4
2.6 Notes to the statement of cash flows
Capital management
Dividend
Inventories
Equity
Net debt
Financial instruments and risk management
Property, plant and equipment and intangible
Income
assets
Lease arrangements
Trade and other receivables and contract assets
Contract liabilities and other revenue received in
advance
3.5
Net contract assets and contract liabilities
Section 3: Our core assets, lease arrangements and working capital
3.6
Deferred contract costs
106
3.1 Property, plant and equipment and intangible assets
3.7
Inventories
112
3.2 Lease arrangements
117
3.3 Trade and other receivables and contract assets
3.8
Trade and other payables
3.4 Contract liabilities and other revenue received in advance 119
Section 4: Our capital and risk management
119
3.5
4.1
120
3.6 Deferred contract costs
4.2
121
3.7
4.3
121
3.8 Trade and other payables
4.4
Section 4: Our capital and risk management
4.5
4.1 Capital management
Section 5: Our people
4.2 Dividend
5.1
Employee benefits
4.3 Equity
5.2
Employee share plans
4.4 Net debt
Post-employment benefits
5.3
4.5 Financial instruments and risk management
5.4
Key management personnel compensation
Section 5: Our people
Section 6: Our investments
5.1 Employee benefits
6.1
Changes in the group structure
5.2 Employee share plans
Investments in controlled entities
6.2
5.3 Post-employment benefits
6.3
Non-controlling interests
5.4 Key management personnel compensation
6.4
Investments in joint ventures and associated
Section 6: Our investments
entities
6.1 Changes in the group structure
Section 7: Other information
6.2
6.3 Non-controlling interests
Auditor’s remuneration
7.1
6.4
7.2
Parent entity disclosures
7.3
Commitments and contingencies
Section 7: Other information
7.4
Events after reporting date
7.1 Auditor’s remuneration
7.2 Parent entity disclosures
Directors’ Declaration
7.3 Commitments and contingencies
Independent Auditor’s Report
7.4 Events after reporting date
Investments in joint ventures and associated entities
Investments in controlled entities
F47
F47
F47
133
F49
133
F53
135
141
F65
F66
150
F69
151
F71
154
157
122
122
122
124
128
147
150
152
153
F72
F75
158
F77
163
F78
140
141
144
146
157
157
159
159
Directors’ Declaration
Independent Auditor’s Report
168
F82
168
F82
169
F84
169
F84
171
171
F85
172
F86
173
160
161
76 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F1
F2 | Telstra Corporation Limited and controlled entities
Income
Statement
For the year ended 30 June 2022
Telstra Group
Revenue (excluding finance income)
Income
Other income
Expenses
Labour
Goods and services purchased
Net impairment losses on financial assets
Other expenses
Finance income
Finance costs
Net finance costs
Income tax expense
Profit for the year
Profit before income tax expense
Profit for the year attributable to:
Equity holders of Telstra Entity
Non-controlling interests
Basic
Diluted
Year ended 30 June
2022
2021
Note
$m
$m
2.2
2.2
2.3
6.4
2.3
2.2
2.3
2.4
2.5
2.5
21,277
768
22,045
3,620
8,228
98
2,812
14,758
7,256
4,358
2,898
110
527
417
2,481
667
1,814
1,688
126
1,814
14.4
14.3
21,558
1,574
23,132
4,012
8,318
160
2,980
15,470
7,638
4,646
2,992
103
654
551
2,441
539
1,902
1,857
45
1,902
15.6
15.6
Share of net loss from joint ventures and associated entities
(31)
(24)
14,789
15,494
Earnings before interest, income tax expense, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Earnings before interest and income tax expense (EBIT)
Earnings per share (cents per share)
cents
cents
The notes following the financial statements form part of the financial report.
Notes to the financial statements (continued) 2022.Financial Report.book Page 1 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 2 Thursday, August 11, 2022 7:54 AM
Income
Statement
For the year ended 30 June 2022
Telstra Group
Income
Revenue (excluding finance income)
Other income
Expenses
Labour
Goods and services purchased
Net impairment losses on financial assets
Other expenses
3.1
Property, plant and equipment and intangible
F31
Earnings before interest and income tax expense (EBIT)
Share of net loss from joint ventures and associated entities
Earnings before interest, income tax expense, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Finance income
Finance costs
Net finance costs
Profit before income tax expense
Income tax expense
Profit for the year
Profit for the year attributable to:
Equity holders of Telstra Entity
Non-controlling interests
Financial instruments and risk management
Earnings per share (cents per share)
Basic
Diluted
The notes following the financial statements form part of the financial report.
Telstra Corporation Limited
and controlled entities
Australian Business Number (ABN): 33 051 775 556
Telstra Financial Report 2022
Financial report: introduction and contents
As at 30 June 2022
About this report
This is the financial report for Telstra Corporation Limited (referred
to as the Company or Telstra Entity) and its controlled entities
(together referred to as we, us, our, Telstra, the Telstra Group or the
Group) for the year ended 30 June 2022.
Telstra Corporation Limited is a ‘for profit’ company limited by
shares incorporated in Australia whose shares are publicly traded
on the Australian Securities Exchange (ASX).
This financial report was authorised for issue in accordance with a
resolution of the Telstra Board of Directors on 11 August 2022. The
Directors have the power to amend and reissue the financial report.
Notes to the Financial Statements
Section 1: Basis of preparation
Basis of preparation of the financial report
Terminology used in our income statement
Principles of consolidation
Key accounting estimates and judgements
Other accounting policies
Section 2: Our performance
Segment information
Income
Expenses
Income taxes
Earnings per share
Reading the financials
Section introduction
Notes to the statement of cash flows
Section 3: Our core assets, lease arrangements and
working capital
The introduction at the start of each section outlines the focus of
the section and explains the purpose and content of that section.
assets
Lease arrangements
Note and topic summary
A summary at the start of certain notes explains the objectives and
advance
content of that note, or at the start of certain specific topics
clarifies complex concepts, which users may not be familiar with.
Trade and other receivables and contract assets
Contract liabilities and other revenue received in
F44
Net contract assets and contract liabilities
Deferred contract costs
Inventories
Trade and other payables
Some narrative disclosures are presented in a tabular format to
provide readers with a clearer understanding of the information
Section 4: Our capital and risk management
Capital management
Narrative table
being presented.
Information panel
The information panel describes our key accounting estimates and
judgements applied in the preparation of the financial report, which
are relevant to that section or note.
Contents
Financial Statements
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
Dividend
Equity
Net debt
Section 5: Our people
Employee benefits
Employee share plans
Post-employment benefits
Key management personnel compensation
F2
F3
F4
F6
F7
Section 6: Our investments
Changes in the group structure
Investments in controlled entities
Non-controlling interests
Investments in joint ventures and associated
entities
Section 7: Other information
Auditor’s remuneration
Parent entity disclosures
Commitments and contingencies
Events after reporting date
Directors’ Declaration
Independent Auditor’s Report
F8
F8
F8
F8
F9
F10
F15
F25
F26
F29
F29
F37
F42
F44
F45
F46
F46
F47
F47
F47
F49
F53
F65
F66
F69
F71
F72
F75
F77
F78
F82
F82
F84
F84
F85
F86
1.1
1.2
1.3
1.4
1.5
2.1
2.2
2.3
2.4
2.5
2.6
3.2
3.3
3.4
3.5
3.6
3.7
3.8
4.1
4.2
4.3
4.4
4.5
5.1
5.2
5.3
5.4
6.1
6.2
6.3
6.4
7.1
7.2
7.3
7.4
Telstra Financial Report 2022
Year ended 30 June
2022
2021
Note
$m
$m
2.2
2.2
2.3
6.4
2.3
2.2
2.3
2.4
2.5
2.5
21,277
768
22,045
3,620
8,228
98
2,812
14,758
21,558
1,574
23,132
4,012
8,318
160
2,980
15,470
(31)
(24)
14,789
15,494
7,256
4,358
2,898
110
527
417
2,481
667
1,814
1,688
126
1,814
7,638
4,646
2,992
103
654
551
2,441
539
1,902
1,857
45
1,902
cents
cents
14.4
14.3
15.6
15.6
Telstra Corporation Limited and controlled entities | F1
F2 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 77
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 3 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 4 Thursday, August 11, 2022 7:54 AM
Statement of
Comprehensive Income
Telstra Financial Report 2022
Statement of
Financial Position
For the year ended 30 June 2022
Telstra Group
Profit for the year attributable to:
Equity holders of Telstra Entity
Non-controlling interests
Year ended 30 June
2022
2021
Note
$m
$m
1,688
126
1,814
1,857
45
1,902
Items that will not be reclassified to the income statement
Retained profits
Actuarial gain on defined benefit plans attributable to equity holders of Telstra Entity
5.3
Income tax on actuarial gain on defined benefit plans
Fair value of equity instruments reserve
Share of other comprehensive income of equity accounted investments
Income tax on share of other comprehensive income of equity accounted investments
Foreign currency translation reserve
Translation differences of foreign operations attributable to non-controlling interests
Items that may be subsequently reclassified to the income statement
Foreign currency translation reserve
Translation differences of foreign operations attributable to equity holders of Telstra Entity
4.5
4.5
Cash flow hedging reserve
Changes in cash flow hedging reserve
Share of other comprehensive income of equity accounted investments
Income tax on movements in the cash flow hedging reserve
Foreign currency basis spread reserve
Changes in the value of the foreign currency basis spread
Income tax on movements in the foreign currency basis spread reserve
Total other comprehensive income
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Equity holders of Telstra Entity
Non-controlling interests
The notes following the financial statements form part of the financial report.
149
(45)
(189)
40
2
(43)
49
204
6
(54)
79
(24)
260
217
2,031
1,903
128
60
(18)
292
(77)
(1)
256
(95)
68
3
(20)
(54)
16
(82)
174
2,076
2,032
44
Trade and other receivables and contract assets
Trade and other receivables and contract assets
Investments – accounted for using the equity method
As at 30 June 2022
Telstra Group
Current assets
Cash and cash equivalents
Deferred contract costs
Inventories
Derivative financial assets
Current tax receivables
Prepayments
Total current assets
Non-current assets
Deferred contract costs
Inventories
Investments – other
Property, plant and equipment
Right-of-use assets
Intangible assets
Derivative financial assets
Deferred tax assets
Defined benefit asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Current tax payables
Total current liabilities
Non-current liabilities
Other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Deferred tax liabilities
Defined benefit liability
Total non-current liabilities
Total liabilities
Net assets
Contract liabilities and other revenue received in advance
Contract liabilities and other revenue received in advance
As at 30 June
2022
2021
Note
$m
$m
2.6
3.3
3.6
3.7
4.4
2.4
3.3
3.6
3.7
6.4
3.1
3.2
3.1
4.4
2.4
5.3
3.8
5.1
3.2
4.4
4.4
2.4
3.4
3.8
5.1
3.2
4.4
4.4
2.4
5.3
3.4
6,260
7,114
20,485
20,863
35,368
41,628
35,411
42,525
4,189
3,766
2,690
3,631
1,125
4,577
113
385
624
5
285
1,168
1,342
1,018
21
15
2,852
7,131
786
60
155
682
87
503
26
124
1,605
10,424
9
150
126
2,802
10,505
331
1,580
10
1,313
16,826
27,250
15,275
1,040
4,074
116
476
302
17
235
861
1,238
28
814
15
2,926
8,155
512
60
274
667
160
490
-
42
1,622
9,860
233
132
119
2,797
8,292
305
1,655
10
1,388
14,931
24,791
16,837
78 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F3
F4 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 3 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 4 Thursday, August 11, 2022 7:54 AM
Statement of
Comprehensive Income
For the year ended 30 June 2022
Telstra Group
Profit for the year attributable to:
Equity holders of Telstra Entity
Non-controlling interests
Items that will not be reclassified to the income statement
Retained profits
Actuarial gain on defined benefit plans attributable to equity holders of Telstra Entity
5.3
Income tax on actuarial gain on defined benefit plans
Fair value of equity instruments reserve
Share of other comprehensive income of equity accounted investments
Income tax on share of other comprehensive income of equity accounted investments
Foreign currency translation reserve
Translation differences of foreign operations attributable to non-controlling interests
Items that may be subsequently reclassified to the income statement
Foreign currency translation reserve
Translation differences of foreign operations attributable to equity holders of Telstra Entity
Cash flow hedging reserve
Changes in cash flow hedging reserve
Share of other comprehensive income of equity accounted investments
Income tax on movements in the cash flow hedging reserve
Foreign currency basis spread reserve
Changes in the value of the foreign currency basis spread
Income tax on movements in the foreign currency basis spread reserve
Total other comprehensive income
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
Equity holders of Telstra Entity
Non-controlling interests
The notes following the financial statements form part of the financial report.
Telstra Financial Report 2022
Year ended 30 June
2022
2021
Note
$m
$m
1,688
126
1,814
1,857
45
1,902
149
(45)
(189)
40
2
(43)
49
204
6
(54)
79
(24)
260
217
2,031
1,903
128
60
(18)
292
(77)
(1)
256
(95)
68
3
(20)
(54)
16
(82)
174
2,076
2,032
44
4.5
4.5
Statement of
Financial Position
As at 30 June 2022
Telstra Group
Current assets
Cash and cash equivalents
Trade and other receivables and contract assets
Deferred contract costs
Inventories
Derivative financial assets
Current tax receivables
Prepayments
Total current assets
Non-current assets
Trade and other receivables and contract assets
Deferred contract costs
Inventories
Investments – accounted for using the equity method
Investments – other
Property, plant and equipment
Right-of-use assets
Intangible assets
Derivative financial assets
Deferred tax assets
Defined benefit asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Current tax payables
Contract liabilities and other revenue received in advance
Total current liabilities
Non-current liabilities
Other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Deferred tax liabilities
Defined benefit liability
Contract liabilities and other revenue received in advance
Total non-current liabilities
Total liabilities
Net assets
Telstra Financial Report 2022
As at 30 June
2022
2021
Note
$m
$m
2.6
3.3
3.6
3.7
4.4
2.4
3.3
3.6
3.7
6.4
3.1
3.2
3.1
4.4
2.4
5.3
3.8
5.1
3.2
4.4
4.4
2.4
3.4
3.8
5.1
3.2
4.4
4.4
2.4
5.3
3.4
1,040
4,074
116
476
302
17
235
1,125
4,577
113
385
624
5
285
6,260
7,114
861
1,238
28
814
15
1,168
1,342
21
1,018
15
20,485
20,863
2,926
8,155
512
60
274
35,368
41,628
2,852
7,131
786
60
155
35,411
42,525
4,189
3,766
667
160
490
682
87
503
2,690
3,631
-
42
1,622
9,860
233
132
119
2,797
8,292
305
1,655
10
1,388
14,931
24,791
16,837
26
124
1,605
10,424
9
150
126
2,802
10,505
331
1,580
10
1,313
16,826
27,250
15,275
Telstra Corporation Limited and controlled entities | F3
F4 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 79
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 5 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 6 Thursday, August 11, 2022 7:54 AM
Statement of
Financial Position (continued)
Telstra Financial Report 2022
As at 30 June 2022
Telstra Group
Equity
Share capital
Reserves
Retained profits
Equity available to Telstra Entity shareholders
Non-controlling interests
Total equity
The notes following the financial statements form part of the financial report.
As at 30 June
2022
2021
Note
$m
$m
4.3
4.3
3,098
2,333
9,918
15,349
1,488
16,837
4,436
138
10,014
14,588
687
15,275
Statement of
Cash Flows
For the year ended 30 June 2022
Telstra Group
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax (GST))
Payments to suppliers and employees (inclusive of GST)
Government grants received for operating activities
Net cash generated from operations
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Capital expenditure (before investments)
Payments for shares in controlled entities (net of cash acquired)
Payments for equity accounted investments
Payments for other investments
Total capital expenditure (including investments)
Proceeds from sale of property, plant and equipment
Proceeds from sale and leaseback
Proceeds from sale of equity accounted and other investments
Distributions received from equity accounted investments
Receipts for the principal portion of finance lease receivables
Government grants received for investing activities
Interest received
Net cash used in investing activities
Operating cash flows less investing cash flows
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of the principal portion of lease liabilities
Share buy-back
Finance costs paid
Purchase of shares for employee share plans
Dividends/distributions paid to non-controlling interests
Dividend paid to equity holders of Telstra Entity
Proceeds from the sale of units in a controlled trust
Other
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
The notes following the financial statements form part of the financial report.
Proceeds from sale of businesses and shares in controlled entities (net of cash disposed)
Year ended 30 June
2022
2021
Note
$m
$m
2.4
2.6
3.2
3.2
4.3
4.2
6.1
23,876
26,727
(15,987)
(18,901)
179
8,068
167
7,993
(819)
(762)
7,249
7,231
(2,176)
(918)
(2,079)
(1,061)
(3,094)
(3,140)
(3,945)
(3,348)
(771)
(30)
(50)
155
12
4
156
93
92
24
14
(697)
(1,350)
(5)
(534)
(100)
2,883
-
(117)
1,125
32
(3,395)
(2,344)
3,854
4,887
1,470
2,308
(3,750)
(3,260)
(1,888)
(1,902)
(3,971)
(4,236)
(26)
(30)
(152)
154
291
218
147
20
120
36
18
(706)
-
(39)
(613)
(35)
-
11
651
499
(25)
2.6
1,040
1,125
80 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F5
F6 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 5 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 6 Thursday, August 11, 2022 7:54 AM
Statement of
Financial Position (continued)
Telstra Financial Report 2022
As at 30 June 2022
Telstra Group
Equity
Share capital
Reserves
Retained profits
Equity available to Telstra Entity shareholders
Non-controlling interests
Total equity
The notes following the financial statements form part of the financial report.
As at 30 June
2022
2021
Note
$m
$m
4.3
4.3
3,098
2,333
9,918
15,349
1,488
16,837
4,436
138
10,014
14,588
687
15,275
Statement of
Cash Flows
For the year ended 30 June 2022
Telstra Group
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax (GST))
Payments to suppliers and employees (inclusive of GST)
Government grants received for operating activities
Net cash generated from operations
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangible assets
Capital expenditure (before investments)
Payments for shares in controlled entities (net of cash acquired)
Payments for equity accounted investments
Payments for other investments
Total capital expenditure (including investments)
Proceeds from sale of property, plant and equipment
Proceeds from sale and leaseback
Proceeds from sale of businesses and shares in controlled entities (net of cash disposed)
Proceeds from sale of equity accounted and other investments
Distributions received from equity accounted investments
Receipts for the principal portion of finance lease receivables
Government grants received for investing activities
Interest received
Net cash used in investing activities
Operating cash flows less investing cash flows
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Payment of the principal portion of lease liabilities
Share buy-back
Purchase of shares for employee share plans
Finance costs paid
Dividends/distributions paid to non-controlling interests
Dividend paid to equity holders of Telstra Entity
Proceeds from the sale of units in a controlled trust
Other
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
The notes following the financial statements form part of the financial report.
Telstra Financial Report 2022
Year ended 30 June
2022
2021
Note
$m
$m
2.4
2.6
3.2
3.2
4.3
4.2
6.1
23,876
26,727
(15,987)
(18,901)
179
8,068
167
7,993
(819)
(762)
7,249
7,231
(2,176)
(918)
(2,079)
(1,061)
(3,094)
(3,140)
(771)
(30)
(50)
(26)
(30)
(152)
(3,945)
(3,348)
155
12
4
156
93
92
24
14
154
291
218
147
20
120
36
18
(3,395)
(2,344)
3,854
4,887
1,470
2,308
(3,750)
(3,260)
(697)
(1,350)
(5)
(534)
(100)
(706)
-
(39)
(613)
(35)
(1,888)
(1,902)
2,883
-
-
11
(3,971)
(4,236)
(117)
1,125
32
651
499
(25)
2.6
1,040
1,125
Telstra Corporation Limited and controlled entities | F5
F6 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 81
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 7 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 8 Thursday, August 11, 2022 7:54 AM
Statement of
Changes in Equity
For the year ended 30 June 2022
Telstra Group
Share
capital
Reserves Retained
Total
profits
Balance at 1 July 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividend
Transactions with non-controlling interests
Amounts repaid on share loans provided to
employees
Additional shares purchased
Share-based payments
Balance at 30 June 2021
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividend
Share buy-back (net of income tax)
Transactions with non-controlling interests
Additional shares purchased
Share-based payments
Balance at 30 June 2022
Note
4.3
6.3
4.3
$m
4,451
-
-
-
-
-
7
(39)
17
4,436
-
-
-
-
(1,350)
-
(5)
17
3,098
$m
5
-
133
133
-
-
-
-
-
138
-
111
111
-
-
2,084
-
-
2,333
$m
10,017
1,857
42
1,899
(1,902)
-
$m
14,473
1,857
175
2,032
(1,902)
-
-
7
-
-
10,014
1,688
104
1,792
(1,888)
-
-
-
-
9,918
(39)
17
14,588
1,688
215
1,903
(1,888)
(1,350)
2,084
(5)
17
15,349
The notes following the financial statements form part of the financial report.
Telstra Financial Report 2022
Notes to the financial statements
Non-
control-
ling
interests
$m
674
45
(1)
44
(35)
4
-
-
-
687
126
2
128
(127)
-
800
-
-
1,488
Total
equity
$m
15,147
1,902
174
2,076
(1,937)
4
7
(39)
17
15,275
1,814
217
2,031
(2,015)
(1,350)
2,884
(5)
17
16,837
Section 1. Basis of preparation
This section explains the basis of preparation of our
financial report, describes changes in our accounting
policies and provides a summary of our key accounting
estimates and judgements.
SECTION 1.
BASIS OF PREPARATION
1.1 Basis of preparation of the financial report
This financial report is a general purpose financial report, prepared
by a ‘for profit’ entity, in accordance with the requirements of the
accounting policies.
The financial statements of controlled entities are prepared for the
same reporting period as the Telstra Entity, using consistent
Australian Corporations Act 2001, Accounting Standards
1.3.1 Translation of financial reports of foreign operations that
applicable in Australia and other authoritative pronouncements of
have a functional currency other than the Australian dollar
the Australian Accounting Standards Board (AASB). It also
complies with International Financial Reporting Standards (IFRS)
and Interpretations published by the International Accounting
Standards Board (IASB).
method:
The financial reports of our foreign operations are translated into
Australian dollars (our presentation currency) using the following
The financial report is presented in Australian dollars and, unless
otherwise stated, all values have been rounded to the nearest
million dollars ($m) under the option available under the Australian
Securities and Investments Commission (ASIC) Corporations
(Rounding in Financial/Directors’ Report) Instrument 2016/191. The
functional currency of the Telstra Entity and its Australian
controlled entities is Australian dollars. The functional currency of
certain non-Australian controlled entities is not Australian dollars.
The results of these entities are translated into Australian dollars in
accordance with our accounting policy described in note 1.3.1.
The financial report is prepared on historical cost basis, except for
some categories of financial instruments, which are recorded at
Foreign currency amount
Exchange rate
Assets and liabilities
including goodwill and fair
value adjustments arising
on consolidation
The reporting date rate
Equity items
The initial investment date
rate
fair value.
presentation.
Where relevant, comparative information has been reclassified to
Income statements
ensure comparability with the current year disclosures and
Average rate (or the
transaction date rate for
significant identifiable
transactions)
1.2 Terminology used in our income statement
EBITDA reflects earnings before interest, income tax, depreciation
and amortisation. EBIT is a similar measure to EBITDA, but takes
into account depreciation and amortisation.
We believe EBITDA is useful as it is a widely recognised measure of
operating performance.
1.3 Principles of consolidation
Our financial report includes the consolidated assets and liabilities
of the Telstra Entity and its controlled entities as a whole as at the
end of the financial year and the consolidated results and cash
flows for the year.
An entity is considered to be a controlled entity where we are
exposed, or have rights, to variable returns from our involvement
with the entity and have the ability to affect those returns through
our power to direct the activities of the entity. We consolidate the
results of our controlled entities from the date on which we gain
control until the date we cease control.
The effects of intra-group transactions and balances are
eliminated from our consolidated financial statements.
Non-controlling interests in the results and equity of controlled
entities are shown separately in our income statement, statement
of comprehensive income, statement of financial position and
statement of changes in equity.
The exchange differences arising from the translation of financial
statements of foreign operations are recognised in other
comprehensive income.
1.4 Key accounting estimates and judgements
Preparation of the financial report requires management to make
estimates and judgements.
1.4.1 COVID-19 pandemic
Financial impacts of the COVID-19 pandemic have been reflected in
our financial performance for the financial year 2022 and
considered in our financial position as at 30 June 2022. To the
extent that ongoing impacts have been identified or could
reasonably be expected, we have made specific disclosures in the
following notes:
• note 3.1 regarding our judgements about impairment indicators
for testing of our ubiquitous telecommunications network
• note 3.3 regarding our judgements in the measurement of
expected credit losses of our financial assets
• note 4.5.5 regarding hedge accounting.
Telstra continues to have access to liquidity to support our short-
term liquidity requirements and protect us against unforeseen
events should the economic environment deteriorate.
82 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F7
F8 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 7 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 8 Thursday, August 11, 2022 7:54 AM
Telstra Financial Report 2022
Notes to the financial statements
Notes to the financial statements
Section 1. Basis of preparation
Section 1. Basis of preparation
This section explains the basis of preparation of our
This section explains the basis of preparation of our
financial report, describes changes in our accounting
financial report, describes changes in our accounting
policies and provides a summary of our key accounting
policies and provides a summary of our key accounting
estimates and judgements.
estimates and judgements.
BASIS OF PREPARATION
Statement of
Changes in Equity
For the year ended 30 June 2022
Telstra Group
Balance at 1 July 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividend
Transactions with non-controlling interests
Amounts repaid on share loans provided to
employees
Additional shares purchased
Share-based payments
Balance at 30 June 2021
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividend
Share buy-back (net of income tax)
Transactions with non-controlling interests
Additional shares purchased
Share-based payments
Balance at 30 June 2022
Share
capital
Reserves Retained
Total
profits
Total
equity
Non-
control-
ling
interests
Note
$m
4,451
-
-
-
-
-
7
-
-
-
-
-
(39)
17
4,436
4.3
6.3
4.3
(1,350)
(5)
17
$m
5
-
133
133
-
-
-
-
-
-
-
-
-
-
138
111
111
2,084
$m
10,017
1,857
42
1,899
(1,902)
10,014
1,688
104
1,792
(1,888)
-
-
-
-
-
-
-
-
$m
14,473
1,857
175
2,032
(1,902)
-
7
(39)
17
14,588
1,688
215
1,903
(1,888)
(1,350)
2,084
(5)
17
$m
674
45
(1)
44
(35)
4
-
-
-
-
-
-
687
126
2
128
(127)
800
$m
15,147
1,902
174
2,076
(1,937)
4
7
(39)
17
15,275
1,814
217
2,031
(2,015)
(1,350)
2,884
(5)
17
3,098
2,333
9,918
15,349
1,488
16,837
The notes following the financial statements form part of the financial report.
1.1 Basis of preparation of the financial report
SECTION 1.
This financial report is a general purpose financial report, prepared
by a ‘for profit’ entity, in accordance with the requirements of the
Australian Corporations Act 2001, Accounting Standards
applicable in Australia and other authoritative pronouncements of
the Australian Accounting Standards Board (AASB). It also
complies with International Financial Reporting Standards (IFRS)
and Interpretations published by the International Accounting
Standards Board (IASB).
The financial report is presented in Australian dollars and, unless
otherwise stated, all values have been rounded to the nearest
million dollars ($m) under the option available under the Australian
Securities and Investments Commission (ASIC) Corporations
(Rounding in Financial/Directors’ Report) Instrument 2016/191. The
functional currency of the Telstra Entity and its Australian
controlled entities is Australian dollars. The functional currency of
certain non-Australian controlled entities is not Australian dollars.
The results of these entities are translated into Australian dollars in
accordance with our accounting policy described in note 1.3.1.
The financial report is prepared on historical cost basis, except for
some categories of financial instruments, which are recorded at
fair value.
Where relevant, comparative information has been reclassified to
ensure comparability with the current year disclosures and
presentation.
1.2 Terminology used in our income statement
EBITDA reflects earnings before interest, income tax, depreciation
and amortisation. EBIT is a similar measure to EBITDA, but takes
into account depreciation and amortisation.
We believe EBITDA is useful as it is a widely recognised measure of
operating performance.
1.3 Principles of consolidation
Our financial report includes the consolidated assets and liabilities
of the Telstra Entity and its controlled entities as a whole as at the
end of the financial year and the consolidated results and cash
flows for the year.
An entity is considered to be a controlled entity where we are
exposed, or have rights, to variable returns from our involvement
with the entity and have the ability to affect those returns through
our power to direct the activities of the entity. We consolidate the
results of our controlled entities from the date on which we gain
control until the date we cease control.
The effects of intra-group transactions and balances are
eliminated from our consolidated financial statements.
Non-controlling interests in the results and equity of controlled
entities are shown separately in our income statement, statement
of comprehensive income, statement of financial position and
statement of changes in equity.
The financial statements of controlled entities are prepared for the
same reporting period as the Telstra Entity, using consistent
accounting policies.
1.3.1 Translation of financial reports of foreign operations that
have a functional currency other than the Australian dollar
The financial reports of our foreign operations are translated into
Australian dollars (our presentation currency) using the following
method:
Foreign currency amount
Exchange rate
Assets and liabilities
including goodwill and fair
value adjustments arising
on consolidation
The reporting date rate
Equity items
The initial investment date
rate
Income statements
Average rate (or the
transaction date rate for
significant identifiable
transactions)
The exchange differences arising from the translation of financial
statements of foreign operations are recognised in other
comprehensive income.
1.4 Key accounting estimates and judgements
Preparation of the financial report requires management to make
estimates and judgements.
1.4.1 COVID-19 pandemic
Financial impacts of the COVID-19 pandemic have been reflected in
our financial performance for the financial year 2022 and
considered in our financial position as at 30 June 2022. To the
extent that ongoing impacts have been identified or could
reasonably be expected, we have made specific disclosures in the
following notes:
• note 3.1 regarding our judgements about impairment indicators
for testing of our ubiquitous telecommunications network
• note 3.3 regarding our judgements in the measurement of
expected credit losses of our financial assets
• note 4.5.5 regarding hedge accounting.
Telstra continues to have access to liquidity to support our short-
term liquidity requirements and protect us against unforeseen
events should the economic environment deteriorate.
Telstra Corporation Limited and controlled entities | F7
F8 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 83
Telstra Financial Report 2022 2022.Financial Report.book Page 9 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 10 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Section 1. Basis of preparation (continued)
1.4 Key accounting estimates and judgements (continued)
1.5.1 Changes in accounting policies
1.4.2 Summary of key management judgements
The accounting policies and significant management judgements
and estimates used, and any changes thereto, are set out in the
relevant notes. The key accounting estimates and judgements are
included in the following notes:
Key accounting estimates and judgements
Key accounting estimates and judgements
Assessment of a significant financing component in
Assessment of a significant financing component
mass market contracts
in mass market contracts
Determining standalone selling prices
Determining standalone selling prices
Assessment of a significant financing component in
Assessment of a significant financing component
Indefeasible Right of Use (IRU)
in Indefeasible Right of Use (IRU)
Impact of nbn Infrastructure Services Agreement
Impact of nbn Infrastructure Services Agreement
(ISA) on revenue from customer contracts and other
(ISA) on revenue from customer contracts and
income
other income
Assessment of a significant financing component in
Assessment of a significant financing component
nbn DAs
in nbn DAs
Unrecognised deferred tax assets
Unrecognised deferred tax assets
Capitalisation of development costs
Capitalisation of development costs
Useful lives and residual values of tangible and
Useful lives and residual values of tangible and
intangible assets
intangible assets
Impairment assessment of our ubiquitous
Impairment assessment of our ubiquitous
telecommunications network
telecommunications network
Determining CGUs and their recoverable amount
Determining CGUs and their recoverable amount for
for impairment assessment of goodwill
impairment assessment of goodwill
Determining lease term for property leases
Determining lease term for property leases
Determining incremental borrowing rates for
Determining incremental borrowing rates for
property leases
property leases
Estimating expected credit losses
Estimating expected credit losses
Amortisation period of deferred contract costs
Amortisation period of deferred contract costs
Long service leave provision
Long service leave provision
Defined benefit plan
Defined benefit plan
Determining non-controlling interests in Power
Determining non-controlling interests in Power
Health
Health
Joint control of Telstra Ventures Fund II, L.P.
Joint control of Telstra Ventures Fund II, L.P.
Significant influence over Telstra Super Pty Ltd
Significant influence over Telstra Super Pty Ltd
Significant influence over Telstra Ventures Fund III,
Significant influence over Telstra Ventures Fund III,
L.P.
L.P.
Note Page
2.2
Note Page
94
2.2
F19
95
F20
95
F20
2.2
2.2
2.2
2.2
2.2
2.2
97
F22
2.2
2.2
98
F23
2.4
2.4
3.1
3.1
103
F28
107
F32
3.1
3.1
108
F33
3.1
3.1
109
F34
3.1
3.1
F35
110
3.2
3.2
F37
112
3.2
3.2
F39
114
3.3
3.3
3.6
3.6
5.1
5.1
5.3
5.3
F43
118
F46
121
F65
140
F70
145
6.1
6.1
F72
147
6.4
6.4
6.4
6.4
F80
155
F80
155
6.4
6.4
F80
155
A number of new or amended accounting standards became
effective in the current reporting period but none of those had a
material impact on our accounting policies.
AASB 2020-8 ‘Amendments to Australian Accounting Standards -
Interest Rate Benchmark Reform - Phase 2’ was issued in
September 2020 and became effective for Telstra from 1 July 2021.
These amendments provide certain relief on rules relating to
discontinued hedge relationships and in accounting for
modification of contractual cash flows as a result of the reform.
As at 30 June 2022 we held some floating rate derivative
instruments hedging term debt issuances and bank facilities which
have a reference to either BBSW, BBSY or EURIBOR. Unlike LIBOR,
no decisions have been made for the replacement of these
benchmark rates which continue to remain in place. We also have
some interest rate swaps and short-term commercial paper
issuance linked to the 3M USLIBOR and 6M USLIBOR benchmark
which will remain in place until 30 June 2023. We continue to
monitor the developments of international regulations to ensure
preparedness for any changes relating to Interest Rate Benchmark
Reform. None of these amendments impacted Telstra’s financial
results for the financial year 2022.
1.5.2 New accounting standards to be applied in future reporting
periods
We have not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective and we do
not expect any of them to have a material impact on our financial
results upon adoption.
1.5.3 Transactions and balances in foreign currency
Foreign currency transactions are translated into the relevant
functional currency at the spot exchange rate at the transaction
date. At the reporting date, amounts receivable or payable
denominated in foreign currencies are translated into the relevant
functional currency at market exchange rates as at the reporting
date. Any currency translation gains and losses that arise are
included in our income statement.
Non-monetary items denominated in foreign currency that are
measured at fair value (i.e. certain equity instruments not held for
trading) are translated using the exchange rates at the date when
the fair value was determined. Differences arising from the
translation are reported as part of the fair value gain or loss in line
with the recognition of the changes in the fair value of the non-
monetary item.
1.5 Other accounting policies
Relevant accounting policies are included in the respective notes to
the financial statements. Changes in the accounting policies and
impacts from the accounting standards to be applied in future
reporting periods, as well as other accounting policies not
disclosed elsewhere in the financial report are detailed below.
84 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F9
F10 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued)
Section 2. Our performance
This section explains our results, performance of our segments,
which are reported on the same basis as our internal
management structure, and our earnings per share for the
period. It also provides disaggregated revenue, details of
selected income and expense items, information about taxation
and a reconciliation of our profit to net cash generated from
operating activities.
SECTION 2. OUR PERFORMANCE
2.1 Segment information
Segment information is based on the information that
management uses to make decisions about operating matters
and allows users to review operations of the Group through
the eyes of management.
Our operating segments represent the functions which offer
our main products and services in the market, however not all
of our operating segments meet the criteria to be disclosed
as reportable segments.
2.1.1 Operating segments
We report segment information on the same basis as our internal
management reporting structure at the reporting date. Segment
comparatives reflect any organisational changes that have
occurred since the end of the prior financial year to present a like-
for-like view.
Segment
Operation
During the financial year 2022, there were no changes to our
operating segments despite the legal transfer of our towers
business to a separate entity (refer to note 6.1.2 for further details
about the transfer of the towers business). This is because the
internal restructure did not change business functions’
accountabilities, the way we assess performance or allocate
resources, and therefore did not change our internal management
reporting structure.
There were no organisational changes to our operating segments,
however we have changed the way we measure our segment results
as detailed in the sections following the table describing our
segments.
In our segment results, the ‘All Other’ category includes functions
that do not qualify as operating segments as well as the operating
segments which are not material to be reported individually.
We have four reportable segments as follows:
Telstra Consumer and
Business customers in Australia using mobile and fixed network technologies
Small Business (TC&SB)
• operates call centres, retail stores, a dealership network, digital channels, distribution systems and
• provides telecommunication, media and technology products and services to Consumer and Small
Telstra Plus customer loyalty program in Australia
Telstra Enterprise (TE)
globally
• provides telecommunication services, advanced technology solutions, network capacity and
management, unified communications, cloud, security, industry solutions, integrated and
monitoring services to government and large enterprise and business customers in Australia and
• provides wholesale services outside of Australia, including both voice and data
• manages Telstra’s networks outside Australia in conjunction with Networks and IT and Telstra
InfraCo segments
Networks and IT (N&IT)
• supports the other segments and their respective revenue generating activities by maintaining high
level of reliability and security of our network platforms and data
• builds and manages our digital platforms underpinning our customer digital experience
• builds and manages software and provides information technology services to all internal functions
Telstra InfraCo
pits and pipes and fibre network
• provides telecommunication products and services delivered over Telstra networks to other carriers,
carriage service providers and internet service providers
• provides other Telstra functions and wholesale customers with access to network infrastructure
within Telstra InfraCo’s asset accountabilities
• operates the fixed passive network infrastructure including data centres, exchanges, poles, ducts,
• designs and constructs fibre, exchanges and other infrastructure
• provides nbn co with long-term access to certain components of our infrastructure under the
Infrastructure Services Agreement
• operates the passive and physical mobile tower assets owned or operated by the Amplitel business
Notes to the financial statements (continued) Notes to the financial statements (continued)
Telstra Financial Report 2022
Section 1. Basis of preparation (continued)
2.2
F22
some interest rate swaps and short-term commercial paper
1.4 Key accounting estimates and judgements (continued)
1.5.1 Changes in accounting policies
1.4.2 Summary of key management judgements
The accounting policies and significant management judgements
and estimates used, and any changes thereto, are set out in the
A number of new or amended accounting standards became
effective in the current reporting period but none of those had a
material impact on our accounting policies.
relevant notes. The key accounting estimates and judgements are
AASB 2020-8 ‘Amendments to Australian Accounting Standards -
included in the following notes:
Interest Rate Benchmark Reform - Phase 2’ was issued in
September 2020 and became effective for Telstra from 1 July 2021.
These amendments provide certain relief on rules relating to
discontinued hedge relationships and in accounting for
modification of contractual cash flows as a result of the reform.
As at 30 June 2022 we held some floating rate derivative
instruments hedging term debt issuances and bank facilities which
have a reference to either BBSW, BBSY or EURIBOR. Unlike LIBOR,
no decisions have been made for the replacement of these
benchmark rates which continue to remain in place. We also have
issuance linked to the 3M USLIBOR and 6M USLIBOR benchmark
which will remain in place until 30 June 2023. We continue to
monitor the developments of international regulations to ensure
preparedness for any changes relating to Interest Rate Benchmark
Reform. None of these amendments impacted Telstra’s financial
results for the financial year 2022.
1.5.2 New accounting standards to be applied in future reporting
We have not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective and we do
not expect any of them to have a material impact on our financial
results upon adoption.
1.5.3 Transactions and balances in foreign currency
Foreign currency transactions are translated into the relevant
functional currency at the spot exchange rate at the transaction
date. At the reporting date, amounts receivable or payable
denominated in foreign currencies are translated into the relevant
functional currency at market exchange rates as at the reporting
date. Any currency translation gains and losses that arise are
included in our income statement.
Non-monetary items denominated in foreign currency that are
measured at fair value (i.e. certain equity instruments not held for
trading) are translated using the exchange rates at the date when
the fair value was determined. Differences arising from the
translation are reported as part of the fair value gain or loss in line
with the recognition of the changes in the fair value of the non-
monetary item.
periods
3.1
F34
Assessment of a significant financing component
in mass market contracts
Determining standalone selling prices
Assessment of a significant financing component
in Indefeasible Right of Use (IRU)
Impact of nbn Infrastructure Services Agreement
(ISA) on revenue from customer contracts and
Assessment of a significant financing component
other income
in nbn DAs
Unrecognised deferred tax assets
Capitalisation of development costs
Useful lives and residual values of tangible and
intangible assets
Impairment assessment of our ubiquitous
telecommunications network
Determining CGUs and their recoverable amount
for impairment assessment of goodwill
Determining lease term for property leases
Determining incremental borrowing rates for
property leases
Estimating expected credit losses
Amortisation period of deferred contract costs
Long service leave provision
Defined benefit plan
Determining non-controlling interests in Power
Health
L.P.
Joint control of Telstra Ventures Fund II, L.P.
Significant influence over Telstra Super Pty Ltd
Significant influence over Telstra Ventures Fund III,
2.2
2.2
2.2
2.2
2.4
3.1
3.1
3.1
3.2
3.2
3.3
3.6
5.1
5.3
6.1
6.4
6.4
6.4
F19
F20
F20
F23
F28
F32
F33
F35
F37
F39
F43
F46
F65
F70
F72
F80
F80
F80
1.5 Other accounting policies
Relevant accounting policies are included in the respective notes to
the financial statements. Changes in the accounting policies and
impacts from the accounting standards to be applied in future
reporting periods, as well as other accounting policies not
disclosed elsewhere in the financial report are detailed below.
2022.Financial Report.book Page 9 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 10 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 2. Our performance
Section 2. Our performance
This section explains our results, performance of our segments,
which are reported on the same basis as our internal
This section explains our results, performance of our segments,
management structure, and our earnings per share for the
which are reported on the same basis as our internal management
period. It also provides disaggregated revenue, details of
structure, and our earnings per share for the period. It also provides
selected income and expense items, information about taxation
disaggregated revenue, details of selected income and expense
and a reconciliation of our profit to net cash generated from
items, information about taxation and a reconciliation of our profit
operating activities.
to net cash generated from operating activities.
Key accounting estimates and judgements
Note Page
SECTION 2. OUR PERFORMANCE
2.1 Segment information
Segment information is based on the information that
management uses to make decisions about operating matters
and allows users to review operations of the Group through
the eyes of management.
Our operating segments represent the functions which offer
our main products and services in the market, however not all
of our operating segments meet the criteria to be disclosed
as reportable segments.
2.1.1 Operating segments
We report segment information on the same basis as our internal
management reporting structure at the reporting date. Segment
comparatives reflect any organisational changes that have
occurred since the end of the prior financial year to present a like-
for-like view.
Segment
Operation
During the financial year 2022, there were no changes to our
operating segments despite the legal transfer of our towers
business to a separate entity (refer to note 6.1.2 for further details
about the transfer of the towers business). This is because the
internal restructure did not change business functions’
accountabilities, the way we assess performance or allocate
resources, and therefore did not change our internal management
reporting structure.
There were no organisational changes to our operating segments,
however we have changed the way we measure our segment results
as detailed in the sections following the table describing our
segments.
In our segment results, the ‘All Other’ category includes functions
that do not qualify as operating segments as well as the operating
segments which are not material to be reported individually.
We have four reportable segments as follows:
Telstra Consumer and
Small Business (TC&SB)
• provides telecommunication, media and technology products and services to Consumer and Small
Business customers in Australia using mobile and fixed network technologies
• operates call centres, retail stores, a dealership network, digital channels, distribution systems and
Telstra Plus customer loyalty program in Australia
Telstra Enterprise (TE)
• provides telecommunication services, advanced technology solutions, network capacity and
management, unified communications, cloud, security, industry solutions, integrated and
monitoring services to government and large enterprise and business customers in Australia and
globally
• provides wholesale services outside of Australia, including both voice and data
• manages Telstra’s networks outside Australia in conjunction with Networks and IT and Telstra
InfraCo segments
Networks and IT (N&IT)
• supports the other segments and their respective revenue generating activities by maintaining high
level of reliability and security of our network platforms and data
• builds and manages our digital platforms underpinning our customer digital experience
• builds and manages software and provides information technology services to all internal functions
Telstra InfraCo
• provides telecommunication products and services delivered over Telstra networks to other carriers,
carriage service providers and internet service providers
• provides other Telstra functions and wholesale customers with access to network infrastructure
within Telstra InfraCo’s asset accountabilities
• operates the fixed passive network infrastructure including data centres, exchanges, poles, ducts,
pits and pipes and fibre network
• designs and constructs fibre, exchanges and other infrastructure
• provides nbn co with long-term access to certain components of our infrastructure under the
Infrastructure Services Agreement
• operates the passive and physical mobile tower assets owned or operated by the Amplitel business
Telstra Corporation Limited and controlled entities | F9
F10 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 85
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 11 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 12 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.1 Segment information (continued)
2.1.1 Operating segments (continued)
Consistent with information presented for internal management
reporting, the result of each segment is measured based on its
EBITDA contribution, which differs from our reported EBITDA.
From 1 July 2021, we have changed the way we measure results of
individual segments. The table below details how we determine
segment income and EBITDA contribution of each segment.
Nature of
transaction
Description
Measurement basis
Transactions with
external parties
Any transactions between any of the
Telstra Group entities with:
Accounted for in accordance with the
Australian Accounting Standards.
• an external counterparty, e.g.
supplier or customer
• any related party which is not
controlled by the Telstra Group, i.e. it
is not eliminated on consolidation.
Transactions with
other segments
Any transactions between segments
arising from:
• inter-company legal agreements
between entities controlled by the
Telstra Group
• internal arrangements for notional
charges not governed by legal
agreements.
The notional internal charges are
determined based on a variety of
internally and externally observable
inputs to reflect an arm's length basis.
In the comparative period, the
transactions related to the
performance of our infrastructure
assets were arising from the notional
internal arrangements, and only
Telstra InfraCo segment had reported
those transactions in their segment
results (i.e. the counterparty segments
to those arrangements did not report
the effects of those transactions). To
provide a like-for-like view, we have
restated the comparative period to
reflect notional internal charges in all
relevant segments.
Some
transactions
which are
managed centrally
or by one segment
Certain items and transactions are
managed centrally or by one of the
segments even if they relate to results
of multiple segments.
We no longer adjust EBITDA
contribution for the depreciation
expense related to the right-of-use
assets for mobile handsets arising
from leases which we subleased to
our TC&SB customers because any
remaining leases are immaterial.
Different measurement bases apply to
our transactions between segments
depending on their nature:
• transactions related to the
performance of our infrastructure
assets are measured based on a
'management view', i.e. all charges
earned/incurred are recognised as
either income or expenses. Such
recognition may differ from the
requirements of the Australian
Accounting Standards in a number
of areas, for example lease
accounting.
• any transactions other than those
described above are accounted for
in accordance with the Australian
Accounting Standards.
Transactions within the same
segment are eliminated within that
segment’s results.
Any transactions with other segments
are eliminated on consolidation,
therefore the total Telstra Group
reported income and total reported
EBITDA reconcile to the statutory
financial statements.
Accounted for in accordance with the
Australian Accounting Standards.
Impact on
segment results
The effects of all
transactions with
external parties are
included in the
segment results.
The effects of the
transactions with
other segments are
included in the
segment results
and - depending on
the nature of the
transaction - either
measured based on
the management
view or as
accounted under
the Australian
Accounting
Standards.
The effects of these
transactions are
included in the
segment results as
detailed in the table
on the following
page.
2.1 Segment information (continued)
2.1.1 Operating segments (continued)
The table below provides further details how some transactions are
allocated and managed and, as a result, how they are reflected in
our segment results.
TC&SB
TE
N&IT
All Other
Telstra InfraCo
n/a
Elimination of
inter-company
transactions
EBITDA
contribution
includes inter-
segment
expenses
recharged by TE
EBITDA
contribution
includes inter-
segment revenue
(earned from
TC&SB and
Telstra InfraCo)
and expenses
(recharged by
Telstra InfraCo)
Income from nbn
EBITDA contribution does not include
n/a
disconnection
these transactions
EBITDA
contribution
includes these
transactions
Network service
EBITDA contribution does not include
EBITDA contribution includes network
EBITDA
delivery
the network service delivery expense for
service delivery expenses related to
expenses other
TC&SB and TE customers
TC&SB, TE and Telstra InfraCo
customers
EBITDA
contribution
includes inter-
segment revenue
(earned from TE)
and expenses
(recharged by TE)
EBITDA
contribution
does not include
these
transactions
contribution
does not include
the network
service delivery
expense for
customers
serviced by
Telstra InfraCo’s
passive
infrastructure
EBITDA
contribution
does not include
those expenses
Nature of
transaction
Inter-company
transactions for
international
connectivity
disclosed as
revenue from
external
customers and
external
expenses
fees and
associated
expenses
than those
supporting
passive
infrastructure
Telstra Entity
redundancy and
restructuring
expenses for all
segments
EBITDA contribution does not include those expenses
EBITDA
contribution
includes those
expenses for the
Telstra Entity
86 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F11
F12 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 11 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 12 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.1 Segment information (continued)
2.1.1 Operating segments (continued)
Consistent with information presented for internal management
reporting, the result of each segment is measured based on its
EBITDA contribution, which differs from our reported EBITDA.
From 1 July 2021, we have changed the way we measure results of
individual segments. The table below details how we determine
segment income and EBITDA contribution of each segment.
Nature of
transaction
Description
Measurement basis
Transactions with
Any transactions between any of the
Accounted for in accordance with the
external parties
Telstra Group entities with:
Australian Accounting Standards.
• an external counterparty, e.g.
We no longer adjust EBITDA
supplier or customer
• any related party which is not
contribution for the depreciation
expense related to the right-of-use
controlled by the Telstra Group, i.e. it
assets for mobile handsets arising
is not eliminated on consolidation.
from leases which we subleased to
our TC&SB customers because any
remaining leases are immaterial.
Transactions with
other segments
arising from:
Any transactions between segments
Different measurement bases apply to
our transactions between segments
depending on their nature:
• inter-company legal agreements
between entities controlled by the
• transactions related to the
Telstra Group
• internal arrangements for notional
charges not governed by legal
agreements.
The notional internal charges are
determined based on a variety of
internally and externally observable
inputs to reflect an arm's length basis.
In the comparative period, the
transactions related to the
performance of our infrastructure
assets were arising from the notional
internal arrangements, and only
Telstra InfraCo segment had reported
those transactions in their segment
results (i.e. the counterparty segments
to those arrangements did not report
the effects of those transactions). To
provide a like-for-like view, we have
restated the comparative period to
relevant segments.
performance of our infrastructure
assets are measured based on a
'management view', i.e. all charges
earned/incurred are recognised as
either income or expenses. Such
recognition may differ from the
requirements of the Australian
Accounting Standards in a number
of areas, for example lease
accounting.
• any transactions other than those
described above are accounted for
in accordance with the Australian
Accounting Standards.
Transactions within the same
segment are eliminated within that
segment’s results.
Any transactions with other segments
are eliminated on consolidation,
therefore the total Telstra Group
EBITDA reconcile to the statutory
financial statements.
reflect notional internal charges in all
reported income and total reported
Impact on
segment results
The effects of all
transactions with
external parties are
included in the
segment results.
The effects of the
transactions with
other segments are
included in the
segment results
and - depending on
the nature of the
transaction - either
measured based on
the management
view or as
accounted under
the Australian
Accounting
Standards.
Some
transactions
which are
managed centrally
or by one segment
Certain items and transactions are
managed centrally or by one of the
segments even if they relate to results
of multiple segments.
Accounted for in accordance with the
The effects of these
Australian Accounting Standards.
transactions are
included in the
segment results as
detailed in the table
on the following
page.
2.1 Segment information (continued)
2.1.1 Operating segments (continued)
The table below provides further details how some transactions are
allocated and managed and, as a result, how they are reflected in
our segment results.
Nature of
transaction
Inter-company
transactions for
international
connectivity
disclosed as
revenue from
external
customers and
external
expenses
Income from nbn
disconnection
fees and
associated
expenses
Network service
delivery
expenses other
than those
supporting
passive
infrastructure
Telstra Entity
redundancy and
restructuring
expenses for all
segments
TC&SB
TE
N&IT
All Other
Telstra InfraCo
n/a
Elimination of
inter-company
transactions
EBITDA
contribution
includes inter-
segment
expenses
recharged by TE
EBITDA
contribution
includes inter-
segment revenue
(earned from
TC&SB and
Telstra InfraCo)
and expenses
(recharged by
Telstra InfraCo)
EBITDA contribution does not include
these transactions
n/a
EBITDA
contribution
includes these
transactions
EBITDA contribution does not include
the network service delivery expense for
TC&SB and TE customers
EBITDA contribution includes network
service delivery expenses related to
TC&SB, TE and Telstra InfraCo
customers
EBITDA contribution does not include those expenses
EBITDA
contribution
includes those
expenses for the
Telstra Entity
EBITDA
contribution
includes inter-
segment revenue
(earned from TE)
and expenses
(recharged by TE)
EBITDA
contribution
does not include
these
transactions
EBITDA
contribution
does not include
the network
service delivery
expense for
customers
serviced by
Telstra InfraCo’s
passive
infrastructure
EBITDA
contribution
does not include
those expenses
Telstra Corporation Limited and controlled entities | F11
F12 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 87
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 13 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 14 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.1 Segment information (continued)
2.1.2 Segment results
Table A details our segment results and a reconciliation of EBITDA
contribution to the Telstra Group’s EBITDA, EBIT and profit before
income tax expense.
Table A
TC&SB
TE
N&IT
Telstra Group
Telstra
InfraCo
All Other Subtotal Elimina-
Total
tions
$m
$m
$m
$m
$m
$m
$m
Year ended 30 June 2021
Table A (continued)
TC&SB
TE
N&IT
All Other Subtotal Elimina-
Total
$m
$m
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
7,449
4,486
-
-
-
-
-
43
-
11,978
1,675
-
3,729
-
-
-
1,705
-
23
7,132
11,978
7,132
-
(1)
-
-
-
-
-
-
-
-
248
248
(216)
32
-
332
-
-
2,456
368
477
-
-
5
3,638
(1,284)
2,354
-
14
-
-
-
-
-
(204)
335
479
624
(75)
549
(30)
5,134
3,051
(2,255)
2,480
(1,154)
7,256
Mobility
Fixed - C&SB
Fixed - Enterprise
InfraCo Fixed
Amplitel
Fixed - Active Wholesale
International
One-off nbn DA and connection
Other
Total management reported
income
Transactions between segments
Total external income
Share of net loss from equity
accounted entities
EBITDA contribution
Depreciation and amortisation
Telstra Group EBIT
Net finance costs
Telstra Group profit before
income tax expense
(1,575)
22,045
(31)
1,575
-
-
22,045
-
-
(31)
7,256
(4,358)
2,898
(417)
2,481
9,470
4,486
3,729
2,456
368
477
1,501
378
755
-
-
-
(976)
(308)
-
-
-
(291)
9,470
4,486
3,729
1,480
60
477
1,501
378
464
23,620
(1,575)
22,045
Total external income
12,330
6,985
Telstra
InfraCo
287
2,569
338
591
-
-
-
-
5
-
-
-
-
-
-
-
-
-
244
244
(211)
33
-
7,497
4,736
34
63
-
-
-
-
-
-
-
1,513
3,724
1,715
33
-
-
-
-
-
-
(1)
$m
13
-
-
-
-
-
(219)
1,016
485
9,310
4,736
3,724
2,569
338
591
1,496
1,050
830
12,330
6,985
3,790
1,295
24,644
(1,512)
23,132
(1,227)
2,563
(74)
1,221
(1,512)
23,132
(23)
(24)
4,830
2,921
(2,336)
2,701
(672)
7,444
2.1 Segment information (continued)
2.1.2 Segment results (continued)
Telstra Group
Mobility
Fixed - C&SB
Fixed - Enterprise
InfraCo Fixed
Amplitel
Fixed - Active Wholesale
International
One-off nbn DA and connection
Other
income
Total management reported
Transactions between segments
Share of net loss from equity
accounted entities
EBITDA contribution
Depreciation of mobile handsets
right-of-use assets
Telstra Group EBITDA
Depreciation and amortisation
Telstra Group EBIT
Net finance costs
Telstra Group profit before
income tax expense
The effects of the following inter-company transactions with other
Information about our non-current assets by geographical market
segments have been reported as external income and expenses in
is presented in Table B.
the respective segment EBITDA contribution:
• revenue from external customers in the TE segment includes
Table B
$204 million (2021: $219 million) of inter-segment revenue
treated as external expenses in the TC&SB and Telstra InfraCo
segments, which is eliminated in the ‘All Other’ category
• EBITDA contribution in the TE segment reflects $5 million (2021:
$7 million) of inter-segment expenses treated as external
revenue in the Telstra InfraCo and eliminated in the ‘All Other’
assets
Telstra Group
category.
Carrying amount of non-current
Located in Australia
Located offshore
In the comparative period, the effects of the following transactions
with other segments arising from notional internal charges have
been restated to provide a like-for-like view:
• additional $211 million internal revenue and $1,203 million
internal expenses have been included in the N&IT segment
• additional $74 million internal revenue has been included in the
'All Other' category.
During the financial year 2021, in the 'All Other' category, we
recognised $1 million gain, net of $34 million impairment loss, from
the disposal of our investment in Project Sunshine I Pty Ltd
(Sensis).
Our geographical operations are split between our Australian and
offshore operations. No individual geographical area of our offshore
operations forms a significant part of our operations.
The carrying amount of our segment non-current assets excludes
financial assets, inventories, defined benefit assets, deferred
contract costs and deferred tax assets.
tions
(949)
(278)
(285)
1,512
-
-
-
-
-
-
-
-
-
9,310
4,736
3,724
1,620
60
591
1,496
1,050
545
-
23,132
(24)
7,444
194
7,638
(4,646)
2,992
(551)
2,441
As at 30 June
2022
2021
$m
$m
30,630
1,750
32,380
30,128
1,736
31,864
88 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F13
F14 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2.1 Segment information (continued)
2.1.2 Segment results
Table A details our segment results and a reconciliation of EBITDA
contribution to the Telstra Group’s EBITDA, EBIT and profit before
income tax expense.
7,449
4,486
-
-
-
-
-
-
-
1,675
3,729
1,705
23
-
-
-
-
-
(1)
One-off nbn DA and connection
43
Total external income
11,978
7,132
Telstra Group
Mobility
Fixed - C&SB
Fixed - Enterprise
InfraCo Fixed
Amplitel
Fixed - Active Wholesale
International
Other
income
Total management reported
Transactions between segments
Share of net loss from equity
accounted entities
EBITDA contribution
Depreciation and amortisation
Telstra Group EBIT
Net finance costs
Telstra Group profit before
income tax expense
$m
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
Telstra
InfraCo
332
2,456
368
477
-
-
-
-
5
-
3,638
(1,284)
2,354
-
-
-
-
-
-
-
-
248
248
(216)
32
-
$m
14
-
-
-
-
-
335
479
624
(75)
549
(30)
9,470
4,486
3,729
2,456
368
477
378
755
(1,575)
22,045
(31)
(204)
1,501
tions
(976)
(308)
(291)
1,575
-
-
-
-
-
-
-
-
-
9,470
4,486
3,729
1,480
60
477
1,501
378
464
-
22,045
(31)
7,256
(4,358)
2,898
(417)
2,481
11,978
7,132
23,620
(1,575)
22,045
5,134
3,051
(2,255)
2,480
(1,154)
7,256
2022.Financial Report.book Page 13 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 14 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
Table A
TC&SB
TE
N&IT
All Other Subtotal Elimina-
Total
$m
$m
$m
$m
$m
$m
$m
$m
Year ended 30 June 2021
2.1 Segment information (continued)
2.1.2 Segment results (continued)
Table A (continued)
TC&SB
TE
N&IT
Telstra Group
Telstra
InfraCo
All Other Subtotal Elimina-
Total
tions
Mobility
Fixed - C&SB
Fixed - Enterprise
InfraCo Fixed
Amplitel
Fixed - Active Wholesale
International
One-off nbn DA and connection
Other
Total management reported
income
Transactions between segments
Total external income
Share of net loss from equity
accounted entities
EBITDA contribution
Depreciation of mobile handsets
right-of-use assets
Telstra Group EBITDA
Depreciation and amortisation
Telstra Group EBIT
Net finance costs
Telstra Group profit before
income tax expense
7,497
4,736
-
-
-
-
-
34
63
12,330
-
12,330
1,513
-
3,724
-
-
-
1,715
-
33
6,985
-
6,985
-
(1)
-
-
-
-
-
-
-
-
244
244
(211)
33
-
287
-
-
2,569
338
591
-
-
5
3,790
13
-
-
-
-
-
(219)
1,016
485
9,310
4,736
3,724
2,569
338
591
1,496
1,050
830
-
-
-
(949)
(278)
-
-
-
(285)
9,310
4,736
3,724
1,620
60
591
1,496
1,050
545
1,295
24,644
(1,512)
23,132
(1,227)
2,563
(74)
1,221
(1,512)
23,132
1,512
-
-
23,132
-
(23)
(24)
4,830
2,921
(2,336)
2,701
(672)
7,444
-
-
(24)
7,444
194
7,638
(4,646)
2,992
(551)
2,441
The effects of the following inter-company transactions with other
segments have been reported as external income and expenses in
the respective segment EBITDA contribution:
• revenue from external customers in the TE segment includes
$204 million (2021: $219 million) of inter-segment revenue
treated as external expenses in the TC&SB and Telstra InfraCo
segments, which is eliminated in the ‘All Other’ category
• EBITDA contribution in the TE segment reflects $5 million (2021:
$7 million) of inter-segment expenses treated as external
revenue in the Telstra InfraCo and eliminated in the ‘All Other’
category.
In the comparative period, the effects of the following transactions
with other segments arising from notional internal charges have
been restated to provide a like-for-like view:
• additional $211 million internal revenue and $1,203 million
internal expenses have been included in the N&IT segment
• additional $74 million internal revenue has been included in the
'All Other' category.
During the financial year 2021, in the 'All Other' category, we
recognised $1 million gain, net of $34 million impairment loss, from
the disposal of our investment in Project Sunshine I Pty Ltd
(Sensis).
Information about our non-current assets by geographical market
is presented in Table B.
Table B
Telstra Group
Carrying amount of non-current
assets
Located in Australia
Located offshore
As at 30 June
2022
2021
$m
$m
30,630
1,750
32,380
30,128
1,736
31,864
Our geographical operations are split between our Australian and
offshore operations. No individual geographical area of our offshore
operations forms a significant part of our operations.
The carrying amount of our segment non-current assets excludes
financial assets, inventories, defined benefit assets, deferred
contract costs and deferred tax assets.
Telstra Corporation Limited and controlled entities | F13
F14 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 89
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 15 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 16 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
Year ended 30 June
2022
2021
$m
20,920
357
21,277
158
7
-
329
223
51
768
22,045
102
8
110
22,155
$m
20,998
560
21,558
66
107
102
1,022
216
61
1,574
23,132
93
10
103
23,235
2.2 Income (continued)
2.2.1 Disaggregated revenue
Table B presents the disaggregated revenue from contracts with
customers based on the nature and the timing of transfer of goods
and services.
We recognise revenue from contracts with customers when the
control of goods or services has been transferred to the customer.
Revenue from sale of services is recognised over time, whereas
revenue from sale of goods is recognised at a point in time.
Other revenue from contracts with customers includes licensing
revenue (recognised either at a point in time or over time) and
agency revenue (recognised over time). Refer to note 2.2.2 for
further details about our contracts with customers.
Table B
TC&SB
TE
N&IT
Telstra
All Other
Total
Telstra Group
Revenue from contracts with customers
Sale of services
Sale of goods
Other revenue from contracts with customers
Sale of services
Sale of goods
Other revenue from contracts with customers
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
InfraCo
2,007
2,281
2
-
2
-
-
-
-
-
-
-
-
-
133
61
3
18,174
2,678
68
-
28
4
32
18,237
2,696
65
20,998
9,767
1,881
18
9,762
2,020
17
6,267
734
47
6,194
646
44
11,799
6,884
2,283
11,666
7,048
2,009
197
20,920
Year ended 30 June 2021
2.2 Income
Table A
Telstra Group
Revenue from contracts with customers
Revenue from other sources
Total revenue (excluding finance income)
Other income
Net gain on disposal of property, plant and equipment and intangible assets
Net gain on disposal of businesses and investments
Net gain on sale and leaseback transactions
nbn disconnection fees
Government grants
Other miscellaneous income
Total income (excluding finance income)
Finance income
Finance income (excluding income from finance leases)
Finance income from finance leases (Telstra as a lessor)
Total income
Revenue from other sources includes income from:
• customer contributions to extend, relocate or amend our network
assets, where the customer does not purchase any ongoing
services under the same (or linked) contract(s)
• late payment fees
• our lease arrangements, including finance leases where Telstra
is a dealer-lessor and operating leases (refer to note 3.2.2 for
further details).
Net gain on disposal of businesses in the prior reporting period
included:
• $60 million gain on disposal of Telstra’s Velocity business for
total sale proceeds of $140 million, with $92 million received in
the prior and current financial years, and the remaining balance
to be received in instalments over the next two years
• $45 million gain on disposal of assets and liabilities of
e-commerce platform for total sale proceeds of $55 million.
Net gain on sale and leaseback transactions in the prior reporting
period resulted from sale and leaseback of our exchange property.
nbn disconnection fees earned under the Subscriber Agreement
with nbn co are recognised as other income because they do not
relate to our ordinary activities. We recognise this income when we
have met our contractual obligations under this agreement.
Government grants include income under the Telstra Universal
Service Obligation Performance Agreement, the Federal
Government’s Mobile Black Spot Program and other individually
immaterial government grants. There are no unfulfilled conditions
or other contingencies attached to these grants.
90 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F15
F16 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 15 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 16 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
Year ended 30 June
2022
2021
$m
20,920
357
21,277
158
7
-
329
223
51
768
102
8
110
22,045
$m
20,998
560
21,558
66
107
102
216
61
1,022
1,574
23,132
93
10
103
2.2 Income (continued)
2.2.1 Disaggregated revenue
Table B presents the disaggregated revenue from contracts with
customers based on the nature and the timing of transfer of goods
and services.
We recognise revenue from contracts with customers when the
control of goods or services has been transferred to the customer.
Revenue from sale of services is recognised over time, whereas
revenue from sale of goods is recognised at a point in time.
Other revenue from contracts with customers includes licensing
revenue (recognised either at a point in time or over time) and
agency revenue (recognised over time). Refer to note 2.2.2 for
further details about our contracts with customers.
Table B
TC&SB
TE
N&IT
Telstra Group
Telstra
InfraCo
All Other
Total
Revenue from contracts with customers
Sale of services
Sale of goods
Other revenue from contracts with customers
Sale of services
Sale of goods
Other revenue from contracts with customers
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
9,767
1,881
18
11,666
9,762
2,020
17
11,799
6,267
734
47
7,048
-
-
-
-
2,007
2
-
2,009
Year ended 30 June 2021
6,194
646
44
6,884
-
-
-
-
2,281
2
-
2,283
133
61
3
197
-
28
4
32
18,174
2,678
68
20,920
18,237
2,696
65
20,998
Total income
22,155
23,235
2.2 Income
Table A
Telstra Group
Revenue from contracts with customers
Revenue from other sources
Total revenue (excluding finance income)
Other income
Net gain on disposal of property, plant and equipment and intangible assets
Net gain on disposal of businesses and investments
Net gain on sale and leaseback transactions
nbn disconnection fees
Government grants
Other miscellaneous income
Total income (excluding finance income)
Finance income
Finance income (excluding income from finance leases)
Finance income from finance leases (Telstra as a lessor)
Revenue from other sources includes income from:
• customer contributions to extend, relocate or amend our network
assets, where the customer does not purchase any ongoing
services under the same (or linked) contract(s)
• late payment fees
• our lease arrangements, including finance leases where Telstra
is a dealer-lessor and operating leases (refer to note 3.2.2 for
further details).
included:
Net gain on disposal of businesses in the prior reporting period
• $60 million gain on disposal of Telstra’s Velocity business for
total sale proceeds of $140 million, with $92 million received in
the prior and current financial years, and the remaining balance
to be received in instalments over the next two years
• $45 million gain on disposal of assets and liabilities of
e-commerce platform for total sale proceeds of $55 million.
Net gain on sale and leaseback transactions in the prior reporting
period resulted from sale and leaseback of our exchange property.
nbn disconnection fees earned under the Subscriber Agreement
with nbn co are recognised as other income because they do not
relate to our ordinary activities. We recognise this income when we
have met our contractual obligations under this agreement.
Government grants include income under the Telstra Universal
Service Obligation Performance Agreement, the Federal
Government’s Mobile Black Spot Program and other individually
immaterial government grants. There are no unfulfilled conditions
or other contingencies attached to these grants.
Telstra Corporation Limited and controlled entities | F15
F16 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 91
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 17 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 18 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Table C presents total revenue from external customers
disaggregated by major products and by geographical markets.
Our geographical operations are split between our Australian and
offshore operations. No individual geographical area of our offshore
operations forms a significant part of our operations.
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Table C
TC&SB
TE
N&IT
Telstra Group
Telstra
InfraCo
All Other
Total
Telstra Group
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
Total revenue from external customers by product
Table C (continued)
TC&SB
TE
N&IT
Telstra
All Other
Total
Total revenue from external customers by product
Mobile
Revenue from contracts with customers
Revenue from other sources
Fixed - C&SB
Revenue from contracts with customers
Revenue from other sources
Fixed - Enterprise
Revenue from contracts with customers
Revenue from other sources
InfraCo Fixed
Revenue from contracts with customers
Revenue from other sources
Amplitel
Revenue from contracts with customers
Fixed - Active Wholesale
Revenue from contracts with customers
International
Revenue from contracts with customers
Revenue from other sources
One-off nbn DA and connection
Revenue from contracts with customers
Other products and services
Revenue from contracts with customers
Revenue from other sources
Total revenue from contracts with customers
Total revenue from other sources
Other income
Total revenue from external customers by geographical market
Australian customers
Revenue from contracts with customers
Revenue from other sources
Offshore customers
Revenue from contracts with customers
Revenue from other sources
Total revenue from contracts with customers
Total revenue from other sources
Other income
7,449
7,368
81
4,296
4,255
41
-
-
-
-
-
-
-
-
-
-
-
-
-
43
43
2
-
2
11,666
124
11,790
188
11,978
11,790
11,666
124
-
-
-
11,666
124
11,790
188
11,978
1,675
1,674
1
-
-
-
3,729
3,702
27
-
-
-
-
-
-
-
1,697
1,677
20
-
-
(5)
(5)
-
7,048
48
7,096
36
7,132
5,645
5,603
42
1,451
1,445
6
7,048
48
7,096
36
7,132
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
32
-
-
-
-
-
-
-
-
-
32
32
332
332
-
-
-
-
-
-
-
1,316
1,135
181
60
60
477
477
-
-
-
-
-
5
5
-
2,009
181
2,190
164
2,354
2,190
2,009
181
-
-
-
2,009
181
2,190
164
2,354
14
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(204)
(204)
-
-
-
391
387
4
197
4
201
348
549
403
399
4
(202)
(202)
-
197
4
201
348
549
9,470
9,388
82
4,296
4,255
41
3,729
3,702
27
1,316
1,135
181
60
60
477
477
1,493
1,473
20
43
43
393
387
6
20,920
357
21,277
768
22,045
20,028
19,677
351
1,249
1,243
6
20,920
357
21,277
768
22,045
92 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F17
F18 | Telstra Corporation Limited and controlled entities
Mobile
Revenue from contracts with customers
Revenue from other sources
Fixed - C&SB
Revenue from contracts with customers
Revenue from other sources
Fixed - Enterprise
Revenue from contracts with customers
Revenue from other sources
InfraCo Fixed
Revenue from contracts with customers
Revenue from other sources
Amplitel
Revenue from contracts with customers
Fixed - Active Wholesale
Revenue from contracts with customers
Revenue from other sources
International
Revenue from contracts with customers
Revenue from other sources
One-off nbn DA and connection
Revenue from contracts with customers
Other products and services
Revenue from contracts with customers
Revenue from other sources
Total revenue from other sources
Other income
Australian customers
Revenue from contracts with customers
Revenue from other sources
Offshore customers
Revenue from contracts with customers
Revenue from other sources
Total revenue from other sources
Other income
Total revenue from contracts with customers
11,799
6,884
Total revenue from external customers by geographical market
Total revenue from contracts with customers
11,799
6,884
InfraCo
$m
$m
$m
$m
$m
$m
Year ended 30 June 2021
287
287
13
13
7,497
7,265
232
4,556
4,500
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34
34
288
243
12,087
11,799
288
12,087
6,946
12,330
6,985
288
243
12,087
6,946
12,330
6,985
4
-
-
-
-
-
-
-
-
-
-
-
-
-
3
2
1
1,513
1,509
3,724
3,682
42
1,706
1,691
15
62
39
5,470
5,423
47
1,476
1,461
15
62
39
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
1
-
1
1
1
-
1
-
-
-
-
1
1
32
33
32
33
-
-
-
-
-
-
-
-
-
-
-
-
4
4
-
-
-
-
1,546
1,354
192
60
60
591
578
13
2,283
205
2,488
75
2,563
2,488
2,283
205
2,283
205
2,488
75
2,563
(219)
(219)
1,487
1,472
9,310
9,074
236
4,556
4,500
56
3,724
3,682
42
1,546
1,354
192
60
60
591
578
13
15
34
34
250
244
6
20,998
560
21,558
1,574
23,132
20,302
19,757
545
1,256
1,241
15
20,998
560
21,558
1,574
23,132
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242
238
4
32
4
36
1,185
1,221
256
252
4
(220)
(220)
-
32
4
36
1,185
1,221
Notes to the financial statements (continued) 2022.Financial Report.book Page 17 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 18 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
Table C
TC&SB
TE
N&IT
Telstra
All Other
Total
Telstra Group
TC&SB
Table C (continued)
TE
N&IT
Telstra
InfraCo
All Other
Total
Our geographical operations are split between our Australian and
offshore operations. No individual geographical area of our offshore
operations forms a significant part of our operations.
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Total revenue from external customers by product
Mobile
Revenue from contracts with customers
Revenue from other sources
Fixed - C&SB
Revenue from contracts with customers
Revenue from other sources
Fixed - Enterprise
Revenue from contracts with customers
Revenue from other sources
InfraCo Fixed
Revenue from contracts with customers
Revenue from other sources
Amplitel
Revenue from contracts with customers
Fixed - Active Wholesale
Revenue from contracts with customers
Revenue from other sources
International
Revenue from contracts with customers
Revenue from other sources
One-off nbn DA and connection
Revenue from contracts with customers
Other products and services
Revenue from contracts with customers
Revenue from other sources
Total revenue from contracts with customers
Total revenue from other sources
Other income
Total revenue from external customers by geographical market
Australian customers
Revenue from contracts with customers
Revenue from other sources
Offshore customers
Revenue from contracts with customers
Revenue from other sources
Total revenue from contracts with customers
Total revenue from other sources
Other income
$m
$m
$m
$m
$m
$m
Year ended 30 June 2021
7,497
7,265
232
4,556
4,500
56
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34
34
-
-
-
11,799
288
12,087
243
12,330
12,087
11,799
288
-
-
-
11,799
288
12,087
243
12,330
1,513
1,509
4
-
-
-
3,724
3,682
42
-
-
-
-
-
-
-
-
1,706
1,691
15
-
-
3
2
1
6,884
62
6,946
39
6,985
5,470
5,423
47
1,476
1,461
15
6,884
62
6,946
39
6,985
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
-
1
-
1
1
32
33
1
-
1
-
-
-
-
1
1
32
33
287
287
-
-
-
-
-
-
-
1,546
1,354
192
60
60
591
578
13
-
-
-
-
-
4
4
-
2,283
205
2,488
75
2,563
2,488
2,283
205
-
-
-
2,283
205
2,488
75
2,563
13
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(219)
(219)
-
-
-
242
238
4
32
4
36
1,185
1,221
256
252
4
(220)
(220)
-
32
4
36
1,185
1,221
9,310
9,074
236
4,556
4,500
56
3,724
3,682
42
1,546
1,354
192
60
60
591
578
13
1,487
1,472
15
34
34
250
244
6
20,998
560
21,558
1,574
23,132
20,302
19,757
545
1,256
1,241
15
20,998
560
21,558
1,574
23,132
Telstra Corporation Limited and controlled entities | F17
F18 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 93
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Table C presents total revenue from external customers
disaggregated by major products and by geographical markets.
Telstra Group
Total revenue from external customers by product
Mobile
Revenue from contracts with customers
Revenue from other sources
Fixed - C&SB
Revenue from contracts with customers
Revenue from other sources
Fixed - Enterprise
Revenue from contracts with customers
Revenue from other sources
InfraCo Fixed
Revenue from contracts with customers
Revenue from other sources
Amplitel
Revenue from contracts with customers
Fixed - Active Wholesale
Revenue from contracts with customers
International
Revenue from contracts with customers
Revenue from other sources
One-off nbn DA and connection
Revenue from contracts with customers
Other products and services
Revenue from contracts with customers
Revenue from other sources
Total revenue from other sources
Other income
Australian customers
Revenue from contracts with customers
Revenue from other sources
Offshore customers
Revenue from contracts with customers
Revenue from other sources
Total revenue from other sources
Other income
InfraCo
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
332
332
14
14
7,449
7,368
81
4,296
4,255
41
-
-
-
-
-
-
-
-
-
-
-
-
-
43
43
2
-
2
124
188
-
-
-
124
188
1,675
1,674
3,729
3,702
27
1
-
-
-
-
-
-
-
-
-
-
1,697
1,677
20
-
-
(5)
(5)
-
48
36
5,645
5,603
42
1,451
1,445
6
48
36
11,790
7,096
11,978
7,132
11,790
11,666
124
11,790
7,096
11,978
7,132
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
32
32
32
32
-
-
-
-
-
-
-
-
-
-
-
-
5
5
-
-
-
-
1,316
1,135
181
60
60
477
477
2,009
181
2,190
164
2,354
2,190
2,009
181
2,009
181
2,190
164
2,354
(204)
(204)
1,493
1,473
9,470
9,388
82
4,296
4,255
41
3,729
3,702
27
1,316
1,135
181
60
60
477
477
20
43
43
393
387
6
357
21,277
768
22,045
20,028
19,677
351
1,249
1,243
6
357
21,277
768
22,045
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
391
387
4
4
201
348
549
403
399
4
-
4
201
348
549
(202)
(202)
Total revenue from contracts with customers
11,666
7,048
197
20,920
Total revenue from external customers by geographical market
Total revenue from contracts with customers
11,666
7,048
197
20,920
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 19 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 20 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Revenue from other products and services includes miscellaneous
income and revenue generated by Telstra Health.
Other negative revenue amounts related to certain corporate level
adjustments.
‘All Other’ category includes eliminations of the inter-segment
transactions described in the segment results below Table A in note
2.1.2.
2.2.2 Our contracts with customers
We generate revenue from external customer contracts, which vary
in their form (standard or bespoke), term (casual, short-term and
long-term) and customer segment (consumer, small-medium
business, government and large enterprise), with the main
contracts being:
• retail consumer contracts (mass market prepaid and post-paid
mobile, fixed and media plans)
• retail small to medium business contracts (mass market and off-
the-shelf technology solutions)
• retail enterprise and government contracts (carriage,
standardised and bespoke technology solutions and their
management)
• network capacity contracts, mainly Indefeasible Right of Use
(IRU)
• wholesale contracts for telecommunication services
• nbn Definitive Agreements (nbn DAs) and related arrangements.
The nature and type of contracts with customers are further
described below.
We sell a wide range of goods and services, which are provided
either directly by us or by third parties. Generally, we act as
principal rather than an agent in our contracts with customers.
(a) Telstra Consumer and Small Business (TC&SB) contracts
We offer prepaid and post-paid services to our mass market
customers. Our mass market contracts are homogeneous in nature
and sold directly by us or via our dealer channel. These contracts
often offer a bundle of goods and services, including products such
as hardware, voice, text and data services, media content and
others. Some also include options to purchase additional goods or
services free of charge or at a discount (i.e. material rights).
We currently offer no-lock-in (monthly) service plans to our fixed
and mobile mass market customers. In those arrangements, our
customers can purchase hardware, either outright or on a device
repayment contract, together with a no-lock-in service plan. If a
customer cancels their no-lock-in service plan, any outstanding
hardware balance becomes payable immediately.
Where we sell a service plan and a device on a device repayment
contract together with that plan, and offer a discount to the
customer who takes up that bundle and purchases directly from us,
or through a dealer that is acting as our agent, we allocate the
discount between handset and services based on their relative
standalone selling prices. For our service bundle plans sold via
dealers, who in their own right also sell the handset to the
customer, the whole discount is allocated to services only.
Generally, we allocate the consideration, and any relevant
discounts, to all products in the bundle based on a mixture of
observable and estimated standalone selling prices of these
products.
By and large we recognise revenue from sale of goods on their
delivery and from sale of services based on passage of time. The
consideration allocated at contract inception to material rights is
recognised as revenue either when the customer exercises the
option and benefits from the free or discounted products or when
the rights are forfeited.
We offer deferred payment terms when customers purchase
certain handsets and other devices under a device repayment
contract.
Assessment of
a significant
financing
component in
mass market
contracts
We have applied judgement to
determine that no significant
financing component exists in our
bundled arrangements offering no-
lock-in mobile plans and device
repayment contracts sold directly by
us. We considered factors such as
significance of financing in the
context of the contract as a whole,
commercial objectives of our offers,
the duration of deferred payment
terms and interest rates prevailing in
the marketplace.
We offer a loyalty program, Telstra Plus, under which our consumer
and small business customers can earn points redeemable in the
future for certain goods and services. The program also provides
customers access to tier benefits in the form of free or discounted
services like entertainment or technical support. Points awarded
for purchases of Telstra goods and services are accounted for as
material rights, with any amount allocated to the points initially
recognised as a contract liability in the statement of financial
position. When a customer redeems the points or they expire we
recognise revenue from sale of goods or services transferred or
from forfeiture of the material rights. Discretionary bonus points
that do not relate to accounting contracts are classified as a
marketing offer and expensed at the time the points are awarded.
Tier benefits reduce revenue of the related accounting contracts.
Generally, mass market contracts are not modified due to their
homogeneous nature. However, because our no-lock-in mass
market fixed and mobile service plans are monthly contracts,
customers can change plans each month or cancel their services
altogether.
(b) Telstra Enterprise (TE) contracts
TE transacts with medium to large enterprise and government
customers. Large and complex TE contracts are usually bespoke in
nature as they deliver tailored solutions and services. Outside of
the large customers, the contracts are mostly standard.
Our TE legal contracts often are in a form of multi-year framework
agreements under which customers can order goods and services,
include performance conditions and grant different types of
discounts or incentives. Such framework agreements are rarely
considered contracts for accounting purposes. Instead, revenue
recognition rules are applied to goods and services ordered under
each valid purchase order or a statement of work raised under the
terms of the framework agreement.
2.2 Income (continued)
2.2.2 Our contracts with customers (continued)
(b) Telstra Enterprise (TE) contracts (continued)
We recognise revenue from management services or fixed fee
services based on passage of time and from usage-based carriage
contracts when the services have been consumed.
Some of our framework agreements offer enterprise loyalty
In some of our TE contracts we also act as a dealer-lessor for
programs and technology funds under which a customer can obtain
computer mainframes, processing equipment and other related
additional free products. At contract inception a portion of the
equipment used by our customers as part of the solutions
consideration is allocated to such products and recognised as a
management and outsourcing services. Leases embedded in those
contract liability in the statement of financial position. We
contracts are separately accounted for, usually as dealer-lessor
recognise revenue when the customer either exercises the option
finance leases with finance lease receivables recognised in the
and benefits from the free products or when the rights are forfeited.
statement of financial position.
Our large commercial arrangements often incorporate service level
Some of our TE contracts include two phases: a build phase
agreements, e.g. agreed delivery time or service reinstatement
followed by the management of the technology solutions. Due to
time. If we fail to comply with these commitments, we will
the complex nature of those arrangements, we analyse the facts
compensate the customer. The expected amount of such
and circumstances of each contract in order to determine goods
compensation reduces the revenue for the period in which a service
and services ordered and timing of revenue recognition. If the build
level commitment has not been met, and it is recognised as soon as
phase (or its components) qualifies as a separate service, we
not meeting the commitment becomes probable. Some
recognise the build phase revenue over the term of the build or at
arrangements also include benchmarking or consumer price index
its completion depending on when the customer obtains control
clauses, which are accounted for as variable consideration, usually
over the technology solution.
from the time the price changes take effect.
From time to time our bespoke TE contracts are varied or
Our international TE arrangements include long-term network
renegotiated. When this happens, we assess the scope of the
capacity arrangements (some being take-or-pay arrangements) as
modification or its impact on the contract price in order to
well as managed services such as security and backups, for which
determine whether the amendment must be treated as a separate
revenue is usually recognised based on passage of time. IRU
contract, as if the existing contract were terminated and a new
arrangements often include upfront payments for services which
contract signed, or whether the amendment must be considered as
will be delivered over multiple years.
a change to the existing contract.
Under some of our enterprise arrangements, we receive customer
contributions to extend or amend our network assets to ultimately
enable delivery of telecommunication services to that customer.
Where the counterparty makes a contribution for network
construction activities and purchases ongoing services under the
same (or linked) contract(s), the upfront contribution is added to
the total consideration in the customer contract and is allocated to
the goods and services to be delivered under that contract.
Our TE accounting contracts include multiple goods and services.
Generally we allocate the consideration and any relevant discounts
to all the products in the accounting contract based on the
standalone selling prices. However, some discounts granted under
the framework agreements may be allocated to selected goods or
services only if specific performance conditions apply. Any
consideration allocated to a lease component is based on the
relative standalone selling price of the lease.
Determining
standalone
selling prices
We have applied judgement to
determine standalone selling prices
in order to allocate the consideration
to goods and services sold under the
same customer contract.
In the absence of observable prices,
we use various estimation methods,
including an adjusted market
assessment and cost plus margin
approach, to arrive at a standalone
selling price. We have determined
that the negotiated prices are largely
aligned to the standalone selling
prices.
Assessment of
a significant
financing
component in
Indefeasible
Right of Use
(IRU)
We have applied judgement to assess
if a financing component is significant
in the context of the contract as a
whole and, where relevant, to
determine appropriate discount
rates.
We account for a significant financing
component in our domestic and
international bespoke network
capacity agreements, i.e. IRUs, where
customers make an upfront payment
in advance of receiving services.
These contracts have an average legal
contract term between 10 and 25
years.
Where Telstra receives financing from
the customer, revenue recognised
over the contract term exceeds the
cash payment received in advance of
performance by the amount of
interest expense recognised in net
finance costs.
In the financial year 2022 we
recognised $46 million interest
expense for our IRU arrangements.
94 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F19
F20 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 19 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 20 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Revenue from other products and services includes miscellaneous
income and revenue generated by Telstra Health.
Other negative revenue amounts related to certain corporate level
adjustments.
2.1.2.
‘All Other’ category includes eliminations of the inter-segment
transactions described in the segment results below Table A in note
contract.
By and large we recognise revenue from sale of goods on their
delivery and from sale of services based on passage of time. The
consideration allocated at contract inception to material rights is
recognised as revenue either when the customer exercises the
option and benefits from the free or discounted products or when
the rights are forfeited.
We offer deferred payment terms when customers purchase
certain handsets and other devices under a device repayment
2.2.2 Our contracts with customers
We generate revenue from external customer contracts, which vary
in their form (standard or bespoke), term (casual, short-term and
long-term) and customer segment (consumer, small-medium
business, government and large enterprise), with the main
contracts being:
• retail consumer contracts (mass market prepaid and post-paid
mobile, fixed and media plans)
• retail small to medium business contracts (mass market and off-
the-shelf technology solutions)
• retail enterprise and government contracts (carriage,
standardised and bespoke technology solutions and their
• network capacity contracts, mainly Indefeasible Right of Use
management)
(IRU)
• wholesale contracts for telecommunication services
• nbn Definitive Agreements (nbn DAs) and related arrangements.
The nature and type of contracts with customers are further
described below.
We sell a wide range of goods and services, which are provided
either directly by us or by third parties. Generally, we act as
principal rather than an agent in our contracts with customers.
(a) Telstra Consumer and Small Business (TC&SB) contracts
We offer prepaid and post-paid services to our mass market
customers. Our mass market contracts are homogeneous in nature
and sold directly by us or via our dealer channel. These contracts
often offer a bundle of goods and services, including products such
as hardware, voice, text and data services, media content and
others. Some also include options to purchase additional goods or
services free of charge or at a discount (i.e. material rights).
We currently offer no-lock-in (monthly) service plans to our fixed
and mobile mass market customers. In those arrangements, our
customers can purchase hardware, either outright or on a device
repayment contract, together with a no-lock-in service plan. If a
customer cancels their no-lock-in service plan, any outstanding
hardware balance becomes payable immediately.
Where we sell a service plan and a device on a device repayment
contract together with that plan, and offer a discount to the
customer who takes up that bundle and purchases directly from us,
or through a dealer that is acting as our agent, we allocate the
discount between handset and services based on their relative
standalone selling prices. For our service bundle plans sold via
dealers, who in their own right also sell the handset to the
customer, the whole discount is allocated to services only.
Generally, we allocate the consideration, and any relevant
discounts, to all products in the bundle based on a mixture of
observable and estimated standalone selling prices of these
products.
Assessment of
a significant
financing
component in
mass market
contracts
We have applied judgement to
determine that no significant
financing component exists in our
bundled arrangements offering no-
lock-in mobile plans and device
repayment contracts sold directly by
us. We considered factors such as
significance of financing in the
context of the contract as a whole,
commercial objectives of our offers,
the duration of deferred payment
terms and interest rates prevailing in
the marketplace.
We offer a loyalty program, Telstra Plus, under which our consumer
and small business customers can earn points redeemable in the
future for certain goods and services. The program also provides
customers access to tier benefits in the form of free or discounted
services like entertainment or technical support. Points awarded
for purchases of Telstra goods and services are accounted for as
material rights, with any amount allocated to the points initially
recognised as a contract liability in the statement of financial
position. When a customer redeems the points or they expire we
recognise revenue from sale of goods or services transferred or
from forfeiture of the material rights. Discretionary bonus points
that do not relate to accounting contracts are classified as a
marketing offer and expensed at the time the points are awarded.
Tier benefits reduce revenue of the related accounting contracts.
Generally, mass market contracts are not modified due to their
homogeneous nature. However, because our no-lock-in mass
market fixed and mobile service plans are monthly contracts,
customers can change plans each month or cancel their services
altogether.
(b) Telstra Enterprise (TE) contracts
TE transacts with medium to large enterprise and government
customers. Large and complex TE contracts are usually bespoke in
nature as they deliver tailored solutions and services. Outside of
the large customers, the contracts are mostly standard.
Our TE legal contracts often are in a form of multi-year framework
agreements under which customers can order goods and services,
include performance conditions and grant different types of
discounts or incentives. Such framework agreements are rarely
considered contracts for accounting purposes. Instead, revenue
recognition rules are applied to goods and services ordered under
each valid purchase order or a statement of work raised under the
terms of the framework agreement.
2.2 Income (continued)
2.2.2 Our contracts with customers (continued)
(b) Telstra Enterprise (TE) contracts (continued)
In some of our TE contracts we also act as a dealer-lessor for
computer mainframes, processing equipment and other related
equipment used by our customers as part of the solutions
management and outsourcing services. Leases embedded in those
contracts are separately accounted for, usually as dealer-lessor
finance leases with finance lease receivables recognised in the
statement of financial position.
Some of our TE contracts include two phases: a build phase
followed by the management of the technology solutions. Due to
the complex nature of those arrangements, we analyse the facts
and circumstances of each contract in order to determine goods
and services ordered and timing of revenue recognition. If the build
phase (or its components) qualifies as a separate service, we
recognise the build phase revenue over the term of the build or at
its completion depending on when the customer obtains control
over the technology solution.
From time to time our bespoke TE contracts are varied or
renegotiated. When this happens, we assess the scope of the
modification or its impact on the contract price in order to
determine whether the amendment must be treated as a separate
contract, as if the existing contract were terminated and a new
contract signed, or whether the amendment must be considered as
a change to the existing contract.
Under some of our enterprise arrangements, we receive customer
contributions to extend or amend our network assets to ultimately
enable delivery of telecommunication services to that customer.
Where the counterparty makes a contribution for network
construction activities and purchases ongoing services under the
same (or linked) contract(s), the upfront contribution is added to
the total consideration in the customer contract and is allocated to
the goods and services to be delivered under that contract.
Our TE accounting contracts include multiple goods and services.
Generally we allocate the consideration and any relevant discounts
to all the products in the accounting contract based on the
standalone selling prices. However, some discounts granted under
the framework agreements may be allocated to selected goods or
services only if specific performance conditions apply. Any
consideration allocated to a lease component is based on the
relative standalone selling price of the lease.
Determining
standalone
selling prices
We have applied judgement to
determine standalone selling prices
in order to allocate the consideration
to goods and services sold under the
same customer contract.
In the absence of observable prices,
we use various estimation methods,
including an adjusted market
assessment and cost plus margin
approach, to arrive at a standalone
selling price. We have determined
that the negotiated prices are largely
aligned to the standalone selling
prices.
We recognise revenue from management services or fixed fee
services based on passage of time and from usage-based carriage
contracts when the services have been consumed.
Some of our framework agreements offer enterprise loyalty
programs and technology funds under which a customer can obtain
additional free products. At contract inception a portion of the
consideration is allocated to such products and recognised as a
contract liability in the statement of financial position. We
recognise revenue when the customer either exercises the option
and benefits from the free products or when the rights are forfeited.
Our large commercial arrangements often incorporate service level
agreements, e.g. agreed delivery time or service reinstatement
time. If we fail to comply with these commitments, we will
compensate the customer. The expected amount of such
compensation reduces the revenue for the period in which a service
level commitment has not been met, and it is recognised as soon as
not meeting the commitment becomes probable. Some
arrangements also include benchmarking or consumer price index
clauses, which are accounted for as variable consideration, usually
from the time the price changes take effect.
Our international TE arrangements include long-term network
capacity arrangements (some being take-or-pay arrangements) as
well as managed services such as security and backups, for which
revenue is usually recognised based on passage of time. IRU
arrangements often include upfront payments for services which
will be delivered over multiple years.
Assessment of
a significant
financing
component in
Indefeasible
Right of Use
(IRU)
We have applied judgement to assess
if a financing component is significant
in the context of the contract as a
whole and, where relevant, to
determine appropriate discount
rates.
We account for a significant financing
component in our domestic and
international bespoke network
capacity agreements, i.e. IRUs, where
customers make an upfront payment
in advance of receiving services.
These contracts have an average legal
contract term between 10 and 25
years.
Where Telstra receives financing from
the customer, revenue recognised
over the contract term exceeds the
cash payment received in advance of
performance by the amount of
interest expense recognised in net
finance costs.
In the financial year 2022 we
recognised $46 million interest
expense for our IRU arrangements.
Telstra Corporation Limited and controlled entities | F19
F20 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 95
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 21 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 22 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
The build of nbn related infrastructure is not considered a separate
service, therefore payments received for it under a separate legal
agreement have been combined and accounted for together with
the ISA long-term access services. These upfront payments have
been recorded as a contract liability in the statement of financial
position and are recognised as services transfer over the ISA
average contracted period of 35 years.
ISA also includes payments for the sale of our infrastructure
assets, with the net gain on sale of those assets recognised in other
income at a point in time when the control passes to nbn co based
on the incremental nbn network rollout percentage.
2.2 Income (continued)
2.2.2 Our contracts with customers (continued)
(d) Agreements with nbn co (continued)
We deliver a number of different services under these
arrangements and the consideration includes a number of fixed
and variable components as described below.
Impact of nbn Infrastructure
Services Agreement (ISA) on
revenue from customer
contracts and other income
Under the ISA, we receive the following payments from nbn co:
• Infrastructure Access Payment (IAP) for long-term access to ducts and pits
• Infrastructure Ownership Payment (IOP) for the progressive transfer of infrastructure
• payments for long-term access to other infrastructure, including dark fibre and
assets
exchange rack spaces.
IAP are indexed to consumer price index (CPI) and will grow in line with the nbn network
rollout until its completion (as defined under the DAs). Subsequently, IAP will continue
being indexed to CPI for the remaining average contracted period of 25 years.
IOP are received over the duration of the nbn network rollout, CPI adjusted and linked to
the progress of the nbn network rollout.
IAP and IOP are classified in the income statement as revenue and other income,
respectively, and are recognised on a percentage rollout basis of the nbn network
footprint.
For any given period, the IAP and IOP amounts ultimately received from nbn co may vary
from the amounts recognised in the income statement depending on the progress of the
nbn network rollout and the final number of our existing fixed line premises as defined and
determined under the ISA. A change in the nbn network rollout progress and/or the final
number of these premises could result in a material change to the amount of IAP and IOP
recognised in the income statement and the associated cash flows. Some of these
adjustments cannot be finalised and the related amounts cannot be settled until the
completion of the rollout and are subject to interest.
The nbn network rollout progress and its completion date are controlled by nbn co and the
final number of the fixed line premises may continue to change even after all the relevant
assets have been transferred to nbn co. Therefore, the final price adjustments and the
resulting cash flows, including interest payable where relevant, may not be known until
nbn co declares that the nbn network rollout is complete in accordance with the DAs.
We have applied judgement in determining the amounts of IAP and IOP recognised for the
for the financial year ended 30 June 2022 and did not identify material impacts resulting
from reassessment of the assumptions described above. Should evidence exist in future
reporting periods that changes these amounts, revenue and other income will be adjusted
in the future reporting periods.
2.2 Income (continued)
2.2.2 Our contracts with customers (continued)
(c) Telstra InfraCo contracts (excluding contracts with nbn co)
Telstra InfraCo transacts with carriage services providers and
internet service providers, who in turn sell their services to their
end users.
Revenue arises from fixed network service contracts, including
usage-based contracts and fixed bundles, with a term of up to three
years. Other contracts provide data and IP and mobile products
such as interconnect, bulk SMS and post-paid mobile services.
Telstra InfraCo legal contracts are generally signed as multi-year
framework agreements, which set out pricing for the agreed
services, the term and any renewal options, incentives, discounts
and one-off fees.
Some of our framework agreements specify a minimum spend
commitment (i.e. a take-or-pay arrangement), in which case the
accounting contract may exist also at the framework agreement
level.
Customer contributions to extend or amend our network assets to
ultimately enable delivery of telecommunication services are
recognised when those services are delivered.
Telstra InfraCo’s service revenue is generally recognised over time
during the period over which the services are rendered, mostly
based on passage of time as the service provider (i.e. our customer)
receives unlimited calls and data.
Some of Telstra InfraCo contracts include multiple goods and
services. We allocate the consideration, and any relevant
discounts, generally to all the products in the accounting contract
based on the negotiated prices, which are largely aligned to the
estimated standalone selling prices of goods and services
promised under the contracts. However, some discounts granted
under the framework agreements may be allocated only to selected
goods or services based on the specific performance conditions in
the framework agreement.
(d) Agreements with nbn co
The main contracts with nbn co are nbn DAs and related
arrangements.
Revenue from contracts with nbn co is mainly reported within the
Telstra InfraCo segment. Amounts recognised as other income are
recorded in the TC&SB segment and in our corporate areas.
Our nbn DAs and related arrangements include a number of
separate legal contracts with both nbn co and the Commonwealth
Government which have been negotiated together with a common
commercial objective. These contracts have been combined for
revenue assessment. The combined contract has a minimum term
of 30 years for accounting purposes.
The combined nbn DAs and related arrangements include a number
of separately priced elements, some of which are not accounted for
under the revenue recognition standard. For example, nbn
disconnection fees are presented as other income as they do not
relate to our ordinary activities and there is no price dependency on
other nbn DAs.
Services provided under the Infrastructure Services Agreement
(ISA) are accounted for under the revenue recognition standard. We
recognise revenue from providing long-term access to our
infrastructure, including ducts and pits, dark fibre and exchange
rack spaces, over time, initially based on the cumulative nbn
network rollout percentage and after rollout completion based on
passage of time.
96 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F21
F22 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 21 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 22 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
(c) Telstra InfraCo contracts (excluding contracts with nbn co)
the ISA long-term access services. These upfront payments have
(d) Agreements with nbn co (continued)
2.2 Income (continued)
2.2.2 Our contracts with customers (continued)
We deliver a number of different services under these
arrangements and the consideration includes a number of fixed
and variable components as described below.
Impact of nbn Infrastructure
Services Agreement (ISA) on
revenue from customer
contracts and other income
Under the ISA, we receive the following payments from nbn co:
• Infrastructure Access Payment (IAP) for long-term access to ducts and pits
• Infrastructure Ownership Payment (IOP) for the progressive transfer of infrastructure
assets
• payments for long-term access to other infrastructure, including dark fibre and
exchange rack spaces.
IAP are indexed to consumer price index (CPI) and will grow in line with the nbn network
rollout until its completion (as defined under the DAs). Subsequently, IAP will continue
being indexed to CPI for the remaining average contracted period of 25 years.
IOP are received over the duration of the nbn network rollout, CPI adjusted and linked to
the progress of the nbn network rollout.
IAP and IOP are classified in the income statement as revenue and other income,
respectively, and are recognised on a percentage rollout basis of the nbn network
footprint.
For any given period, the IAP and IOP amounts ultimately received from nbn co may vary
from the amounts recognised in the income statement depending on the progress of the
nbn network rollout and the final number of our existing fixed line premises as defined and
determined under the ISA. A change in the nbn network rollout progress and/or the final
number of these premises could result in a material change to the amount of IAP and IOP
recognised in the income statement and the associated cash flows. Some of these
adjustments cannot be finalised and the related amounts cannot be settled until the
completion of the rollout and are subject to interest.
The nbn network rollout progress and its completion date are controlled by nbn co and the
final number of the fixed line premises may continue to change even after all the relevant
assets have been transferred to nbn co. Therefore, the final price adjustments and the
resulting cash flows, including interest payable where relevant, may not be known until
nbn co declares that the nbn network rollout is complete in accordance with the DAs.
We have applied judgement in determining the amounts of IAP and IOP recognised for the
for the financial year ended 30 June 2022 and did not identify material impacts resulting
from reassessment of the assumptions described above. Should evidence exist in future
reporting periods that changes these amounts, revenue and other income will be adjusted
in the future reporting periods.
Telstra Corporation Limited and controlled entities | F21
F22 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 97
The build of nbn related infrastructure is not considered a separate
service, therefore payments received for it under a separate legal
agreement have been combined and accounted for together with
been recorded as a contract liability in the statement of financial
position and are recognised as services transfer over the ISA
average contracted period of 35 years.
ISA also includes payments for the sale of our infrastructure
assets, with the net gain on sale of those assets recognised in other
income at a point in time when the control passes to nbn co based
on the incremental nbn network rollout percentage.
2.2 Income (continued)
2.2.2 Our contracts with customers (continued)
Telstra InfraCo transacts with carriage services providers and
internet service providers, who in turn sell their services to their
end users.
Revenue arises from fixed network service contracts, including
usage-based contracts and fixed bundles, with a term of up to three
years. Other contracts provide data and IP and mobile products
such as interconnect, bulk SMS and post-paid mobile services.
Telstra InfraCo legal contracts are generally signed as multi-year
framework agreements, which set out pricing for the agreed
services, the term and any renewal options, incentives, discounts
and one-off fees.
Some of our framework agreements specify a minimum spend
commitment (i.e. a take-or-pay arrangement), in which case the
accounting contract may exist also at the framework agreement
level.
Customer contributions to extend or amend our network assets to
ultimately enable delivery of telecommunication services are
recognised when those services are delivered.
Telstra InfraCo’s service revenue is generally recognised over time
during the period over which the services are rendered, mostly
based on passage of time as the service provider (i.e. our customer)
receives unlimited calls and data.
Some of Telstra InfraCo contracts include multiple goods and
services. We allocate the consideration, and any relevant
discounts, generally to all the products in the accounting contract
based on the negotiated prices, which are largely aligned to the
estimated standalone selling prices of goods and services
promised under the contracts. However, some discounts granted
under the framework agreements may be allocated only to selected
goods or services based on the specific performance conditions in
the framework agreement.
(d) Agreements with nbn co
The main contracts with nbn co are nbn DAs and related
arrangements.
Revenue from contracts with nbn co is mainly reported within the
Telstra InfraCo segment. Amounts recognised as other income are
recorded in the TC&SB segment and in our corporate areas.
Our nbn DAs and related arrangements include a number of
separate legal contracts with both nbn co and the Commonwealth
Government which have been negotiated together with a common
commercial objective. These contracts have been combined for
revenue assessment. The combined contract has a minimum term
of 30 years for accounting purposes.
The combined nbn DAs and related arrangements include a number
of separately priced elements, some of which are not accounted for
under the revenue recognition standard. For example, nbn
disconnection fees are presented as other income as they do not
relate to our ordinary activities and there is no price dependency on
other nbn DAs.
Services provided under the Infrastructure Services Agreement
(ISA) are accounted for under the revenue recognition standard. We
recognise revenue from providing long-term access to our
infrastructure, including ducts and pits, dark fibre and exchange
rack spaces, over time, initially based on the cumulative nbn
network rollout percentage and after rollout completion based on
passage of time.
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 23 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 24 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.4 Recognition and measurement
2.2 Income (continued)
(b) Revenue from other sources
2.2.2 Our contracts with customers (continued)
Our revenue recognition accounting policies are described below.
2.2.4 Recognition and measurement (continued)
(d) Agreements with nbn co (continued)
(a) Revenue from contracts with customers
(a) Revenue from contracts with customers (continued)
Given significant variability in the overall ISA consideration, the
legal contract includes specific clauses as to if, when and how an
interest receivable or an interest payable should be calculated.
Revenue from contracts with customers arises from goods and
services sold as part of our ordinary activities.
(i) Accounting contracts with customer
Assessment of
a significant
financing
component in
nbn DAs
We have applied judgement to assess
if a financing component is significant
in the context of the contract as a
whole and, where relevant, to
determine appropriate discount
rates.
We do not separately account for the
financing component in our nbn DAs
and related arrangements because it
is not significant to the accounting
contract.
Revenue recognition principles are applied to accounting contracts
which are agreements between two or more parties that create
enforceable rights and obligations.
The accounting contract may not align with the legal contract and
in some cases multiple legal contracts may need to be combined to
form one accounting contract. In other instances, a legal contract
may only provide a framework agreement (i.e. an offer) and an
accounting contract only exists when the customer commits to
purchase goods or services.
Any components of the contract which are accounted for under
other accounting standards are separated out and accounted for
under those other standards.
(ii) Goods, services and/or material rights
(vi) Timing of revenue recognition
contracts with customers.
2.2.3 Revenue for contracted goods and services yet to be
delivered
Sometimes goods and services purchased under the same
customer contract will be transferred to the customer over multiple
reporting periods.
Table D presents aggregate consideration allocated to the
remaining goods, services and material rights promised under the
contracts where a customer has made a firm commitment before
the balance date but goods and services will be transferred after 30
June 2022. Any future amounts arising from contracts where the
customer has not made a firm commitment, such as usage-based
contracts, are not included in the disclosed amounts. Presented
time bands best depict the future revenue recognition profile.
Table D
Telstra Group
Less than 1 year
Between 1 to 2 years
Between 2 to 5 years
Between 5 to 10 years
Between 10 to 20 years
More than 20 years
As at 30 June
2022
2021
$m
4,360
2,394
4,100
6,988
14,385
8,368
40,595
$m
4,589
2,419
3,864
5,922
13,659
9,671
40,124
Future revenue arising from nbn DAs is estimated based on a
number of assumptions which are reassessed at each reporting
period. However, given its size, long-term nature and a number of
variable components impacting the contract consideration (refer to
note 2.2.2 for details), the actual amounts recognised in the future
periods may still materially differ from our estimates.
Any amounts arising from our existing customer contracts which
will be recognised as ‘revenue from other sources’ or ‘other
income’, for example operating lease income or net gain on sale of
assets, are excluded from revenue for contracted goods and
services yet to be delivered.
Revenue is recognised when Telstra fulfils its contractual
obligation to deliver promised goods and services (or a bundle of
goods and services) to the customer.
A contractual promise giving the customer an option to purchase
additional goods and services at a discount (i.e. material right) is
accounted for separately if the incremental discount is at least five
per cent compared to other customers.
A good or service is separately accounted for if a customer can
benefit from it on its own or together with other readily available
resources, and no transformative relationship exists with other
promised goods or services.
(iii) Variable consideration
If a contractual amount includes a variable component, we
estimate the amount to which we will be entitled in exchange for
promised goods and services. Examples of variable consideration
include discounts, rebates, refunds, credits and price concessions.
To estimate an amount of variable consideration, we use either the
most likely amount or the expected value method depending on
which better predicts the variable amount. The variable
consideration is estimated at contract inception and constrained
until it is highly probable that a significant reversal of cumulative
revenue recognised will not occur.
(iv) Significant financing component
If the period between when we would transfer the good or service to
the customer and when the customer would pay for them is
expected to be greater than one year, we assess whether revenue
should be adjusted for significant financing component, i.e.
reduced if we offer deferred payment terms or increased if we
receive an advance payment from customer. The significance of
financing is assessed relative to the total contract value and
interest rates used reflect credit characteristics of the
counterparty receiving financing.
98 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F23
F24 | Telstra Corporation Limited and controlled entities
Revenue from other sources includes income arising from
arrangements other than those accounted for under the revenue
recognition standard.
Contract terminations generally trigger different rights and
(v) Allocation of revenue to goods and services
We allocate the consideration to the goods and services based on
obligations. These rights and obligations are not related to our
their relative standalone selling prices. Standalone selling price is
performance and were not considered at inception of the
the price for which we would sell the goods or services on a
accounting contract. Therefore, where relevant, any income over
standalone basis, i.e. not in a bundle. We determine standalone
and above the recovery of the consideration due for the delivered
selling price at contract inception using an observable price for a
goods or services is not classified as revenue from customer
standalone sale of substantially the same good or service under
contracts. Instead, we classify it as revenue from other sources.
similar circumstances and to a similar class of customers. If no
observable price is available, we estimate the standalone selling
price using an appropriate method, e.g. adjusted market
assessment approach, expected cost plus a margin approach or a
residual approach.
In some instances, in order to correctly reflect the amount of
revenue we expect to be entitled to, we allocate variable
consideration, discounts or a significant financing component to
some but not all goods, services and/or material rights.
We earn revenue from some of our lease arrangements described in
note 3.2, in particular from finance leases where Telstra is a dealer-
lessor of customer premise equipment. We recognise revenue from
sale of these goods at a point in time at the commencement date of
the lease.
Where a (combined) accounting contract includes lease and non-
lease components and Telstra is a lessor, we allocate the
consideration to lease and non-lease components applying the
relative standalone selling prices requirements for revenue from
Revenue is recognised when control of the good or service is
We receive contributions to extend, relocate or amend our network
transferred to the customer, i.e. when the customer can benefit
assets. Where the counterparty makes a contribution for network
from the good or service and decide how to use them.
We recognise revenue over time when the customer simultaneously
receives and consumes the benefits provided to them or we create
or enhance an asset controlled by the customer. Otherwise, we
recognise revenue at a point in time.
construction activities that is neither a government grant nor
relates to the purchase of ongoing services under the same (or
linked) contract(s), we recognise revenue over the period of the
network construction activities.
Revenue from other sources also includes late payment fees, which
are recognised when charged and their collectability is reasonably
We use either input or output methods to measure progress when
selling goods or services. Output methods use direct
assured.
measurements of the value to the customer, for example,
(c) Government grants
milestones reached. Input methods use our efforts or inputs in
measuring the performance, for example, our labour hours used
relative to the total expected labour hours.
Government grants are recognised where there is reasonable
assurance that the grant will be received and Telstra will comply
with all attached conditions. Government grants relating to costs
When revenue is recognised at a point in time, the allocated
are deferred and recognised in the income statement as other
consideration is recognised when control over a good is transferred
income over the period necessary to match them with the costs
to the customer. In determining this, we consider the customer’s
that they are intended to compensate.
obligation to pay, transfer of legal title to the good, physical
possession of the good, the customer’s acceptance, and risks and
rewards of ownership.
(vii) Contract modifications
From time to time, our contracts are renegotiated after contract
inception and their scope and/or price change. A contract
modification will result in a cumulative change to revenue already
recognised only when the remaining goods and services are not
separate from those already delivered.
(viii) Gross versus net presentation
When we control the promised goods and services before they are
transferred to the customer and we have primary obligation for
their delivery, we act as principal in the contract with a customer
and recognise revenue at gross amounts. When we act as an agent
of a third-party provider, we recognise revenue net of amounts
payable to that third party.
Notes to the financial statements (continued) 2022.Financial Report.book Page 23 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 24 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.4 Recognition and measurement
2.2 Income (continued)
(b) Revenue from other sources
2.2.2 Our contracts with customers (continued)
Our revenue recognition accounting policies are described below.
2.2.4 Recognition and measurement (continued)
(d) Agreements with nbn co (continued)
(a) Revenue from contracts with customers
(a) Revenue from contracts with customers (continued)
Given significant variability in the overall ISA consideration, the
Revenue from contracts with customers arises from goods and
(v) Allocation of revenue to goods and services
legal contract includes specific clauses as to if, when and how an
services sold as part of our ordinary activities.
interest receivable or an interest payable should be calculated.
(i) Accounting contracts with customer
Assessment of
a significant
financing
component in
We have applied judgement to assess
if a financing component is significant
in the context of the contract as a
whole and, where relevant, to
determine appropriate discount
nbn DAs
rates.
We do not separately account for the
financing component in our nbn DAs
and related arrangements because it
is not significant to the accounting
contract.
2.2.3 Revenue for contracted goods and services yet to be
delivered
Sometimes goods and services purchased under the same
customer contract will be transferred to the customer over multiple
reporting periods.
Table D presents aggregate consideration allocated to the
remaining goods, services and material rights promised under the
contracts where a customer has made a firm commitment before
the balance date but goods and services will be transferred after 30
June 2022. Any future amounts arising from contracts where the
customer has not made a firm commitment, such as usage-based
contracts, are not included in the disclosed amounts. Presented
time bands best depict the future revenue recognition profile.
Table D
Telstra Group
Less than 1 year
Between 1 to 2 years
Between 2 to 5 years
Between 5 to 10 years
Between 10 to 20 years
More than 20 years
As at 30 June
2022
2021
$m
$m
4,360
2,394
4,100
6,988
14,385
8,368
40,595
4,589
2,419
3,864
5,922
13,659
9,671
40,124
Future revenue arising from nbn DAs is estimated based on a
number of assumptions which are reassessed at each reporting
period. However, given its size, long-term nature and a number of
variable components impacting the contract consideration (refer to
note 2.2.2 for details), the actual amounts recognised in the future
periods may still materially differ from our estimates.
Any amounts arising from our existing customer contracts which
will be recognised as ‘revenue from other sources’ or ‘other
income’, for example operating lease income or net gain on sale of
assets, are excluded from revenue for contracted goods and
services yet to be delivered.
Revenue recognition principles are applied to accounting contracts
which are agreements between two or more parties that create
enforceable rights and obligations.
The accounting contract may not align with the legal contract and
in some cases multiple legal contracts may need to be combined to
form one accounting contract. In other instances, a legal contract
may only provide a framework agreement (i.e. an offer) and an
accounting contract only exists when the customer commits to
purchase goods or services.
Any components of the contract which are accounted for under
other accounting standards are separated out and accounted for
under those other standards.
(ii) Goods, services and/or material rights
Revenue is recognised when Telstra fulfils its contractual
obligation to deliver promised goods and services (or a bundle of
goods and services) to the customer.
A contractual promise giving the customer an option to purchase
additional goods and services at a discount (i.e. material right) is
accounted for separately if the incremental discount is at least five
per cent compared to other customers.
A good or service is separately accounted for if a customer can
benefit from it on its own or together with other readily available
resources, and no transformative relationship exists with other
promised goods or services.
(iii) Variable consideration
If a contractual amount includes a variable component, we
estimate the amount to which we will be entitled in exchange for
promised goods and services. Examples of variable consideration
include discounts, rebates, refunds, credits and price concessions.
To estimate an amount of variable consideration, we use either the
most likely amount or the expected value method depending on
which better predicts the variable amount. The variable
consideration is estimated at contract inception and constrained
until it is highly probable that a significant reversal of cumulative
revenue recognised will not occur.
(iv) Significant financing component
If the period between when we would transfer the good or service to
the customer and when the customer would pay for them is
expected to be greater than one year, we assess whether revenue
should be adjusted for significant financing component, i.e.
reduced if we offer deferred payment terms or increased if we
receive an advance payment from customer. The significance of
financing is assessed relative to the total contract value and
interest rates used reflect credit characteristics of the
counterparty receiving financing.
We allocate the consideration to the goods and services based on
their relative standalone selling prices. Standalone selling price is
the price for which we would sell the goods or services on a
standalone basis, i.e. not in a bundle. We determine standalone
selling price at contract inception using an observable price for a
standalone sale of substantially the same good or service under
similar circumstances and to a similar class of customers. If no
observable price is available, we estimate the standalone selling
price using an appropriate method, e.g. adjusted market
assessment approach, expected cost plus a margin approach or a
residual approach.
In some instances, in order to correctly reflect the amount of
revenue we expect to be entitled to, we allocate variable
consideration, discounts or a significant financing component to
some but not all goods, services and/or material rights.
(vi) Timing of revenue recognition
Revenue is recognised when control of the good or service is
transferred to the customer, i.e. when the customer can benefit
from the good or service and decide how to use them.
We recognise revenue over time when the customer simultaneously
receives and consumes the benefits provided to them or we create
or enhance an asset controlled by the customer. Otherwise, we
recognise revenue at a point in time.
We use either input or output methods to measure progress when
selling goods or services. Output methods use direct
measurements of the value to the customer, for example,
milestones reached. Input methods use our efforts or inputs in
measuring the performance, for example, our labour hours used
relative to the total expected labour hours.
When revenue is recognised at a point in time, the allocated
consideration is recognised when control over a good is transferred
to the customer. In determining this, we consider the customer’s
obligation to pay, transfer of legal title to the good, physical
possession of the good, the customer’s acceptance, and risks and
rewards of ownership.
(vii) Contract modifications
From time to time, our contracts are renegotiated after contract
inception and their scope and/or price change. A contract
modification will result in a cumulative change to revenue already
recognised only when the remaining goods and services are not
separate from those already delivered.
(viii) Gross versus net presentation
When we control the promised goods and services before they are
transferred to the customer and we have primary obligation for
their delivery, we act as principal in the contract with a customer
and recognise revenue at gross amounts. When we act as an agent
of a third-party provider, we recognise revenue net of amounts
payable to that third party.
Revenue from other sources includes income arising from
arrangements other than those accounted for under the revenue
recognition standard.
Contract terminations generally trigger different rights and
obligations. These rights and obligations are not related to our
performance and were not considered at inception of the
accounting contract. Therefore, where relevant, any income over
and above the recovery of the consideration due for the delivered
goods or services is not classified as revenue from customer
contracts. Instead, we classify it as revenue from other sources.
We earn revenue from some of our lease arrangements described in
note 3.2, in particular from finance leases where Telstra is a dealer-
lessor of customer premise equipment. We recognise revenue from
sale of these goods at a point in time at the commencement date of
the lease.
Where a (combined) accounting contract includes lease and non-
lease components and Telstra is a lessor, we allocate the
consideration to lease and non-lease components applying the
relative standalone selling prices requirements for revenue from
contracts with customers.
We receive contributions to extend, relocate or amend our network
assets. Where the counterparty makes a contribution for network
construction activities that is neither a government grant nor
relates to the purchase of ongoing services under the same (or
linked) contract(s), we recognise revenue over the period of the
network construction activities.
Revenue from other sources also includes late payment fees, which
are recognised when charged and their collectability is reasonably
assured.
(c) Government grants
Government grants are recognised where there is reasonable
assurance that the grant will be received and Telstra will comply
with all attached conditions. Government grants relating to costs
are deferred and recognised in the income statement as other
income over the period necessary to match them with the costs
that they are intended to compensate.
Telstra Corporation Limited and controlled entities | F23
F24 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 99
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 25 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 26 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.3 Expenses
We classify expenses (apart from finance costs) by nature as this
classification more accurately reflects the type of operations we
undertake.
Telstra Group
Included in our labour expenses are the following:
Employee redundancy
Share-based payments
Defined contribution plan expense
Defined benefit plan expense
Included in our goods and services purchased are the following:
Network payments
Cost of goods sold
Other expenses
Impairment losses (excluding net losses on financial assets)
Expenses relating to lease arrangements
Service contracts and other agreements
Promotion and advertising
General and administration
Stamp duty expenses
Other operating expenses
Depreciation and amortisation
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Finance costs
Interest on borrowings
Interest on lease liabilities (Telstra as a lessee)
Other
Less: interest on borrowings capitalised
The following paragraphs provide further information about our
expenses and finance costs:
• share-based payments expense relates to both cash-settled and
equity-settled share plans. Refer to note 5.2 for further details.
• impairment losses include $107 million impairment of deferred
contract costs (2021: $113 million impairment of deferred
contract costs and $34 million impairment loss on
remeasurement of our investment in Project Sunshine I Pty Ltd to
its fair value less costs to sell)
• stamp duty expenses related mainly to the establishment of the
Amplitel business
• interest on borrowings has been capitalised using a
capitalisation rate of 3.7 per cent (2021: 3.7 per cent)
• other finance costs include unrealised valuation impacts on our
borrowings and derivatives. These include net losses which arise
from changes in the fair value of derivative financial instruments
to the extent that hedge accounting is not effective or the hedge
Year ended 30 June
2022
2021
$m
$m
80
19
215
45
3,223
2,648
144
21
1,167
248
915
95
222
2,812
2,572
587
1,199
4,358
444
78
61
583
(56)
527
253
18
212
52
3,153
2,797
162
214
1,144
248
982
1
229
2,980
2,606
726
1,314
4,646
518
83
108
709
(55)
654
accounting criteria are not met. These fair values increase or
decrease because of changes in financial indices and prices over
which we have no control. All unrealised amounts unwind to nil at
maturity of the underlying instrument.
Table B
Telstra Group
This note sets out our tax accounting policies and provides an analysis of our income tax expense and deferred tax balances,
including a reconciliation of tax expense to accounting profit.
Current income tax is based on the accounting profit adjusted for differences in accounting and tax treatments of income and
expenses (i.e. taxable income).
Deferred income tax, which is accounted for using the balance sheet method, arises because the accounting income is not always
the same as taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, a deferred tax
asset or liability must be recognised in the statement of financial position.
This note also provides disclosures which form part of the requirements of the Australian Board of Taxation’s Voluntary Tax
Table A provides a reconciliation of notional income tax expense to actual income tax expense.
2.4 Income taxes
Transparency Code.
2.4.1 Income tax expense
Table A
Telstra Group
Major components of income tax expense
Current tax expense
Deferred tax resulting from the origination and reversal of temporary differences
(Over)/under provision of tax in prior years
Reconciliation of notional income tax expense to actual income tax expense
Profit before income tax expense
Notional income tax expense calculated at the Australian tax rate of 30% (2021: 30%)
Notional income tax expense differs from actual income tax expense due to the tax effect of:
2,481
744
2,441
732
Year ended 30 June
2022
2021
$m
697
(23)
(7)
667
(5)
(15)
(18)
(7)
(32)
667
83
$m
665
(138)
12
539
(194)
-
-
12
(11)
539
99
Net (non-taxable) and non-deductible items
Deferred tax liabilities derecognised
Amended assessments
(Over)/under provision of tax in prior years
Different tax rates in overseas jurisdictions
Income tax expense on profit
Income tax expense recognised during the year directly in other comprehensive income or equity
Tables B and C include disclosures which form part of the
Table B provides a breakdown of effective income tax rates and Tax
requirements of the Australian Board of Taxation’s Voluntary Tax
Transparency Code effective income tax rates (TTC ETR) for both
Transparency Code. Any disclosed amounts are determined in
the Australian Economic Group (the Telstra Entity and its Australian
accordance with the Australian Accounting Standards.
resident controlled entities) and the Telstra Group.
Year ended 30 June
2022
2021
Group
Australia
Group
Australia
26.9%
27.9%
28.4%
29.2%
22.1%
21.2%
22.7%
22.0%
Effective income tax rate
Tax Transparency Code effective income tax rate
The effective income tax rate for the Telstra Group of 26.9 per cent
assessments. The 2021 TTC ETRs have been updated to include the
(2021: 22.1 per cent) was calculated as income tax expense divided
impact of the net over provision of tax and amended 2021
by profit before income tax expense. Refer to the key non-taxable
assessments reflected in the current year income tax expense.
and non-deductible items impacting our effective tax rate as
detailed on the next page.
The TTC ETR forms part of the requirements of the Voluntary Tax
Transparency Code to disclose the income tax expense borne by
The TTC ETR for the Telstra Group of 27.9 per cent (2021: 21.2 per
Telstra in respect of the Australian and global operations for the
cent) differs from the effective income tax rate due to excluding the
individual year.
impact of under or over provision of tax in prior years and amended
100 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F25
F26 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 25 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 26 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.4 Income taxes
This note sets out our tax accounting policies and provides an analysis of our income tax expense and deferred tax balances,
including a reconciliation of tax expense to accounting profit.
Current income tax is based on the accounting profit adjusted for differences in accounting and tax treatments of income and
expenses (i.e. taxable income).
Deferred income tax, which is accounted for using the balance sheet method, arises because the accounting income is not always
the same as taxable income. This creates temporary differences, which usually reverse over time. Until they reverse, a deferred tax
asset or liability must be recognised in the statement of financial position.
This note also provides disclosures which form part of the requirements of the Australian Board of Taxation’s Voluntary Tax
Transparency Code.
Included in our goods and services purchased are the following:
Table A provides a reconciliation of notional income tax expense to actual income tax expense.
2.4.1 Income tax expense
Table A
Telstra Group
Major components of income tax expense
Current tax expense
Deferred tax resulting from the origination and reversal of temporary differences
(Over)/under provision of tax in prior years
Reconciliation of notional income tax expense to actual income tax expense
Profit before income tax expense
Notional income tax expense calculated at the Australian tax rate of 30% (2021: 30%)
Notional income tax expense differs from actual income tax expense due to the tax effect of:
Net (non-taxable) and non-deductible items
Deferred tax liabilities derecognised
Amended assessments
(Over)/under provision of tax in prior years
Different tax rates in overseas jurisdictions
Income tax expense on profit
Income tax expense recognised during the year directly in other comprehensive income or equity
Year ended 30 June
2022
2021
$m
697
(23)
(7)
667
$m
665
(138)
12
539
2,481
744
2,441
732
(5)
(15)
(18)
(7)
(32)
667
83
(194)
-
-
12
(11)
539
99
Tables B and C include disclosures which form part of the
requirements of the Australian Board of Taxation’s Voluntary Tax
Transparency Code. Any disclosed amounts are determined in
accordance with the Australian Accounting Standards.
Table B provides a breakdown of effective income tax rates and Tax
Transparency Code effective income tax rates (TTC ETR) for both
the Australian Economic Group (the Telstra Entity and its Australian
resident controlled entities) and the Telstra Group.
The following paragraphs provide further information about our
accounting criteria are not met. These fair values increase or
decrease because of changes in financial indices and prices over
which we have no control. All unrealised amounts unwind to nil at
maturity of the underlying instrument.
Table B
Telstra Group
Effective income tax rate
Tax Transparency Code effective income tax rate
Year ended 30 June
2022
2021
Group
26.9%
27.9%
Australia
28.4%
29.2%
Group
22.1%
21.2%
Australia
22.7%
22.0%
The effective income tax rate for the Telstra Group of 26.9 per cent
(2021: 22.1 per cent) was calculated as income tax expense divided
by profit before income tax expense. Refer to the key non-taxable
and non-deductible items impacting our effective tax rate as
detailed on the next page.
The TTC ETR for the Telstra Group of 27.9 per cent (2021: 21.2 per
cent) differs from the effective income tax rate due to excluding the
impact of under or over provision of tax in prior years and amended
assessments. The 2021 TTC ETRs have been updated to include the
impact of the net over provision of tax and amended 2021
assessments reflected in the current year income tax expense.
The TTC ETR forms part of the requirements of the Voluntary Tax
Transparency Code to disclose the income tax expense borne by
Telstra in respect of the Australian and global operations for the
individual year.
Telstra Corporation Limited and controlled entities | F25
F26 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 101
We classify expenses (apart from finance costs) by nature as this
classification more accurately reflects the type of operations we
2.3 Expenses
undertake.
Telstra Group
Included in our labour expenses are the following:
Employee redundancy
Share-based payments
Defined contribution plan expense
Defined benefit plan expense
Impairment losses (excluding net losses on financial assets)
Expenses relating to lease arrangements
Service contracts and other agreements
Network payments
Cost of goods sold
Other expenses
Promotion and advertising
General and administration
Stamp duty expenses
Other operating expenses
Depreciation and amortisation
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Finance costs
Interest on borrowings
Other
Interest on lease liabilities (Telstra as a lessee)
Less: interest on borrowings capitalised
expenses and finance costs:
• share-based payments expense relates to both cash-settled and
equity-settled share plans. Refer to note 5.2 for further details.
• impairment losses include $107 million impairment of deferred
contract costs (2021: $113 million impairment of deferred
contract costs and $34 million impairment loss on
remeasurement of our investment in Project Sunshine I Pty Ltd to
its fair value less costs to sell)
• stamp duty expenses related mainly to the establishment of the
Amplitel business
• interest on borrowings has been capitalised using a
capitalisation rate of 3.7 per cent (2021: 3.7 per cent)
• other finance costs include unrealised valuation impacts on our
borrowings and derivatives. These include net losses which arise
from changes in the fair value of derivative financial instruments
to the extent that hedge accounting is not effective or the hedge
Year ended 30 June
2022
2021
$m
$m
3,223
2,648
3,153
2,797
1,167
1,144
2,812
2,980
80
19
215
45
144
21
248
915
95
222
2,572
587
1,199
4,358
444
78
61
583
(56)
527
253
18
212
52
162
214
248
982
1
229
2,606
726
1,314
4,646
518
83
108
709
(55)
654
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 27 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 28 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.4 Income taxes (continued)
2.4.1 Income tax expense (continued)
Non-taxable and non-deductible items include the tax effect of:
• $61 million lease termination deductions relating to the
acquisition of Telstra dealership stores
• $46 million non-assessable gains on property disposals
• $90 million non-deductible stamp duty costs relating to the
establishment of the towers business.
Table C provides a reconciliation of income tax expense to income
tax paid during the year.
Table C
Year ended/As at
Telstra Group
30 June
2022
2021
Income tax expense
Over/(under) provision in prior years
Temporary differences recognised in
deferred tax expense
Trade and other receivables and
contract assets
Deferred contract costs
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Provision for employee entitlements
Lease liabilities
Borrowings and derivative financial
instruments
Contract liabilities and other revenue
received in advance
Other
Current tax expense
Income tax payments for prior years
Income tax payable next year
Other
Income tax paid
$m
667
7
3
52
(1)
62
50
(84)
26
(4)
(50)
(5)
(5)
(21)
23
697
130
(25)
17
819
$m
539
(12)
(12)
5
27
(40)
52
(39)
19
(10)
(11)
103
60
(16)
138
665
213
(119)
3
762
2.4.2 Deferred tax assets/(liabilities)
2.4 Income taxes (continued)
2.4.4 Recognition and measurement
Table D details the amount of deferred tax assets and liabilities
recognised in the statement of financial position, which include
impact of foreign exchange movements.
Table D
Year ended/As at
Telstra Group
Deferred tax items recognised in the
income statement
Trade and other receivables and
contract assets
Allowance for doubtful debts
Deferred contract costs
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Provision for employee entitlements
Other provisions
Lease liabilities
Defined benefit asset
Borrowings and derivative financial
instruments
Contract liabilities and other revenue
received in advance
Capital tax losses
Income tax losses
Other
Deferred tax items recognised in other
comprehensive income or equity
Investments
Defined benefit asset
Borrowings and derivative financial
instruments
Net deferred tax liability
Comprising:
Deferred tax assets
Deferred tax liabilities
30 June
2022
2021
$m
$m
(217)
(221)
52
(318)
(12)
(1,545)
(600)
(688)
196
244
99
665
123
44
514
26
8
(5)
(1,414)
(69)
(206)
94
(181)
(1,595)
60
(1,655)
(1,595)
54
(370)
(15)
(1,626)
(832)
(567)
169
246
128
909
114
46
514
33
9
(13)
(1,422)
(109)
(161)
172
(98)
(1,520)
60
(1,580)
(1,520)
2.4.2 Deferred tax assets/(liabilities) (continued)
Our income tax expense is the sum of current and deferred income
Year ended 30 June
2022
2021
$m
$m
We apply the balance sheet method for calculating our deferred tax
balances. Deferred tax is the expected tax payable or recoverable
on all taxable and deductible temporary differences determined
with reference to the tax bases of assets and liabilities and their
carrying amount for financial reporting purposes as at the reporting
tax expenses. Current income tax expense is calculated on
accounting profit after adjusting for non-taxable and non-
deductible items based on rules set by the tax authorities. Deferred
income tax expense is calculated at the tax rates that are expected
to apply for the period in which the deferred tax asset is realised or
the deferred tax liability is settled. Both our current and deferred
income tax expenses are calculated using tax rates that have been
enacted or substantively enacted at the reporting date.
Our current and deferred taxes are recognised as an expense in the
income statement, except when they relate to items that are
directly recognised in other comprehensive income or equity. In this
case, our current and deferred tax expenses are also recognised
directly in other comprehensive income or equity.
Our current and deferred taxes must also recognise the impact of
any uncertain tax positions. If it is probable that a relevant tax
authority would accept our tax treatment, our tax balances are
recognised under that tax treatment. Otherwise, for each uncertain
tax position for which it is not probable that the relevant tax
authority will accept the tax treatment, we use the most likely
amount or the expected value to estimate our tax balances.
We generally recognise deferred tax liabilities for all taxable
temporary differences, except to the extent that the deferred tax
liability arises from:
• the initial recognition of goodwill
• the initial recognition of an asset or liability in a transaction that
is not a business combination and affects neither our accounting
profit nor our taxable income at the time of the transaction
(single transactions where both deductible and taxable
temporary differences arise on initial recognition that result in
deferred tax assets and liabilities of the same amount are
excluded from this exemption).
associated entities, recognition of deferred tax liabilities is
required unless we are able to control the timing of our temporary
difference reversal and it is probable that the temporary difference
will not reverse.
Deferred tax assets are recognised to the extent that it is probable
that taxable profit will be available against which the deductible
temporary differences, and the carried forward unused tax losses
and tax credits, can be utilised.
Deferred tax assets and deferred tax liabilities are offset in the
statement of financial position where they relate to income taxes
levied by the same taxation authority and to the extent that we
intend to settle our current tax assets and liabilities on a net basis.
Unrecognised
deferred tax
assets
We apply judgement to recognise a
deferred tax asset and review its
carrying amount at each reporting
date. The carrying amount is only
recognised to the extent that it is
probable that sufficient taxable profit
will be available in the future to utilise
this benefit. Any amount
unrecognised could be subsequently
recognised if it has become probable
that future taxable profit will allow us
to benefit from this deferred tax
asset.
Table E details deferred tax assets not recognised in the statement
of financial position.
Table E
Telstra Group
Deferred tax assets not recognised
Capital tax losses
Income tax losses
Deductible temporary differences
date.
1,253
255
111
1,619
1,285
257
118
1,660
2.4.3 Tax consolidated group
Under the Australian taxation law, the Telstra Entity and its
Australian resident wholly-owned entities (members) form a tax
consolidated group and are treated as a single entity for income tax
purposes. The Telstra Entity is the head entity of the group and, in
addition to its own transactions, it recognises the current tax
losses and tax credits for all members in the group.
Entities within the tax consolidated group have entered into a tax
sharing agreement and a tax funding arrangement with the head
entity.
The tax sharing agreement specifies methods of allocating any tax
liability in the event the head entity defaults on its group payment
obligations and the treatment where a member exits the tax
consolidated group.
Under the tax funding arrangement, the head entity and each of the
members have agreed to pay/receive a current tax payable to/
receivable from the head entity based on the current tax liability or
current tax asset recorded in the financial statements of the
members. The Telstra Entity will also compensate the members for
any deferred tax assets relating to unused tax losses and tax
credits.
Amounts receivable by the Telstra Entity of $74 million (2021:
$27 million) and payable by the Telstra Entity of $87 million
(2021: $17 million) under the tax funding arrangement are due in
the next financial year upon final settlement of the current tax
payable for the tax consolidated group.
liabilities and the deferred tax assets arising from unused tax
For our investments in controlled entities, joint ventures and
102 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F27
F28 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2.4 Income taxes (continued)
2.4.1 Income tax expense (continued)
Non-taxable and non-deductible items include the tax effect of:
• $61 million lease termination deductions relating to the
acquisition of Telstra dealership stores
• $46 million non-assessable gains on property disposals
• $90 million non-deductible stamp duty costs relating to the
establishment of the towers business.
Table C provides a reconciliation of income tax expense to income
tax paid during the year.
Table C
Year ended/As at
Telstra Group
30 June
2022
2021
Income tax expense
Over/(under) provision in prior years
Temporary differences recognised in
deferred tax expense
Trade and other receivables and
contract assets
Deferred contract costs
Investments
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Provision for employee entitlements
Lease liabilities
instruments
Borrowings and derivative financial
Contract liabilities and other revenue
received in advance
Other
Current tax expense
Income tax payments for prior years
Income tax payable next year
Other
Income tax paid
Table D details the amount of deferred tax assets and liabilities
recognised in the statement of financial position, which include
impact of foreign exchange movements.
Table D
Year ended/As at
Telstra Group
30 June
2022
2021
$m
$m
Property, plant and equipment
(1,545)
(1,626)
Deferred tax items recognised in the
income statement
Trade and other receivables and
contract assets
Allowance for doubtful debts
Deferred contract costs
Investments
Right-of-use assets
Intangible assets
Trade and other payables
Provision for employee entitlements
Other provisions
Lease liabilities
Defined benefit asset
Borrowings and derivative financial
instruments
Contract liabilities and other revenue
Deferred tax items recognised in other
comprehensive income or equity
Investments
Defined benefit asset
Borrowings and derivative financial
instruments
Net deferred tax liability
Comprising:
Deferred tax assets
Deferred tax liabilities
received in advance
Capital tax losses
Income tax losses
103
Other
$m
667
7
3
52
(1)
62
50
(84)
26
(4)
(50)
(5)
(5)
(21)
23
697
130
(25)
17
819
$m
539
(12)
(12)
5
27
(40)
52
(39)
19
(10)
(11)
60
(16)
138
665
213
(119)
3
762
(217)
52
(318)
(12)
(600)
(688)
196
244
99
665
123
44
514
26
8
(5)
(69)
(206)
94
(181)
(1,595)
60
(1,655)
(1,595)
(221)
54
(370)
(15)
(832)
(567)
169
246
128
909
114
46
514
33
9
(13)
(109)
(161)
172
(98)
(1,520)
60
(1,580)
(1,520)
(1,414)
(1,422)
2022.Financial Report.book Page 27 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 28 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.4.2 Deferred tax assets/(liabilities)
2.4 Income taxes (continued)
2.4.4 Recognition and measurement
Our income tax expense is the sum of current and deferred income
tax expenses. Current income tax expense is calculated on
accounting profit after adjusting for non-taxable and non-
deductible items based on rules set by the tax authorities. Deferred
income tax expense is calculated at the tax rates that are expected
to apply for the period in which the deferred tax asset is realised or
the deferred tax liability is settled. Both our current and deferred
income tax expenses are calculated using tax rates that have been
enacted or substantively enacted at the reporting date.
Our current and deferred taxes are recognised as an expense in the
income statement, except when they relate to items that are
directly recognised in other comprehensive income or equity. In this
case, our current and deferred tax expenses are also recognised
directly in other comprehensive income or equity.
Our current and deferred taxes must also recognise the impact of
any uncertain tax positions. If it is probable that a relevant tax
authority would accept our tax treatment, our tax balances are
recognised under that tax treatment. Otherwise, for each uncertain
tax position for which it is not probable that the relevant tax
authority will accept the tax treatment, we use the most likely
amount or the expected value to estimate our tax balances.
We apply the balance sheet method for calculating our deferred tax
balances. Deferred tax is the expected tax payable or recoverable
on all taxable and deductible temporary differences determined
with reference to the tax bases of assets and liabilities and their
carrying amount for financial reporting purposes as at the reporting
date.
We generally recognise deferred tax liabilities for all taxable
temporary differences, except to the extent that the deferred tax
liability arises from:
• the initial recognition of goodwill
• the initial recognition of an asset or liability in a transaction that
is not a business combination and affects neither our accounting
profit nor our taxable income at the time of the transaction
(single transactions where both deductible and taxable
temporary differences arise on initial recognition that result in
deferred tax assets and liabilities of the same amount are
excluded from this exemption).
For our investments in controlled entities, joint ventures and
associated entities, recognition of deferred tax liabilities is
required unless we are able to control the timing of our temporary
difference reversal and it is probable that the temporary difference
will not reverse.
Deferred tax assets are recognised to the extent that it is probable
that taxable profit will be available against which the deductible
temporary differences, and the carried forward unused tax losses
and tax credits, can be utilised.
Deferred tax assets and deferred tax liabilities are offset in the
statement of financial position where they relate to income taxes
levied by the same taxation authority and to the extent that we
intend to settle our current tax assets and liabilities on a net basis.
2.4.2 Deferred tax assets/(liabilities) (continued)
Unrecognised
deferred tax
assets
We apply judgement to recognise a
deferred tax asset and review its
carrying amount at each reporting
date. The carrying amount is only
recognised to the extent that it is
probable that sufficient taxable profit
will be available in the future to utilise
this benefit. Any amount
unrecognised could be subsequently
recognised if it has become probable
that future taxable profit will allow us
to benefit from this deferred tax
asset.
Table E details deferred tax assets not recognised in the statement
of financial position.
Table E
Telstra Group
Deferred tax assets not recognised
Capital tax losses
Income tax losses
Deductible temporary differences
Year ended 30 June
2022
2021
$m
$m
1,253
255
111
1,619
1,285
257
118
1,660
2.4.3 Tax consolidated group
Under the Australian taxation law, the Telstra Entity and its
Australian resident wholly-owned entities (members) form a tax
consolidated group and are treated as a single entity for income tax
purposes. The Telstra Entity is the head entity of the group and, in
addition to its own transactions, it recognises the current tax
liabilities and the deferred tax assets arising from unused tax
losses and tax credits for all members in the group.
Entities within the tax consolidated group have entered into a tax
sharing agreement and a tax funding arrangement with the head
entity.
The tax sharing agreement specifies methods of allocating any tax
liability in the event the head entity defaults on its group payment
obligations and the treatment where a member exits the tax
consolidated group.
Under the tax funding arrangement, the head entity and each of the
members have agreed to pay/receive a current tax payable to/
receivable from the head entity based on the current tax liability or
current tax asset recorded in the financial statements of the
members. The Telstra Entity will also compensate the members for
any deferred tax assets relating to unused tax losses and tax
credits.
Amounts receivable by the Telstra Entity of $74 million (2021:
$27 million) and payable by the Telstra Entity of $87 million
(2021: $17 million) under the tax funding arrangement are due in
the next financial year upon final settlement of the current tax
payable for the tax consolidated group.
Telstra Corporation Limited and controlled entities | F27
F28 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 103
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 29 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 30 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.5 Earnings per share
2.6 Notes to the statement of cash flows
2.6 Notes to the statement of cash flows (continued)
2.6.1 Reconciliation of profit to net cash provided by operating
activities
2.6.2 Cash and cash equivalents
This note outlines the calculation of Earnings per Share (EPS),
which is the amount of post-tax profit attributable to each
share. EPS excludes profit attributable to non-controlling
interests and takes into account the average number of
shares weighted by the number of days on issue.
We calculate basic and diluted EPS. Diluted EPS reflects the
effects of the equity instruments allocated to our employee
share schemes under the Telstra Growthshare Trust.
Telstra Group
Earnings used in the calculation of
basic and diluted EPS
Profit for the year attributable to
equity holders of Telstra Entity
Year ended 30 June
2022
2021
$m
$m
1,688
1,857
Weighted average number of ordinary
shares
Number of shares
(millions)
Weighted average number of ordinary
shares used in the calculation of basic
EPS
Dilutive effect of certain employee
share instruments
Weighted average number of ordinary
shares used in the calculation of
diluted EPS
Basic EPS
Diluted EPS
11,755
11,875
9
17
11,764
11,892
cents
cents
14.4
14.3
15.6
15.6
When we calculate the basic EPS, we adjust the weighted average
number of ordinary shares to exclude the shares held in trust by
Telstra Growthshare Trust (Growthshare).
Information about equity instruments issued under Growthshare
can be found in note 5.2.
Table A
Telstra Group
Profit for the year
Add/(subtract) items classified as
investing/financing activities
Finance income
Finance costs
Net gain on disposal of property, plant
and equipment and intangible assets
Net gain on disposal of businesses,
controlled entities and equity
accounted investments
Revenue of a dealer-lessor
Net (gain)/loss on lease related
transactions
Government grants received relating
to investing activities
Other
Add/(subtract) non-cash items
Depreciation and amortisation
Share-based payments
Defined benefit plan expense
Share of net loss from joint ventures
and associated entities
Impairment losses (excluding
inventories, trade and other
receivables)
Effects of exchange rate changes on
other investments
Other
Cash movements in operating assets
and liabilities
Decrease in trade and other
receivables and contract assets
(Increase)/decrease in inventories
Decrease/(increase) in prepayments
and other assets
Increase/(decrease) in deferred
contract costs
Increase/(decrease) in trade and other
payables
(Decrease)/increase in contract
liabilities and other revenue received
in advance
Decrease in net taxes payable
Increase/(decrease) in provisions
Net cash provided by operating
activities
Year ended 30 June
2022
2021
$m
1,814
$m
1,902
(110)
527
(158)
(7)
(15)
(2)
(22)
-
(103)
654
(66)
(107)
(42)
4
(19)
(1)
4,358
19
45
4,646
18
52
31
26
(22)
(6)
620
(101)
56
104
241
24
40
15
(12)
589
31
(88)
(18)
(98)
(12)
111
(152)
15
(222)
(79)
7,249
7,231
Table B
Telstra Group
Cash at bank and on hand
Bank deposits and negotiable
certificates of deposit
Cash and cash equivalents in the
statement of cash flows
Year ended 30 June
2022
2021
$m
417
623
$m
266
859
1,040
1,125
2.6.3 Recognition, measurement and presentation
(a) Cash and cash equivalents
Cash and cash equivalents include cash at bank and on hand, bank
deposits and negotiable certificates of deposit that are held to
meet short-term cash commitments rather than for investment
purposes.
Bank deposits and negotiable certificates of deposit are classified
as financial assets held at amortised cost.
(b) Short-term borrowings in financing cash flows
Where our short-term borrowings are held for the purposes of
meeting short-term cash commitments, we report the cash
receipts and subsequent repayments in financing activities on a net
basis in the statement of cash flows.
(c) Goods and Services Tax (GST) (including other value-added
taxes)
We record our revenue, expenses and assets net of any applicable
GST, except where the amount of GST incurred is not recoverable
from the Australian Taxation Office (ATO). In these circumstances
the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item.
Receivable and payable balances in the statement of financial
position, and receipts from customers and payments to suppliers in
the statement of cash flows include GST where we have either
included GST in our price charged to customers or a supplier has
included GST in their price charged to us. The net amount of GST
due to the ATO but not paid is included in our current trade and
other payables.
104 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F29
F30 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 29 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 30 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.5 Earnings per share
2.6 Notes to the statement of cash flows
2.6 Notes to the statement of cash flows (continued)
2.6.1 Reconciliation of profit to net cash provided by operating
2.6.2 Cash and cash equivalents
This note outlines the calculation of Earnings per Share (EPS),
which is the amount of post-tax profit attributable to each
share. EPS excludes profit attributable to non-controlling
interests and takes into account the average number of
shares weighted by the number of days on issue.
We calculate basic and diluted EPS. Diluted EPS reflects the
effects of the equity instruments allocated to our employee
share schemes under the Telstra Growthshare Trust.
activities
Table A
Telstra Group
Profit for the year
Add/(subtract) items classified as
investing/financing activities
Finance income
Finance costs
Year ended 30 June
2022
2021
$m
1,814
$m
1,902
Telstra Group
Year ended 30 June
2022
2021
Net gain on disposal of property, plant
and equipment and intangible assets
$m
$m
Net gain on disposal of businesses,
Earnings used in the calculation of
basic and diluted EPS
Profit for the year attributable to
equity holders of Telstra Entity
Weighted average number of ordinary
Number of shares
1,688
1,857
controlled entities and equity
accounted investments
Revenue of a dealer-lessor
Net (gain)/loss on lease related
transactions
(millions)
Government grants received relating
to investing activities
Weighted average number of ordinary
shares used in the calculation of basic
11,755
11,875
Other
shares
EPS
diluted EPS
Basic EPS
Diluted EPS
Dilutive effect of certain employee
share instruments
Weighted average number of ordinary
9
17
shares used in the calculation of
11,764
11,892
cents
cents
14.4
14.3
15.6
15.6
When we calculate the basic EPS, we adjust the weighted average
number of ordinary shares to exclude the shares held in trust by
Other
Telstra Growthshare Trust (Growthshare).
Information about equity instruments issued under Growthshare
can be found in note 5.2.
Share-based payments
Defined benefit plan expense
Share of net loss from joint ventures
and associated entities
Impairment losses (excluding
inventories, trade and other
receivables)
Effects of exchange rate changes on
other investments
Cash movements in operating assets
and liabilities
Decrease in trade and other
receivables and contract assets
(Increase)/decrease in inventories
Decrease/(increase) in prepayments
and other assets
Increase/(decrease) in deferred
contract costs
Increase/(decrease) in trade and other
(110)
527
(158)
(7)
(15)
(2)
(22)
-
19
45
31
26
(22)
(6)
620
(101)
56
104
241
(103)
654
(66)
(107)
(42)
4
(19)
(1)
18
52
24
40
15
(12)
589
31
(88)
(18)
(98)
Add/(subtract) non-cash items
Depreciation and amortisation
4,358
4,646
payables
in advance
(Decrease)/increase in contract
liabilities and other revenue received
(12)
111
Decrease in net taxes payable
Increase/(decrease) in provisions
Net cash provided by operating
activities
(152)
15
(222)
(79)
7,249
7,231
Table B
Telstra Group
Cash at bank and on hand
Bank deposits and negotiable
certificates of deposit
Cash and cash equivalents in the
statement of cash flows
Year ended 30 June
2022
2021
$m
417
623
$m
266
859
1,040
1,125
2.6.3 Recognition, measurement and presentation
(a) Cash and cash equivalents
Cash and cash equivalents include cash at bank and on hand, bank
deposits and negotiable certificates of deposit that are held to
meet short-term cash commitments rather than for investment
purposes.
Bank deposits and negotiable certificates of deposit are classified
as financial assets held at amortised cost.
(b) Short-term borrowings in financing cash flows
Where our short-term borrowings are held for the purposes of
meeting short-term cash commitments, we report the cash
receipts and subsequent repayments in financing activities on a net
basis in the statement of cash flows.
(c) Goods and Services Tax (GST) (including other value-added
taxes)
We record our revenue, expenses and assets net of any applicable
GST, except where the amount of GST incurred is not recoverable
from the Australian Taxation Office (ATO). In these circumstances
the GST is recognised as part of the cost of acquisition of the asset
or as part of the expense item.
Receivable and payable balances in the statement of financial
position, and receipts from customers and payments to suppliers in
the statement of cash flows include GST where we have either
included GST in our price charged to customers or a supplier has
included GST in their price charged to us. The net amount of GST
due to the ATO but not paid is included in our current trade and
other payables.
Telstra Corporation Limited and controlled entities | F29
F30 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 105
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 31 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 3. Our core assets, lease
Section 3. Our core assets, lease
arrangements and working capital
arrangements and working capital
This section describes our core long-term tangible (owned and
leased) and intangible assets underpinning the Group’s
This section describes our core long-term tangible (owned and
performance and provides a summary of our asset impairment
leased) and intangible assets underpinning the Group’s performance
assessment. This section also describes our short-term assets
and provides a summary of our asset impairment assessment. This
and liabilities, i.e. our working capital supporting the operating
section also describes our short-term assets and liabilities, i.e. our
liquidity of our business.
working capital supporting the operating liquidity of our business.
SECTION 3.
3.1 Property, plant and equipment and intangible assets
OUR CORE ASSETS, LEASE ARRANGEMENTS AND WORKING CAPITAL
This note provides details of our tangible and intangible
assets, including goodwill, and their impairment assessment.
Our impairment assessment compares the carrying values of
our cash generating units (CGUs) with their recoverable
amounts determined using a ‘value in use’ calculation. The
value in use calculations use key assumptions such as cash
flow forecasts, discount rates and terminal growth rates.
3.1.1 Property, plant and equipment
Table A shows movements in the net book value of our property,
plant and equipment assets during the financial year.
Table A
Land and
buildings
Communication
assets
Other plant and
equipment
Total property,
plant and
equipment
Telstra Group
Net book value at 1 July 2020
Additions
Depreciation expenses
Other movements
Net book value at 30 June 2021, comprising:
Cost
Accumulated depreciation and impairment
Net book value at 1 July 2021
Additions
Additions due to acquisitions of controlled entities
Depreciation expenses
Other movements
Net book value at 30 June 2022, comprising:
Cost
Accumulated depreciation and impairment
$m
624
52
(55)
(33)
588
1,344
(756)
588
59
27
(60)
1
615
1,274
(659)
$m
20,627
2,064
(2,476)
(158)
20,057
62,302
(42,245)
20,057
2,093
-
(2,433)
(53)
19,664
62,475
(42,811)
$m
248
48
(75)
(3)
218
1,096
(878)
218
79
6
(79)
(18)
206
1,130
(924)
$m
21,499
2,164
(2,606)
(194)
20,863
64,742
(43,879)
20,863
2,231
33
(2,572)
(70)
20,485
64,879
(44,394)
The following paragraphs provide further information about our
fixed asset classes:
of the rental income those assets continue to be presented as
owned assets not subject to operating leases.
• additions to property, plant and equipment include $42 million
(2021: $41 million) of capitalised borrowing costs directly
attributable to qualifying assets
• land and buildings include leasehold improvements related to
right-of-use assets recognised under our leasing arrangements
(Telstra as a lessee)
• communication assets include certain network land and building
assets that are essential to the operation of our communication
assets
• our property, plant and equipment assets include buildings and
communication assets which are mainly used by us to generate
revenue, however we also generate an insignificant rental income
from those assets. Given the dual purpose and the insignificance
• as at 30 June 2022, $1,137 million (2021: $1,133 million) of
property, plant and equipment was under construction and not
installed or ready for use
• other movements include $83 million (2021: $30 million) net
transfers to intangible assets, $44 million increase (2021: $74
million decrease) due to net foreign exchange differences, $23
million (2021: $5 million) impairment loss, $5 million (2021: $85
million) disposals, and other individually insignificant
transactions.
106 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F31
2022.Financial Report.book Page 31 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 32 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Section 3. Our core assets, lease
arrangements and working capital
This section describes our core long-term tangible (owned and
leased) and intangible assets underpinning the Group’s
performance and provides a summary of our asset impairment
assessment. This section also describes our short-term assets
and liabilities, i.e. our working capital supporting the operating
liquidity of our business.
SECTION 3.
3.1 Property, plant and equipment and intangible assets
OUR CORE ASSETS, LEASE ARRANGEMENTS AND WORKING CAPITAL
This note provides details of our tangible and intangible
assets, including goodwill, and their impairment assessment.
Our impairment assessment compares the carrying values of
our cash generating units (CGUs) with their recoverable
amounts determined using a ‘value in use’ calculation. The
value in use calculations use key assumptions such as cash
flow forecasts, discount rates and terminal growth rates.
3.1.1 Property, plant and equipment
Table A shows movements in the net book value of our property,
plant and equipment assets during the financial year.
Table A
Land and
Communication
Other plant and
Total property,
Telstra Group
buildings
assets
equipment
plant and
equipment
Net book value at 1 July 2020
Additions
Depreciation expenses
Other movements
Net book value at 30 June 2021, comprising:
Accumulated depreciation and impairment
Additions due to acquisitions of controlled entities
Net book value at 1 July 2021
Additions
Depreciation expenses
Other movements
Net book value at 30 June 2022, comprising:
Accumulated depreciation and impairment
Cost
Cost
fixed asset classes:
• additions to property, plant and equipment include $42 million
(2021: $41 million) of capitalised borrowing costs directly
attributable to qualifying assets
• land and buildings include leasehold improvements related to
right-of-use assets recognised under our leasing arrangements
(Telstra as a lessee)
• communication assets include certain network land and building
assets that are essential to the operation of our communication
assets
• our property, plant and equipment assets include buildings and
communication assets which are mainly used by us to generate
revenue, however we also generate an insignificant rental income
from those assets. Given the dual purpose and the insignificance
$m
624
52
(55)
(33)
588
1,344
(756)
588
59
27
(60)
1
615
1,274
(659)
$m
20,627
2,064
(2,476)
(158)
20,057
62,302
(42,245)
20,057
2,093
-
(2,433)
(53)
19,664
62,475
(42,811)
$m
248
48
(75)
(3)
218
1,096
(878)
218
79
6
(79)
(18)
206
1,130
(924)
$m
21,499
2,164
(2,606)
(194)
20,863
64,742
(43,879)
20,863
2,231
33
(2,572)
(70)
20,485
64,879
(44,394)
owned assets not subject to operating leases.
• as at 30 June 2022, $1,137 million (2021: $1,133 million) of
property, plant and equipment was under construction and not
installed or ready for use
• other movements include $83 million (2021: $30 million) net
transfers to intangible assets, $44 million increase (2021: $74
million decrease) due to net foreign exchange differences, $23
million (2021: $5 million) impairment loss, $5 million (2021: $85
million) disposals, and other individually insignificant
transactions.
The following paragraphs provide further information about our
of the rental income those assets continue to be presented as
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.2 Goodwill and other intangible assets
Table B shows movements in the net book value of our intangible
assets during the financial year.
Table B
Goodwill
Telstra Group
Software
assets
Licences
Other intan-
gible assets
Total intan-
gible assets
Net book value at 1 July 2020
Additions
Additions due to acquisitions of controlled entities
Amortisation expense
Other movements
Net book value at 30 June 2021, comprising:
Cost
Accumulated amortisation and impairment
Net book value at 1 July 2021
Additions
Additions due to acquisitions of controlled entities
Amortisation expense
Other movements
Net book value at 30 June 2022, comprising:
Cost
Accumulated amortisation and impairment
$m
1,085
-
14
-
(47)
1,052
1,139
(87)
1,052
-
676
-
41
1,769
1,856
(87)
$m
3,510
924
7
(964)
(22)
3,455
11,281
(7,826)
3,455
891
103
(823)
83
3,709
12,048
(8,339)
$m
2,189
120
-
(265)
(1)
2,043
3,328
(1,285)
2,043
238
-
(282)
(4)
1,995
3,547
(1,552)
$m
628
7
6
(85)
25
581
1,525
(944)
581
42
147
(94)
6
682
1,735
(1,053)
$m
7,412
1,051
27
(1,314)
(45)
7,131
17,273
(10,142)
7,131
1,171
926
(1,199)
126
8,155
19,186
(11,031)
The following paragraphs detail further information about our
intangible asset classes:
• additions to software assets include $14 million (2021: $14
million) of capitalised borrowing costs directly attributable to
qualifying assets
• software assets mostly comprise internally generated assets.
• licences comprise of the spectrum licences and apparatus
licences obtained to operate a range of radiocommunications
devices
• other movements include $48 million increase (2021: $61 million
decrease) due to net foreign exchange differences, $83 million
(2021: $30 million) net transfers from property, plant and
equipment to intangible assets, and other individually
insignificant transactions.
Capitalisation
of development
costs
We apply judgement to determine
whether to capitalise development
costs.
Development costs are only
capitalised if the project is assessed
to be technically and commercially
feasible, we are able to use or sell the
asset, and we have sufficient
resources and intent to complete the
development.
As at 30 June 2022, $434 million
(2021: $451 million) of software
assets were not installed and ready
for use.
Telstra Corporation Limited and controlled entities | F31
F32 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 107
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 33 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 34 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.3 Depreciation and amortisation
Table C presents the weighted average useful lives of our property,
plant and equipment and identifiable intangible assets.
Table C
Telstra Group
Property, plant and equipment
Buildings
Communication assets
Other plant and equipment
Intangible assets
Software assets
Licences
Other intangibles
Expected benefit
(years)
As at 30 June
2022
2021
30
25
7
9
14
17
30
25
8
9
13
17
3.1.4 Impairment assessment
All non-current tangible and intangible assets are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amounts may not be recoverable. Goodwill and
intangible assets with an indefinite useful life are not subject to
amortisation and are assessed for impairment at least annually. If
the carrying amount of the asset exceeds its recoverable amount,
the asset is impaired and an impairment loss is charged to the
income statement so as to reduce the carrying amount.
The recoverable amount of an asset is the higher of its fair value
less cost of disposal and its value in use. Fair value less cost of
disposal is measured with reference to quoted market prices in an
active market. Value in use represents the present value of the
future amount expected to be recovered through the cash inflows
and outflows arising from the asset’s continued use and
subsequent disposal.
We identify CGUs, the smallest groups of assets that generate
largely independent cash inflows from other assets or groups of
assets. CGUs to which goodwill is allocated cannot be larger than
an operating segment.
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.4 Impairment assessment (continued)
(a) Telstra Entity ubiquitous telecommunication network
An impairment assessment is performed at the level of our Telstra
Entity ubiquitous telecommunications network CGU.
Impairment assessment of
our ubiquitous
telecommunications network
We have determined that assets which form part of the Telstra Entity ubiquitous
telecommunications network, comprising the customer access network and the core
network, are working together to generate independent cash inflows. No one item of
telecommunications equipment is of any value without the other assets to which it is
connected to deliver our products and services.
Useful lives and
residual values
of tangible and
intangible
assets
We apply judgement to estimate
useful lives and residual values of our
assets and review them each year. If
useful lives or residual values need to
be modified, the depreciation and
amortisation expense changes from
the date of reassessment until the
end of the revised useful life for both
the current and future years.
Assessment of useful lives and
residual values includes a
comparison with international trends
for telecommunication companies
and, in relation to communication
assets, a determination of when the
asset may be superseded
technologically or made obsolete. For
intangible assets, specifically
business software, useful lives are
adjusted to align with expected
retirement dates of the relevant
applications under the current
corporate strategies.
In the financial year 2022, there was
no significant net effect of the
assessment of useful lives.
108 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F33
F34 | Telstra Corporation Limited and controlled entities
Indicators of impairment may include changes in our operating and economic
assumptions or possible impacts from risks such as the COVID-19 pandemic and climate
change. We apply judgement in determining whether certain trends with an adverse
impact on our cash flows are considered impairment indicators.
The COVID-19 pandemic continues to create uncertainty in the economic environments
we operate in. However, given the long-lived nature of the majority of our assets and the
nature of the services we provide, we did not consider it as an impairment indicator of our
ubiquitous telecommunications network.
We continue to assess the potential impacts of climate change and the transition to a
lower carbon economy. Some financial impacts of meeting our medium-term
environmental goals associated with both maintaining our carbon neutral status, and
with enabling 100 per cent renewable energy generation equivalent to our consumption by
2025, are incorporated in our management forecasts. On the other hand, work is ongoing
to incorporate the potential long-term financial impacts of climate change and our
relevant adaptation strategies in our forward plans, as those impacts are progressively
identified and strategies developed. Telstra operates significant physical assets
including telephone exchanges, mobile towers, data centres and fibre network. These are
located in city centres as well as urban and regional areas of Australia with many exposed
to extreme weather conditions. Increased frequency and severity of extreme weather
events such as bushfires, coastal inundation and flooding, cyclones, high temperatures,
and flash flooding may damage and disrupt our operations and service delivery.
During the year, we progressed our understanding of the potential long-term financial
impacts of extreme weather events from asset loss, asset damage and service disruption
on our above ground assets in Australia, which is based on a range of climate scenarios to
2050. We have assessed the potential impacts of physical climate risks on Telstra
associated with bushfires, cyclones, coastal inundation and urban flooding. We have not
yet assessed in detail or quantified the impacts of other potential climate-related chronic
physical risks (such as increases in temperature) or transition risks or opportunities.
Based on our experience with extreme weather events, and considering the diverse
location and nature of our assets as well as our continued focus on network resiliency and
business continuity programs, we do not consider the potential impacts of climate change
and the transition to a lower carbon economy to be an impairment indicator at this stage.
In addition, based on the sensitivity analysis performed, the range of financial impacts
identified and quantified to date for possible climate scenarios, namely the cost to
relocate and/or replace assets at risk, is not significant compared to the excess of the
recoverable amount over the carrying value of our ubiquitous telecommunications
network.
As we continue to assess climate impacts to our business we will incorporate any
identified financial impacts into our impairment assessment. Should we identify material
adverse effects of climate change or transition to a lower carbon economy on our cash
flows, we may deem it an impairment indicator in the future.
Management forecasts require significant judgements and assumptions and are subject
to risk and uncertainty that may be beyond our control. Hence, there is a possibility that
changes in circumstances will materially alter projections, which may impact our
assessment of impairment indicators and the recoverable amount of assets at each
reporting date.
Notes to the financial statements (continued) 2022.Financial Report.book Page 33 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 34 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.1 Property, plant and equipment and intangible assets
3.1.4 Impairment assessment
(continued)
3.1.3 Depreciation and amortisation
Table C presents the weighted average useful lives of our property,
plant and equipment and identifiable intangible assets.
All non-current tangible and intangible assets are reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amounts may not be recoverable. Goodwill and
intangible assets with an indefinite useful life are not subject to
amortisation and are assessed for impairment at least annually. If
the carrying amount of the asset exceeds its recoverable amount,
Table C
Expected benefit
the asset is impaired and an impairment loss is charged to the
(years)
income statement so as to reduce the carrying amount.
Telstra Group
As at 30 June
2022
2021
30
25
7
9
14
17
30
25
8
9
13
17
The recoverable amount of an asset is the higher of its fair value
less cost of disposal and its value in use. Fair value less cost of
disposal is measured with reference to quoted market prices in an
active market. Value in use represents the present value of the
future amount expected to be recovered through the cash inflows
and outflows arising from the asset’s continued use and
subsequent disposal.
We identify CGUs, the smallest groups of assets that generate
largely independent cash inflows from other assets or groups of
assets. CGUs to which goodwill is allocated cannot be larger than
an operating segment.
Property, plant and equipment
Buildings
Communication assets
Other plant and equipment
Intangible assets
Software assets
Licences
Other intangibles
Useful lives and
residual values
of tangible and
intangible
assets
We apply judgement to estimate
useful lives and residual values of our
assets and review them each year. If
useful lives or residual values need to
be modified, the depreciation and
amortisation expense changes from
the date of reassessment until the
end of the revised useful life for both
the current and future years.
Assessment of useful lives and
residual values includes a
comparison with international trends
for telecommunication companies
and, in relation to communication
assets, a determination of when the
asset may be superseded
technologically or made obsolete. For
intangible assets, specifically
business software, useful lives are
adjusted to align with expected
retirement dates of the relevant
applications under the current
corporate strategies.
In the financial year 2022, there was
no significant net effect of the
assessment of useful lives.
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.4 Impairment assessment (continued)
(a) Telstra Entity ubiquitous telecommunication network
An impairment assessment is performed at the level of our Telstra
Entity ubiquitous telecommunications network CGU.
Impairment assessment of
our ubiquitous
telecommunications network
We have determined that assets which form part of the Telstra Entity ubiquitous
telecommunications network, comprising the customer access network and the core
network, are working together to generate independent cash inflows. No one item of
telecommunications equipment is of any value without the other assets to which it is
connected to deliver our products and services.
Indicators of impairment may include changes in our operating and economic
assumptions or possible impacts from risks such as the COVID-19 pandemic and climate
change. We apply judgement in determining whether certain trends with an adverse
impact on our cash flows are considered impairment indicators.
The COVID-19 pandemic continues to create uncertainty in the economic environments
we operate in. However, given the long-lived nature of the majority of our assets and the
nature of the services we provide, we did not consider it as an impairment indicator of our
ubiquitous telecommunications network.
We continue to assess the potential impacts of climate change and the transition to a
lower carbon economy. Some financial impacts of meeting our medium-term
environmental goals associated with both maintaining our carbon neutral status, and
with enabling 100 per cent renewable energy generation equivalent to our consumption by
2025, are incorporated in our management forecasts. On the other hand, work is ongoing
to incorporate the potential long-term financial impacts of climate change and our
relevant adaptation strategies in our forward plans, as those impacts are progressively
identified and strategies developed. Telstra operates significant physical assets
including telephone exchanges, mobile towers, data centres and fibre network. These are
located in city centres as well as urban and regional areas of Australia with many exposed
to extreme weather conditions. Increased frequency and severity of extreme weather
events such as bushfires, coastal inundation and flooding, cyclones, high temperatures,
and flash flooding may damage and disrupt our operations and service delivery.
During the year, we progressed our understanding of the potential long-term financial
impacts of extreme weather events from asset loss, asset damage and service disruption
on our above ground assets in Australia, which is based on a range of climate scenarios to
2050. We have assessed the potential impacts of physical climate risks on Telstra
associated with bushfires, cyclones, coastal inundation and urban flooding. We have not
yet assessed in detail or quantified the impacts of other potential climate-related chronic
physical risks (such as increases in temperature) or transition risks or opportunities.
Based on our experience with extreme weather events, and considering the diverse
location and nature of our assets as well as our continued focus on network resiliency and
business continuity programs, we do not consider the potential impacts of climate change
and the transition to a lower carbon economy to be an impairment indicator at this stage.
In addition, based on the sensitivity analysis performed, the range of financial impacts
identified and quantified to date for possible climate scenarios, namely the cost to
relocate and/or replace assets at risk, is not significant compared to the excess of the
recoverable amount over the carrying value of our ubiquitous telecommunications
network.
As we continue to assess climate impacts to our business we will incorporate any
identified financial impacts into our impairment assessment. Should we identify material
adverse effects of climate change or transition to a lower carbon economy on our cash
flows, we may deem it an impairment indicator in the future.
Management forecasts require significant judgements and assumptions and are subject
to risk and uncertainty that may be beyond our control. Hence, there is a possibility that
changes in circumstances will materially alter projections, which may impact our
assessment of impairment indicators and the recoverable amount of assets at each
reporting date.
Telstra Corporation Limited and controlled entities | F33
F34 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 109
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 35 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 36 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.4 Impairment assessment (continued)
(b) Goodwill
We have used the following key assumptions in determining the
recoverable amount of our CGUs to which goodwill has been
allocated:
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.5 Recognition and measurement
The carrying amount of goodwill has been allocated to the CGUs as
detailed in Table D.
Telstra Group
Table E
Discount rate
Terminal value
growth rate
Asset class
Recognition and measurement
Table D
Telstra Group
Telstra Enterprise International Group ¹
Telstra Enterprise Australia Group ²
Telstra Consumer & Small Business
Group
MedicalDirector Group
Power Health Group
Other ³
As at 30 June
2022
2021
$m
585
437
323
224
89
111
1,769
$m
543
437
9
-
-
63
1,052
1 These CGUs operate in overseas locations. Therefore, the goodwill allocated to these
CGUs will fluctuate in line with movements in applicable foreign exchange rates.
2 The Telstra Enterprise Australia Group includes goodwill from past acquisitions
integrated into this business.
3 Other includes individually immaterial CGUs.
In regard to goodwill recognised on acquisitions completed during
the financial year 2022 there were no impairment indicators in
relation to these assets since their acquisition date. For all other
CGUs with allocated goodwill we used a value in use calculation to
determine the recoverable amount.
2022
2021
2022
2021
%
9.9
%
9.0
14.0
13.1
%
2.0
2.5
%
2.0
2.3
Telstra Enterprise
International Group
Telstra Enterprise
Australia Group
The discount rate represents the pre-tax discount rate applied to
the cash flow projections. The discount rate reflects the market
determined, risk-adjusted discount rate that is adjusted for
specific risks relating to the CGU and the countries in which it
operates.
The terminal value growth rate represents the growth rate applied
to extrapolate our cash flows beyond the forecast period. These
growth rates are based on our expectation of the CGUs’ long-term
performance in their markets.
We also perform a sensitivity analysis to examine the effect of a
change in a key assumption on the remaining CGUs. The pre-tax
discount rate would need to increase by 364 basis points (2021: 300
basis points) or the terminal value growth rate would need to
decrease by 697 basis points (2021: 584 basis points) before the
recoverable amount of any of the CGUs would equal its carrying
value. No other changes in key assumptions will result in a material
impairment charge for any of the CGUs.
Determining
CGUs and their
recoverable
amount for
impairment
assessment of
goodwill
We apply judgement to identify our
CGUs and determine their recoverable
amounts using a value in use
calculation. These judgements
include cash flow forecasts, as well
as the selection of growth rates,
terminal growth rates and discount
rates based on experience and our
expectations for the future.
Our cash flow projections are based
on five-year management-approved
forecasts unless a different period is
justified. The forecasts use
management estimates to determine
income, expenses, capital
expenditure and cash flows for each
asset and CGU.
We have concluded that the
generated discounted cash flows
continue to support the carrying
values of our CGUs, thus no
impairment has been identified.
Property, plant and
Property, plant and equipment, including assets under construction, is recorded at cost less
equipment
accumulated depreciation and impairment. Cost includes the purchase price and costs directly
attributable to bringing the asset to the location and condition necessary for its intended use.
We capitalise borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset. All other borrowing costs are recognised as an expense in our income
statement when incurred.
Property, plant and equipment other than freehold land are depreciated on a straight-line basis in the
income statement from the time when the assets are installed and ready for use. Items of property,
plant and equipment excluding leasehold improvements are depreciated over their estimated useful
lives. Leasehold improvements are depreciated over the shorter of the lease term and the useful life of
Goodwill
Goodwill acquired in a business combination is measured at cost. Cost represents the excess of what
we pay for the business combination over the fair value of the identifiable net assets acquired at the
Goodwill is not amortised but is tested for impairment on an annual basis or when an indication of
Goodwill arising on the acquisition of joint ventures or associated entities constitutes part of the cost
the assets.
date of acquisition.
impairment arises.
of the investment.
Internally generated
intangible assets
Internally generated intangible assets include mainly IT development costs incurred in design, build
and testing of new or improved IT products and systems.
Research costs are expensed when incurred.
Capitalised development costs include:
• external direct costs of materials and services consumed
• payroll and payroll-related costs for employees (including contractors) directly associated with the
• borrowing costs that are directly attributable to the qualifying assets.
Internally generated intangible assets have a finite life and are amortised on a straight-line basis over
project
their useful lives.
Acquired intangible
We acquire other intangible assets either as part of a business combination or through a separate
assets
acquisition. Intangible assets acquired in a business combination are recorded at their fair value at the
date of acquisition and recognised separately from goodwill. Intangible assets acquired through a
specific acquisition are recorded at cost.
Intangible assets that are considered to have a finite life are amortised on a straight-line basis over the
useful lives. Intangible assets that are considered to have an indefinite life are not amortised but
tested for impairment on an annual basis or when an indication of impairment exists.
110 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F35
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Notes to the financial statements (continued) 2022.Financial Report.book Page 35 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 36 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
The carrying amount of goodwill has been allocated to the CGUs as
Telstra Group
growth rate
Asset class
Recognition and measurement
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.5 Recognition and measurement
Property, plant and
equipment
Property, plant and equipment, including assets under construction, is recorded at cost less
accumulated depreciation and impairment. Cost includes the purchase price and costs directly
attributable to bringing the asset to the location and condition necessary for its intended use.
Goodwill
We capitalise borrowing costs that are directly attributable to the acquisition, construction or
production of a qualifying asset. All other borrowing costs are recognised as an expense in our income
statement when incurred.
Property, plant and equipment other than freehold land are depreciated on a straight-line basis in the
income statement from the time when the assets are installed and ready for use. Items of property,
plant and equipment excluding leasehold improvements are depreciated over their estimated useful
lives. Leasehold improvements are depreciated over the shorter of the lease term and the useful life of
the assets.
Goodwill acquired in a business combination is measured at cost. Cost represents the excess of what
we pay for the business combination over the fair value of the identifiable net assets acquired at the
date of acquisition.
Goodwill is not amortised but is tested for impairment on an annual basis or when an indication of
impairment arises.
Goodwill arising on the acquisition of joint ventures or associated entities constitutes part of the cost
of the investment.
Internally generated
intangible assets
Internally generated intangible assets include mainly IT development costs incurred in design, build
and testing of new or improved IT products and systems.
Research costs are expensed when incurred.
Capitalised development costs include:
• external direct costs of materials and services consumed
• payroll and payroll-related costs for employees (including contractors) directly associated with the
project
• borrowing costs that are directly attributable to the qualifying assets.
Internally generated intangible assets have a finite life and are amortised on a straight-line basis over
their useful lives.
Acquired intangible
assets
We acquire other intangible assets either as part of a business combination or through a separate
acquisition. Intangible assets acquired in a business combination are recorded at their fair value at the
date of acquisition and recognised separately from goodwill. Intangible assets acquired through a
specific acquisition are recorded at cost.
Intangible assets that are considered to have a finite life are amortised on a straight-line basis over the
useful lives. Intangible assets that are considered to have an indefinite life are not amortised but
tested for impairment on an annual basis or when an indication of impairment exists.
Telstra Corporation Limited and controlled entities | F35
F36 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 111
3.1 Property, plant and equipment and intangible assets
We have used the following key assumptions in determining the
3.1.4 Impairment assessment (continued)
(continued)
(b) Goodwill
detailed in Table D.
Table D
Telstra Group
Telstra Enterprise International Group ¹
Telstra Enterprise Australia Group ²
Telstra Consumer & Small Business
MedicalDirector Group
Power Health Group
Group
Other ³
recoverable amount of our CGUs to which goodwill has been
allocated:
Table E
Discount rate
Terminal value
As at 30 June
2022
2021
$m
585
437
323
224
89
111
1,769
$m
543
437
9
-
-
63
1,052
2022
2021
2022
2021
%
9.9
%
9.0
14.0
13.1
%
2.0
2.5
%
2.0
2.3
Telstra Enterprise
International Group
Telstra Enterprise
Australia Group
The discount rate represents the pre-tax discount rate applied to
the cash flow projections. The discount rate reflects the market
determined, risk-adjusted discount rate that is adjusted for
specific risks relating to the CGU and the countries in which it
operates.
The terminal value growth rate represents the growth rate applied
to extrapolate our cash flows beyond the forecast period. These
growth rates are based on our expectation of the CGUs’ long-term
1 These CGUs operate in overseas locations. Therefore, the goodwill allocated to these
CGUs will fluctuate in line with movements in applicable foreign exchange rates.
performance in their markets.
2 The Telstra Enterprise Australia Group includes goodwill from past acquisitions
integrated into this business.
3 Other includes individually immaterial CGUs.
In regard to goodwill recognised on acquisitions completed during
the financial year 2022 there were no impairment indicators in
relation to these assets since their acquisition date. For all other
CGUs with allocated goodwill we used a value in use calculation to
determine the recoverable amount.
We also perform a sensitivity analysis to examine the effect of a
change in a key assumption on the remaining CGUs. The pre-tax
discount rate would need to increase by 364 basis points (2021: 300
basis points) or the terminal value growth rate would need to
decrease by 697 basis points (2021: 584 basis points) before the
recoverable amount of any of the CGUs would equal its carrying
value. No other changes in key assumptions will result in a material
impairment charge for any of the CGUs.
Determining
CGUs and their
recoverable
amount for
impairment
assessment of
goodwill
We apply judgement to identify our
CGUs and determine their recoverable
amounts using a value in use
calculation. These judgements
include cash flow forecasts, as well
as the selection of growth rates,
terminal growth rates and discount
rates based on experience and our
expectations for the future.
Our cash flow projections are based
on five-year management-approved
forecasts unless a different period is
justified. The forecasts use
management estimates to determine
income, expenses, capital
expenditure and cash flows for each
asset and CGU.
We have concluded that the
generated discounted cash flows
continue to support the carrying
values of our CGUs, thus no
impairment has been identified.
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 37 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 38 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.2 Lease arrangements
This note provides details about our leasing arrangements,
where Telstra is either a lessee or a lessor, including
arrangements where Telstra is an intermediate lessor (i.e.
subleases).
3.2.1 Telstra as a lessee
Our most significant lease contracts relate to network and non-
network properties, including:
• land and buildings supporting our network assets and data
centres
• office buildings, retail spaces and warehouses.
Other lease arrangements include:
• communication assets dedicated to solution management that
we provide to our enterprise customers
• spaces on mobile towers
• renewable energy plants
• motor vehicles
• laptops, personal computers and printers.
None of our leases include residual value guarantees. Other
features of our leases are described below.
(a) Leases with extension, termination and purchase options
We do not have any significant purchase options in our property
leases.
Extension options are included in a number of commercial and
network property leases and are taken up to maximise the
operational flexibility in terms of managing the assets used in our
core business operations.
The majority of extension and termination options within our lease
contracts are exercisable only by us and not by the respective
lessor, with the exception of ‘holdover periods’ in our property
leases, where generally either party can terminate the lease.
The extension, termination and purchase options are considered
when determining lease term.
On 31 August 2021, the assets and liabilities of our towers business
were transferred to Towers Business Operating Trust (Trust). The
trustee of the Trust is our subsidiary Amplitel Pty Ltd (Amplitel),
previously known as Telstra Towerco No.1 Pty Ltd. On 1 September
2021, we disposed of 49 per cent interests in the Trust and
Amplitel. Refer to note 6.1.2 for further details about the sale of
units in the Trust.
As the towers business became operational, a number of inter-
company arrangements with the Telstra Entity became effective,
including long-term arrangements to access tower sites, some of
which are located on leased land. We have considered those inter-
company arrangements as a significant event impacting our
judgement when reassessing the lease term of our external leases
and adjusted the lease term for those leases where the inter-
company sub-leases extended beyond the period of our previous
judgement. As a result, we have recognised a $349 million increase
in our lease liabilities with a corresponding increase in our right-of-
use assets.
Determining lease term for
property leases
We apply judgement to determine a lease term for leases with extension, termination or
purchase options. We also consider lease modifications where we continue to use the
same underlying asset for an extended term.
Our property lease terms are negotiated on an individual basis and contain a wide range
of different terms and conditions, with typical fixed term periods between three and 15
years.
In determining the lease term, we consider all facts and circumstances that create an
economic incentive to exercise an extension, termination or purchase option, including
holdover periods where relevant.
In particular, we consider contractual terms under which the lease term can be extended
or terminated, potential relocation costs, asset specific factors and any relevant
leasehold improvements or our wider strategy and policy decisions.
We also consider long-term inter-company arrangements to access tower sites located
on land leased from third parties.
Extension options are only included in the lease term if the lease is reasonably certain to
be extended. Periods beyond termination options are only included in the lease term if it
is reasonably certain that the lease will not be terminated.
The longer the fixed lease term, the less certain a lessee is to exercise an option to extend
the lease.
The extension options for leases of office buildings have generally not been included in
the lease term due to a competitive marketplace and our commercial ability to either
substantially renegotiate or replace these assets instead of exercising the extension
options.
None of our termination options have been considered reasonably certain to be exercised;
therefore, the lease terms have not been shortened and all future cash flows have been
included in the measurement of the lease liability.
The lease term assessment is reviewed if a significant event or change in circumstances
occurs which affects this assessment and that is within our control as a lessee.
3.2 Lease arrangements (continued)
3.2.1 Telstra as a lessee (continued)
(b) Leases with lease payment increases
(c) Leases with variable lease payments that do not depend on an
index or a rate
Some of our leases, such as leases of renewable energy plants,
include variable lease payments that do not depend on an index or
Under most of our lease arrangements, we pay fixed lease
a rate. Such payments are not included in the measurement of the
payments, which are included in the measurement of lease
lease liability and are expensed as incurred in ‘other expenses’ in
liabilities at initial recognition or at the time of reassessment. Fixed
the income statement.
lease payments in our property leases usually include fixed
increases. However, some of our property leases contain other
(d) Right-of-use assets
escalation clauses, including increases subject to the consumer
Table A shows movements in net book value of our right-of-use
price index, the greater of fixed increase or the consumer price
assets during the financial year.
index or increases subject to market rates. Market rent review
terms are used to respond to competitive market trends and to
minimise our fixed costs. No material adjustments to lease
liabilities resulting from such escalation clauses were recognised
during the financial year 2022.
Right-of-use assets for underlying assets
Other
Total
Land and
buildings
$m
2,782
409
(448)
(33)
(17)
2,693
3,583
(890)
2,693
513
96
(482)
(32)
1
2,789
4,149
(1,360)
$m
248
243
(278)
(25)
(29)
159
400
(241)
159
121
-
(105)
(13)
(25)
137
351
(214)
$m
3,030
652
(726)
(58)
(46)
2,852
3,983
(1,131)
2,852
634
96
(587)
(45)
(24)
2,926
4,500
(1,574)
Table A
Telstra Group
Net book value at 1 July 2020
Additions
Depreciation expense
Terminations
Other movements
Net book value at 30 June 2021, comprising:
Cost
Accumulated depreciation and impairment
Net book value at 1 July 2021
Additions
Depreciation expense
Terminations
Other movements
Net book value at 30 June 2022, comprising:
Cost
Accumulated depreciation and impairment
Additions due to acquisitions of controlled entities and businesses
In the prior financial year, terminated leases of other assets mainly
included derecognised right-of-use assets for our mobile handset
leases (Telstra as a lessee), which we ceased following
terminations of the back-to-back customer operating leases.
Other movements include other individually insignificant
transactions.
Table B provides information about the weighted average useful
lives of our right-of-use assets.
Table B
Weighted average
Telstra Group
Right-of-use assets
Land and buildings
Other
useful life (years)
As at 30 June
2022
2021
9
3
9
4
112 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F37
F38 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 37 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 38 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Our most significant lease contracts relate to network and non-
when determining lease term.
This note provides details about our leasing arrangements,
where Telstra is either a lessee or a lessor, including
arrangements where Telstra is an intermediate lessor (i.e.
3.2 Lease arrangements
subleases).
3.2.1 Telstra as a lessee
network properties, including:
centres
• office buildings, retail spaces and warehouses.
Other lease arrangements include:
we provide to our enterprise customers
• spaces on mobile towers
• renewable energy plants
• motor vehicles
• laptops, personal computers and printers.
Extension options are included in a number of commercial and
network property leases and are taken up to maximise the
operational flexibility in terms of managing the assets used in our
core business operations.
The majority of extension and termination options within our lease
contracts are exercisable only by us and not by the respective
lessor, with the exception of ‘holdover periods’ in our property
leases, where generally either party can terminate the lease.
The extension, termination and purchase options are considered
On 31 August 2021, the assets and liabilities of our towers business
trustee of the Trust is our subsidiary Amplitel Pty Ltd (Amplitel),
previously known as Telstra Towerco No.1 Pty Ltd. On 1 September
2021, we disposed of 49 per cent interests in the Trust and
Amplitel. Refer to note 6.1.2 for further details about the sale of
As the towers business became operational, a number of inter-
company arrangements with the Telstra Entity became effective,
including long-term arrangements to access tower sites, some of
which are located on leased land. We have considered those inter-
company arrangements as a significant event impacting our
• land and buildings supporting our network assets and data
were transferred to Towers Business Operating Trust (Trust). The
• communication assets dedicated to solution management that
units in the Trust.
None of our leases include residual value guarantees. Other
judgement when reassessing the lease term of our external leases
features of our leases are described below.
(a) Leases with extension, termination and purchase options
and adjusted the lease term for those leases where the inter-
company sub-leases extended beyond the period of our previous
judgement. As a result, we have recognised a $349 million increase
We do not have any significant purchase options in our property
in our lease liabilities with a corresponding increase in our right-of-
leases.
use assets.
Determining lease term for
property leases
We apply judgement to determine a lease term for leases with extension, termination or
purchase options. We also consider lease modifications where we continue to use the
same underlying asset for an extended term.
Our property lease terms are negotiated on an individual basis and contain a wide range
of different terms and conditions, with typical fixed term periods between three and 15
years.
In determining the lease term, we consider all facts and circumstances that create an
economic incentive to exercise an extension, termination or purchase option, including
holdover periods where relevant.
In particular, we consider contractual terms under which the lease term can be extended
or terminated, potential relocation costs, asset specific factors and any relevant
leasehold improvements or our wider strategy and policy decisions.
We also consider long-term inter-company arrangements to access tower sites located
on land leased from third parties.
Extension options are only included in the lease term if the lease is reasonably certain to
be extended. Periods beyond termination options are only included in the lease term if it
is reasonably certain that the lease will not be terminated.
The longer the fixed lease term, the less certain a lessee is to exercise an option to extend
The extension options for leases of office buildings have generally not been included in
the lease term due to a competitive marketplace and our commercial ability to either
substantially renegotiate or replace these assets instead of exercising the extension
the lease.
options.
None of our termination options have been considered reasonably certain to be exercised;
therefore, the lease terms have not been shortened and all future cash flows have been
included in the measurement of the lease liability.
The lease term assessment is reviewed if a significant event or change in circumstances
occurs which affects this assessment and that is within our control as a lessee.
3.2 Lease arrangements (continued)
3.2.1 Telstra as a lessee (continued)
(b) Leases with lease payment increases
Under most of our lease arrangements, we pay fixed lease
payments, which are included in the measurement of lease
liabilities at initial recognition or at the time of reassessment. Fixed
lease payments in our property leases usually include fixed
increases. However, some of our property leases contain other
escalation clauses, including increases subject to the consumer
price index, the greater of fixed increase or the consumer price
index or increases subject to market rates. Market rent review
terms are used to respond to competitive market trends and to
minimise our fixed costs. No material adjustments to lease
liabilities resulting from such escalation clauses were recognised
during the financial year 2022.
(c) Leases with variable lease payments that do not depend on an
index or a rate
Some of our leases, such as leases of renewable energy plants,
include variable lease payments that do not depend on an index or
a rate. Such payments are not included in the measurement of the
lease liability and are expensed as incurred in ‘other expenses’ in
the income statement.
(d) Right-of-use assets
Table A shows movements in net book value of our right-of-use
assets during the financial year.
Right-of-use assets for underlying assets
Land and
buildings
Other
Total
$m
2,782
409
(448)
(33)
(17)
2,693
3,583
(890)
2,693
513
96
(482)
(32)
1
2,789
4,149
(1,360)
$m
248
243
(278)
(25)
(29)
159
400
(241)
159
121
-
(105)
(13)
(25)
137
351
(214)
$m
3,030
652
(726)
(58)
(46)
2,852
3,983
(1,131)
2,852
634
96
(587)
(45)
(24)
2,926
4,500
(1,574)
Table A
Telstra Group
Net book value at 1 July 2020
Additions
Depreciation expense
Terminations
Other movements
Net book value at 30 June 2021, comprising:
Cost
Accumulated depreciation and impairment
Net book value at 1 July 2021
Additions
Additions due to acquisitions of controlled entities and businesses
Depreciation expense
Terminations
Other movements
Net book value at 30 June 2022, comprising:
Cost
Accumulated depreciation and impairment
In the prior financial year, terminated leases of other assets mainly
included derecognised right-of-use assets for our mobile handset
leases (Telstra as a lessee), which we ceased following
terminations of the back-to-back customer operating leases.
Other movements include other individually insignificant
transactions.
Table B provides information about the weighted average useful
lives of our right-of-use assets.
Table B
Telstra Group
Right-of-use assets
Land and buildings
Other
Weighted average
useful life (years)
As at 30 June
2022
2021
9
3
9
4
Telstra Corporation Limited and controlled entities | F37
F38 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 113
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 39 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 40 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.2 Lease arrangements (continued)
3.2.1 Telstra as a lessee (continued)
(e) Lease liabilities
Lease liabilities do not include liabilities for leases of low value
assets (such as personal computers, laptops and printers) or
leases with variable payments which do not depend on an index or
a rate, for which associated outstanding rental payments as at
balance date continue to be included in trade and other payables.
Determining
incremental
borrowing rates
for property
leases
We apply judgement to determine
incremental borrowing rates for our
property leases because the interest
rates implicit in leases are not readily
determinable for those
arrangements.
The incremental borrowing rates are
determined with reference to rates
sourced from market-based credit
adjusted yield curves which are
independently derived and
reasonably reflect the credit risk of
the lessee. The discount rates also
reflect:
• the lease term (based on the
weighted average repayment term)
• any guarantees which may be in
place
• the impact of any security if
significant to pricing.
As at 30 June 2022, the weighted
average incremental borrowing rate
was 2.4 per cent.
Table C presents maturity analysis of our lease liabilities.
Table C
Telstra Group
Undiscounted future cash flows
Less than 1 year
1 to 2 years
2 to 5 years
More than 5 years
Total undiscounted lease liabilities
Future finance charges
Present value of lease liabilities
Comprising:
Current
Non-current
As at 30 June
2022
2021
$m
$m
550
546
1,196
1,394
3,686
(399)
3,287
490
2,797
3,287
566
577
1,118
1,444
3,705
(400)
3,305
503
2,802
3,305
Measurement of lease liabilities reflects judgements made about
discounted future cash flows arising from reasonably certain
extension options and lease modifications, which must be
reassessed should the circumstances change.
Potential future cash outflows of $1,961 million (2021: $2,194
million) are not reflected in the measurement of lease liabilities as
they relate to leases which are yet to commence and/or extension
options that we assessed as not reasonably certain. Almost 90 per
cent of those cash flows will occur after five years. These outflows
represent contractual undiscounted future cash flows estimated
based on fixed lease payments only, payable over:
3.2 Lease arrangements (continued)
(iii) Finance lease receivable maturity analysis
3.2.2 Telstra as a lessor (including a dealer-lessor and an
Table E sets out the maturity analysis of undiscounted lease
Our lease arrangements where Telstra is a lessor, including a
dealer-lessor and intermediate lessor, include the following main
under our finance leases.
payments receivable and the unearned finance income for our
finance lease receivables. No unguaranteed residual values accrue
• for leases yet to commence - the legally non-cancellable lease
• leases and subleases of property assets, including office and
term
• for leases already recognised in the statement of financial
position and for those yet to commence - all extension options
exercisable only by us (i.e. excluding holdover periods).
Such cash flows are not contractually payable until options have
been legally exercised (if at all) and/or until the effective dates of
already executed new contracts.
(f) Amounts recognised in the income statement and cash outflows
for leases
Table D presents amounts recognised in the income statement and
the cash outflows related to our lease arrangements.
Table D
Telstra Group
Year ended 30 June
2022
2021
$m
$m
Amounts recognised in the income
statement
Income from operating subleases (in
revenue from other sources)
Depreciation of right-of-use assets (in
depreciation and amortisation
expense)
Interest expense on lease liabilities (in
net finance costs)
Net gain on sale and leaseback
transactions (in other income)
Net gain/(loss) on termination and
modification of leases (in other
income/expenses)
Expense for leases of low value assets
and variable payments (in other
expenses)
Cash outflows for leases
In cash flows from operating activities
In cash flows from financing activities
(principal portion)
In cash flows from financing activities
(interest portion)
40
181
property assets on market terms for the remaining non-cancellable
Current
(587)
(726)
(78)
-
2
(83)
102
(189)
(21)
(25)
(21)
(697)
(78)
(25)
(706)
(83)
During the financial year 2022, we did not enter into any individually
significant sale and leaseback transactions. In the prior financial
year, we recognised a $102 million net gain from a sale and
leaseback transaction for an exchange property and received $282
million in sale proceeds. We also recognised a $136 million lease
liability and a $39 million right-of-use asset for the transaction.
Net loss on termination and modification of leases in the prior
financial year mainly included early termination charges for our
mobile handset leases which has been partly recovered from the
income recognised on termination of the operating subleases of
those handsets.
intermediate lessor)
categories:
network buildings
• finance leases where Telstra is a dealer-lessor of communication
assets dedicated to solution management.
Our key finance and operating leases are described below.
(a) Finance leases
(i) Finance leases where Telstra is a dealer-lessor
We enter into finance lease arrangements with our customers
predominantly for communication assets dedicated to solution
management. At lease commencement date, we recognise revenue
and a selling profit from these transactions as we have no risks
associated with the remaining rights in the underlying assets. The
weighted average remaining term of the finance leases in our
customer contracts is four years (2021: four years).
(ii) Subleases
Generally, we rent office and network buildings for our own use and
not with the intention to earn rental income. However, where our
needs or the intended use of the rented properties change and we
have assessed that exiting a lease is uneconomical, we sublease
lease term of the head lease.
These subleases are classified as finance leases and, at lease
commencement date, we record a net gain or loss on the
derecognised right-of-use asset and recognise a finance lease
receivable. We have no risks associated with any retained rights in
the underlying assets as the properties are vacated and returned to
the landlords at the end of the non-cancellable lease term.
Undiscounted lease payments
receivable under finance leases
Less than 1 year
Table E
Telstra Group
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
More than 5 years
Total undiscounted lease payments
receivables
Less: unearned finance income
Net investment in the lease
Allowance for doubtful debts
Comprising
Non-current
As at 30 June
2022
2021
$m
$m
70
46
26
20
13
17
192
(16)
176
(1)
175
63
112
175
89
64
38
22
22
30
265
(24)
241
(1)
240
80
160
240
During the financial year, we added $31 million (2021: $61 million)
new finance lease receivables and recognised interest income of $8
million (2021: $10 million).
Refer to note 3.3.1 for details regarding impairment assessment of
our finance lease receivables.
(b) Operating leases
The undiscounted future lease payments receivable under our
operating leases totalled $67 million (2021: $60 million), with 70 per
cent (2021: 55 per cent) of that amount maturing within the next
two years.
(c) Amounts recognised in the income statement
Table F presents amounts relating to our lease arrangements
where Telstra is a lessor (including an intermediate lessor)
recognised in the income statement during the financial year.
Table F
Telstra Group
Revenue from dealer-lessor finance
leases (in revenue from other sources)
Income from operating leases,
including subleases (in revenue from
other sources)
As at 30 June
2022
2021
$m
22
73
$m
39
203
114 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F39
F40 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 39 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 40 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Potential future cash outflows of $1,961 million (2021: $2,194
million) are not reflected in the measurement of lease liabilities as
they relate to leases which are yet to commence and/or extension
options that we assessed as not reasonably certain. Almost 90 per
cent of those cash flows will occur after five years. These outflows
represent contractual undiscounted future cash flows estimated
based on fixed lease payments only, payable over:
3.2 Lease arrangements (continued)
(iii) Finance lease receivable maturity analysis
3.2.2 Telstra as a lessor (including a dealer-lessor and an
intermediate lessor)
Our lease arrangements where Telstra is a lessor, including a
dealer-lessor and intermediate lessor, include the following main
categories:
Table E sets out the maturity analysis of undiscounted lease
payments receivable and the unearned finance income for our
finance lease receivables. No unguaranteed residual values accrue
under our finance leases.
• for leases yet to commence - the legally non-cancellable lease
• leases and subleases of property assets, including office and
network buildings
• finance leases where Telstra is a dealer-lessor of communication
assets dedicated to solution management.
Our key finance and operating leases are described below.
(a) Finance leases
rates implicit in leases are not readily
already executed new contracts.
(i) Finance leases where Telstra is a dealer-lessor
We enter into finance lease arrangements with our customers
predominantly for communication assets dedicated to solution
management. At lease commencement date, we recognise revenue
and a selling profit from these transactions as we have no risks
associated with the remaining rights in the underlying assets. The
weighted average remaining term of the finance leases in our
customer contracts is four years (2021: four years).
(ii) Subleases
Generally, we rent office and network buildings for our own use and
not with the intention to earn rental income. However, where our
needs or the intended use of the rented properties change and we
have assessed that exiting a lease is uneconomical, we sublease
property assets on market terms for the remaining non-cancellable
lease term of the head lease.
These subleases are classified as finance leases and, at lease
commencement date, we record a net gain or loss on the
derecognised right-of-use asset and recognise a finance lease
receivable. We have no risks associated with any retained rights in
the underlying assets as the properties are vacated and returned to
the landlords at the end of the non-cancellable lease term.
Table E
Telstra Group
Undiscounted lease payments
receivable under finance leases
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
More than 5 years
Total undiscounted lease payments
receivables
Less: unearned finance income
Net investment in the lease
Allowance for doubtful debts
Comprising
Current
Non-current
As at 30 June
2022
2021
$m
$m
70
46
26
20
13
17
192
(16)
176
(1)
175
63
112
175
89
64
38
22
22
30
265
(24)
241
(1)
240
80
160
240
During the financial year, we added $31 million (2021: $61 million)
new finance lease receivables and recognised interest income of $8
million (2021: $10 million).
Refer to note 3.3.1 for details regarding impairment assessment of
our finance lease receivables.
(b) Operating leases
The undiscounted future lease payments receivable under our
operating leases totalled $67 million (2021: $60 million), with 70 per
cent (2021: 55 per cent) of that amount maturing within the next
two years.
(c) Amounts recognised in the income statement
Table F presents amounts relating to our lease arrangements
where Telstra is a lessor (including an intermediate lessor)
recognised in the income statement during the financial year.
Table F
Telstra Group
Revenue from dealer-lessor finance
leases (in revenue from other sources)
Income from operating leases,
including subleases (in revenue from
other sources)
As at 30 June
2022
2021
$m
22
73
$m
39
203
3.2 Lease arrangements (continued)
3.2.1 Telstra as a lessee (continued)
(e) Lease liabilities
Lease liabilities do not include liabilities for leases of low value
assets (such as personal computers, laptops and printers) or
leases with variable payments which do not depend on an index or
a rate, for which associated outstanding rental payments as at
balance date continue to be included in trade and other payables.
term
Determining
incremental
borrowing rates
for property
leases
We apply judgement to determine
incremental borrowing rates for our
property leases because the interest
determinable for those
arrangements.
The incremental borrowing rates are
determined with reference to rates
sourced from market-based credit
adjusted yield curves which are
independently derived and
reasonably reflect the credit risk of
the lessee. The discount rates also
reflect:
• for leases already recognised in the statement of financial
position and for those yet to commence - all extension options
exercisable only by us (i.e. excluding holdover periods).
Such cash flows are not contractually payable until options have
been legally exercised (if at all) and/or until the effective dates of
(f) Amounts recognised in the income statement and cash outflows
for leases
Table D presents amounts recognised in the income statement and
the cash outflows related to our lease arrangements.
Table D
Telstra Group
• the lease term (based on the
weighted average repayment term)
statement
Amounts recognised in the income
• any guarantees which may be in
Income from operating subleases (in
place
• the impact of any security if
significant to pricing.
revenue from other sources)
Depreciation of right-of-use assets (in
depreciation and amortisation
As at 30 June 2022, the weighted
expense)
average incremental borrowing rate
Interest expense on lease liabilities (in
was 2.4 per cent.
net finance costs)
Table C presents maturity analysis of our lease liabilities.
Undiscounted future cash flows
Table C
Telstra Group
Less than 1 year
1 to 2 years
2 to 5 years
More than 5 years
Total undiscounted lease liabilities
Future finance charges
Present value of lease liabilities
Comprising:
Current
Non-current
As at 30 June
2022
2021
$m
$m
expenses)
Net gain on sale and leaseback
transactions (in other income)
Net gain/(loss) on termination and
modification of leases (in other
income/expenses)
Expense for leases of low value assets
and variable payments (in other
Cash outflows for leases
In cash flows from operating activities
In cash flows from financing activities
(principal portion)
In cash flows from financing activities
(interest portion)
550
546
1,196
1,394
3,686
(399)
3,287
490
2,797
3,287
566
577
1,118
1,444
3,705
(400)
3,305
503
2,802
3,305
During the financial year 2022, we did not enter into any individually
significant sale and leaseback transactions. In the prior financial
year, we recognised a $102 million net gain from a sale and
leaseback transaction for an exchange property and received $282
million in sale proceeds. We also recognised a $136 million lease
liability and a $39 million right-of-use asset for the transaction.
Net loss on termination and modification of leases in the prior
financial year mainly included early termination charges for our
mobile handset leases which has been partly recovered from the
income recognised on termination of the operating subleases of
those handsets.
Measurement of lease liabilities reflects judgements made about
discounted future cash flows arising from reasonably certain
extension options and lease modifications, which must be
reassessed should the circumstances change.
Year ended 30 June
2022
2021
$m
$m
40
181
(587)
(726)
(78)
-
2
(21)
(697)
(78)
(83)
102
(189)
(25)
(706)
(83)
(21)
(25)
Telstra Corporation Limited and controlled entities | F39
F40 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 115
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 41 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 42 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.2 Lease arrangements (continued)
3.2.3 Recognition and measurement
(a) Lease identification and lease term
A contract is, or contains, a lease if it conveys the right to control
the use of an identified asset, including a physically distinct portion
of an asset, for a period of time in exchange for consideration. The
customer has the right to control the use of an identified asset if the
supplier has no substantive substitution rights, and the customer
obtains substantially all of the economic benefits from use of the
identified asset and has the right to direct its use.
A contract may include lease and non-lease components, which are
accounted for separately. We allocate the consideration to lease
and non-lease components based on their relative standalone
(selling) prices.
If a lease has been identified at inception of the arrangement, a
lease term is determined considering a non-cancellable period and
reasonably certain extension, termination or purchase options.
(b) Telstra as a lessee
A lessee recognises a right-of-use asset and a lease liability at a
lease commencement date. The lease liability is initially measured
as a present value of the following lease payments:
• fixed payments (including any in-substance fixed lease
payments), less any lease incentives receivable
• variable lease payments that are based on an index or a rate,
initially using the index or rate as at the commencement date
• the exercise price of a purchase option, if the purchase option
was assessed as reasonably certain to be exercised
• payments for penalties for terminating the lease, if the lease
term reflects that the lessee will exercise that option.
Lease payments expected to be made under a reasonably certain
extension option are also reflected in the measurement of the lease
liability.
Where lease arrangements include market rent review clauses,
lease liabilities are measured excluding any expected impacts from
market rent reviews until they are legally binding and can be
reliably measured.
The lease payments are discounted using the interest rate implicit
in the lease, unless that rate is not readily determinable, in which
case the lessee’s incremental borrowing rate is used.
Lease payments are allocated between principal and finance cost.
The finance cost is charged to the income statement over the lease
term so as to produce a constant periodic rate of interest on the
remaining balance of the liability for each period.
Variable lease payments that do not depend on an index or a rate
are recognised in the income statement in the period in which the
event or condition that triggers those payments occurs.
Payments associated with leases of low value assets are
recognised on a straight-line basis as an expense in the income
statement.
At the commencement of the lease right-of-use assets are
measured at cost, which comprises the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement date and any initial direct costs. Where an
obligation exists to dismantle, remove or restore a leased asset or
the site it is located on and a provision has been raised, the right-
of-use asset also includes these restoration costs.
Right-of-use assets are subsequently measured at cost less
accumulated depreciation and impairment losses.
Right-of-use assets are generally depreciated on a straight-line
basis over the shorter of the asset’s useful life and the lease term.
If it is reasonably certain that we will exercise the purchase option,
the right-of-use asset is depreciated over the underlying asset’s
useful life. The depreciation starts at the commencement date of
the lease.
Right-of-use assets are reviewed for impairment under the same
policy as our property, plant and equipment assets. Refer to note
3.1.4 for further details regarding impairment testing.
Costs of improvements to the leased properties are capitalised as
leasehold improvements and usually depreciated over the shorter
of the useful life of the improvements and the term of the lease.
We reassess lease liability (and make a corresponding adjustment
to the related right-of-use asset) whenever:
• the lease term has changed (reflecting reassessment of or
exercise of an extension or termination options previously not
included in the measurement of the lease liability) or there is a
change in the assessment of exercise of a purchase option, in
which case the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate
• the future lease payments change due to changes in an index or
a rate, in which case the lease liability is remeasured by
discounting the revised lease payments using the initial discount
rate
• a lease contract is modified and the lease modification is not
accounted for as a separate lease, in which case the lease
liability is remeasured by discounting the revised lease payments
using a revised discount rate.
(c) Telstra as a lessor (including a dealer-lessor and an
intermediate lessor)
We distinguish between finance leases, which effectively transfer
substantially all the risks and benefits incidental to ownership of
the leased asset from the lessor to the lessee, and operating leases
under which the lessor effectively retains substantially all such
risks and benefits. Lease classification is made at the inception
date and is only reassessed if there is a lease modification.
Where we are an intermediate lessor, we account for the head lease
and the sublease as two separate contracts. The sublease is
classified as a finance or operating lease by reference to the right-
of-use asset arising from the head lease.
Where we lease assets via a finance lease, a finance lease
receivable (i.e. a net investment in the lease) is recognised at the
lease commencement date and measured at the present value of
the lease payments receivable plus the present value of any
unguaranteed residual value expected to accrue at the end of the
lease term and discounted using the interest rate implicit in the
lease.
Finance lease receipts are allocated between finance income and a
reduction of the finance lease receivable over the term of the lease
in order to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.
Where we are a dealer-lessor, at the commencement of the lease,
in addition to the finance lease receivable we also recognise a
selling profit or loss (being the difference between revenue from
other sources and the cost of sale) from the sale of the underlying
asset.
Income from operating leases is recognised on a straight-line basis
over the term of the relevant lease and presented in the income
statement as revenue from other sources.
3.2 Lease arrangements (continued)
3.2.3 Recognition and measurement (continued)
(d) Sale and leaseback transactions
When we sell and lease back the same asset, the accounting
treatment depends on whether the control of the asset has been
transferred to the buyer:
• if yes, we measure the right-of-use asset arising from the
leaseback at the proportion of the previous carrying amount of
the asset that relates to the rights retained by us as a seller-
lessee. Accordingly, we recognise only the amount of any gain or
loss that relates to the rights transferred to the buyer-lessor.
Trade receivables from contracts with customers represent an
unconditional right to receive consideration (primarily cash) which
normally arises when the goods and services have been delivered
and/or a valid invoice has been issued. By contrast, contract assets
relate to our rights to consideration for goods or services provided
to the customer but for which we do not have an unconditional right
to payment at the reporting date.
In general, we invoice customers in advance for services provided
under our prepaid or fixed fee (usually monthly) contracts and in
arrears for usage-based contracts (e.g. carriage services under
enterprise contracts). In those cases we would recognise a contract
liability and a contract asset, respectively.
• if not, as a seller-lessee we continue to recognise the transferred
Refer to note 3.5 for movements in net contract assets and contract
asset and we recognise a financial liability equal to the transfer
liabilities.
proceeds.
3.3 Trade and other receivables and contract assets
3.3.1 Current and non-current trade and other receivables and
contract assets
Table A
Telstra Group
Current
Trade receivables from
contracts with customers
Finance lease receivables
3.2
Accrued revenue
Other receivables
Contract assets
Non-current
Trade receivables from
contracts with customers
Finance lease receivables
Amounts owed by joint ventures
and associated entities
Other receivables
3.5
3.2
6.4
3.5
63
260
166
3,244
830
4,074
412
112
132
47
703
158
861
80
325
253
3,794
783
4,577
694
160
79
51
984
184
(a) Impairment of trade and other receivables and contract assets
Trade and other receivables and contract assets are exposed to
customers’ credit risk and are subject to impairment assessment.
If a credit loss (i.e. a shortfall between the contractual and
expected cash flows) is expected, an allowance for doubtful debt is
raised to reduce the carrying amount of trade and other receivables
and contract assets. For both receivables and contract assets we
estimate the expected credit loss using one or a combination of a
portfolio approach and/or an individual account by account
The portfolio approach is based on historical credit loss experience
and, where appropriate, adjusted to reflect current conditions and
estimates of future economic outlook. This approach is mostly
applied to balances arising from our consumer and small business
customer contracts. Under this approach, receivables and contract
assets are grouped based on shared credit risk characteristics,
such as:
• account status (services still active or not)
• customers’ payment history
• the days past due.
For each grouping, the expected credit loss is then calculated on
the probability that an account within the group will default (i.e. it
will become past due by more than 90 days) and the expected loss
rate when they default, both represented as a percentage of the
exposure at default and determined at the customer account level.
Our provision rates range from 0.1 per cent (2021: 0.1 per cent) for
balances not past due to 92.0 per cent (2021: 91.0 per cent) for
balances where the payment is overdue by more than 90 days and
the customer’s services have been deactivated.
As at 30 June
2022
2021
Note
$m
$m
assessment as detailed below.
(i) Portfolio approach
2,755
3,136
Contract assets
(ii) Individual approach
The majority of our receivables are in the form of contracted
agreements with our customers. In general, the terms and
conditions of these contracts require settlement between 14 and
30 days from the date of invoice. Credit risk associated with trade
and other receivables and contract assets has been provided for.
1,168
The individual approach is an account by account assessment
based on credit history, knowledge of debtor’s financial situation,
such as insolvency or entering a payment plan, or other known
credit risk specific to the debtor, such as judgement based on the
debtor’s industry. This approach is applied to balances arising from
contracts with large enterprise and government customers as well
as to other accounts in Telstra Enterprise, Telstra InfraCo and
Telstra Consumer & Small Business segments where some
Our trade receivables include receivables with deferred payment
detrimental change in payment behaviour has been noticed or
terms over 12, 24 or 36 months arising from mass market plans of
certain thresholds have been exceeded by a customer.
hardware and services. Amounts expected to be collected within 12
months from the reporting date are presented as current assets.
Balances arising from our transactions with nbn co (reported
mainly in TC&SB segment and in ‘All Other’ category) are separately
assessed based on the Australian government credit risk rating.
116 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F41
F42 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 41 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 42 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.2 Lease arrangements (continued)
3.2.3 Recognition and measurement
(a) Lease identification and lease term
Right-of-use assets are generally depreciated on a straight-line
basis over the shorter of the asset’s useful life and the lease term.
If it is reasonably certain that we will exercise the purchase option,
the right-of-use asset is depreciated over the underlying asset’s
useful life. The depreciation starts at the commencement date of
A contract is, or contains, a lease if it conveys the right to control
the use of an identified asset, including a physically distinct portion
the lease.
of an asset, for a period of time in exchange for consideration. The
Right-of-use assets are reviewed for impairment under the same
customer has the right to control the use of an identified asset if the
policy as our property, plant and equipment assets. Refer to note
supplier has no substantive substitution rights, and the customer
3.1.4 for further details regarding impairment testing.
obtains substantially all of the economic benefits from use of the
identified asset and has the right to direct its use.
Costs of improvements to the leased properties are capitalised as
leasehold improvements and usually depreciated over the shorter
A contract may include lease and non-lease components, which are
of the useful life of the improvements and the term of the lease.
accounted for separately. We allocate the consideration to lease
and non-lease components based on their relative standalone
(selling) prices.
If a lease has been identified at inception of the arrangement, a
lease term is determined considering a non-cancellable period and
reasonably certain extension, termination or purchase options.
(b) Telstra as a lessee
A lessee recognises a right-of-use asset and a lease liability at a
lease commencement date. The lease liability is initially measured
as a present value of the following lease payments:
We reassess lease liability (and make a corresponding adjustment
to the related right-of-use asset) whenever:
• the lease term has changed (reflecting reassessment of or
exercise of an extension or termination options previously not
included in the measurement of the lease liability) or there is a
change in the assessment of exercise of a purchase option, in
which case the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate
• the future lease payments change due to changes in an index or
a rate, in which case the lease liability is remeasured by
discounting the revised lease payments using the initial discount
• fixed payments (including any in-substance fixed lease
rate
payments), less any lease incentives receivable
• a lease contract is modified and the lease modification is not
• variable lease payments that are based on an index or a rate,
accounted for as a separate lease, in which case the lease
initially using the index or rate as at the commencement date
liability is remeasured by discounting the revised lease payments
• the exercise price of a purchase option, if the purchase option
using a revised discount rate.
was assessed as reasonably certain to be exercised
• payments for penalties for terminating the lease, if the lease
term reflects that the lessee will exercise that option.
Lease payments expected to be made under a reasonably certain
extension option are also reflected in the measurement of the lease
liability.
(c) Telstra as a lessor (including a dealer-lessor and an
intermediate lessor)
We distinguish between finance leases, which effectively transfer
substantially all the risks and benefits incidental to ownership of
the leased asset from the lessor to the lessee, and operating leases
under which the lessor effectively retains substantially all such
Where lease arrangements include market rent review clauses,
risks and benefits. Lease classification is made at the inception
lease liabilities are measured excluding any expected impacts from
date and is only reassessed if there is a lease modification.
market rent reviews until they are legally binding and can be
reliably measured.
Where we are an intermediate lessor, we account for the head lease
and the sublease as two separate contracts. The sublease is
The lease payments are discounted using the interest rate implicit
classified as a finance or operating lease by reference to the right-
in the lease, unless that rate is not readily determinable, in which
of-use asset arising from the head lease.
case the lessee’s incremental borrowing rate is used.
Where we lease assets via a finance lease, a finance lease
Lease payments are allocated between principal and finance cost.
receivable (i.e. a net investment in the lease) is recognised at the
The finance cost is charged to the income statement over the lease
lease commencement date and measured at the present value of
term so as to produce a constant periodic rate of interest on the
the lease payments receivable plus the present value of any
remaining balance of the liability for each period.
Variable lease payments that do not depend on an index or a rate
are recognised in the income statement in the period in which the
lease.
event or condition that triggers those payments occurs.
Payments associated with leases of low value assets are
recognised on a straight-line basis as an expense in the income
statement.
At the commencement of the lease right-of-use assets are
measured at cost, which comprises the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement date and any initial direct costs. Where an
obligation exists to dismantle, remove or restore a leased asset or
asset.
unguaranteed residual value expected to accrue at the end of the
lease term and discounted using the interest rate implicit in the
Finance lease receipts are allocated between finance income and a
reduction of the finance lease receivable over the term of the lease
in order to reflect a constant periodic rate of return on the net
investment outstanding in respect of the lease.
Where we are a dealer-lessor, at the commencement of the lease,
in addition to the finance lease receivable we also recognise a
selling profit or loss (being the difference between revenue from
other sources and the cost of sale) from the sale of the underlying
the site it is located on and a provision has been raised, the right-
Income from operating leases is recognised on a straight-line basis
of-use asset also includes these restoration costs.
over the term of the relevant lease and presented in the income
statement as revenue from other sources.
Right-of-use assets are subsequently measured at cost less
accumulated depreciation and impairment losses.
3.2 Lease arrangements (continued)
3.2.3 Recognition and measurement (continued)
(d) Sale and leaseback transactions
When we sell and lease back the same asset, the accounting
treatment depends on whether the control of the asset has been
transferred to the buyer:
• if yes, we measure the right-of-use asset arising from the
leaseback at the proportion of the previous carrying amount of
the asset that relates to the rights retained by us as a seller-
lessee. Accordingly, we recognise only the amount of any gain or
loss that relates to the rights transferred to the buyer-lessor.
• if not, as a seller-lessee we continue to recognise the transferred
asset and we recognise a financial liability equal to the transfer
proceeds.
3.3 Trade and other receivables and contract assets
3.3.1 Current and non-current trade and other receivables and
contract assets
Table A
Telstra Group
As at 30 June
2022
2021
Note
$m
$m
Current
Trade receivables from
contracts with customers
Finance lease receivables
3.2
Accrued revenue
Other receivables
Contract assets
Non-current
Trade receivables from
contracts with customers
Finance lease receivables
Amounts owed by joint ventures
and associated entities
Other receivables
Contract assets
3.5
3.2
6.4
3.5
2,755
3,136
63
260
166
3,244
830
4,074
412
112
132
47
703
158
861
80
325
253
3,794
783
4,577
694
160
79
51
984
184
1,168
The majority of our receivables are in the form of contracted
agreements with our customers. In general, the terms and
conditions of these contracts require settlement between 14 and
30 days from the date of invoice. Credit risk associated with trade
and other receivables and contract assets has been provided for.
Our trade receivables include receivables with deferred payment
terms over 12, 24 or 36 months arising from mass market plans of
hardware and services. Amounts expected to be collected within 12
months from the reporting date are presented as current assets.
Trade receivables from contracts with customers represent an
unconditional right to receive consideration (primarily cash) which
normally arises when the goods and services have been delivered
and/or a valid invoice has been issued. By contrast, contract assets
relate to our rights to consideration for goods or services provided
to the customer but for which we do not have an unconditional right
to payment at the reporting date.
In general, we invoice customers in advance for services provided
under our prepaid or fixed fee (usually monthly) contracts and in
arrears for usage-based contracts (e.g. carriage services under
enterprise contracts). In those cases we would recognise a contract
liability and a contract asset, respectively.
Refer to note 3.5 for movements in net contract assets and contract
liabilities.
(a) Impairment of trade and other receivables and contract assets
Trade and other receivables and contract assets are exposed to
customers’ credit risk and are subject to impairment assessment.
If a credit loss (i.e. a shortfall between the contractual and
expected cash flows) is expected, an allowance for doubtful debt is
raised to reduce the carrying amount of trade and other receivables
and contract assets. For both receivables and contract assets we
estimate the expected credit loss using one or a combination of a
portfolio approach and/or an individual account by account
assessment as detailed below.
(i) Portfolio approach
The portfolio approach is based on historical credit loss experience
and, where appropriate, adjusted to reflect current conditions and
estimates of future economic outlook. This approach is mostly
applied to balances arising from our consumer and small business
customer contracts. Under this approach, receivables and contract
assets are grouped based on shared credit risk characteristics,
such as:
• account status (services still active or not)
• customers’ payment history
• the days past due.
For each grouping, the expected credit loss is then calculated on
the probability that an account within the group will default (i.e. it
will become past due by more than 90 days) and the expected loss
rate when they default, both represented as a percentage of the
exposure at default and determined at the customer account level.
Our provision rates range from 0.1 per cent (2021: 0.1 per cent) for
balances not past due to 92.0 per cent (2021: 91.0 per cent) for
balances where the payment is overdue by more than 90 days and
the customer’s services have been deactivated.
(ii) Individual approach
The individual approach is an account by account assessment
based on credit history, knowledge of debtor’s financial situation,
such as insolvency or entering a payment plan, or other known
credit risk specific to the debtor, such as judgement based on the
debtor’s industry. This approach is applied to balances arising from
contracts with large enterprise and government customers as well
as to other accounts in Telstra Enterprise, Telstra InfraCo and
Telstra Consumer & Small Business segments where some
detrimental change in payment behaviour has been noticed or
certain thresholds have been exceeded by a customer.
Balances arising from our transactions with nbn co (reported
mainly in TC&SB segment and in ‘All Other’ category) are separately
assessed based on the Australian government credit risk rating.
Telstra Corporation Limited and controlled entities | F41
F42 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 117
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 43 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 44 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.3 Trade and other receivables and contract assets
(continued)
3.3.1 Current and non-current trade and other receivables and
contract assets (continued)
(a) Impairment of trade and other receivables and contract assets
(continued)
We estimate our allowance for impairment as detailed below.
Estimating
expected credit
losses
We apply judgement to estimate the
expected credit losses for our trade
and other receivables measured at
amortised cost and for contract
assets.
For trade receivables and contract
assets arising from our Telstra
Consumer & Small Business and
Telstra Enterprise Australian
customers, we have implemented a
scenario-based approach
incorporating base, good and bad
economic scenarios. The overall
expected credit loss was calculated
as a weighted average of the three
scenarios.
Our analysis has shown that generally
overall macroeconomic factors, such
as unemployment rates, interest
rates or gross domestic product have
no strong correlation with our bad
debt losses unless certain thresholds
are exceeded. As at 30 June 2022,
those macroeconomic factors were
within the relevant thresholds. During
the financial year 2022 there were no
significant adjustments to our
allowance for impairment due to
COVID-19-related factors.
The aging analysis and loss allowance in relation to trade
receivables from contracts with customers, finance lease
receivables and contract assets are detailed in Table B. The
analysis is based on the original due date of the receivables,
including where repayment terms for certain long outstanding
receivables have been renegotiated. Contract assets are not yet
due for collection, thus the entire balance has been included in the
‘not past due’ category.
Table B
As at 30 June
Telstra Group
2022
2021
(continued)
3.3.2 Recognition and measurement
3.3 Trade and other receivables and contract assets
Table A presents customer payments received in advance under
different types of our commercial arrangements.
Not past due,
including measured
at:
- amortised cost
- fair value
Past due 1 - 30 days
Past due 31 - 60
days
Past due 61 - 90
days
Past 91 days
Gross
Allow-
ance
Gross
Allow-
ance
$m
$m
$m
$m
3,892
65
3,957
277
100
41
157
4,532
(43)
-
(43)
(10)
(9)
(10)
4,266
397
4,663
301
84
44
(47)
-
(47)
(21)
(11)
(10)
(130)
(202)
144
5,236
(110)
(199)
Accrued revenue, amounts owed by joint ventures and associated
entities, and other receivables (before allowance for doubtful
debts) totalling $613 million (2021: $717 million) are subject to
impairment assessment using the general approach and include 49
per cent (2021: 67 per cent) of balances with counterparties with an
external credit rating of A- or above, and 28 per cent (2021: 11 per
cent) of balances with counterparties with an external credit rating
between BBB- and A-.
We hold security for a number of trade receivables, including past
due or impaired receivables, in the form of guarantees, letters of
credit and deposits. During the financial year 2022, the securities
we called upon were insignificant. These trade receivables, along
with our trade receivables that are neither past due nor impaired,
comprise customers who have a good debt history and are
considered recoverable. Further, we limit our exposure to credit
risk from trade receivables by establishing a maximum payment
period and, in certain instances, cease providing further services
after 90 days from the past due date.
Movements in the allowance for doubtful debts in respect of all our
trade and other receivables and contracts assets, regardless of the
method used in measuring the impairment allowance, are detailed
in Table C.
Table C
Telstra Group
Year ended 30 June
2022
2021
Opening balance 1 July
Additional allowance
Amount used
Amount reversed
Disposal of controlled entities
Closing balance 30 June
$m
(208)
(122)
25
90
5
(210)
$m
(210)
(121)
26
97
-
(208)
Impairment allowance related to accrued revenue, amounts owed
by joint ventures and associated entities, and other receivables (i.e.
balances not presented in Table B) amounted to $8 million (2021: $9
million).
Trade and other receivables and contract assets are financial
assets which are initially recorded at fair value and subsequently
measured at amortised cost using the effective interest method,
with the exception of certain trade receivables from contracts with
customers, which are subsequently measured at fair value (refer to
note 4.5.6 for further details).
Contract assets are initially recorded at the transaction price
allocated as compensation for goods or services provided to
customers for which the right to collect payment is subject to
providing other goods or services under the same contract (or group
Table A
Telstra Group
Current
As at 30 June
2022
2021
Note
$m
$m
Contract liabilities
3.5
1,561
1,534
Other revenue received in
advance
of contracts) and/or we are yet to issue a valid invoice. Contract
Non-current
assets are subsequently measured to reflect relevant transaction
price adjustments (where required) and are transferred to trade
receivables when the right to payment becomes unconditional.
Contract liabilities
3.5
Other revenue received in
advance
(a) Impairment of financial assets
61
71
1,622
1,605
987
401
974
339
1,388
1,313
We estimate the expected credit losses for our financial assets
(including contract assets) measured at amortised cost depending
on their nature on either of the following basis:
• for accrued revenue, amounts owed by joint ventures and
associated entities, and other receivables - using a general
approach, i.e. 12-month expected credit loss which results from
all possible default events within the 12 months after the
reporting date. However, if the credit risk of a financial asset at
the reporting date has increased significantly since its initial
recognition, loss allowance is calculated based on lifetime
expected credit losses.
• for trade receivables from contracts with customer, contract
assets and lease receivables - using a simplified approach, i.e.
lifetime expected credit loss which results from all possible
default events over the expected life of a financial instrument.
Any expected credit loss is discounted at the original effective
interest rate.
Any customer account with debt more than 90 days past due is
considered to be in default.
Trade and other receivables and contract assets are written off
against the impairment allowance or directly against their carrying
amounts and expensed in the income statement when all collection
efforts have been exhausted and the financial asset is considered
uncollectable. Factors indicating there is no reasonable
expectation of recovery include insolvency and significant time
period since the last invoice was issued.
3.4 Contract liabilities and other revenue received in
advance
represent amounts paid (or due) to us by customers before
receiving the goods and/or services promised under the contract.
Revenue received in advance comprises of upfront consideration
under contracts giving rise to revenue from other sources or other
income, for example from sale of assets.
Amounts expected to be recognised as revenue within 12 months
from the reporting date are presented as current liabilities.
3.5 Net contract assets and contract liabilities
Contract assets and contract liabilities arise due to the timing
differences between revenue recognition and customer invoicing.
Our billing arrangements for goods and services as well as different
types of discounts, credits or other incentives can vary depending
on the type and nature of the contracts with customers. As a result,
at times under the same accounting contract, we may recognise
both a contract asset and a contract liability. At each reporting
date, any balances arising from the same accounting contract are
presented net in the statement of financial position as either a net
contract asset or a net contract liability.
The net presentation mainly impacts our small business and
enterprise framework arrangements that offer loyalty programs
and technology funds, and nbn Definitive Agreements, where
multiple legal contracts have been combined as one accounting
contract.
Table A presents opening and closing balances of our current and
non-current contract assets and contract liabilities and their total
net movement for the period.
Table A
Telstra Group
As at 30 June
2022
2021
Current contract assets
Non-current contract assets
Total contract assets
Non-current contract liabilities
Total contract liabilities
Total net contract liabilities
Increase in net contract liabilities for
the year
$m
830
158
988
(1,561)
(987)
(2,548)
(1,560)
$m
783
184
967
(1,534)
(974)
(2,508)
(1,541)
(19)
(146)
Generally, contract assets increase when we recognise revenue for
goods and services transferred to the customer before billing and
decrease when we invoice customers for already provided goods
and services.
Contract liabilities arise from our contracts with customers and
Current contract liabilities
118 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F43
F44 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 43 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 44 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.3 Trade and other receivables and contract assets
(continued)
Table B
As at 30 June
3.3 Trade and other receivables and contract assets
(continued)
Table A presents customer payments received in advance under
different types of our commercial arrangements.
3.3.1 Current and non-current trade and other receivables and
Telstra Group
2022
2021
3.3.2 Recognition and measurement
contract assets (continued)
(a) Impairment of trade and other receivables and contract assets
(continued)
We estimate our allowance for impairment as detailed below.
Estimating
expected credit
losses
We apply judgement to estimate the
expected credit losses for our trade
and other receivables measured at
amortised cost and for contract
assets.
For trade receivables and contract
assets arising from our Telstra
Consumer & Small Business and
Telstra Enterprise Australian
customers, we have implemented a
scenario-based approach
incorporating base, good and bad
economic scenarios. The overall
expected credit loss was calculated
as a weighted average of the three
scenarios.
Our analysis has shown that generally
overall macroeconomic factors, such
as unemployment rates, interest
rates or gross domestic product have
no strong correlation with our bad
debt losses unless certain thresholds
are exceeded. As at 30 June 2022,
those macroeconomic factors were
within the relevant thresholds. During
the financial year 2022 there were no
significant adjustments to our
allowance for impairment due to
COVID-19-related factors.
The aging analysis and loss allowance in relation to trade
receivables from contracts with customers, finance lease
receivables and contract assets are detailed in Table B. The
analysis is based on the original due date of the receivables,
including where repayment terms for certain long outstanding
receivables have been renegotiated. Contract assets are not yet
due for collection, thus the entire balance has been included in the
‘not past due’ category.
in Table C.
Table C
Telstra Group
Not past due,
including measured
at:
- amortised cost
- fair value
Past due 1 - 30 days
Past due 31 - 60
days
days
Past due 61 - 90
Past 91 days
Gross
Gross
Allow-
ance
Allow-
ance
$m
$m
$m
$m
3,892
65
3,957
277
100
41
157
4,532
(43)
-
(43)
(10)
(9)
(10)
4,266
397
4,663
301
84
44
(47)
-
(47)
(21)
(11)
(10)
(130)
(202)
144
5,236
(110)
(199)
Accrued revenue, amounts owed by joint ventures and associated
entities, and other receivables (before allowance for doubtful
debts) totalling $613 million (2021: $717 million) are subject to
impairment assessment using the general approach and include 49
per cent (2021: 67 per cent) of balances with counterparties with an
external credit rating of A- or above, and 28 per cent (2021: 11 per
cent) of balances with counterparties with an external credit rating
between BBB- and A-.
We hold security for a number of trade receivables, including past
due or impaired receivables, in the form of guarantees, letters of
credit and deposits. During the financial year 2022, the securities
we called upon were insignificant. These trade receivables, along
with our trade receivables that are neither past due nor impaired,
comprise customers who have a good debt history and are
considered recoverable. Further, we limit our exposure to credit
risk from trade receivables by establishing a maximum payment
period and, in certain instances, cease providing further services
after 90 days from the past due date.
Movements in the allowance for doubtful debts in respect of all our
trade and other receivables and contracts assets, regardless of the
method used in measuring the impairment allowance, are detailed
Opening balance 1 July
Additional allowance
Amount used
Amount reversed
Disposal of controlled entities
Closing balance 30 June
Year ended 30 June
2022
2021
$m
(208)
(122)
25
90
5
$m
(210)
(121)
26
97
-
(210)
(208)
Impairment allowance related to accrued revenue, amounts owed
by joint ventures and associated entities, and other receivables (i.e.
balances not presented in Table B) amounted to $8 million (2021: $9
million).
Trade and other receivables and contract assets are financial
assets which are initially recorded at fair value and subsequently
measured at amortised cost using the effective interest method,
with the exception of certain trade receivables from contracts with
customers, which are subsequently measured at fair value (refer to
note 4.5.6 for further details).
Contract assets are initially recorded at the transaction price
allocated as compensation for goods or services provided to
customers for which the right to collect payment is subject to
providing other goods or services under the same contract (or group
of contracts) and/or we are yet to issue a valid invoice. Contract
assets are subsequently measured to reflect relevant transaction
price adjustments (where required) and are transferred to trade
receivables when the right to payment becomes unconditional.
(a) Impairment of financial assets
We estimate the expected credit losses for our financial assets
(including contract assets) measured at amortised cost depending
on their nature on either of the following basis:
• for accrued revenue, amounts owed by joint ventures and
associated entities, and other receivables - using a general
approach, i.e. 12-month expected credit loss which results from
all possible default events within the 12 months after the
reporting date. However, if the credit risk of a financial asset at
the reporting date has increased significantly since its initial
recognition, loss allowance is calculated based on lifetime
expected credit losses.
• for trade receivables from contracts with customer, contract
assets and lease receivables - using a simplified approach, i.e.
lifetime expected credit loss which results from all possible
default events over the expected life of a financial instrument.
Any expected credit loss is discounted at the original effective
interest rate.
Any customer account with debt more than 90 days past due is
considered to be in default.
Trade and other receivables and contract assets are written off
against the impairment allowance or directly against their carrying
amounts and expensed in the income statement when all collection
efforts have been exhausted and the financial asset is considered
uncollectable. Factors indicating there is no reasonable
expectation of recovery include insolvency and significant time
period since the last invoice was issued.
3.4 Contract liabilities and other revenue received in
advance
Contract liabilities arise from our contracts with customers and
represent amounts paid (or due) to us by customers before
receiving the goods and/or services promised under the contract.
Revenue received in advance comprises of upfront consideration
under contracts giving rise to revenue from other sources or other
income, for example from sale of assets.
Amounts expected to be recognised as revenue within 12 months
from the reporting date are presented as current liabilities.
Table A
Telstra Group
Current
As at 30 June
2022
2021
Note
$m
$m
Contract liabilities
3.5
1,561
1,534
Other revenue received in
advance
Non-current
Contract liabilities
Other revenue received in
advance
3.5
61
71
1,622
1,605
987
401
974
339
1,388
1,313
3.5 Net contract assets and contract liabilities
Contract assets and contract liabilities arise due to the timing
differences between revenue recognition and customer invoicing.
Our billing arrangements for goods and services as well as different
types of discounts, credits or other incentives can vary depending
on the type and nature of the contracts with customers. As a result,
at times under the same accounting contract, we may recognise
both a contract asset and a contract liability. At each reporting
date, any balances arising from the same accounting contract are
presented net in the statement of financial position as either a net
contract asset or a net contract liability.
The net presentation mainly impacts our small business and
enterprise framework arrangements that offer loyalty programs
and technology funds, and nbn Definitive Agreements, where
multiple legal contracts have been combined as one accounting
contract.
Table A presents opening and closing balances of our current and
non-current contract assets and contract liabilities and their total
net movement for the period.
Table A
Telstra Group
As at 30 June
2022
2021
Current contract assets
Non-current contract assets
Total contract assets
Current contract liabilities
Non-current contract liabilities
Total contract liabilities
Total net contract liabilities
Increase in net contract liabilities for
the year
$m
830
158
988
(1,561)
(987)
(2,548)
(1,560)
$m
783
184
967
(1,534)
(974)
(2,508)
(1,541)
(19)
(146)
Generally, contract assets increase when we recognise revenue for
goods and services transferred to the customer before billing and
decrease when we invoice customers for already provided goods
and services.
Telstra Corporation Limited and controlled entities | F43
F44 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 119
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 45 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 46 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.5 Net contract assets and contract liabilities (continued)
On the other hand, contract liabilities increase when we receive
consideration in advance of transferring the goods and services to
the customer, and decrease when we recognise revenue for the
goods and services previously prepaid by the customer.
Other changes in our contract assets and contract liabilities
represent movements resulting from changes in the transaction
prices due to timing of invoicing and recognition of discounts,
credits and other incentives.
The following selected movements contributed to the overall
increase of $19 million (2021: $146 million) in the net contract
liabilities:
• $1,628 million (2021: $1,562 million) revenue recognised in the
reporting period that was included in the contract liabilities
balance at the beginning of the reporting period
• $47 million (2021: $15 million) cumulative catch-up adjustments
to revenue recognised in the prior reporting periods.
Refer to note 3.3.1 for details regarding impairment assessment of
contract assets.
3.6 Deferred contract costs (continued)
3.7 Inventories
3.6 Deferred contract costs
We pay dealer commissions to acquire customer contracts
and we incur upfront set-up and other costs related to
customer contracts. When those costs support the delivery of
goods and services in the future and are expected to be
recovered, they are deferred in the statement of financial
position and amortised on a basis consistent with the transfer
of goods and services to which these costs relate.
Table A provides movements in net book values of the deferred
contract costs.
Table A
Costs to fulfil a contract
Telstra Group
Net book value at 1 July 2020, comprising:
Current
Non-current
Additions
Amortisation expense
Impairment losses
Net book value at 30 June 2021, comprising:
Current
Non-current
Net book value at 1 July 2021
Additions
Amortisation expense
Impairment losses
Net book value at 30 June 2022, comprising:
Current
Non-current
Costs to
obtain a
contract
Commis-
sions
Set-up costs
Costs of
service
provider
Total
$m
1,161
n/a
1,161
488
(390)
(113)
1,146
n/a
1,146
1,146
365
(382)
(107)
1,022
n/a
1,022
$m
47
-
47
14
(20)
-
41
-
41
41
11
(9)
-
43
-
43
$m
228
82
146
835
(795)
-
268
113
155
268
809
(788)
-
289
116
173
$m
275
82
193
849
(815)
-
309
113
196
309
820
(797)
-
332
116
216
Total
deferred
contract
costs
$m
1,436
82
1,354
1,337
(1,205)
(113)
1,455
113
1,342
1,455
1,185
(1,179)
(107)
1,354
116
1,238
Amortisation
period of
deferred
contract costs
We apply judgement to estimate the
amortisation period of deferred
contract costs to obtain a contract.
For sales commissions paid on
acquisition of the initial contract
which are not commensurate with
recontracting commissions, the
amortisation period reflects the
average estimated customer life for
respective types of contracts.
Telstra Group
Current
Goods for resale
Network and other inventory
Non-current
Network and other inventory
As at 30 June
2022
2021
$m
$m
400
76
476
28
28
305
80
385
21
21
3.6.1 Recognition and measurement
We capitalise costs to obtain an accounting contract when the
costs are incremental, i.e. would not have been incurred if the
contract had not been obtained and are recoverable either directly
via reimbursement by the customer or indirectly through the
contract margin.
3.7.1 Recognition and measurement
Inventories are valued at the lower of cost and net realisable value.
For the majority of inventory items, we assign cost using the
weighted average cost basis.
Net realisable value of items expected to be sold is the estimated
selling price less the estimated costs incurred in marketing, selling
We immediately expense the incremental costs of obtaining
contracts if the period of benefit is one year or less.
and distribution.
Net realisable value of items expected to be consumed, for example
used in the construction of another asset, is the net value expected
to be earned through future use.
3.8 Trade and other payables
Telstra Group
Costs to fulfil a contract relate directly to an identified good or
service or indirectly to other activities that are necessary under the
contract but that do not result in a transfer of goods or services.
Costs to fulfil a contract include set-up costs and prepaid costs of
a service provider related to goods and services which will be
transferred in the future reporting periods.
We capitalise costs to fulfil a contract if:
• the costs relate directly to a contract or a specifically identified
anticipated contract
• the costs generate or enhance resources that we control and will
Current
use when transferring future goods and services
• we expect to recover the costs.
We amortise deferred contract costs in ‘goods and services
purchased’ expense over the term that reflects the expected period
of benefit of the expense. This period may extend beyond the initial
contract term to the estimated customer life or average customer
life of the class of customers. We use the amortisation pattern
consistent with the method used to measure progress and
recognise revenue for the related goods or services.
We assess whether deferred contract costs are impaired whenever
events or changes in circumstances indicate that the carrying
amounts may not be recoverable. We recognise impairment losses
in ‘other expenses’.
Trade payables
Accrued expenses
Accrued capital expenditure
Accrued interest
Contingent consideration
Other payables
Non-current
Contingent consideration
Other payables
As at 30 June
2022
2021
$m
$m
1,297
1,877
316
142
19
538
53
180
233
1,204
1,723
280
185
2
372
2
7
9
4,189
3,766
Trade payables and other payables are non-interest bearing
liabilities. Our payment terms vary, however payments are
generally made within 20 days to 90 days from the invoice date.
3.8.1 Recognition and measurement
Trade and other payables, including accruals, are recorded when
we are required to make future payments as a result of purchases
of assets or services. Trade and other payables are financial
liabilities initially recognised at fair value and carried at amortised
cost using the effective interest method.
120 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F45
F46 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 45 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 46 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.5 Net contract assets and contract liabilities (continued)
Refer to note 3.3.1 for details regarding impairment assessment of
3.6 Deferred contract costs (continued)
3.7 Inventories
On the other hand, contract liabilities increase when we receive
consideration in advance of transferring the goods and services to
contract assets.
the customer, and decrease when we recognise revenue for the
3.6 Deferred contract costs
goods and services previously prepaid by the customer.
Other changes in our contract assets and contract liabilities
represent movements resulting from changes in the transaction
prices due to timing of invoicing and recognition of discounts,
credits and other incentives.
The following selected movements contributed to the overall
increase of $19 million (2021: $146 million) in the net contract
liabilities:
• $1,628 million (2021: $1,562 million) revenue recognised in the
We pay dealer commissions to acquire customer contracts
and we incur upfront set-up and other costs related to
customer contracts. When those costs support the delivery of
goods and services in the future and are expected to be
recovered, they are deferred in the statement of financial
position and amortised on a basis consistent with the transfer
of goods and services to which these costs relate.
reporting period that was included in the contract liabilities
Table A provides movements in net book values of the deferred
balance at the beginning of the reporting period
contract costs.
• $47 million (2021: $15 million) cumulative catch-up adjustments
to revenue recognised in the prior reporting periods.
Table A
Costs to
Costs to fulfil a contract
Telstra Group
obtain a
contract
sions
Commis-
Set-up costs
Total
Costs of
service
provider
Total
deferred
contract
costs
Net book value at 1 July 2020, comprising:
Current
Non-current
Additions
Amortisation expense
Impairment losses
Current
Non-current
Net book value at 30 June 2021, comprising:
Net book value at 1 July 2021
Additions
Amortisation expense
Impairment losses
Current
Non-current
Net book value at 30 June 2022, comprising:
$m
1,161
n/a
1,161
488
(390)
(113)
1,146
n/a
1,146
1,146
365
(382)
(107)
1,022
n/a
1,022
$m
47
-
47
14
(20)
41
-
-
41
41
11
(9)
43
-
-
43
$m
228
82
146
835
(795)
-
268
113
155
268
809
(788)
-
289
116
173
$m
275
82
193
849
(815)
-
309
113
196
309
820
(797)
-
332
116
216
$m
1,436
82
1,354
1,337
(1,205)
(113)
1,455
113
1,342
1,455
1,185
(1,179)
(107)
1,354
116
1,238
Amortisation
period of
deferred
contract costs
We apply judgement to estimate the
amortisation period of deferred
contract costs to obtain a contract.
For sales commissions paid on
acquisition of the initial contract
which are not commensurate with
recontracting commissions, the
amortisation period reflects the
average estimated customer life for
respective types of contracts.
Telstra Group
Current
Goods for resale
Network and other inventory
Non-current
Network and other inventory
As at 30 June
2022
2021
$m
$m
400
76
476
28
28
305
80
385
21
21
3.6.1 Recognition and measurement
We capitalise costs to obtain an accounting contract when the
costs are incremental, i.e. would not have been incurred if the
contract had not been obtained and are recoverable either directly
via reimbursement by the customer or indirectly through the
contract margin.
We immediately expense the incremental costs of obtaining
contracts if the period of benefit is one year or less.
Costs to fulfil a contract relate directly to an identified good or
service or indirectly to other activities that are necessary under the
contract but that do not result in a transfer of goods or services.
Costs to fulfil a contract include set-up costs and prepaid costs of
a service provider related to goods and services which will be
transferred in the future reporting periods.
We capitalise costs to fulfil a contract if:
• the costs relate directly to a contract or a specifically identified
anticipated contract
• the costs generate or enhance resources that we control and will
use when transferring future goods and services
• we expect to recover the costs.
We amortise deferred contract costs in ‘goods and services
purchased’ expense over the term that reflects the expected period
of benefit of the expense. This period may extend beyond the initial
contract term to the estimated customer life or average customer
life of the class of customers. We use the amortisation pattern
consistent with the method used to measure progress and
recognise revenue for the related goods or services.
We assess whether deferred contract costs are impaired whenever
events or changes in circumstances indicate that the carrying
amounts may not be recoverable. We recognise impairment losses
in ‘other expenses’.
3.7.1 Recognition and measurement
Inventories are valued at the lower of cost and net realisable value.
For the majority of inventory items, we assign cost using the
weighted average cost basis.
Net realisable value of items expected to be sold is the estimated
selling price less the estimated costs incurred in marketing, selling
and distribution.
Net realisable value of items expected to be consumed, for example
used in the construction of another asset, is the net value expected
to be earned through future use.
3.8 Trade and other payables
Telstra Group
Current
Trade payables
Accrued expenses
Accrued capital expenditure
Accrued interest
Contingent consideration
Other payables
Non-current
Contingent consideration
Other payables
As at 30 June
2022
2021
$m
$m
1,297
1,877
316
142
19
538
4,189
53
180
233
1,204
1,723
280
185
2
372
3,766
2
7
9
Trade payables and other payables are non-interest bearing
liabilities. Our payment terms vary, however payments are
generally made within 20 days to 90 days from the invoice date.
3.8.1 Recognition and measurement
Trade and other payables, including accruals, are recorded when
we are required to make future payments as a result of purchases
of assets or services. Trade and other payables are financial
liabilities initially recognised at fair value and carried at amortised
cost using the effective interest method.
Telstra Corporation Limited and controlled entities | F45
F46 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 121
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 47 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 48 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 4. Our capital and risk management
Section 4. Our capital and risk management
This section provides information on our approach to capital
This section provides information on our approach to capital
management and our capital structure. Our total capital is
management and our capital structure. Our total capital is
defined as equity and net debt. Also outlined in this section are
defined as equity and net debt. Also outlined in this section
the financial risks that we are exposed to and how we manage
are the financial risks that we are exposed to and how we
these financial risks.
manage these financial risks.
SECTION 4. OUR CAPITAL AND RISK MANAGEMENT
4.1 Capital management
Capital management is undertaken in accordance with the financial
parameters regularly reviewed and approved by the Board.
We manage our capital structure with the aim to provide returns for
shareholders and benefits for other stakeholders, while:
• safeguarding our ability to continue as a going concern
• maintaining an optimal capital structure and cost of capital that
provides flexibility for strategic investments.
In order to maintain or adjust our capital structure, we may issue or
repay debt, adjust the amount of dividend paid to shareholders or
return capital to shareholders.
Notes 4.3 and 4.4 provide further details on each component of
capital, being equity and net debt.
4.2 Dividend
This note includes the previous year final dividend and the
current year interim dividend paid. Our dividend comprises of
ordinary and special dividends.
We currently pay dividends to equity holders of the Telstra Entity
twice a year, an interim and a final dividend. Table A below provides
details about the dividends paid during the financial year.
Table A
Year ended 30 June
Telstra Entity
2022
2021
2022
2021
Previous year final
dividend paid
Interim dividend
paid
$m
$m
cents
cents
951
937
951
951
1,888
1,902
8
8
16
8
8
16
On 11 August 2022, the Directors of Telstra Corporation Limited
resolved to pay a fully franked final dividend for the financial year
2022 of 8.5 cents per ordinary share, comprising a final ordinary
dividend of 7.5 cents and a final special dividend of 1.0 cent. The
final dividend will be fully franked at a tax rate of 30 per cent. The
record date for the final dividend will be 25 August 2022, with
payment to be made on 22 September 2022. From 24 August 2022,
shares will trade excluding entitlement to the dividend.
On 11 August 2022, the Board determined that the Dividend
Reinvestment Plan (DRP) will continue to operate for the final
dividend for the financial year 2022. The election date for
participation in the DRP is 26 August 2022.
As at 30 June 2022, the final dividend for the financial year 2022
was not determined or publicly recommended by the Board.
Therefore no provision for the dividend had been raised in the
statement of financial position. A $982 million provision for the final
dividend payable has been raised as at the date of resolution.
There are no income tax consequences for the Telstra Group
resulting from the resolution and payment of the final dividend,
except for $421 million of franking debits arising from the payment
of this dividend that will be adjusted in our franking account
balance.
Table B provides information about franking credits available for
use in subsequent reporting periods.
Table B
Telstra Group
Year ended 30 June
2022
2021
Franking account balance
Franking credits that will arise from
the payment of income tax payable as
at 30 June (at a tax rate of 30% on a tax
paid basis)
$m
24
24
48
$m
29
99
128
We believe that our current balance in the franking account,
combined with the franking credits that will arise on income tax
instalments expected to be paid in the financial year 2023, will be
sufficient to fully frank our 2022 final dividend.
4.3 Equity
This note provides information about our share capital and
reserves presented in the statement of changes in equity.
We have established the Telstra Growthshare Trust to
administer the Company's employee share schemes. The trust
is consolidated as it is controlled by us. Shares held within the
trust are used to satisfy future vesting of entitlements in these
employee share schemes and reduce our contributed equity.
4.3.1 Share capital
Table A details components of our share capital balance.
Table A
Telstra Group
Contributed equity
Shares held by employee share plans
Net services received under employee
share plans
As at 30 June
2022
2021
$m
3,180
(36)
(46)
$m
4,530
(69)
(25)
3,098
4,436
Section 4. Our capital and risk management (continued)
4.3 Equity (continued)
4.3.1 Share capital (continued)
(a) Contributed equity
The EPS would have been higher had we completed the on-market
share buy-back at the beginning of this reporting period.
(c) Shares held by employee share plans
As at 30 June 2022, the number of shares held by employee share
plans totalled 10,132,961 (2021: 19,895,768).
During the financial year 2022, we conducted an on-market share
buy-back of 338,870,502 ordinary shares for the total
consideration of $1.35 billion. The buy-back was conducted in the
During the financial year 2022, Telstra Growthshare Pty Ltd (the
ordinary course of trading at an average price per share of $3.98.
trustee of the Telstra Growthshare Trust that administers our
The shares bought back were subsequently cancelled.
employee share schemes) purchased on-market 1,224,568 shares
As at 30 June 2022, we had 11,554,427,353 (2021: 11,893,297,855)
authorised fully paid ordinary shares on issue. Each of our fully paid
ordinary shares carries the right to one vote on a poll at a meeting
$3.92.
for the purposes of the employee incentive schemes for a total
consideration of $5 million and at the average price per share of
of the Company.
(d) Net services received under employee share plans
Holders of our shares also have the right to receive dividends and to
We measure the fair value of services received under employee
participate in the proceeds from sale of all surplus assets in
share plans by reference to the fair value of the equity instruments
proportion to the total shares issued in the event of the Company
granted. The net services received under employee share plans
winding up.
represent the cumulative value of all instruments issued.
(b) Share buy-back impact on earnings per share (EPS)
4.3.2 Reserves
EPS is the amount of post-tax profit attributable to each share. It
Table B details our reserve balances.
excludes profit attributable to non-controlling interest and takes
into account the average number of shares weighted by the number
of days on issue.
Telstra Group
Table B
Foreign
Cash flow
Foreign
Fair value
General
reserve
Total
reserves
currency
transla-
tion
reserve
hedging
reserve
currency
of equity
basis
spread
reserve
instru-
ments
reserve
Balance at 1 July 2020
Other comprehensive income
Balance at 30 June 2021
Other comprehensive income
Transactions with non-controlling interests
Balance at 30 June 2022
$m
130
(95)
35
49
-
84
$m
(177)
51
(126)
156
-
30
$m
(25)
(38)
(63)
55
-
(8)
$m
84
215
299
(149)
-
150
$m
(7)
(7)
-
-
2,084
2,077
$m
5
133
138
111
2,084
2,333
The table below details the nature and purpose of our reserves.
Reserve
Nature and purpose
Foreign currency
translation reserve
Represents exchange differences arising from the conversion of the non-Australian controlled entities’
financial statements into Australian dollars. This reserve is also used to record our percentage share
of exchange differences arising from our equity accounted non-Australian investments in joint
ventures and associated entities.
Cash flow hedging
Represents the effective portion of gains or losses on remeasuring the fair value of hedge instruments,
reserve
where a hedge qualifies for hedge accounting.
Foreign currency basis
Represents changes in the fair value of our derivative financial instruments attributable to movements
spread reserve
in foreign currency basis spread. Currency basis is included in interest on borrowings in the income
statement over the life of the borrowing.
Fair value of equity
instruments reserve
through other comprehensive income.
Represents changes in fair value of equity instruments we have elected to measure at fair value
General reserve
Represents other items we have taken directly to equity.
122 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F47
F48 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 47 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 48 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
4.3 Equity (continued)
4.3.1 Share capital (continued)
(a) Contributed equity
The EPS would have been higher had we completed the on-market
share buy-back at the beginning of this reporting period.
(c) Shares held by employee share plans
During the financial year 2022, we conducted an on-market share
buy-back of 338,870,502 ordinary shares for the total
consideration of $1.35 billion. The buy-back was conducted in the
ordinary course of trading at an average price per share of $3.98.
The shares bought back were subsequently cancelled.
As at 30 June 2022, we had 11,554,427,353 (2021: 11,893,297,855)
authorised fully paid ordinary shares on issue. Each of our fully paid
ordinary shares carries the right to one vote on a poll at a meeting
of the Company.
As at 30 June 2022, the number of shares held by employee share
plans totalled 10,132,961 (2021: 19,895,768).
During the financial year 2022, Telstra Growthshare Pty Ltd (the
trustee of the Telstra Growthshare Trust that administers our
employee share schemes) purchased on-market 1,224,568 shares
for the purposes of the employee incentive schemes for a total
consideration of $5 million and at the average price per share of
$3.92.
(d) Net services received under employee share plans
Holders of our shares also have the right to receive dividends and to
participate in the proceeds from sale of all surplus assets in
proportion to the total shares issued in the event of the Company
winding up.
We measure the fair value of services received under employee
share plans by reference to the fair value of the equity instruments
granted. The net services received under employee share plans
represent the cumulative value of all instruments issued.
(b) Share buy-back impact on earnings per share (EPS)
4.3.2 Reserves
EPS is the amount of post-tax profit attributable to each share. It
excludes profit attributable to non-controlling interest and takes
into account the average number of shares weighted by the number
of days on issue.
Table B details our reserve balances.
Table B
Telstra Group
Foreign
currency
transla-
tion
reserve
Cash flow
hedging
reserve
Foreign
currency
basis
spread
reserve
Fair value
of equity
instru-
ments
reserve
General
reserve
Total
reserves
Balance at 1 July 2020
Other comprehensive income
Balance at 30 June 2021
Other comprehensive income
Transactions with non-controlling interests
Balance at 30 June 2022
$m
130
(95)
35
49
-
84
$m
(177)
51
(126)
156
-
30
$m
(25)
(38)
(63)
55
-
(8)
$m
84
215
299
(149)
-
150
$m
(7)
-
(7)
-
2,084
2,077
$m
5
133
138
111
2,084
2,333
The table below details the nature and purpose of our reserves.
Reserve
Nature and purpose
Foreign currency
translation reserve
Represents exchange differences arising from the conversion of the non-Australian controlled entities’
financial statements into Australian dollars. This reserve is also used to record our percentage share
of exchange differences arising from our equity accounted non-Australian investments in joint
ventures and associated entities.
Cash flow hedging
reserve
Represents the effective portion of gains or losses on remeasuring the fair value of hedge instruments,
where a hedge qualifies for hedge accounting.
Foreign currency basis
spread reserve
Represents changes in the fair value of our derivative financial instruments attributable to movements
in foreign currency basis spread. Currency basis is included in interest on borrowings in the income
statement over the life of the borrowing.
Fair value of equity
instruments reserve
Represents changes in fair value of equity instruments we have elected to measure at fair value
through other comprehensive income.
General reserve
Represents other items we have taken directly to equity.
Telstra Corporation Limited and controlled entities | F47
F48 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 123
Section 4. Our capital and risk management
This section provides information on our approach to capital
management and our capital structure. Our total capital is
defined as equity and net debt. Also outlined in this section are
the financial risks that we are exposed to and how we manage
these financial risks.
SECTION 4. OUR CAPITAL AND RISK MANAGEMENT
4.1 Capital management
Capital management is undertaken in accordance with the financial
parameters regularly reviewed and approved by the Board.
We manage our capital structure with the aim to provide returns for
balance.
shareholders and benefits for other stakeholders, while:
There are no income tax consequences for the Telstra Group
resulting from the resolution and payment of the final dividend,
except for $421 million of franking debits arising from the payment
of this dividend that will be adjusted in our franking account
Table B provides information about franking credits available for
• safeguarding our ability to continue as a going concern
use in subsequent reporting periods.
• maintaining an optimal capital structure and cost of capital that
provides flexibility for strategic investments.
In order to maintain or adjust our capital structure, we may issue or
repay debt, adjust the amount of dividend paid to shareholders or
return capital to shareholders.
Table B
Telstra Group
Notes 4.3 and 4.4 provide further details on each component of
Franking account balance
capital, being equity and net debt.
4.2 Dividend
Franking credits that will arise from
the payment of income tax payable as
at 30 June (at a tax rate of 30% on a tax
paid basis)
Year ended 30 June
2022
2021
$m
24
24
48
$m
29
99
128
This note includes the previous year final dividend and the
current year interim dividend paid. Our dividend comprises of
We believe that our current balance in the franking account,
ordinary and special dividends.
combined with the franking credits that will arise on income tax
instalments expected to be paid in the financial year 2023, will be
sufficient to fully frank our 2022 final dividend.
We currently pay dividends to equity holders of the Telstra Entity
twice a year, an interim and a final dividend. Table A below provides
details about the dividends paid during the financial year.
4.3 Equity
Table A
Year ended 30 June
Telstra Entity
2022
2021
2022
2021
Previous year final
dividend paid
Interim dividend
paid
$m
$m
cents
cents
951
937
951
951
1,888
1,902
8
8
16
8
8
16
On 11 August 2022, the Directors of Telstra Corporation Limited
resolved to pay a fully franked final dividend for the financial year
2022 of 8.5 cents per ordinary share, comprising a final ordinary
dividend of 7.5 cents and a final special dividend of 1.0 cent. The
final dividend will be fully franked at a tax rate of 30 per cent. The
record date for the final dividend will be 25 August 2022, with
payment to be made on 22 September 2022. From 24 August 2022,
shares will trade excluding entitlement to the dividend.
On 11 August 2022, the Board determined that the Dividend
Reinvestment Plan (DRP) will continue to operate for the final
dividend for the financial year 2022. The election date for
participation in the DRP is 26 August 2022.
As at 30 June 2022, the final dividend for the financial year 2022
was not determined or publicly recommended by the Board.
Therefore no provision for the dividend had been raised in the
statement of financial position. A $982 million provision for the final
dividend payable has been raised as at the date of resolution.
This note provides information about our share capital and
reserves presented in the statement of changes in equity.
We have established the Telstra Growthshare Trust to
administer the Company's employee share schemes. The trust
is consolidated as it is controlled by us. Shares held within the
trust are used to satisfy future vesting of entitlements in these
employee share schemes and reduce our contributed equity.
Table A details components of our share capital balance.
4.3.1 Share capital
Table A
Telstra Group
Contributed equity
Shares held by employee share plans
Net services received under employee
share plans
As at 30 June
2022
2021
$m
3,180
(36)
(46)
$m
4,530
(69)
(25)
3,098
4,436
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 49 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 50 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.3 Equity (continued)
4.3.3 Recognition and measurement
Issued and paid-up capital is recognised at the fair value of the
consideration received by the Telstra Entity.
Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity, net of income tax, as a reduction of
the share proceeds received.
Services received under employee share plans (i.e. share-based
payments) increase our share capital balance and vested employee
share plans decrease the share capital balance resulting in a net
movement in our equity.
We record purchases of the Telstra Entity shares underpinning our
employee share plans as a reduction in share capital.
4.4 Net debt
As part of our capital management we monitor net debt. Net
debt equals total borrowings and derivative financial
instruments, less cash and cash equivalents.
This note provides information about components of our net
debt and related finance costs.
Table A lists the carrying value of our net debt components (both
current and non-current balances).
Table A
Telstra Group
Lease liabilities
Borrowings
Net derivative financial instruments
Gross debt
Cash and cash equivalents
Net debt
As at 30 June
2022
2021
$m
(3,287)
(10,982)
509
(13,760)
1,040
(12,720)
$m
(3,305)
(14,136)
1,053
(16,388)
1,125
(15,263)
No components of net debt are subject to any externally imposed
capital requirements. We did not have any defaults or breaches
under any of our agreements with our lenders during the financial
year 2022.
Table B summarises the key movements in net debt during the
financial year and provides our gearing ratio. Our gearing ratio
equals net debt divided by total capital, where total capital equals
equity, as shown in the statement of financial position, plus net
debt.
4.4 Net debt (continued)
4.4.1 Borrowings
Table C details the carrying and fair values of borrowings included
in the statement of financial position.
Table B
Telstra Group
Year ended 30 June
2022
2021
Table C
Telstra Group
Opening net debt at 1 July
Drawings (bilateral bank loans)
Commercial paper (net)
Revolving bank facilities (net)
Debt repayments
Other borrowings
Lease liability payments
Net cash outflow
Fair value gain impacting:
Equity
Other expenses
Finance costs
Other non-cash movements
Lease liability (Telstra as a lessee)
Other loans
Total non-cash movements
Total decrease in gross debt
Net (decrease)/increase in cash and
cash equivalents (including effects of
foreign exchange rate changes)
Total decrease in net debt
Closing net debt at 30 June
Total equity
Total capital
$m
(15,263)
(901)
415
(14)
2,795
(15)
697
2,977
284
1
23
(679)
22
(349)
2,628
$m
(16,844)
(753)
(463)
260
2,357
(449)
706
1,658
15
31
10
(713)
(46)
(703)
955
(85)
626
2,543
(12,720)
(16,837)
(29,557)
%
1,581
(15,263)
(15,275)
(30,538)
%
Gearing ratio
43.0
50.0
Current borrowings
Unsecured notes
Bank and other loans - unsecured
Commercial paper - unsecured
Other financial liabilities
Non-current borrowings
Unsecured notes
Bank and other loans - unsecured
Other financial liabilities
Total borrowings
As at 30 June 2022
As at 30 June 2021
Carrying
Fair value
Carrying
Fair value
value
value
$m
$m
$m
$m
2,035
2,033
2,704
2,727
2,690
2,690
3,631
3,656
206
448
1
7,137
739
416
8,292
10,982
208
448
1
7,177
751
346
8,274
10,964
65
862
-
9,425
667
413
10,505
14,136
65
864
-
10,151
686
416
11,253
14,909
Unsecured notes comprise bonds and private placements.
Other financial liabilities represent amounts arising from sale and
leaseback transactions accounted as financial liabilities under the
accounting standards.
Our commercial paper is used principally to support working capital
and short-term liquidity and continues to be supported by a
combination of liquid financial assets, and access to committed
bank facilities.
(a) Recognition and measurement
Recognition and measurement
Initial recognition and
Borrowings are recognised initially on the trade date (the date on which we become a party to the
measurement
contractual provisions of the instrument).
All loans and borrowings are initially recorded at fair value, which typically reflects the proceeds
received, net of directly attributable transaction costs.
Subsequent
measurement
After initial recognition, all borrowings are stated at amortised cost, using the effective interest
method. Any difference between proceeds received net of direct transaction costs and the amount
payable at maturity is recognised over the term of the borrowing using the effective interest method.
Borrowings that are in designated fair value hedge relationships are adjusted for fair value
movements attributable to the hedged risk.
Derecognition
Borrowings are derecognised when our contractual obligations are discharged, canceled or expired.
A gain or a loss is recognised in the income statement when the borrowing is derecognised.
Borrowings are classified as non-current borrowings except for
those that mature in less than 12 months from the reporting date,
which are classified as current borrowings.
124 | Telstra Corporation Limited and controlled entities
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Notes to the financial statements (continued) 2022.Financial Report.book Page 49 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 50 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.3 Equity (continued)
4.3.3 Recognition and measurement
Table B summarises the key movements in net debt during the
financial year and provides our gearing ratio. Our gearing ratio
equals net debt divided by total capital, where total capital equals
4.4 Net debt (continued)
4.4.1 Borrowings
Issued and paid-up capital is recognised at the fair value of the
equity, as shown in the statement of financial position, plus net
consideration received by the Telstra Entity.
debt.
Table C details the carrying and fair values of borrowings included
in the statement of financial position.
Any transaction costs arising on the issue of ordinary shares are
recognised directly in equity, net of income tax, as a reduction of
the share proceeds received.
Services received under employee share plans (i.e. share-based
payments) increase our share capital balance and vested employee
share plans decrease the share capital balance resulting in a net
movement in our equity.
We record purchases of the Telstra Entity shares underpinning our
employee share plans as a reduction in share capital.
4.4 Net debt
As part of our capital management we monitor net debt. Net
debt equals total borrowings and derivative financial
instruments, less cash and cash equivalents.
This note provides information about components of our net
debt and related finance costs.
Table A lists the carrying value of our net debt components (both
current and non-current balances).
Table A
Telstra Group
Lease liabilities
Borrowings
Net derivative financial instruments
Cash and cash equivalents
Gross debt
Net debt
As at 30 June
2022
2021
$m
(3,287)
(10,982)
509
$m
(3,305)
(14,136)
1,053
(13,760)
(16,388)
1,040
1,125
(12,720)
(15,263)
No components of net debt are subject to any externally imposed
capital requirements. We did not have any defaults or breaches
under any of our agreements with our lenders during the financial
year 2022.
Table B
Telstra Group
Opening net debt at 1 July
Drawings (bilateral bank loans)
Commercial paper (net)
Revolving bank facilities (net)
Debt repayments
Other borrowings
Lease liability payments
Net cash outflow
Fair value gain impacting:
Equity
Other expenses
Finance costs
Other non-cash movements
Lease liability (Telstra as a lessee)
Other loans
Total non-cash movements
Total decrease in gross debt
Net (decrease)/increase in cash and
cash equivalents (including effects of
foreign exchange rate changes)
Total decrease in net debt
Closing net debt at 30 June
Total equity
Total capital
Gearing ratio
Year ended 30 June
2022
2021
$m
$m
(15,263)
(16,844)
(901)
415
(14)
2,795
(15)
697
2,977
284
1
23
(679)
22
(349)
2,628
(753)
(463)
260
2,357
(449)
706
1,658
15
31
10
(713)
(46)
(703)
955
(85)
626
2,543
(12,720)
(16,837)
(29,557)
%
1,581
(15,263)
(15,275)
(30,538)
%
43.0
50.0
Table C
Telstra Group
Current borrowings
Unsecured notes
Bank and other loans - unsecured
Commercial paper - unsecured
Other financial liabilities
Non-current borrowings
Unsecured notes
Bank and other loans - unsecured
Other financial liabilities
Total borrowings
Unsecured notes comprise bonds and private placements.
Our commercial paper is used principally to support working capital
and short-term liquidity and continues to be supported by a
combination of liquid financial assets, and access to committed
bank facilities.
(a) Recognition and measurement
Recognition and measurement
As at 30 June 2022
As at 30 June 2021
Carrying
value
Fair value
Carrying
value
Fair value
$m
$m
$m
$m
2,035
206
448
1
2,690
7,137
739
416
8,292
10,982
2,033
208
448
1
2,690
7,177
751
346
8,274
10,964
2,704
65
862
-
3,631
9,425
667
413
10,505
14,136
2,727
65
864
-
3,656
10,151
686
416
11,253
14,909
Other financial liabilities represent amounts arising from sale and
leaseback transactions accounted as financial liabilities under the
accounting standards.
Initial recognition and
measurement
Borrowings are recognised initially on the trade date (the date on which we become a party to the
contractual provisions of the instrument).
All loans and borrowings are initially recorded at fair value, which typically reflects the proceeds
received, net of directly attributable transaction costs.
Subsequent
measurement
After initial recognition, all borrowings are stated at amortised cost, using the effective interest
method. Any difference between proceeds received net of direct transaction costs and the amount
payable at maturity is recognised over the term of the borrowing using the effective interest method.
Borrowings that are in designated fair value hedge relationships are adjusted for fair value
movements attributable to the hedged risk.
Derecognition
Borrowings are derecognised when our contractual obligations are discharged, canceled or expired.
A gain or a loss is recognised in the income statement when the borrowing is derecognised.
Borrowings are classified as non-current borrowings except for
those that mature in less than 12 months from the reporting date,
which are classified as current borrowings.
Telstra Corporation Limited and controlled entities | F49
F50 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 125
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 51 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 52 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.4 Net debt (continued)
4.4.2 Derivatives
Derivatives are financial instruments that derive their value
from the price of an underlying item such as interest rate,
foreign currency exchange rate, credit spread or other index.
We enter into derivative transactions in accordance with
policies approved by the Board to manage our exposure to
market risks and volatility of financial outcomes that arise as
part of our normal business operations. We do not
speculatively trade in derivative financial instruments.
Table D shows the carrying value of each class of derivative
financial instruments.
Table D
Telstra Group
Current derivative financial instruments
Cross currency swaps
Interest rate swaps
Forward foreign exchange contracts
Non-current derivative financial instruments
Cross currency swaps
Interest rate swaps
Total derivative financial instruments
The terms of a derivative contract are determined at inception,
therefore any movements in the price of the underlying item over
time will cause the contract value to fluctuate, which is reflected in
the change in fair value of the derivative.
Where the fair value of a derivative is positive, it is carried as an
asset, and where negative, as a liability. Both parties are therefore
exposed to the credit quality of the counterparty. We are exposed to
credit risk on derivative assets as a result of the potential failure of
the counterparties to meet their contractual obligations.
Refer to note 4.5.3 for information about our credit risk policies.
4.4 Net debt (continued)
4.4.2 Derivatives (continued)
(a) Recognition and measurement
Recognition and measurement
Initial recognition and
Derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and subsequently remeasured at fair value at each reporting date.
subsequent
measurement
Recognition of resulting gains or losses depends on the designation of the derivative as a hedging
instrument and the nature of the item being hedged.
Right to set-off
We record derivative financial instruments on a net basis in our statement of financial position where
we have a legally recognised right to set-off the derivative asset and the derivative liability, and we
intend to settle on a net basis or simultaneously.
Derecognition
Derivative assets are derecognised when the rights to receive cash flows from the derivative assets
have expired or have been transferred and we have transferred substantially all the risks and rewards
of the asset.
expired.
Derivative liabilities are derecognised when the contractual obligations are discharged, cancelled or
Derivative financial instruments are included as non-current
assets or liabilities, except for those that mature in less than 12
months from the reporting date, which are classified as current.
Derivatives embedded in host contracts that are financial assets
are not separated from financial asset hosts and a hybrid contract
is classified in its entirety at fair value.
Derivatives embedded in other financial liabilities or host contracts
are treated as separate financial instruments when their risks and
characteristics are not closely related to those of the host
contracts and the host contracts are not measured at fair value
through profit or loss.
As at 30 June 2022
As at 30 June 2021
Assets
Liabilities
Assets
Liabilities
$m
$m
$m
267
8
27
302
486
26
512
814
-
-
-
-
(292)
(13)
(305)
(305)
552
42
30
624
728
58
786
1,410
$m
-
(15)
(11)
(26)
(223)
(108)
(331)
(357)
126 | Telstra Corporation Limited and controlled entities
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F52 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 51 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 52 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.4 Net debt (continued)
4.4.2 Derivatives
Derivatives are financial instruments that derive their value
from the price of an underlying item such as interest rate,
foreign currency exchange rate, credit spread or other index.
We enter into derivative transactions in accordance with
policies approved by the Board to manage our exposure to
market risks and volatility of financial outcomes that arise as
part of our normal business operations. We do not
speculatively trade in derivative financial instruments.
Table D shows the carrying value of each class of derivative
financial instruments.
Table D
Telstra Group
Current derivative financial instruments
Cross currency swaps
Interest rate swaps
Forward foreign exchange contracts
Non-current derivative financial instruments
Cross currency swaps
Interest rate swaps
Total derivative financial instruments
The terms of a derivative contract are determined at inception,
therefore any movements in the price of the underlying item over
time will cause the contract value to fluctuate, which is reflected in
the change in fair value of the derivative.
Where the fair value of a derivative is positive, it is carried as an
asset, and where negative, as a liability. Both parties are therefore
exposed to the credit quality of the counterparty. We are exposed to
credit risk on derivative assets as a result of the potential failure of
the counterparties to meet their contractual obligations.
Refer to note 4.5.3 for information about our credit risk policies.
4.4 Net debt (continued)
4.4.2 Derivatives (continued)
(a) Recognition and measurement
Recognition and measurement
Initial recognition and
subsequent
measurement
Derivative financial instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and subsequently remeasured at fair value at each reporting date.
Recognition of resulting gains or losses depends on the designation of the derivative as a hedging
instrument and the nature of the item being hedged.
Right to set-off
Derecognition
We record derivative financial instruments on a net basis in our statement of financial position where
we have a legally recognised right to set-off the derivative asset and the derivative liability, and we
intend to settle on a net basis or simultaneously.
Derivative assets are derecognised when the rights to receive cash flows from the derivative assets
have expired or have been transferred and we have transferred substantially all the risks and rewards
of the asset.
Derivative liabilities are derecognised when the contractual obligations are discharged, cancelled or
expired.
Derivative financial instruments are included as non-current
assets or liabilities, except for those that mature in less than 12
months from the reporting date, which are classified as current.
Derivatives embedded in host contracts that are financial assets
are not separated from financial asset hosts and a hybrid contract
is classified in its entirety at fair value.
Derivatives embedded in other financial liabilities or host contracts
are treated as separate financial instruments when their risks and
characteristics are not closely related to those of the host
contracts and the host contracts are not measured at fair value
through profit or loss.
As at 30 June 2022
As at 30 June 2021
Assets
Liabilities
Assets
Liabilities
$m
$m
$m
267
8
27
302
486
26
512
814
-
-
-
-
(292)
(13)
(305)
(305)
552
42
30
624
728
58
786
1,410
$m
-
(15)
(11)
(26)
(223)
(108)
(331)
(357)
Telstra Corporation Limited and controlled entities | F51
F52 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 127
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 53 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Section 4. Our capital and risk management (continued)
4.4 Net debt (continued)
4.4.3 Finance costs
Table E presents our net finance costs. Interest expense on
borrowings are net amounts after offsetting interest income and
interest expense on associated derivative instruments.
Table E
Telstra Group
Year ended 30 June
2022
2021
Interest income
Finance income from finance leases
(Telstra as a lessor)
Finance income from contracts with
customers
Net interest income on defined benefit
plan
Total finance income
Interest expense on borrowings
Interest expense on lease liabilities
Gross interest on debt
Finance costs from contracts with
customers
Net gains on financial instruments
included in remeasurements
Interest capitalised
Total finance costs
Net finance costs
$m
15
8
84
3
110
(444)
(78)
(522)
(100)
39
(61)
56
(527)
(417)
$m
12
10
79
2
103
(518)
(83)
(601)
(134)
26
(108)
55
(654)
(551)
4.5.1 Managing our interest rate risk
Interest rate risk arises from changes in market interest rates.
Borrowings issued at fixed rates expose us to fair value
interest rate risk. Variable rate borrowings give rise to cash
flow interest rate risk, which is partially offset by cash and
cash equivalents balances held at variable rates.
We manage interest rate risk on our net debt portfolio by:
• setting a target ratio of fixed interest debt to variable interest
debt, as required by our debt management policy
• ensuring access to diverse sources of funding
• reducing risks of refinancing by establishing and managing our
target maturity profiles
• entering into cross currency and interest rate swaps. Refer to
note 4.4.2 for further details on derivatives.
(a) Exposure
The use of cross currency and interest rate swaps allows us to
manage the level of exposure our borrowings have to interest rate
risks. Table A shows our fixed to floating ratio based on the carrying
value of our borrowings. The post hedge position differs from the
pre hedge position where we have derivative hedging instruments
in place.
Table A
As at 30 June
Telstra Group
2022
2021
Pre
hedge
Post
hedge
Pre
hedge
Post
hedge
$m
$m
$m
$m
(1,217)
(3,611)
(1,321)
(5,236)
(9,348)
(6,954)
(12,402)
(8,487)
(417)
(417)
(413)
(413)
(10,982)
(10,982)
(14,136)
(14,136)
Net gains on derivative financial instruments included in
remeasurements within net finance costs comprise unrealised
valuation impacts on our borrowings and derivatives. These include
net unrealised gains or losses which arise from changes in the fair
value of derivative financial instruments to the extent that hedge
accounting is not achieved or is not effective. These fair values
increase or decrease because of changes in financial indices and
prices over which we have no control.
Floating rate
borrowings
Fixed rate
borrowings
Other financial
liabilities
Total borrowings
4.5 Financial instruments and risk management
Refer to note 4.4.1 for further details on our borrowings.
Our underlying business activities result in exposure to
operational risks and financial risks, including interest rate
risk, foreign currency risk, credit risk and liquidity risk.
Our overall risk management program seeks to mitigate these
risks in order to reduce volatility of our financial performance
and to support the delivery of our financial targets. Financial
risk management is carried out centrally by our treasury
department under policies approved by the Board.
Our financial risk management strategies ensure that we can
withstand market disruptions for extended periods.
This note summarises how we manage these financial risks.
There have been no material changes to our risk management
policies since 30 June 2021.
128 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F53
Notes to the financial statements (continued) 2022.Financial Report.book Page 53 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 54 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5.1 Managing our interest rate risk
4.5 Financial instruments and risk management (continued)
4.5.1 Managing our interest rate risk (continued)
(a) Exposure (continued)
Table B summarises as at 30 June our floating rate derivative
instruments in hedging relationships that would be affected by
IBOR reform (refer to note 1.5.1 for further information), showing
estimated gross nominal floating rate interest cash flows until
maturity, associated nominal amounts in the underlying currency
and weighted average maturity.
Table B
Telstra Group
Interest rate
swaps
3MBBSW
3MBBSW
3MEURIBOR
3MLIBOR
6MUSLIBOR
Cross currency
swaps
3MBBSW
3MEURIBOR
3MLIBOR
(b) Sensitivity
As at 30 June 2022
As at 30 June 2021
Native
currency
Receive/
(pay)
Nominal
interest
flows
Nominal/
Principal
amounts
Weighted
average
maturity
Nominal
Interest
flows
Nominal/
Principal
amounts
Weighted
average
maturity
$m
$m
years
$m
$m
years
AUD
AUD
EUR
USD
USD
AUD
EUR
USD
Receive
Pay
Pay
Pay
Receive
Pay
Receive
Receive
50
(4)
(3)
-
36
(513)
3
-
1,268
(50)
(1,000)
-
300
(3,538)
1,000
-
1.2
1.5
0.2
-
3.8
2.5
0.2
-
7
(3)
(17)
(6)
-
(381)
17
6
2,223
(50)
(1,750)
(1,000)
-
(5,495)
1,750
1,000
1.4
2.5
1.1
0.3
-
2.5
1.1
0.3
The results of the sensitivity analysis are driven primarily from the
following factors:
• any increase or decrease in interest rates will impact our net
unhedged floating rate financial instruments and therefore will
directly impact profit or loss
• changes in the fair value of derivatives which are part of effective
cash flow hedge relationships are deferred in equity.
The analysis does not include the impact of any management action
that might take place if the interest rate shifts were to occur.
We have performed a sensitivity analysis based on the interest rate
risk exposures of our financial instruments as at 30 June. In
accordance with our policy to swap foreign currency borrowings
into Australian dollars, interest rate sensitivity relates primarily to
movements in the Australian interest rates.
We have selected a sensitivity range of plus 100 basis points (2021:
100 basis points) and minus 25 basis points (2021: 25 basis points)
as a reasonably possible shift in interest rates taking into account
the current level of both short-term and long-term interest rates,
historical volatility and market expectations of future movements.
The sensitivity reflects a change in benchmark rates only. This is
not a forecast or prediction of future market conditions.
Table C shows the results of our sensitivity analysis on the impacts
to profit after tax and on equity.
Table C
As at 30 June
Telstra Group
2022
2021
Gain/(loss)
Net
profit
Equity
Net
profit
Equity
$m
(20)
5
$m
(2)
1
$m
(28)
7
$m
(11)
3
Interest rates
(+100bp)
Interest rates
(-25bp)
Telstra Corporation Limited and controlled entities | F53
F54 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 129
Interest rate risk arises from changes in market interest rates.
Borrowings issued at fixed rates expose us to fair value
interest rate risk. Variable rate borrowings give rise to cash
flow interest rate risk, which is partially offset by cash and
cash equivalents balances held at variable rates.
We manage interest rate risk on our net debt portfolio by:
• setting a target ratio of fixed interest debt to variable interest
debt, as required by our debt management policy
• ensuring access to diverse sources of funding
• reducing risks of refinancing by establishing and managing our
target maturity profiles
• entering into cross currency and interest rate swaps. Refer to
note 4.4.2 for further details on derivatives.
The use of cross currency and interest rate swaps allows us to
manage the level of exposure our borrowings have to interest rate
risks. Table A shows our fixed to floating ratio based on the carrying
value of our borrowings. The post hedge position differs from the
pre hedge position where we have derivative hedging instruments
(a) Exposure
in place.
Table A
Telstra Group
2022
2021
As at 30 June
Pre
hedge
Post
hedge
Pre
hedge
Post
hedge
$m
$m
$m
$m
(1,217)
(3,611)
(1,321)
(5,236)
(9,348)
(6,954)
(12,402)
(8,487)
(417)
(417)
(413)
(413)
Total borrowings
(10,982)
(10,982)
(14,136)
(14,136)
Refer to note 4.4.1 for further details on our borrowings.
4.4 Net debt (continued)
4.4.3 Finance costs
Table E presents our net finance costs. Interest expense on
borrowings are net amounts after offsetting interest income and
interest expense on associated derivative instruments.
Table E
Telstra Group
Interest income
Finance income from finance leases
(Telstra as a lessor)
Finance income from contracts with
customers
plan
Net interest income on defined benefit
Total finance income
Interest expense on borrowings
Interest expense on lease liabilities
Gross interest on debt
Finance costs from contracts with
customers
Net gains on financial instruments
included in remeasurements
Interest capitalised
Total finance costs
Net finance costs
Year ended 30 June
2022
2021
$m
15
8
84
3
110
(444)
(78)
(522)
(100)
39
(61)
56
(527)
(417)
$m
12
10
79
2
103
(518)
(83)
(601)
(134)
26
(108)
55
(654)
(551)
Net gains on derivative financial instruments included in
remeasurements within net finance costs comprise unrealised
valuation impacts on our borrowings and derivatives. These include
net unrealised gains or losses which arise from changes in the fair
value of derivative financial instruments to the extent that hedge
accounting is not achieved or is not effective. These fair values
increase or decrease because of changes in financial indices and
prices over which we have no control.
Floating rate
borrowings
Fixed rate
borrowings
Other financial
liabilities
4.5 Financial instruments and risk management
Our underlying business activities result in exposure to
operational risks and financial risks, including interest rate
risk, foreign currency risk, credit risk and liquidity risk.
Our overall risk management program seeks to mitigate these
risks in order to reduce volatility of our financial performance
and to support the delivery of our financial targets. Financial
risk management is carried out centrally by our treasury
department under policies approved by the Board.
Our financial risk management strategies ensure that we can
withstand market disruptions for extended periods.
This note summarises how we manage these financial risks.
There have been no material changes to our risk management
policies since 30 June 2021.
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 55 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 56 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.2 Managing our foreign currency risk
Foreign currency risk is our risk that the value of a financial
commitment, forecast transaction, recognised asset or
liability will fluctuate due to changes in foreign exchange
rates. We issue debt offshore and operate internationally and
hence we are exposed to foreign exchange risk from various
currencies.
This risk exposure arises primarily from:
• borrowings denominated in foreign currencies
• trade and other creditor balances denominated in foreign
currencies
• firm commitments or highly probable forecast transactions
for receipts and payments settled in foreign currencies or
with prices dependent on foreign currencies
• translation risk associated with our net investments in
foreign controlled entities (foreign operations).
(a) Borrowings
We mitigate the foreign currency exposure on foreign currency
denominated borrowings by converting these borrowings to
Australian dollars using currency swaps.
Table D shows the cross currency swaps that are hedging our
unsecured notes and forward foreign exchange contracts that are
hedging United States dollar denominated commercial paper.
Table D
Telstra Group
Exposure
As at 30 June 2022
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Carrying
value
Exposure
As at 30 June 2021
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Carrying
value
Euro
United States dollars
Japanese yen
Unsecured notes denominated in
foreign currency
United States dollars
Commercial paper
(b) Trading
Local currency
Australian dollars
Local currency
Australian dollars
m
(3,925)
(1,500)
(5,000)
m
3,925
1,500
5,000
$m
(5,569)
(1,958)
(62)
$m
(5,849)
(2,177)
(54)
m
(4,675)
(2,500)
(5,000)
m
4,675
2,500
5,000
(310)
310
(7,589)
(8,080)
(443)
(443)
(448)
(448)
(650)
650
$m
(6,571)
(2,914)
(62)
$m
(7,511)
(3,321)
(62)
(9,547)
(10,894)
(858)
(858)
(862)
(862)
We have some exposure to foreign currency risk from our operating
(transactional) activities. We manage this risk by:
• hedging a proportion of the exposure of foreign exchange
transaction risk arising from firm commitments or highly
probable forecast transactions denominated in foreign
currencies in accordance with our risk management policy. These
transactions may be physically settled in a foreign currency or in
Australian dollars but with direct reference to quoted currency
rates in accordance with a contractual formula.
• economically hedging a proportion of foreign currency risk
associated with trade and other creditor balances.
We hedge the above risks using forward foreign exchange
contracts.
4.5 Financial instruments and risk management (continued)
4.5.2 Managing our foreign currency risk (continued)
(b) Trading (continued)
Table E summarises forward foreign exchange contracts that are
hedging our transactional currency exposures.
Table E
Telstra Group
Transactions to and from WOCE
British pounds sterling
Other (various currencies)
Forecast transactions
United States dollars
Indian rupee
Philippine peso
Trade payables
As at 30 June 2022
As at 30 June 2021
Exposure
Forward foreign exchange
Exposure
Forward foreign exchange
contract receive/(pay)
contract receive/(pay)
Local currency
Austra-
Average
Local currency
Austra-
Average
lian
exchange
dollars
rate
lian
exchange
dollars
rate
m
(38)
-
m
18
-
(266)
(8,607)
(770)
165
4,165
308
$m
(32)
14
(227)
(72)
(8)
$
0.57
-
0.72
57.99
39.84
m
(38)
-
m
19
-
(340)
(6,999)
(1,188)
157
2,800
475
$m
(34)
10
(200)
(47)
(13)
$
0.54
-
0.78
59.60
37.92
United States dollars
(85)
85
(122)
0.70
(52)
52
(67)
0.78
At 30 June 2022, we also had a $442 million United States dollar
A shift of 10 per cent has been selected as a reasonably possible
(2021: $438 million United States dollar) liability exposure relating
change taking into account the current level of exchange rates and
to transactions with wholly-owned controlled entities (WOCE) that
the volatility observed both on a historical basis and on market
is partially hedged with a $175 million (2021: $175 million) bank
expectations of future movements. This is not a forecast or
deposit in the same currency.
(c) Natural offset
Our direct foreign exchange exposure arising from the impact of
translation of the results of our foreign entities to Australian dollars
is, in part, naturally offset at the Group level by foreign currency
denominated operating and capital expenditure of functions, for
which we do not have hedges in place.
(d) Sensitivity
currency risk exposures existing at balance date. Table F shows the
impact that a 10 per cent shift in applicable exchange rates would
have on our profit after tax and on equity.
Table F
As at 30 June
Telstra Group
2022
2021
prediction of future market conditions. We have disclosed the
sensitivity analysis on a total portfolio basis and not separately by
currency.
Any unhedged foreign exchange positions associated with our
transactional exposures will directly affect profit or loss as a result
of foreign currency movements.
There is no significant impact on profit or loss from foreign currency
movements associated with our borrowings portfolio that are
swapped to Australian dollars as an offsetting entry will be
We are exposed to equity impacts from foreign currency
movements associated with our offshore investments and our
derivatives in cash flow hedges. The translation of our foreign
entities’ results into the Group’s presentation currency has not
been included in the above sensitivity analysis as this represents
translation risk rather than transaction risk.
We have performed a sensitivity analysis based on our foreign
recognised on the associated hedging instrument.
Gain/(loss)
The analysis does not include the impact of any management action
that might take place if these events occurred.
Net
profit
Equity
Equity
Net
profit
$m
42
(47)
$m
3
(3)
$m
40
(49)
$m
(33)
40
Exchange rates
(+10%)
Exchange rates
(-10%)
130 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F55
F56 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 55 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 56 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.2 Managing our foreign currency risk
Foreign currency risk is our risk that the value of a financial
commitment, forecast transaction, recognised asset or
liability will fluctuate due to changes in foreign exchange
rates. We issue debt offshore and operate internationally and
hence we are exposed to foreign exchange risk from various
currencies.
This risk exposure arises primarily from:
• borrowings denominated in foreign currencies
• trade and other creditor balances denominated in foreign
currencies
• firm commitments or highly probable forecast transactions
for receipts and payments settled in foreign currencies or
with prices dependent on foreign currencies
• translation risk associated with our net investments in
foreign controlled entities (foreign operations).
(a) Borrowings
We mitigate the foreign currency exposure on foreign currency
denominated borrowings by converting these borrowings to
Australian dollars using currency swaps.
Table D shows the cross currency swaps that are hedging our
unsecured notes and forward foreign exchange contracts that are
hedging United States dollar denominated commercial paper.
Table D
Telstra Group
Exposure
Unsecured notes denominated in
Euro
United States dollars
Japanese yen
foreign currency
United States dollars
Commercial paper
(b) Trading
We have some exposure to foreign currency risk from our operating
(transactional) activities. We manage this risk by:
• hedging a proportion of the exposure of foreign exchange
transaction risk arising from firm commitments or highly
probable forecast transactions denominated in foreign
currencies in accordance with our risk management policy. These
transactions may be physically settled in a foreign currency or in
Australian dollars but with direct reference to quoted currency
rates in accordance with a contractual formula.
• economically hedging a proportion of foreign currency risk
associated with trade and other creditor balances.
We hedge the above risks using forward foreign exchange
contracts.
As at 30 June 2022
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Carrying
Exposure
value
Carrying
value
As at 30 June 2021
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Local currency
Australian dollars
Local currency
Australian dollars
m
(3,925)
(1,500)
(5,000)
m
3,925
1,500
5,000
$m
(5,569)
(1,958)
(62)
$m
(5,849)
(2,177)
(54)
m
(4,675)
(2,500)
(5,000)
m
4,675
2,500
5,000
(310)
310
(650)
650
(7,589)
(8,080)
(443)
(443)
(448)
(448)
$m
(6,571)
(2,914)
(62)
$m
(7,511)
(3,321)
(62)
(9,547)
(10,894)
(858)
(858)
(862)
(862)
4.5 Financial instruments and risk management (continued)
4.5.2 Managing our foreign currency risk (continued)
(b) Trading (continued)
Table E summarises forward foreign exchange contracts that are
hedging our transactional currency exposures.
Table E
Telstra Group
Transactions to and from WOCE
British pounds sterling
Other (various currencies)
Forecast transactions
United States dollars
Indian rupee
Philippine peso
Trade payables
United States dollars
As at 30 June 2022
As at 30 June 2021
Exposure
Forward foreign exchange
contract receive/(pay)
Exposure
Forward foreign exchange
contract receive/(pay)
Local currency
Austra-
lian
dollars
Average
exchange
rate
Local currency
Austra-
lian
dollars
Average
exchange
rate
m
(38)
-
m
18
-
(266)
(8,607)
(770)
165
4,165
308
$m
(32)
14
(227)
(72)
(8)
$
0.57
-
0.72
57.99
39.84
m
(38)
-
m
19
-
(340)
(6,999)
(1,188)
157
2,800
475
$m
(34)
10
(200)
(47)
(13)
$
0.54
-
0.78
59.60
37.92
(85)
85
(122)
0.70
(52)
52
(67)
0.78
At 30 June 2022, we also had a $442 million United States dollar
(2021: $438 million United States dollar) liability exposure relating
to transactions with wholly-owned controlled entities (WOCE) that
is partially hedged with a $175 million (2021: $175 million) bank
deposit in the same currency.
(c) Natural offset
Our direct foreign exchange exposure arising from the impact of
translation of the results of our foreign entities to Australian dollars
is, in part, naturally offset at the Group level by foreign currency
denominated operating and capital expenditure of functions, for
which we do not have hedges in place.
(d) Sensitivity
We have performed a sensitivity analysis based on our foreign
currency risk exposures existing at balance date. Table F shows the
impact that a 10 per cent shift in applicable exchange rates would
have on our profit after tax and on equity.
Table F
As at 30 June
Telstra Group
2022
2021
Gain/(loss)
Net
profit
Equity
Net
profit
Equity
$m
42
(47)
$m
3
(3)
$m
40
(49)
$m
(33)
40
Exchange rates
(+10%)
Exchange rates
(-10%)
A shift of 10 per cent has been selected as a reasonably possible
change taking into account the current level of exchange rates and
the volatility observed both on a historical basis and on market
expectations of future movements. This is not a forecast or
prediction of future market conditions. We have disclosed the
sensitivity analysis on a total portfolio basis and not separately by
currency.
Any unhedged foreign exchange positions associated with our
transactional exposures will directly affect profit or loss as a result
of foreign currency movements.
There is no significant impact on profit or loss from foreign currency
movements associated with our borrowings portfolio that are
swapped to Australian dollars as an offsetting entry will be
recognised on the associated hedging instrument.
We are exposed to equity impacts from foreign currency
movements associated with our offshore investments and our
derivatives in cash flow hedges. The translation of our foreign
entities’ results into the Group’s presentation currency has not
been included in the above sensitivity analysis as this represents
translation risk rather than transaction risk.
The analysis does not include the impact of any management action
that might take place if these events occurred.
Telstra Corporation Limited and controlled entities | F55
F56 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 131
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 57 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 58 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.4 Managing our liquidity risk
4.5 Financial instruments and risk management (continued)
Our objective is to maintain a balance between continuity and
flexibility of funding through the use of liquid financial instruments,
long-term and short-term borrowings, and committed available
bank facilities.
We manage liquidity risk by:
• defining minimum levels of cash and cash equivalents
• defining minimum levels of cash and cash equivalents plus
undrawn bank facilities
• closely monitoring rolling forecasts of liquidity reserves on the
basis of expected business cash flows
• using instruments which trade in highly liquid markets with
highly rated counterparties
• investing surplus funds in liquid instruments.
Our access to commercial paper programs continue to be
supported by a combination of liquid financial assets, and access
to committed bank facilities.
Table G shows our total and undrawn committed bank facilities. As
at 30 June 2022, we had total available facilities of $3,800 million,
the majority of which were held by the Telstra Entity, with none
maturing in the next 12 months. Drawings under our bank facilities
and commercial paper issues are shown on a gross basis in the
statement of cash flows.
Table G
Telstra Group
Facilities available
Facilities used
Facilities unused
As at 30 June
2022
2021
$m
3,800
(14)
3,786
$m
2,500
-
2,500
4.5.4 Managing our liquidity risk (continued)
Table H shows the maturity profile of our financial liabilities
including estimated interest payments. We reduce refinancing risk
by ensuring that our borrowings mature in different periods. Table
H also includes derivative financial assets as these assets have a
direct relationship with an underlying financial liability and both
the asset and the liability are managed together.
The amounts disclosed are undiscounted contractual future cash
flows and therefore do not reconcile to the amounts in the
statement of financial position.
Contractual maturity
As at 30 June 2022
1 to 2
years
2 to 5
years
Total
More
than 5
years
Less
than 1
year
As at 30 June 2021
1 to 2
years
2 to 5
years
Total
More
than 5
years
Less
than 1
year
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
(2,017)
(1,681)
(3,195)
(2,396)
(9,289)
(2,658)
(2,084)
(4,331)
(2,957)
(12,030)
(451)
(207)
(20)
-
(415)
(17)
-
(323)
(59)
-
-
(719)
(451)
(945)
(815)
(865)
(65)
(18)
-
(227)
(20)
-
(440)
(55)
-
-
(725)
(865)
(732)
(818)
(261)
(191)
(294)
(60)
(806)
(339)
(241)
(386)
(125)
(1,091)
Lease liabilities
(550)
(546)
(1,196)
(1,394)
(3,686)
(566)
(577)
(1,118)
(1,444)
(3,705)
(4,189)
(233)
-
-
(4,422)
(3,766)
(9)
-
-
(3,775)
Derivative financial assets
2,668
1,787
2,860
2,456
9,771
4,046
1,784
4,580
2,511
12,921
(2,463)
(1,619)
(2,996)
(2,718)
(9,796)
(3,541)
(1,517)
(4,422)
(2,756)
(12,236)
(7,490)
(2,915)
(5,203)
(4,831)
(20,439)
(7,772)
(2,891)
(6,172)
(5,496)
(22,331)
Table H
Telstra Group
Unsecured notes
Commercial paper
Bank and other loans
Other financial liabilities
Interest on unsecured
notes, bank and other
loans
Trade/other payables and
accrued expenses
Derivative financial
liabilities
Total
4.5.5 Hedge accounting
4.5.3 Managing our credit risk
Credit risk is the risk that a counterparty will default on its
contractual obligations resulting in a financial loss. We are
exposed to credit risk from our operating activities (primarily
customer credit risk) and financing activities.
We manage credit risk by:
• applying Board approved credit policies
• monitoring exposure to high-risk debtors
• requiring collateral where appropriate
• assigning credit limits to all financial counterparties.
We may also be subject to credit risk on transactions not included
in the statement of financial position, such as when we provide a
guarantee for another party. Details of our contingent liabilities are
disclosed in note 7.2.3.
(a) Customer credit risk
Trade and other receivables and contract assets consist of a large
number of customers, spread across the consumer, business,
enterprise, government and international sectors. Our credit
management team assesses customers’ credit quality, and defines
and monitors credit limits by customer. Sales to overdue
customers are prohibited unless appropriately approved.
Compliance with credit limits and approval process is regularly
monitored. Other than nbn co, we do not have any significant credit
risk exposure to a single customer or group of customers.
Refer to note 3.3 for details about our trade and other receivables
and contract assets.
(b) Treasury credit risk
We are exposed to credit risk from the investment of surplus funds
(primarily deposits) and from the use of derivative financial
instruments.
We have a number of exposures to individual counterparties. To
manage this risk, we have Board approved policies that limit the
amount of credit exposure to any single counterparty. Counterparty
credit ratings and market conditions are reviewed continually with
limits being revised and utilisation adjusted where appropriate.
We also manage our credit exposure using a value at risk (VaR)
methodology, which is an industry standard measure that
estimates the maximum potential exposure of our risk positions as
a result of future movements in market rates. This helps to ensure
that we do not underestimate credit exposure with any single
counterparty. Using VaR analysis at 30 June 2022, 100 per cent
(2021: 94 per cent) of our derivative credit exposure was with
counterparties that have a credit rating of A- or better.
Hedging refers to the way in which we use financial instruments,
primarily derivatives, to manage our exposure to financial risks. The
gain or loss on the underlying item (the ‘hedged item’) is expected
to move in the opposite direction to the gain or loss on the derivative
(the ‘hedging instrument’), therefore offsetting our risk position.
Hedge accounting allows the matching of the gains and losses on
hedged items and associated hedging instruments in the same
accounting period to minimise volatility in the income statement.
In order to qualify for hedge accounting, prospective hedge
effectiveness testing must meet all of the following criteria:
• an economic relationship exists between the hedged item and
hedging instrument
• the effect of credit risk does not dominate the value changes
resulting from the economic relationship
• the hedge ratio is the same as that resulting from actual amounts
of hedged items and hedging instruments for risk management.
The COVID-19 pandemic has had no impact to our hedge
relationships which continue to meet the criteria for hedge
accounting.
132 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F57
F58 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 57 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 58 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.4 Managing our liquidity risk
4.5 Financial instruments and risk management (continued)
4.5.3 Managing our credit risk
Our objective is to maintain a balance between continuity and
flexibility of funding through the use of liquid financial instruments,
long-term and short-term borrowings, and committed available
Credit risk is the risk that a counterparty will default on its
contractual obligations resulting in a financial loss. We are
exposed to credit risk from our operating activities (primarily
customer credit risk) and financing activities.
bank facilities.
We manage liquidity risk by:
We manage credit risk by:
• applying Board approved credit policies
• monitoring exposure to high-risk debtors
• requiring collateral where appropriate
• defining minimum levels of cash and cash equivalents
• defining minimum levels of cash and cash equivalents plus
undrawn bank facilities
• closely monitoring rolling forecasts of liquidity reserves on the
basis of expected business cash flows
• using instruments which trade in highly liquid markets with
highly rated counterparties
• assigning credit limits to all financial counterparties.
• investing surplus funds in liquid instruments.
We may also be subject to credit risk on transactions not included
Our access to commercial paper programs continue to be
in the statement of financial position, such as when we provide a
supported by a combination of liquid financial assets, and access
guarantee for another party. Details of our contingent liabilities are
to committed bank facilities.
Table G shows our total and undrawn committed bank facilities. As
at 30 June 2022, we had total available facilities of $3,800 million,
the majority of which were held by the Telstra Entity, with none
maturing in the next 12 months. Drawings under our bank facilities
and commercial paper issues are shown on a gross basis in the
statement of cash flows.
Table G
Telstra Group
Facilities available
Facilities used
Facilities unused
As at 30 June
2022
2021
$m
3,800
(14)
3,786
$m
2,500
-
2,500
disclosed in note 7.2.3.
(a) Customer credit risk
Trade and other receivables and contract assets consist of a large
number of customers, spread across the consumer, business,
enterprise, government and international sectors. Our credit
management team assesses customers’ credit quality, and defines
and monitors credit limits by customer. Sales to overdue
customers are prohibited unless appropriately approved.
Compliance with credit limits and approval process is regularly
monitored. Other than nbn co, we do not have any significant credit
risk exposure to a single customer or group of customers.
Refer to note 3.3 for details about our trade and other receivables
and contract assets.
(b) Treasury credit risk
We are exposed to credit risk from the investment of surplus funds
(primarily deposits) and from the use of derivative financial
instruments.
We have a number of exposures to individual counterparties. To
manage this risk, we have Board approved policies that limit the
amount of credit exposure to any single counterparty. Counterparty
credit ratings and market conditions are reviewed continually with
limits being revised and utilisation adjusted where appropriate.
We also manage our credit exposure using a value at risk (VaR)
methodology, which is an industry standard measure that
estimates the maximum potential exposure of our risk positions as
a result of future movements in market rates. This helps to ensure
that we do not underestimate credit exposure with any single
counterparty. Using VaR analysis at 30 June 2022, 100 per cent
(2021: 94 per cent) of our derivative credit exposure was with
counterparties that have a credit rating of A- or better.
4.5.4 Managing our liquidity risk (continued)
Table H shows the maturity profile of our financial liabilities
including estimated interest payments. We reduce refinancing risk
by ensuring that our borrowings mature in different periods. Table
H also includes derivative financial assets as these assets have a
direct relationship with an underlying financial liability and both
the asset and the liability are managed together.
The amounts disclosed are undiscounted contractual future cash
flows and therefore do not reconcile to the amounts in the
statement of financial position.
Table H
Telstra Group
Unsecured notes
Commercial paper
Bank and other loans
Other financial liabilities
Interest on unsecured
notes, bank and other
loans
Lease liabilities
Trade/other payables and
accrued expenses
Derivative financial assets
Derivative financial
liabilities
Total
4.5.5 Hedge accounting
Contractual maturity
As at 30 June 2022
As at 30 June 2021
Less
than 1
year
$m
(2,017)
(451)
(207)
(20)
1 to 2
years
2 to 5
years
$m
(1,681)
-
(415)
(17)
$m
(3,195)
-
(323)
(59)
More
than 5
years
$m
(2,396)
-
-
(719)
Total
$m
(9,289)
(451)
(945)
(815)
Less
than 1
year
$m
(2,658)
(865)
(65)
(18)
1 to 2
years
2 to 5
years
$m
(2,084)
-
(227)
(20)
$m
(4,331)
-
(440)
(55)
More
than 5
years
$m
(2,957)
-
-
(725)
Total
$m
(12,030)
(865)
(732)
(818)
(261)
(191)
(294)
(60)
(806)
(339)
(241)
(386)
(125)
(1,091)
(550)
(546)
(1,196)
(1,394)
(3,686)
(566)
(577)
(1,118)
(1,444)
(3,705)
(4,189)
(233)
-
-
(4,422)
(3,766)
(9)
-
-
(3,775)
2,668
1,787
2,860
2,456
9,771
4,046
1,784
4,580
2,511
12,921
(2,463)
(1,619)
(2,996)
(2,718)
(9,796)
(3,541)
(1,517)
(4,422)
(2,756)
(12,236)
(7,490)
(2,915)
(5,203)
(4,831)
(20,439)
(7,772)
(2,891)
(6,172)
(5,496)
(22,331)
Hedging refers to the way in which we use financial instruments,
primarily derivatives, to manage our exposure to financial risks. The
gain or loss on the underlying item (the ‘hedged item’) is expected
to move in the opposite direction to the gain or loss on the derivative
(the ‘hedging instrument’), therefore offsetting our risk position.
Hedge accounting allows the matching of the gains and losses on
hedged items and associated hedging instruments in the same
accounting period to minimise volatility in the income statement.
In order to qualify for hedge accounting, prospective hedge
effectiveness testing must meet all of the following criteria:
• an economic relationship exists between the hedged item and
hedging instrument
• the effect of credit risk does not dominate the value changes
resulting from the economic relationship
• the hedge ratio is the same as that resulting from actual amounts
of hedged items and hedging instruments for risk management.
The COVID-19 pandemic has had no impact to our hedge
relationships which continue to meet the criteria for hedge
accounting.
Telstra Corporation Limited and controlled entities | F57
F58 | Telstra Corporation Limited and controlled entities
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Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 59 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 60 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.5 Hedge accounting (continued)
To the extent permitted by Australian Accounting Standards, we
formally designate and document our financial instruments by
hedge type as follows:
Fair value hedges
Cash flow hedges
Objectives of this hedging
arrangement
To hedge the exposure to changes in the
fair value of borrowings which are issued at
a fixed rate, or denominated in foreign
currency, by converting to floating rate
borrowings denominated in Australian
dollars.
Instruments used
We enter into cross currency and interest
rate swaps to mitigate our exposure to
changes in the fair value of our long-term
borrowings.
To hedge the exposure to changes in cash
flows from borrowings that bear floating
interest rates or are denominated in foreign
currency. Cash flow hedging is also used to
mitigate the foreign currency exposure
arising from highly probable and
committed future foreign currency cash
flows.
We enter into cross currency and interest
rate swaps to hedge future cash flows
arising from our borrowings.
We use forward foreign exchange contracts
to hedge a portion of firm commitments
and highly probable forecast transactions.
Economic relationships
In all our hedge relationships, the critical terms of the hedging instrument and hedged item
(including face values, cash flows and currency) are generally aligned.
Discontinuation of hedge
accounting
Hedge accounting is discontinued when a hedging instrument expires, is sold, terminated,
or no longer meets the criteria for hedge accounting. At that time, any cumulative gains or
losses relating to cash flow hedges recognised in equity are initially retained in equity and
subsequently recognised in the income statement as the previously hedged item affects
profit or loss.
For fair value hedges, the cumulative adjustment recorded against the carrying value of the
hedged item at the date hedge accounting ceases is amortised to the income statement
using the effective interest method.
4.5 Financial instruments and risk management (continued)
(b) Fair value hedges
4.5.5 Hedge accounting (continued)
Table I shows the carrying value of each component of our gross
debt including derivative financial instruments categorised by
All changes in the fair value of the underlying item relating to the
hedged risk are recognised in the income statement together with
the changes in the fair value of derivatives. The net difference is
recorded in the income statement as ineffectiveness. The carrying
value of borrowings in effective fair value hedge relationships is
adjusted for gains or losses attributable to the risk(s) being hedged.
As at 30 June
2022
2021
adjustments that are included in the carrying amount of borrowings
Table J outlines the cumulative amount of fair value hedge
$m
$m
in the statement of financial position.
Total borrowings and lease liabilities
(14,269)
(17,441)
hedge type.
Table I
Telstra Group
Borrowings by hedge designation
Not in an accounting hedge
Fair value hedges
Cash flow hedges
relationship
Total borrowings
Lease liabilities
Derivative assets by hedge
designation
Fair value hedges
Cash flow hedges
Not in an accounting hedge
relationship
Total derivative assets
Derivative liabilities by hedge
designation
Fair value hedges
Cash flow hedges
Not in an accounting hedge
relationship
Total derivative liabilities
Total gross debt
The principal value of our gross debt on an equivalent basis was
$13,758 million (2021: $16,070 million). Principal value represents
contractual obligations less future finance charges, excluding fair
value remeasurements and for foreign denominated balances
equates to the principal value in the underlying currency converted
at the spot exchange rate as at 30 June 2022.
(a) Derivatives not in an accounting hedge relationship
Some derivatives may not qualify for hedge accounting or are
specifically not designated as a hedge as natural offset achieves
substantially the same accounting results. This includes forward
foreign currency contracts that are used to economically hedge
exchange rate fluctuations associated with trade payables or other
liability and asset balances denominated in a foreign currency.
(2,392)
(5,733)
(3,912)
(7,029)
(2,857)
(3,195)
(10,982)
(14,136)
(3,287)
(3,305)
293
511
10
814
(240)
(65)
-
(305)
622
769
19
1,410
(109)
(237)
(11)
(357)
(13,760)
(16,388)
Principal value
(2,493)
(3,792)
Table K shows the ineffectiveness recognised in the income
statement. We have excluded foreign currency basis spreads from
our designated fair value and cash flow hedge relationships.
Table J
Telstra Group
Unamortised discounts/premiums
Amortised cost
Cumulative fair value hedge
adjustments
Carrying amount
Table K
Telstra Group
Remeasurement of hedged item used
to measure ineffectiveness
Change in value of hedging
instruments
Net gain before tax from
ineffectiveness
Net gain after tax
As at 30 June
2022
2021
$m
7
94
$m
10
(130)
(2,486)
(3,782)
(2,392)
(3,912)
Year ended 30 June
2022
(Gain)/
loss
2021
(Gain)/
loss
$m
(325)
(23)
(16)
$m
(254)
(5)
(4)
302
249
134 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F59
F60 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 59 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 60 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.5 Hedge accounting (continued)
To the extent permitted by Australian Accounting Standards, we
formally designate and document our financial instruments by
hedge type as follows:
Fair value hedges
Cash flow hedges
Objectives of this hedging
To hedge the exposure to changes in the
To hedge the exposure to changes in cash
arrangement
fair value of borrowings which are issued at
flows from borrowings that bear floating
Instruments used
a fixed rate, or denominated in foreign
currency, by converting to floating rate
borrowings denominated in Australian
dollars.
interest rates or are denominated in foreign
currency. Cash flow hedging is also used to
mitigate the foreign currency exposure
arising from highly probable and
committed future foreign currency cash
flows.
We enter into cross currency and interest
We enter into cross currency and interest
rate swaps to mitigate our exposure to
rate swaps to hedge future cash flows
changes in the fair value of our long-term
arising from our borrowings.
borrowings.
We use forward foreign exchange contracts
to hedge a portion of firm commitments
and highly probable forecast transactions.
Economic relationships
In all our hedge relationships, the critical terms of the hedging instrument and hedged item
(including face values, cash flows and currency) are generally aligned.
Discontinuation of hedge
Hedge accounting is discontinued when a hedging instrument expires, is sold, terminated,
accounting
or no longer meets the criteria for hedge accounting. At that time, any cumulative gains or
losses relating to cash flow hedges recognised in equity are initially retained in equity and
subsequently recognised in the income statement as the previously hedged item affects
profit or loss.
For fair value hedges, the cumulative adjustment recorded against the carrying value of the
hedged item at the date hedge accounting ceases is amortised to the income statement
using the effective interest method.
4.5 Financial instruments and risk management (continued)
(b) Fair value hedges
All changes in the fair value of the underlying item relating to the
hedged risk are recognised in the income statement together with
the changes in the fair value of derivatives. The net difference is
recorded in the income statement as ineffectiveness. The carrying
value of borrowings in effective fair value hedge relationships is
adjusted for gains or losses attributable to the risk(s) being hedged.
Table J outlines the cumulative amount of fair value hedge
adjustments that are included in the carrying amount of borrowings
in the statement of financial position.
Table J
Telstra Group
Principal value
Unamortised discounts/premiums
Amortised cost
Cumulative fair value hedge
adjustments
Carrying amount
As at 30 June
2022
2021
$m
(2,493)
7
(2,486)
$m
(3,792)
10
(3,782)
94
(130)
(2,392)
(3,912)
Table K shows the ineffectiveness recognised in the income
statement. We have excluded foreign currency basis spreads from
our designated fair value and cash flow hedge relationships.
Table K
Telstra Group
Remeasurement of hedged item used
to measure ineffectiveness
Change in value of hedging
instruments
Net gain before tax from
ineffectiveness
Net gain after tax
Year ended 30 June
2022
(Gain)/
loss
2021
(Gain)/
loss
$m
(325)
302
(23)
(16)
$m
(254)
249
(5)
(4)
4.5.5 Hedge accounting (continued)
Table I shows the carrying value of each component of our gross
debt including derivative financial instruments categorised by
hedge type.
Table I
Telstra Group
Borrowings by hedge designation
Fair value hedges
Cash flow hedges
Not in an accounting hedge
relationship
Total borrowings
Lease liabilities
Total borrowings and lease liabilities
Derivative assets by hedge
designation
Fair value hedges
Cash flow hedges
Not in an accounting hedge
relationship
Total derivative assets
Derivative liabilities by hedge
designation
Fair value hedges
Cash flow hedges
Not in an accounting hedge
relationship
Total derivative liabilities
Total gross debt
As at 30 June
2022
2021
$m
$m
(2,392)
(5,733)
(3,912)
(7,029)
(2,857)
(3,195)
(10,982)
(3,287)
(14,269)
(14,136)
(3,305)
(17,441)
293
511
10
814
(240)
(65)
-
622
769
19
1,410
(109)
(237)
(11)
(305)
(13,760)
(357)
(16,388)
The principal value of our gross debt on an equivalent basis was
$13,758 million (2021: $16,070 million). Principal value represents
contractual obligations less future finance charges, excluding fair
value remeasurements and for foreign denominated balances
equates to the principal value in the underlying currency converted
at the spot exchange rate as at 30 June 2022.
(a) Derivatives not in an accounting hedge relationship
Some derivatives may not qualify for hedge accounting or are
specifically not designated as a hedge as natural offset achieves
substantially the same accounting results. This includes forward
foreign currency contracts that are used to economically hedge
exchange rate fluctuations associated with trade payables or other
liability and asset balances denominated in a foreign currency.
Telstra Corporation Limited and controlled entities | F59
F60 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 135
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 61 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 62 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.5 Hedge accounting (continued)
(c) Cash flow hedges
Table M shows when the cash flows are expected to occur with
respect to items in cash flow hedges (i.e. notional cash outflows).
These amounts are the undiscounted cash flows reported in
Australian dollars.
Table M
Telstra Group
Non-capital items
Within 1 year
Capital items
Within 1 year
Borrowings
Within 1 year
Within 1 to 5 years
After 5 years
As at 30 June
2022
2021
$m
$m
(466)
(556)
(99)
(55)
(132)
(4,421)
(1,674)
(6,792)
(1,491)
(4,498)
(1,687)
(8,287)
Non-capital items will be recognised in the income statement in the
same period in which the cash flows are expected to occur. For
capital items, the hedged assets affect the income statement as
the assets are depreciated over their useful lives.
market prices in active
markets for identical assets
or liabilities
instruments
The portion of the gain or loss on the hedging instrument that is
effective (i.e. offsets the movement on the hedged item) is
recognised directly in the cash flow hedging reserve in equity and
any ineffective portion is recognised within net finance costs
directly in the income statement.
Gains or losses deferred in the cash flow hedging reserve are
subsequently:
• transferred to the income statement when the hedged
transaction affects profit or loss
• included in the measurement of the initial cost of the assets
where the hedged item is for purchases of property, plant and
equipment
• transferred immediately to the income statement if a forecast
hedged transaction is no longer expected to occur.
During the current and prior financial years, there was no material
impact on profit or loss resulting from ineffectiveness of our cash
flow hedges or from discontinuing hedge accounting for forecast
transactions no longer expected to occur.
Table L presents the hedge gains or losses transferred to and from
the cash flow hedging reserve.
Table L
Telstra Group
Year ended 30 June
2022
2021
Changes in fair value of cash flow
hedges
Changes in fair value transferred to
other expenses
Changes in fair value transferred to
goods and services purchased
Changes in fair value transferred to
finance costs
Changes in fair value transferred to
property, plant and equipment
Cash flow hedging reserve
Income tax on movements in the cash
flow hedging reserve
$m
152
(43)
(11)
107
(1)
204
(54)
150
$m
(515)
439
16
124
4
68
(20)
48
4.5 Financial instruments and risk management (continued)
During the financial year 2022, there were no changes in valuation
4.5.6 Valuation and disclosures within fair value hierarchy
techniques for recurring fair value measurements of our financial
instruments. There were also no transfers between fair value
hierarchy levels.
The table below summaries the methods used to estimate the fair
value of our financial instruments.
The financial instruments included in the statement of
financial position are measured either at fair value or their
carrying value approximates fair value, with the exception of
borrowings, which are held at amortised cost.
To determine fair value, we use both observable and
unobservable inputs. We classify the inputs used in the
valuation of our financial instruments according to a three
level hierarchy as shown below. The classification is based on
the lowest level input that is significant to the fair value
measurement as a whole.
Level
Financial instrument
Fair value
Level 1: quoted (unadjusted)
Listed investments in equity
Quoted prices in active markets.
Level 2: the lowest level input
Borrowings, cross currency and
Valuation techniques maximising the use of observable
that is significant to the fair
interest rate swaps
value measurement is directly
(as prices) or indirectly
(derived from prices)
observable
market data. Present value of the estimated future cash
flows using appropriate market-based yield curves,
which are independently derived. Yield curves are
sourced from readily available market data quoted for
all major currencies.
Forward foreign exchange
Quoted forward exchange rates at reporting date for
contracts
contracts with similar maturity profiles.
Level 3: one or more key
Trade receivables from contracts
Trade receivables from contracts with customers
inputs for the instrument are
with customers
not based on observable
market data (unobservable
inputs)
measured at fair value are such where the instrument
does not meet the classification requirements of
financial assets at amortised cost.
A valuation technique is used, where the estimated
future cash flows are discounted to their present value
using a discount rate determined using a risk-free rate
plus a risk adjustment reflecting the credit risk
associated with the cash flows.
Unlisted investments in equity
Valuation techniques (where one or more of the
instruments
significant inputs is not based on observable market
data) include reference to discounted cash flows and
fair values of recent orderly sell transactions between
market participants involving instruments that are
substantially the same.
Contingent consideration
Initial recognition: expectations of future performance
of the business. Subsequent measurement: present
value of the future expected cash flows.
136 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F61
F62 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 4.5.5 Hedge accounting (continued)
(c) Cash flow hedges
The portion of the gain or loss on the hedging instrument that is
effective (i.e. offsets the movement on the hedged item) is
recognised directly in the cash flow hedging reserve in equity and
any ineffective portion is recognised within net finance costs
directly in the income statement.
Gains or losses deferred in the cash flow hedging reserve are
Non-capital items
subsequently:
• transferred to the income statement when the hedged
transaction affects profit or loss
• included in the measurement of the initial cost of the assets
where the hedged item is for purchases of property, plant and
equipment
• transferred immediately to the income statement if a forecast
hedged transaction is no longer expected to occur.
Within 1 to 5 years
After 5 years
During the current and prior financial years, there was no material
impact on profit or loss resulting from ineffectiveness of our cash
Australian dollars.
Table M
Telstra Group
Within 1 year
Capital items
Within 1 year
Borrowings
Within 1 year
As at 30 June
2022
2021
$m
$m
(466)
(556)
(99)
(55)
(132)
(4,421)
(1,674)
(6,792)
(1,491)
(4,498)
(1,687)
(8,287)
flow hedges or from discontinuing hedge accounting for forecast
Non-capital items will be recognised in the income statement in the
transactions no longer expected to occur.
Table L presents the hedge gains or losses transferred to and from
the cash flow hedging reserve.
same period in which the cash flows are expected to occur. For
capital items, the hedged assets affect the income statement as
the assets are depreciated over their useful lives.
Table L
Telstra Group
Year ended 30 June
2022
2021
Changes in fair value of cash flow
hedges
Changes in fair value transferred to
other expenses
Changes in fair value transferred to
goods and services purchased
Changes in fair value transferred to
finance costs
Changes in fair value transferred to
property, plant and equipment
Cash flow hedging reserve
Income tax on movements in the cash
flow hedging reserve
$m
152
(43)
(11)
107
(1)
204
(54)
150
$m
(515)
439
16
124
4
68
(20)
48
2022.Financial Report.book Page 61 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 62 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
Table M shows when the cash flows are expected to occur with
4.5 Financial instruments and risk management (continued)
respect to items in cash flow hedges (i.e. notional cash outflows).
These amounts are the undiscounted cash flows reported in
4.5.6 Valuation and disclosures within fair value hierarchy
The financial instruments included in the statement of
financial position are measured either at fair value or their
carrying value approximates fair value, with the exception of
borrowings, which are held at amortised cost.
To determine fair value, we use both observable and
unobservable inputs. We classify the inputs used in the
valuation of our financial instruments according to a three
level hierarchy as shown below. The classification is based on
the lowest level input that is significant to the fair value
measurement as a whole.
During the financial year 2022, there were no changes in valuation
techniques for recurring fair value measurements of our financial
instruments. There were also no transfers between fair value
hierarchy levels.
The table below summaries the methods used to estimate the fair
value of our financial instruments.
Level
Financial instrument
Fair value
Level 1: quoted (unadjusted)
market prices in active
markets for identical assets
or liabilities
Level 2: the lowest level input
that is significant to the fair
value measurement is directly
(as prices) or indirectly
(derived from prices)
observable
Listed investments in equity
instruments
Quoted prices in active markets.
Borrowings, cross currency and
interest rate swaps
Valuation techniques maximising the use of observable
market data. Present value of the estimated future cash
flows using appropriate market-based yield curves,
which are independently derived. Yield curves are
sourced from readily available market data quoted for
all major currencies.
Forward foreign exchange
contracts
Quoted forward exchange rates at reporting date for
contracts with similar maturity profiles.
Level 3: one or more key
inputs for the instrument are
not based on observable
market data (unobservable
inputs)
Trade receivables from contracts
with customers
Unlisted investments in equity
instruments
Trade receivables from contracts with customers
measured at fair value are such where the instrument
does not meet the classification requirements of
financial assets at amortised cost.
A valuation technique is used, where the estimated
future cash flows are discounted to their present value
using a discount rate determined using a risk-free rate
plus a risk adjustment reflecting the credit risk
associated with the cash flows.
Valuation techniques (where one or more of the
significant inputs is not based on observable market
data) include reference to discounted cash flows and
fair values of recent orderly sell transactions between
market participants involving instruments that are
substantially the same.
Contingent consideration
Initial recognition: expectations of future performance
of the business. Subsequent measurement: present
value of the future expected cash flows.
Telstra Corporation Limited and controlled entities | F61
F62 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 137
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 63 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 64 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.6 Valuation and disclosures within fair value hierarchy
(continued)
Table N categorises our financial instruments which are measured
at fair value, according to the valuation methodology applied.
Table N
Telstra Group
As at 30 June 2022
As at 30 June 2021
Level 2
Level 3
Total
Level 2
Level 3
Total
Assets
Trade receivables from contracts
with customers
Derivative financial instruments
Investments in unlisted securities
Liabilities
Derivative financial instruments
Contingent consideration
Total
$m
$m
$m
$m
-
814
-
814
(305)
-
(305)
509
65
-
15
80
-
(72)
(72)
8
65
814
15
894
(305)
(72)
(377)
517
-
1,410
-
1,410
(357)
-
(357)
1,053
$m
397
-
15
412
-
(4)
(4)
408
$m
397
1,410
15
1,822
(357)
(4)
(361)
1,461
As at 30 June 2022, there were no financial instruments measured
using level 1 inputs.
Fair value of borrowings presented in Table C in note 4.4.1 was
measured using level 2 inputs.
Fair value of contingent consideration was measured using level 3
inputs. For further details about contingent consideration
recognised during the financial year 2022, refer to note 6.1.1, with
the amounts disclosed in tables B and D of that note.
4.5 Financial instruments and risk management (continued)
4.5.7 Offsetting and netting arrangements
Table O presents financial assets and financial liabilities that are
offset, or subject to enforceable master netting arrangements or
other similar agreements but not offset.
The column ‘net amounts’ shows the impact on the statement of
financial position if all set-off rights were exercised. ‘Related
amounts not offset in the statement of financial position’ reflect
amounts subject to conditional offsetting arrangements.
Table O
Effects of offsetting in the statement of
Related amounts not offset in the
financial position
statement of financial position
Telstra Group
Gross
amounts
Gross
Net amounts
Financial
Collateral
Net amounts
amounts
presented in
instruments
received or
pledged
offset in the
the
statement of
statement of
financial
position
financial
position
$m
$m
$m
$m
$m
$m
A
B
C=A-B
D
E
F=C-D-E
As at 30 June 2022
Trade and other receivables and
contract assets
Trade and other payables
Derivative financial assets
Derivative financial liabilities
Total
Trade and other receivables and
contract assets
Trade and other payables
Derivative financial assets
Derivative financial liabilities
Total
309
(210)
814
(305)
608
311
(209)
1,410
(357)
1,155
68
(68)
64
(64)
-
-
-
-
-
-
241
(142)
814
(305)
608
247
(145)
1,410
(357)
1,155
As at 30 June 2021
53
(53)
204
(204)
-
58
(58)
287
(287)
-
9
-
-
-
9
9
-
-
-
9
179
(89)
610
(101)
599
180
(87)
1,123
(70)
1,146
Our rights of set-off that are not otherwise included in column B of
Table O, related to:
• our inter-operative tariff arrangements with some of our
international roaming partners, where we have executed
agreements that allow the netting of amounts payable and
receivable by us on cessation of the contract
• our wholesale customers, where we have executed Customer
Relationship Agreements that allow for the netting of amounts
payable and receivable by us in certain circumstances where
there is a right to suspend the supply of services or on the
expiration or termination of the agreement
• our derivative financial instruments, where we have executed
master netting arrangements under our International Swaps and
Derivatives Association agreements. These agreements allow for
the netting of amounts payable and receivable by us or the
counterparty in the event of default or a credit event. In line with
contractual provisions, in the event of insolvency all derivatives
with a positive or negative fair value that exist with the respective
counterparty are offset against each other, leaving a net
receivable or liability.
138 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F63
F64 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 63 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 64 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
4.5 Financial instruments and risk management (continued)
4.5.6 Valuation and disclosures within fair value hierarchy
(continued)
Table N categorises our financial instruments which are measured
at fair value, according to the valuation methodology applied.
Table N
Telstra Group
Assets
Trade receivables from contracts
with customers
Derivative financial instruments
Investments in unlisted securities
Liabilities
Derivative financial instruments
Contingent consideration
Total
As at 30 June 2022
As at 30 June 2021
Level 2
Level 3
Total
Level 2
Level 3
Total
$m
$m
$m
$m
814
814
-
-
-
(305)
(305)
509
65
-
15
80
-
(72)
(72)
8
65
814
15
894
(305)
(72)
(377)
517
-
-
-
1,410
1,410
(357)
(357)
1,053
$m
397
-
15
412
-
(4)
(4)
408
$m
397
1,410
15
1,822
(357)
(4)
(361)
1,461
As at 30 June 2022, there were no financial instruments measured
using level 1 inputs.
Fair value of borrowings presented in Table C in note 4.4.1 was
measured using level 2 inputs.
Fair value of contingent consideration was measured using level 3
inputs. For further details about contingent consideration
recognised during the financial year 2022, refer to note 6.1.1, with
the amounts disclosed in tables B and D of that note.
4.5 Financial instruments and risk management (continued)
4.5.7 Offsetting and netting arrangements
Table O presents financial assets and financial liabilities that are
offset, or subject to enforceable master netting arrangements or
other similar agreements but not offset.
The column ‘net amounts’ shows the impact on the statement of
financial position if all set-off rights were exercised. ‘Related
amounts not offset in the statement of financial position’ reflect
amounts subject to conditional offsetting arrangements.
Table O
Telstra Group
Effects of offsetting in the statement of
financial position
Related amounts not offset in the
statement of financial position
Gross
amounts
Gross
amounts
offset in the
statement of
financial
position
Net amounts
presented in
the
statement of
financial
position
Financial
instruments
Collateral
received or
pledged
Net amounts
$m
$m
$m
$m
$m
$m
A
B
C=A-B
D
E
F=C-D-E
Trade and other receivables and
contract assets
Trade and other payables
Derivative financial assets
Derivative financial liabilities
Total
Trade and other receivables and
contract assets
Trade and other payables
Derivative financial assets
Derivative financial liabilities
Total
309
(210)
814
(305)
608
311
(209)
1,410
(357)
1,155
As at 30 June 2022
241
(142)
814
(305)
608
As at 30 June 2021
247
(145)
1,410
(357)
1,155
53
(53)
204
(204)
-
58
(58)
287
(287)
-
68
(68)
-
-
-
64
(64)
-
-
-
9
-
-
-
9
9
-
-
-
9
179
(89)
610
(101)
599
180
(87)
1,123
(70)
1,146
Our rights of set-off that are not otherwise included in column B of
Table O, related to:
• our inter-operative tariff arrangements with some of our
international roaming partners, where we have executed
agreements that allow the netting of amounts payable and
receivable by us on cessation of the contract
• our wholesale customers, where we have executed Customer
Relationship Agreements that allow for the netting of amounts
payable and receivable by us in certain circumstances where
there is a right to suspend the supply of services or on the
expiration or termination of the agreement
• our derivative financial instruments, where we have executed
master netting arrangements under our International Swaps and
Derivatives Association agreements. These agreements allow for
the netting of amounts payable and receivable by us or the
counterparty in the event of default or a credit event. In line with
contractual provisions, in the event of insolvency all derivatives
with a positive or negative fair value that exist with the respective
counterparty are offset against each other, leaving a net
receivable or liability.
Telstra Corporation Limited and controlled entities | F63
F64 | Telstra Corporation Limited and controlled entities
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Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 65 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 5. Our people
Section 5. Our people
We are working to attract and retain employees with the
skills and passion to best serve our markets. This section
We are working to attract and retain employees with the skills
provides information about our employee benefits
and passion to best serve our markets. This section provides
obligations. It also includes details of our employee share
information about our employee benefits obligations. It also
plans and compensation paid to key management
includes details of our employee share plans and
personnel.
compensation paid to key management personnel.
SECTION 5. OUR PEOPLE
5.1 Employee benefits
5.1.1 Aggregate employee benefits
Our employee related obligations include:
• liabilities for wages and salaries and related on-costs (presented
within current trade and other payables)
• annual leave, long service leave and employee incentives
(presented within current and non-current employee benefits)
and
• redundancy provisions (presented within current other
provisions).
Table A provides a summary of all these employee obligations.
Table A
Telstra Group
Accrued labour and on-costs
Current employee benefits
Non-current employee benefits
Current redundancy provisions
As at 30 June
2022
2021
$m
489
667
132
11
1,299
$m
515
682
150
-
1,347
Long service
leave provision
We applied judgement to determine
the following key assumptions used in
the calculation of long service leave
entitlements:
• 3.5 per cent (2021: 3.0 per cent)
weighted average projected
increases in salaries
• 5.2 per cent (2021: 2.5 per cent)
discount rate.
The discount rate used to calculate
the present value has been
determined by reference to market
yields at 30 June 2022 on nine year
(2021: nine year) high quality
corporate bonds which have due
dates similar to those of our
liabilities.
For the amounts of the provision presented as current, we do not
have the right at the end of the financial year to defer settlement for
any of these obligations. However, based on experience, we do not
expect all employees to take the full amount of accrued leave or
require payment within the next 12 months. Amounts disclosed in
Table B have been determined in accordance with an actuarial
assessment and reflect leave that is not expected to be taken or
paid within the next 12 months.
Table B
Telstra Group
Leave obligations expected to be
settled after 12 months
5.1.2 Recognition and measurement
As at 30 June
2022
2021
$m
354
$m
398
The liabilities for employee benefits relating to wages and salaries,
annual leave and other current employee benefits are accrued at
their nominal amounts. These are calculated based on
remuneration rates expected to be current at the settlement date
and include related costs.
Certain employees who have been employed by Telstra for at least
10 years are entitled to long service leave of three months or more
depending on the actual length of employment. We accrue
liabilities for long service leave not expected to be paid or settled
within 12 months of the reporting date at present values of future
amounts expected to be paid. This is based on the projected
increases in wage and salary rates over an average of 10 years,
experience of employee departures and periods of service.
Provisions are recognised when:
• the Telstra Group has a present legal or constructive obligation to
make a future sacrifice of economic benefits as a result of past
transactions or events
• it is probable that a future sacrifice of economic benefits will
arise
• a reliable estimate can be made of the amount of the obligation.
We recognise a provision for redundancy costs when a detailed
formal plan for the redundancies has been developed and a valid
expectation has been created that the redundancies will be carried
out in respect of the employees likely to be affected.
140 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F65
Notes to the financial statements (continued) 2022.Financial Report.book Page 65 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 66 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Section 5. Our people
We are working to attract and retain employees with the
skills and passion to best serve our markets. This section
provides information about our employee benefits
obligations. It also includes details of our employee share
plans and compensation paid to key management
personnel.
Notes to the financial statements (continued)
Section 5. Our people (continued)
5.2 Employee share plans
SECTION 5. OUR PEOPLE
5.1 Employee benefits
5.1.1 Aggregate employee benefits
Our employee related obligations include:
• liabilities for wages and salaries and related on-costs (presented
within current trade and other payables)
• annual leave, long service leave and employee incentives
(presented within current and non-current employee benefits)
• redundancy provisions (presented within current other
Table A provides a summary of all these employee obligations.
Table B
Telstra Group
and
provisions).
Table A
Telstra Group
Accrued labour and on-costs
Current employee benefits
Non-current employee benefits
Current redundancy provisions
As at 30 June
2022
2021
$m
489
667
132
11
$m
515
682
150
-
1,299
1,347
Long service
leave provision
We applied judgement to determine
the following key assumptions used in
the calculation of long service leave
entitlements:
• 3.5 per cent (2021: 3.0 per cent)
weighted average projected
increases in salaries
The discount rate used to calculate
the present value has been
determined by reference to market
yields at 30 June 2022 on nine year
(2021: nine year) high quality
corporate bonds which have due
dates similar to those of our
liabilities.
For the amounts of the provision presented as current, we do not
have the right at the end of the financial year to defer settlement for
any of these obligations. However, based on experience, we do not
expect all employees to take the full amount of accrued leave or
require payment within the next 12 months. Amounts disclosed in
Table B have been determined in accordance with an actuarial
assessment and reflect leave that is not expected to be taken or
paid within the next 12 months.
As at 30 June
2022
2021
$m
354
$m
398
Leave obligations expected to be
settled after 12 months
5.1.2 Recognition and measurement
The liabilities for employee benefits relating to wages and salaries,
annual leave and other current employee benefits are accrued at
their nominal amounts. These are calculated based on
remuneration rates expected to be current at the settlement date
and include related costs.
Certain employees who have been employed by Telstra for at least
10 years are entitled to long service leave of three months or more
depending on the actual length of employment. We accrue
liabilities for long service leave not expected to be paid or settled
within 12 months of the reporting date at present values of future
amounts expected to be paid. This is based on the projected
increases in wage and salary rates over an average of 10 years,
experience of employee departures and periods of service.
Provisions are recognised when:
• the Telstra Group has a present legal or constructive obligation to
make a future sacrifice of economic benefits as a result of past
arise
• a reliable estimate can be made of the amount of the obligation.
We recognise a provision for redundancy costs when a detailed
formal plan for the redundancies has been developed and a valid
expectation has been created that the redundancies will be carried
out in respect of the employees likely to be affected.
• 5.2 per cent (2021: 2.5 per cent)
transactions or events
discount rate.
• it is probable that a future sacrifice of economic benefits will
We have a number of employee share plans pursuant to which equity is awarded to executives as part of their total remuneration.
Active share plans are conducted through the Telstra Growthshare Trust (Growthshare). Telstra wholly owns Telstra Growthshare Pty
Ltd, the corporate trustee for Growthshare (the Trustee). The results of the Trustee are consolidated into our Telstra Group Financial
Report.
A transaction will be classified as share-based compensation where the Group receives services from employees and pays for these
either in shares or similar equity instruments or in cash but the amounts due are based on the Telstra share price.
This note summarises the primary employee share plans conducted through Growthshare and the key events in the share-based
payment arrangements that have occurred during the financial year.
We have granted the following types of equity instruments as part
of our equity-settled employee share plans:
• restricted shares
• performance rights.
Restricted shares are Telstra shares that are subject to a
restriction period.
Performance rights are rights to Telstra shares subject to the
satisfaction of certain performance measures and service
conditions over a defined performance period.
Type of equity
instrument
Financial year
granted
Restriction
period
Executive
Variable
Remuneration
Plan (EVP)
restricted
shares
Short-term
incentive (STI)
restricted
shares
FY22
FY21
FY20
FY22
FY21
FY20
FY19
Four equal tranches
with the respective
tranches restricted
from one to four
years from the end
of the initial
performance period
Three equal
tranches with the
respective tranches
restricted from one
to three years from
the end of the
performance period
One tranche
restricted for three
years from the end
of the performance
period
Telstra has discretion to provide the holder of a performance right
with a share or a cash amount equivalent to the value of a share on
vesting of a performance right. Further information can be found in
note 5.2.1.
The table below provides a summary of the instruments granted
under the main equity-settled employee share plans outstanding at
30 June 2022.
Date of testing
against
performance
hurdles
Performance
hurdles
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Number of
instruments
allocated and
outstanding at
30 June 2022
The restricted
shares for FY22 are
expected to be
allocated in the
first half of FY23
1,931,605
1,271,084
The STI restricted
shares for FY22 are
expected to be
allocated in the
first half of FY23
n/a
n/a
6,209,275
Telstra Corporation Limited and controlled entities | F65
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Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.2 Employee share plans (continued)
Type of equity
instrument
Financial year
granted
Restriction
period
Date of testing
against
performance
hurdles
Performance
hurdles
EVP
performance
rights
FY22
n/a
30 June 2026
Relative Total
Shareholder
Return (RTSR)
Number of
instruments
allocated and
outstanding at
30 June 2022
The performance
rights for FY22 are
expected to be
allocated in the
first half of FY23
FY21
FY20
FY19
FY18
n/a
n/a
n/a
n/a
We will also grant cash rights in lieu of restricted shares and
performance rights under the FY22 EVP to Andrew Penn, who will
cease employment as CEO before the FY22 restricted shares and
performance rights are allocated. The cash rights are expected to
be allocated in the first half of the financial year 2023. The cash
rights provided in lieu of restricted shares are subject to the same
time condition as restricted shares and the cash rights provided in
lieu of performance rights are subject to the same performance
hurdle as performance rights.
Provided they have not been forfeited earlier, the EVP and STI
restricted shares, as well as shares allocated on the vesting of EVP
performance rights, will be transferred to the relevant executive on
the first day of the first trading window occurring under Telstra’s
Securities Trading policy following the end of the relevant
restriction period or the vesting date, as applicable.
The definition of Relative Total Shareholder Return (RTSR) is set out
in the Remuneration Report Glossary (the Remuneration Report
forms part of the Directors’ Report).
5.2.1 Description of share-based payment arrangements
(a) Executive Variable Remuneration Plan (EVP)
Under the EVP, the amount earned by the CEO and eligible Group
Executives is determined at the end of an initial one year
performance period based on certain factors, including Telstra’s
performance against certain predetermined performance
measures and the executive’s individual performance (including
their performance relative to other executives), with the Board
retaining discretion to adjust the outcome to ensure it is
appropriate. A component of the amount earned under the EVP is
provided in restricted shares and a component in performance
rights.
30 June 2025
RTSR
2,207,550
30 June 2024
RTSR
1,936,886
30 June 2023
RTSR
1,878,032
50% 30 June 2022
RTSR
-
Refer to the Remuneration Report for further details on the FY22
EVP structure.
The allocation of restricted shares and performance rights under
the FY22 EVP is expected to be made shortly after the 2022 Annual
General Meeting. Shareholder approval will be sought at the 2022
Annual General Meeting for the CEO’s FY22 EVP allocation.
If an executive leaves Telstra other than for a Permitted Reason (the
definition of which is set out in the Remuneration Report Glossary)
before the end of the relevant performance or restriction period,
their performance rights will lapse and restricted shares will be
forfeited. Performance rights and restricted shares may also lapse
or be forfeited if certain clawback (malus) events occur before the
performance rights vest or restricted shares are transferred to the
executive following the end of the relevant restriction period.
(i) Restricted shares (equity-settled)
The above table summarising the instruments granted under the
employee share plans lists the restriction periods for each EVP
restricted share plan. No further performance hurdles will apply
once the restricted shares are allocated. During the restriction
period, executives are entitled to vote and earn dividends on their
restricted shares from the actual allocation date. However, they are
restricted from dealing with the shares during this period.
(ii) Performance rights (equity-settled)
Once allocated, the EVP performance rights are tested against a
RTSR measure over a five year period inclusive of the initial one year
performance period (refer to the table summarising the
instruments granted under the employee share plans for testing
dates).
5.2 Employee share plans (continued)
5.2.1 Description of share-based payment arrangements
(continued)
If an executive leaves Telstra other than for a Permitted Reason
before the end of the relevant restriction period, their restricted
shares are forfeited. Restricted shares may also be forfeited if
certain clawback (malus) events occur before the restricted shares
(a) Executive Variable Remuneration Plan (EVP) (continued)
are transferred to the executive following the end of the relevant
(ii) Performance rights (equity-settled) (continued)
restriction period.
5.2.2 Fair value measurement
The FY22, FY21 and FY20 EVP performance rights will vest on a
straight-line scale, with 50 per cent of the performance rights
(a) EVP restricted shares
vesting if Telstra’s RTSR ranks at the 50th percentile against a
comparator group comprising the ASX100, excluding resource
companies (Comparator Group) over the performance period, up to
100 per cent of the performance rights vesting where Telstra’s
RTSR ranks at the 75th percentile of the Comparator Group or
EVP restricted shares were measured based on the Board approved
dollar amount outcome for the financial year 2022, with a final
number of shares to be allocated shortly after Telstra’s 2022
Annual General Meeting. The estimated fair value per share granted
in the financial year 2022 was $3.91 (2021: $3.75).
No performance rights will vest if Telstra’s RTSR ranks below the
(b) EVP performance rights
50th percentile of the Comparator Group. Any performance rights
Table A provides a weighted average of the inputs used in
that do not vest following testing against the RTSR measure will
measuring the fair value of EVP performance rights at grant date.
above.
lapse.
The FY19 and FY18 EVP performance rights will vest if Telstra’s
Table A
RTSR ranks at the 50th percentile or greater against the
Comparator Group over the performance period. If the RTSR
measure is not satisfied, all of the applicable performance rights in
Share price
the relevant tranche will lapse. Testing of the outstanding FY18 EVP
performance rights as at 30 June 2022 (being 50 per cent of the
initial grant) resulted in all of those performance rights lapsing due
to the RTSR performance hurdle not being met (2021: 50 per cent
lapsed).
No dividends are paid on performance rights prior to vesting. For
performance rights that do vest, a cash payment equivalent to
dividends paid by Telstra during the period between allocation of
the performance rights and vesting will be made at or around the
time of vesting, subject to applicable taxation. This cash
entitlement is not included in the grant date fair values of the
performance rights as this is accounted for separately.
(iii) Cash rights (cash-settled)
Telstra Group
Risk free rate
Dividend yield
Expected life in years
Expected stock volatility
Fair value ($)
Year ended 30 June
2022
2021
$3.84
0.62%
5.21%
22%
$1.78
$3.28
0.37%
5.58%
22%
$1.63
4.6 years
4.6 years
The expected stock volatility is a measure of the amount by which
the price is expected to fluctuate during a period. This is based on
an annualised historical daily volatility of closing share prices over
a certain period to the measurement date.
5.2.3 Expense recognised in the income statement
Refer to note 2.3 for details about the related employee benefit
Under the EVP, the executives who cease employment for a
Permitted Reason before allocation of the restricted shares and
performance rights will receive cash rights in lieu of restricted
expenses.
5.2.4 Recognition and measurement
shares and performance rights.
As at 30 June 2022, we recorded a $5 million liability (2021: $4
million) pertaining to the outstanding cash rights issued to certain
former executives that ceased employment for a Permitted Reason
in prior financial years, and Andrew Penn who will cease
employment for a Permitted Reason before allocation of the FY22
EVP and will be issued cash rights in lieu of restricted shares and
performance rights (expected to be allocated in the first half of the
For each of our equity-settled share plans, we measure the fair
value of the equity instrument at grant date and recognise in the
income statement the expense over the relevant vesting period
with a corresponding increase in equity (i.e. share capital). The
expense is adjusted to reflect actual and expected levels of vesting.
Grant date is the date when there is a shared understanding
between employees and Telstra of the terms and conditions of the
plan and the employees have accepted the offer. This often occurs
prior to the allocation of equity instruments to the employees.
financial year 2023).
(b) STI restricted shares
Under the STI arrangements, 25 per cent of an eligible executive’s
actual STI payment is provided as restricted shares. The above
table lists the restriction periods for each STI restricted share plan.
Performance hurdles are applied in determining the number of
restricted shares allocated to executives, and therefore, restricted
shares are not subject to any other performance hurdles once they
have been allocated. During the restriction period, from the actual
grant date, executives are entitled to vote and earn dividends on
their restricted shares. However, they are restricted from dealing
with the shares during this period.
142 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F67
F68 | Telstra Corporation Limited and controlled entities
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2022.Financial Report.book Page 68 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.2 Employee share plans (continued)
Type of equity
instrument
Financial year
granted
Restriction
period
Date of testing
Performance
hurdles
against
performance
hurdles
EVP
rights
performance
FY22
n/a
30 June 2026
Relative Total
Shareholder
Return (RTSR)
Number of
instruments
allocated and
outstanding at
30 June 2022
The performance
rights for FY22 are
expected to be
allocated in the
first half of FY23
FY21
FY20
FY19
FY18
n/a
n/a
n/a
n/a
30 June 2025
RTSR
2,207,550
30 June 2024
RTSR
1,936,886
30 June 2023
RTSR
1,878,032
50% 30 June 2022
RTSR
-
We will also grant cash rights in lieu of restricted shares and
Refer to the Remuneration Report for further details on the FY22
performance rights under the FY22 EVP to Andrew Penn, who will
EVP structure.
cease employment as CEO before the FY22 restricted shares and
performance rights are allocated. The cash rights are expected to
be allocated in the first half of the financial year 2023. The cash
rights provided in lieu of restricted shares are subject to the same
time condition as restricted shares and the cash rights provided in
The allocation of restricted shares and performance rights under
the FY22 EVP is expected to be made shortly after the 2022 Annual
General Meeting. Shareholder approval will be sought at the 2022
Annual General Meeting for the CEO’s FY22 EVP allocation.
lieu of performance rights are subject to the same performance
If an executive leaves Telstra other than for a Permitted Reason (the
hurdle as performance rights.
Provided they have not been forfeited earlier, the EVP and STI
restricted shares, as well as shares allocated on the vesting of EVP
performance rights, will be transferred to the relevant executive on
the first day of the first trading window occurring under Telstra’s
Securities Trading policy following the end of the relevant
restriction period or the vesting date, as applicable.
The definition of Relative Total Shareholder Return (RTSR) is set out
definition of which is set out in the Remuneration Report Glossary)
before the end of the relevant performance or restriction period,
their performance rights will lapse and restricted shares will be
forfeited. Performance rights and restricted shares may also lapse
or be forfeited if certain clawback (malus) events occur before the
performance rights vest or restricted shares are transferred to the
executive following the end of the relevant restriction period.
(i) Restricted shares (equity-settled)
in the Remuneration Report Glossary (the Remuneration Report
The above table summarising the instruments granted under the
forms part of the Directors’ Report).
5.2.1 Description of share-based payment arrangements
(a) Executive Variable Remuneration Plan (EVP)
Under the EVP, the amount earned by the CEO and eligible Group
Executives is determined at the end of an initial one year
employee share plans lists the restriction periods for each EVP
restricted share plan. No further performance hurdles will apply
once the restricted shares are allocated. During the restriction
period, executives are entitled to vote and earn dividends on their
restricted shares from the actual allocation date. However, they are
restricted from dealing with the shares during this period.
performance period based on certain factors, including Telstra’s
(ii) Performance rights (equity-settled)
performance against certain predetermined performance
measures and the executive’s individual performance (including
their performance relative to other executives), with the Board
retaining discretion to adjust the outcome to ensure it is
appropriate. A component of the amount earned under the EVP is
provided in restricted shares and a component in performance
dates).
rights.
Once allocated, the EVP performance rights are tested against a
RTSR measure over a five year period inclusive of the initial one year
performance period (refer to the table summarising the
instruments granted under the employee share plans for testing
If an executive leaves Telstra other than for a Permitted Reason
before the end of the relevant restriction period, their restricted
shares are forfeited. Restricted shares may also be forfeited if
certain clawback (malus) events occur before the restricted shares
are transferred to the executive following the end of the relevant
restriction period.
5.2.2 Fair value measurement
(a) EVP restricted shares
EVP restricted shares were measured based on the Board approved
dollar amount outcome for the financial year 2022, with a final
number of shares to be allocated shortly after Telstra’s 2022
Annual General Meeting. The estimated fair value per share granted
in the financial year 2022 was $3.91 (2021: $3.75).
(b) EVP performance rights
Table A provides a weighted average of the inputs used in
measuring the fair value of EVP performance rights at grant date.
Table A
Telstra Group
Share price
Risk free rate
Dividend yield
Expected life in years
Expected stock volatility
Fair value ($)
Year ended 30 June
2022
$3.84
0.62%
5.21%
4.6 years
22%
$1.78
2021
$3.28
0.37%
5.58%
4.6 years
22%
$1.63
The expected stock volatility is a measure of the amount by which
the price is expected to fluctuate during a period. This is based on
an annualised historical daily volatility of closing share prices over
a certain period to the measurement date.
5.2.3 Expense recognised in the income statement
Refer to note 2.3 for details about the related employee benefit
expenses.
5.2.4 Recognition and measurement
For each of our equity-settled share plans, we measure the fair
value of the equity instrument at grant date and recognise in the
income statement the expense over the relevant vesting period
with a corresponding increase in equity (i.e. share capital). The
expense is adjusted to reflect actual and expected levels of vesting.
Grant date is the date when there is a shared understanding
between employees and Telstra of the terms and conditions of the
plan and the employees have accepted the offer. This often occurs
prior to the allocation of equity instruments to the employees.
5.2 Employee share plans (continued)
5.2.1 Description of share-based payment arrangements
(continued)
(a) Executive Variable Remuneration Plan (EVP) (continued)
(ii) Performance rights (equity-settled) (continued)
The FY22, FY21 and FY20 EVP performance rights will vest on a
straight-line scale, with 50 per cent of the performance rights
vesting if Telstra’s RTSR ranks at the 50th percentile against a
comparator group comprising the ASX100, excluding resource
companies (Comparator Group) over the performance period, up to
100 per cent of the performance rights vesting where Telstra’s
RTSR ranks at the 75th percentile of the Comparator Group or
above.
No performance rights will vest if Telstra’s RTSR ranks below the
50th percentile of the Comparator Group. Any performance rights
that do not vest following testing against the RTSR measure will
lapse.
The FY19 and FY18 EVP performance rights will vest if Telstra’s
RTSR ranks at the 50th percentile or greater against the
Comparator Group over the performance period. If the RTSR
measure is not satisfied, all of the applicable performance rights in
the relevant tranche will lapse. Testing of the outstanding FY18 EVP
performance rights as at 30 June 2022 (being 50 per cent of the
initial grant) resulted in all of those performance rights lapsing due
to the RTSR performance hurdle not being met (2021: 50 per cent
lapsed).
No dividends are paid on performance rights prior to vesting. For
performance rights that do vest, a cash payment equivalent to
dividends paid by Telstra during the period between allocation of
the performance rights and vesting will be made at or around the
time of vesting, subject to applicable taxation. This cash
entitlement is not included in the grant date fair values of the
performance rights as this is accounted for separately.
(iii) Cash rights (cash-settled)
Under the EVP, the executives who cease employment for a
Permitted Reason before allocation of the restricted shares and
performance rights will receive cash rights in lieu of restricted
shares and performance rights.
As at 30 June 2022, we recorded a $5 million liability (2021: $4
million) pertaining to the outstanding cash rights issued to certain
former executives that ceased employment for a Permitted Reason
in prior financial years, and Andrew Penn who will cease
employment for a Permitted Reason before allocation of the FY22
EVP and will be issued cash rights in lieu of restricted shares and
performance rights (expected to be allocated in the first half of the
financial year 2023).
(b) STI restricted shares
Under the STI arrangements, 25 per cent of an eligible executive’s
actual STI payment is provided as restricted shares. The above
table lists the restriction periods for each STI restricted share plan.
Performance hurdles are applied in determining the number of
restricted shares allocated to executives, and therefore, restricted
shares are not subject to any other performance hurdles once they
have been allocated. During the restriction period, from the actual
grant date, executives are entitled to vote and earn dividends on
their restricted shares. However, they are restricted from dealing
with the shares during this period.
Telstra Corporation Limited and controlled entities | F67
F68 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 143
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 69 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 70 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.2 Employee share plans (continued)
5.3.2 Telstra Superannuation Scheme (Telstra Super)
5.3 Post-employment benefits (continued)
(i) Related party disclosures
The Telstra Entity participates in Telstra Super, a regulated fund in
accordance with the Superannuation Industry Supervision Act
governed by the Australian Prudential Regulation Authority.
Telstra Super’s board of directors operates and governs the plan,
including making investment decisions.
Telstra Super has both defined benefit and defined contribution
divisions. The defined benefit divisions, which are closed to new
members, provide benefits based on years of service and final
average salary paid as a lump sum. Post-employment benefits do
not include payments for medical costs.
On an annual basis, we engage qualified actuaries to calculate the
present value of the defined benefit obligations.
Contribution levels made to the defined benefit divisions are
determined by Telstra after obtaining the advice of the actuary and
in consultation with Telstra Super Pty Ltd (the Trustee). These are
designed to ensure that benefits accruing to members and
beneficiaries are fully funded as they fall due. The benefits received
by members of each defined benefit division take into account
factors such as each employee’s length of service, final average
salary, and employer and employee contributions.
Telstra Super is exposed to inflation, credit risk, liquidity risk and
market risk. Market risk includes interest rate risk, equity price risk
and foreign currency risk. The strategic investment policy of the
fund is to build a diversified portfolio of assets to match the
projected liabilities of the defined benefit plan.
(a) Fair value of defined benefit plan assets
Table B provides a reconciliation of fair value of defined benefit
plan assets from the opening to the closing balance.
Table B
Telstra Super
Fair value of defined benefit plan
assets at the beginning of the year
Employer contributions
Member contributions
Benefits paid (including contributions
tax)
Plan expenses after tax
Interest income on plan assets
Actual asset (loss)/gain
Fair value of defined benefit plan
assets at the end of the year
As at 30 June
2022
2021
$m
$m
1,704
1,781
12
18
15
18
(144)
(226)
(4)
37
(71)
(6)
35
87
1,552
1,704
5.2.4 Recognition and measurement (continued)
The fair values of our equity instruments are calculated by taking
into account the terms and conditions of the individual plan and as
follows:
Equity instrument
Fair value approach
Restricted shares
Performance rights
By reference to the dollar
amount outcome approved
by the Board
Black-Scholes methodology
and utilises Monte Carlo
simulations
A liability is recognised for the fair value of cash-settled
transactions. The fair value is measured initially and at each
reporting date up to and including the settlement date, with
changes in fair value recognised in employee benefits expense in
the income statement.
5.3 Post-employment benefits
We participate in, or sponsor, defined benefit and defined
contribution schemes for our employees. This note provides
details of our Telstra Superannuation Scheme (Telstra Super)
defined benefit plan.
Our employer contributions to Telstra Super are based on the
recommendations from the actuary of Telstra Super in line
with any legislative requirements. The net defined benefit
asset/(liability) at balance date is also affected by the
valuation of Telstra Super’s investments and our obligations
to members of Telstra Super.
5.3.1 Net defined benefit plan asset/(liability)
Table A details our net defined benefit plan asset/(liability)
recognised in the statement of financial position.
Table A
Telstra Group
Fair value of defined benefit plan
assets
Present value of the defined benefit
obligation
Net defined benefit asset
Attributable to:
Telstra Super
Other
As at 30 June
2022
2021
$m
$m
1,552
1,704
1,288
1,559
264
274
(10)
264
145
155
(10)
145
5.3.2 Telstra Superannuation Scheme (Telstra Super) (continued)
The related party disclosures below relate to Telstra Super as a
(b) Present value of the wholly funded defined benefit obligation
Table C provides a reconciliation of the present value of defined
benefit obligation from the opening to the closing balance.
Table C
Telstra Super
Present value of defined benefit
obligation at the beginning of the year
Current service cost
Interest cost
Member contributions
Past service cost/(credit)
Benefits paid
Actuarial gain due to change in
financial assumptions
Actuarial gain due to change in
demographic assumptions
Actuarial loss due to experience
Present value of wholly funded
of the year
As at 30 June
2022
2021
$m
$m
1,549
1,658
50
34
7
2
(144)
(221)
(1)
2
51
33
7
(1)
(226)
(9)
-
36
defined benefit obligation at the end
1,278
1,549
The actual return on defined benefit plan assets was 2.8 per cent
loss (2021: 5.8 per cent gain). Net actuarial gain recognised in other
comprehensive income for Telstra Super amounted to $149 million
(2021: $60 million).
(c) Categories of plan assets
Table D details the weighted average allocation as a percentage of
the fair value of total defined benefit plan assets by class based on
their nature and risks.
whole, rather than just the defined benefit plan.
As at 30 June 2022, Telstra Super owned 44,202,865 (2021:
56,797,514) shares in the Telstra Entity at a cost of $169 million
(2021: $181 million) and a market value of $170 million (2021: $214
million). All these shares were fully paid at 30 June 2022. During the
financial year 2022, we paid a dividend to Telstra Super of $8 million
(2021: $8 million). We own 100 per cent of the equity of Telstra
Super Pty Ltd, the Trustee of Telstra Super.
Telstra Super also holds promissory notes and bonds issued by the
Telstra Entity. As at 30 June 2022, these securities had a cost of $5
million (2021: $10 million) and a market value of $5 million (2021:
$10 million).
All purchases and sales of Telstra shares, promissory notes and
bonds by Telstra Super are on an arm’s length basis and are
determined by the Trustee and/or its investment managers on
behalf of the members of Telstra Super.
(d) Actuarial assumptions and sensitivity analysis
Defined benefit
plan
The following key assumptions were
used in the calculation of our defined
benefit obligations:
• 3.0 per cent (2021: 2.5 per cent)
average expected rate of increase
in future salaries
• 5.1 per cent (2021: 2.2 per cent)
discount rate.
We have used a seven year (2021:
eight year) high quality corporate
bond rate to determine the discount
rate as the term matches closest to
the term of the defined benefit
obligations.
Our assumption for the salary
inflation rate for Telstra Super
reflects our long-term expectation for
salary increases.
If the estimates prove to be different
to actual experience, this may
materially affect balances in the next
reporting period.
Table D
Telstra Super
Asset allocations
Equity instruments
Australian equity ¹
International equity ¹
Private equity
Debt instruments
Fixed interest ¹
Other
Property
Other
As at 30 June
2022
2021
%
%
9
11
-
61
11
5
3
9
10
2
64
10
5
-
100
100
Cash and cash equivalents
Telstra Super
1 These assets have quoted prices in active markets.
Table E summarises how the defined benefit obligation as at 30
June 2022 would have increased/(decreased) as a result of a
change in the respective assumptions by one percentage point
(1pp).
Table E
Defined benefit
obligation
1pp
1pp
increase
decrease
$m
(74)
74
$m
83
(67)
Discount rate
salaries
Expected rate of increase in future
144 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F69
F70 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 69 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 70 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.2 Employee share plans (continued)
5.3.2 Telstra Superannuation Scheme (Telstra Super)
5.3 Post-employment benefits (continued)
(i) Related party disclosures
5.2.4 Recognition and measurement (continued)
The Telstra Entity participates in Telstra Super, a regulated fund in
5.3.2 Telstra Superannuation Scheme (Telstra Super) (continued)
accordance with the Superannuation Industry Supervision Act
governed by the Australian Prudential Regulation Authority.
Telstra Super’s board of directors operates and governs the plan,
including making investment decisions.
Telstra Super has both defined benefit and defined contribution
divisions. The defined benefit divisions, which are closed to new
members, provide benefits based on years of service and final
average salary paid as a lump sum. Post-employment benefits do
not include payments for medical costs.
On an annual basis, we engage qualified actuaries to calculate the
present value of the defined benefit obligations.
Contribution levels made to the defined benefit divisions are
determined by Telstra after obtaining the advice of the actuary and
in consultation with Telstra Super Pty Ltd (the Trustee). These are
designed to ensure that benefits accruing to members and
beneficiaries are fully funded as they fall due. The benefits received
by members of each defined benefit division take into account
factors such as each employee’s length of service, final average
salary, and employer and employee contributions.
Telstra Super is exposed to inflation, credit risk, liquidity risk and
market risk. Market risk includes interest rate risk, equity price risk
and foreign currency risk. The strategic investment policy of the
fund is to build a diversified portfolio of assets to match the
projected liabilities of the defined benefit plan.
(a) Fair value of defined benefit plan assets
Table B provides a reconciliation of fair value of defined benefit
plan assets from the opening to the closing balance.
Table B
Telstra Super
Fair value of defined benefit plan
assets at the beginning of the year
Employer contributions
Member contributions
As at 30 June
2022
2021
$m
$m
1,704
1,781
12
18
(4)
37
(71)
15
18
(6)
35
87
The fair values of our equity instruments are calculated by taking
into account the terms and conditions of the individual plan and as
follows:
Equity instrument
Fair value approach
Restricted shares
Performance rights
By reference to the dollar
amount outcome approved
by the Board
Black-Scholes methodology
and utilises Monte Carlo
simulations
A liability is recognised for the fair value of cash-settled
transactions. The fair value is measured initially and at each
reporting date up to and including the settlement date, with
changes in fair value recognised in employee benefits expense in
the income statement.
5.3 Post-employment benefits
We participate in, or sponsor, defined benefit and defined
contribution schemes for our employees. This note provides
details of our Telstra Superannuation Scheme (Telstra Super)
defined benefit plan.
Our employer contributions to Telstra Super are based on the
recommendations from the actuary of Telstra Super in line
with any legislative requirements. The net defined benefit
asset/(liability) at balance date is also affected by the
valuation of Telstra Super’s investments and our obligations
to members of Telstra Super.
5.3.1 Net defined benefit plan asset/(liability)
Table A
Telstra Group
assets
obligation
Attributable to:
Telstra Super
Other
Fair value of defined benefit plan
Present value of the defined benefit
Net defined benefit asset
2022
2021
$m
$m
1,552
1,704
1,288
1,559
264
274
(10)
264
145
155
(10)
145
Table A details our net defined benefit plan asset/(liability)
Benefits paid (including contributions
recognised in the statement of financial position.
tax)
(144)
(226)
As at 30 June
Interest income on plan assets
Plan expenses after tax
Actual asset (loss)/gain
Fair value of defined benefit plan
assets at the end of the year
1,552
1,704
(b) Present value of the wholly funded defined benefit obligation
Table C provides a reconciliation of the present value of defined
benefit obligation from the opening to the closing balance.
Table C
Telstra Super
Present value of defined benefit
obligation at the beginning of the year
Current service cost
Interest cost
Member contributions
Past service cost/(credit)
Benefits paid
Actuarial gain due to change in
financial assumptions
Actuarial gain due to change in
demographic assumptions
Actuarial loss due to experience
Present value of wholly funded
defined benefit obligation at the end
of the year
As at 30 June
2022
2021
$m
$m
1,549
1,658
50
34
7
2
(144)
(221)
(1)
2
51
33
7
(1)
(226)
(9)
-
36
1,278
1,549
The actual return on defined benefit plan assets was 2.8 per cent
loss (2021: 5.8 per cent gain). Net actuarial gain recognised in other
comprehensive income for Telstra Super amounted to $149 million
(2021: $60 million).
(c) Categories of plan assets
Table D details the weighted average allocation as a percentage of
the fair value of total defined benefit plan assets by class based on
their nature and risks.
Table D
Telstra Super
Asset allocations
Equity instruments
Australian equity ¹
International equity ¹
Private equity
Debt instruments
Fixed interest ¹
Other
Property
Cash and cash equivalents
Other
As at 30 June
2022
2021
%
%
9
11
-
61
11
5
3
100
9
10
2
64
10
5
-
100
1 These assets have quoted prices in active markets.
The related party disclosures below relate to Telstra Super as a
whole, rather than just the defined benefit plan.
As at 30 June 2022, Telstra Super owned 44,202,865 (2021:
56,797,514) shares in the Telstra Entity at a cost of $169 million
(2021: $181 million) and a market value of $170 million (2021: $214
million). All these shares were fully paid at 30 June 2022. During the
financial year 2022, we paid a dividend to Telstra Super of $8 million
(2021: $8 million). We own 100 per cent of the equity of Telstra
Super Pty Ltd, the Trustee of Telstra Super.
Telstra Super also holds promissory notes and bonds issued by the
Telstra Entity. As at 30 June 2022, these securities had a cost of $5
million (2021: $10 million) and a market value of $5 million (2021:
$10 million).
All purchases and sales of Telstra shares, promissory notes and
bonds by Telstra Super are on an arm’s length basis and are
determined by the Trustee and/or its investment managers on
behalf of the members of Telstra Super.
(d) Actuarial assumptions and sensitivity analysis
Defined benefit
plan
The following key assumptions were
used in the calculation of our defined
benefit obligations:
• 3.0 per cent (2021: 2.5 per cent)
average expected rate of increase
in future salaries
• 5.1 per cent (2021: 2.2 per cent)
discount rate.
We have used a seven year (2021:
eight year) high quality corporate
bond rate to determine the discount
rate as the term matches closest to
the term of the defined benefit
obligations.
Our assumption for the salary
inflation rate for Telstra Super
reflects our long-term expectation for
salary increases.
If the estimates prove to be different
to actual experience, this may
materially affect balances in the next
reporting period.
Table E summarises how the defined benefit obligation as at 30
June 2022 would have increased/(decreased) as a result of a
change in the respective assumptions by one percentage point
(1pp).
Table E
Telstra Super
Defined benefit
obligation
Discount rate
Expected rate of increase in future
salaries
1pp
increase
1pp
decrease
$m
(74)
74
$m
83
(67)
Telstra Corporation Limited and controlled entities | F69
F70 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 145
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 71 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Section 5. Our people (continued)
5.3 Post-employment benefits (continued)
5.3.2 Telstra Superannuation Scheme (Telstra Super) (continued)
(e) Employer contributions
During the financial year 2022, we paid contributions totalling $12
million (2021: $15 million) at the average rate of five per cent (2021:
five per cent) to our defined benefit divisions, following
recommendations from the actuary of Telstra Super.
The current five per cent contribution rate is expected to be next
reviewed in the next triennial actuarial review as at 30 June 2024, to
be completed by 31 December 2024, although the review could be
brought forward (due to, for example, but not limited to the defined
benefit obligation’s financial position) that could result in a change
in the contribution rate.
Table F shows the expected proportion of benefits paid from the
defined benefit obligation in future years.
Table F
Telstra Super
Year ended 30 June
2022
2021
Within 1 year
Between 1 and 4 years
Between 5 and 9 years
Between 10 and 19 years
After 20 years
%
8
23
27
38
4
100
%
7
23
26
39
5
100
The weighted average duration of the defined benefit plan
obligations at the end of the reporting period was seven years
(2021: eight years).
5.3.3 Other defined benefit schemes
Our controlled entities also participate in both funded and
unfunded defined benefit schemes, which are individually and in
aggregate immaterial.
5.3.4 Recognition and measurement
(a) Defined contribution plans
Our commitment to defined contribution plans is limited to making
contributions in accordance with our minimum statutory
requirements and other obligations. The contributions are recorded
as an expense in the income statement as they become payable.
We recognise a liability when we are required to make future
payments as a result of employee services provided.
(b) Defined benefit plans - Telstra Superannuation Scheme
We currently sponsor a post-employment defined benefit plan
under the Telstra Superannuation Scheme.
At a reporting date, where the fair value of the plan assets is less
than the present value of the defined benefit obligations, the net
deficit is recognised as a liability. In the reverse situation, the net
surplus is recognised as an asset. We recognise the asset to the
extent that we have the ability to control this surplus to generate
future funds that will be available to us in the form of reductions in
future contributions or as a cash refund.
The actuaries use the projected unit credit method to estimate the
present value of the defined benefit obligations of the plan. This
method determines each year of service as giving rise to an
additional unit of benefit entitlement. Each unit is measured
separately to calculate the final obligation. The present value is
determined by discounting the estimated future cash outflows
using rates based on high quality corporate bonds.
We recognise all our defined benefit costs in the income statement,
with the exception of actuarial gains and losses that are recognised
directly in other comprehensive income.
Actuarial gains and losses are based on an actuarial valuation of
each defined benefit plan at a reporting date. Actuarial gains and
losses represent the differences between previous actuarial
assumptions of future outcomes and the actual outcome, in
addition to the effect of changes in actuarial assumptions.
5.4 Key management personnel compensation
Key management personnel (KMP) refer to those who have
authority and responsibility for planning, directing and
controlling the activities of the Telstra Group. KMP are
deemed to include the following:
• the non-executive Directors of the Telstra Entity
• certain executives in the Chief Executive Officer’s (CEO’s)
senior leadership team, including the CEO.
5.4.1 KMP aggregate compensation
During the financial years 2022 and 2021, the aggregate
compensation of our KMP was:
Telstra Group
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Year ended 30 June
2022
2021
$000
19,080
348
1,019
-
11,065
31,512
$000
19,075
311
772
1,154
8,534
29,846
Refer to the Remuneration Report, which forms part of the
Directors’ Report for further details regarding KMP remuneration.
5.4.2 Other transactions with our KMP and their related parties
During the financial years 2022 and 2021, apart from transactions
trivial and domestic in nature and on normal commercial terms and
conditions, there were no other transactions with our KMP and
their related parties.
146 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F71
Notes to the financial statements (continued) 2022.Financial Report.book Page 71 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 72 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 6. Our investments
Section 6. Our investments
This section outlines our group structure and includes information
This section outlines our group structure and includes information
about our controlled entities, joint ventures and associated
about our controlled entities, joint ventures and associated
entities. It provides details of changes to these investments and
entities. It provides details of changes to these investments and
their effect on our financial position and performance during the
their effect on our financial position and performance during the
financial year. It also includes the results of our material joint
financial year. It also includes the results of our material joint
ventures and associated entities.
ventures and associated entities.
SECTION 6. OUR INVESTMENTS
6.1 Changes in the group structure
6.1.1 Current year acquisitions
During the financial year 2022 we have acquired a number of
controlled entities. Individually material acquisitions and a
summary of those individually immaterial have been disclosed
below. The goodwill arising from acquisitions is not deductible for
income tax purposes.
(a) MedicalDirector
On 16 August 2021, we acquired 100 per cent of the shares in
Clinical Technology Holdings Pty Ltd and its subsidiaries
(MedicalDirector) for a total consideration of $363 million.
MedicalDirector is a provider of clinical software and digital health
to health care practitioners in Australia.
The acquisition gave rise to $224 million goodwill reflecting revenue
growth opportunities, cost synergies, workforce talents and
profitability of the acquired businesses.
Table A summarises the effects of accounting for this acquisition.
(b) Power Health
On 9 November 2021, we completed the acquisition of 70 per cent
of the shares in Power Solutions Holdings Pty Ltd and its
subsidiaries (Power Health). The consideration payable consists of
$98 million upfront cash payment, up to $10 million deferred
payment contingent on the business entering into certain customer
contracts, and up to $10 million incentive payment that is
contingent on Power Health achieving certain financial targets in
each case by 15 April 2023, and the buyout of the remaining 30 per
cent of the shares in Power Health between the end of years two
and five from completion or otherwise obligatory acquisition by
year five.
Power Health provides a health software asset that is used in
almost every public hospital and Healthscope private hospitals in
Australia as well as in a growing number of hospitals
internationally.
The acquisition of Power Health is accounted as a 100 per cent
wholly-owned group as detailed below.
Section 5. Our people (continued)
5.3 Post-employment benefits (continued)
5.3.2 Telstra Superannuation Scheme (Telstra Super) (continued)
(e) Employer contributions
During the financial year 2022, we paid contributions totalling $12
million (2021: $15 million) at the average rate of five per cent (2021:
five per cent) to our defined benefit divisions, following
recommendations from the actuary of Telstra Super.
The current five per cent contribution rate is expected to be next
reviewed in the next triennial actuarial review as at 30 June 2024, to
be completed by 31 December 2024, although the review could be
brought forward (due to, for example, but not limited to the defined
benefit obligation’s financial position) that could result in a change
in the contribution rate.
Table F shows the expected proportion of benefits paid from the
defined benefit obligation in future years.
Table F
Telstra Super
Year ended 30 June
2022
2021
The actuaries use the projected unit credit method to estimate the
present value of the defined benefit obligations of the plan. This
method determines each year of service as giving rise to an
additional unit of benefit entitlement. Each unit is measured
separately to calculate the final obligation. The present value is
determined by discounting the estimated future cash outflows
using rates based on high quality corporate bonds.
We recognise all our defined benefit costs in the income statement,
with the exception of actuarial gains and losses that are recognised
directly in other comprehensive income.
Actuarial gains and losses are based on an actuarial valuation of
each defined benefit plan at a reporting date. Actuarial gains and
losses represent the differences between previous actuarial
assumptions of future outcomes and the actual outcome, in
addition to the effect of changes in actuarial assumptions.
5.4 Key management personnel compensation
Within 1 year
Between 1 and 4 years
Between 5 and 9 years
Between 10 and 19 years
After 20 years
%
8
23
27
38
4
%
7
23
26
39
5
Key management personnel (KMP) refer to those who have
authority and responsibility for planning, directing and
controlling the activities of the Telstra Group. KMP are
deemed to include the following:
• the non-executive Directors of the Telstra Entity
• certain executives in the Chief Executive Officer’s (CEO’s)
senior leadership team, including the CEO.
The weighted average duration of the defined benefit plan
obligations at the end of the reporting period was seven years
(2021: eight years).
5.3.3 Other defined benefit schemes
Our controlled entities also participate in both funded and
unfunded defined benefit schemes, which are individually and in
aggregate immaterial.
5.3.4 Recognition and measurement
(a) Defined contribution plans
Our commitment to defined contribution plans is limited to making
contributions in accordance with our minimum statutory
requirements and other obligations. The contributions are recorded
as an expense in the income statement as they become payable.
We recognise a liability when we are required to make future
payments as a result of employee services provided.
(b) Defined benefit plans - Telstra Superannuation Scheme
We currently sponsor a post-employment defined benefit plan
under the Telstra Superannuation Scheme.
At a reporting date, where the fair value of the plan assets is less
than the present value of the defined benefit obligations, the net
deficit is recognised as a liability. In the reverse situation, the net
surplus is recognised as an asset. We recognise the asset to the
extent that we have the ability to control this surplus to generate
future funds that will be available to us in the form of reductions in
future contributions or as a cash refund.
Telstra Group
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Year ended 30 June
2022
2021
$000
19,080
348
1,019
-
11,065
31,512
$000
19,075
311
772
1,154
8,534
29,846
Refer to the Remuneration Report, which forms part of the
Directors’ Report for further details regarding KMP remuneration.
5.4.2 Other transactions with our KMP and their related parties
During the financial years 2022 and 2021, apart from transactions
trivial and domestic in nature and on normal commercial terms and
conditions, there were no other transactions with our KMP and
their related parties.
100
100
5.4.1 KMP aggregate compensation
During the financial years 2022 and 2021, the aggregate
compensation of our KMP was:
Table A
MedicalDirector
Cash consideration
Cash balances acquired
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Right-of-use assets
Intangible assets
Deferred tax assets
Other assets
Trade and other payables
Lease liabilities
Deferred tax liabilities
Contract liabilities and other revenue received in
advance
Other liabilities
Net assets
Goodwill on acquisition
Total purchase consideration
Contributions to the Group's performance from
acquisition date to 30 June 2022
Income
Profit before income tax expense
On acquisition date we recognised a financial liability for our
commitment to purchase the 30 per cent interest of the group,
initially measured at the present value of the purchase price for the
remaining 30 per cent interest. This liability is remeasured to its fair
value at each reporting date, with any subsequent changes
recognised in the income statement. No earnings are attributed to
the non-controlling interests. As at 30 June 2022, the fair value of
the financial liability was $46 million. This amount has been
included within contingent consideration in Table B.
The acquisition gave rise to $89 million goodwill comprised of
revenue growth opportunities and cost synergies.
On 9 November 2021, we acquired 70
per cent of shares in Power Health,
however, we applied judgement to
determine that we control 100 per
cent on the acquisition date. This is
because we have a contractual
obligation to purchase the remaining
30 per cent interest from the founding
shareholder by 2026. Therefore, the
non-controlling interest is deemed to
have been acquired at the acquisition
date.
We account for our obligation to
purchase the remaining interest as a
financial liability.
Determining
non-controlling
interests in
Power Health
Year ended
30 June 2022
$m
363
(23)
340
6
Fair value
23
3
8
157
24
14
(17)
(10)
(48)
(10)
(5)
139
224
363
53
10
Telstra Corporation Limited and controlled entities | F71
F72 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 147
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 73 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 74 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
During the financial year 2022, we have also completed multiple
individually immaterial acquisitions of retail stores from various
licensees, and the accounting for some of which remains
provisional as at 30 June 2022. The total purchase consideration for
these acquisitions amounted to $243 million and resulted in
recognition of total goodwill of $216 million. The acquisitions were
prompted by our strategy to transition all Telstra branded retail
stores to corporate ownership.
We have effectively settled the pre-existing relationships between
us and the acquired entities and businesses, including the pre-
existing debtor/creditor balances netted off at their recorded
amounts. As the main source of income of the acquired entities and
businesses was the commissions they generated from us, we have
not disclosed the contributions to the Group's performance from
acquisition date to 30 June 2022 as they were not meaningful.
Table C summarises the effects of provisional and final accounting
for all these acquisitions. Goodwill recognised is part of Telstra
Consumer & Small Business CGU.
6.1 Changes in the group structure (continued)
6.1.2 Current year disposals
6.1.1 Current year acquisitions (continued)
(d) Other acquisitions
On 30 June 2021, we announced that a consortium comprising the
Future Fund, Commonwealth Superannuation Corporation and
Sunsuper agreed to acquire a 49 per cent interest and become a
On 28 February 2022, we acquired 100 per cent shareholding in
strategic partner in Telstra’s towers business.
Alliance Automation Pty Ltd and its wholly-owned subsidiary for a
total consideration of $39 million. Alliance Automation Pty Ltd is a
provider of IoT industrial automation solutions and control
systems.
On 31 August 2021, the towers business became operational
following a transfer of business assets and liabilities to Towers
Business Operating Trust (Trust). The Trust also incurred $90
million estimated stamp duty costs related to the establishment of
On 28 February 2022, we acquired 100 per cent shareholding in
the business. The trustee of the Trust is our subsidiary Amplitel Pty
Aqura Technologies Pty Ltd for a total consideration of $28 million.
Ltd (Amplitel).
Aqura Technologies Pty Ltd offers leading technology and
telecommunication infrastructure solutions.
The sale of 49 per cent interests in the Trust and Amplitel to the
consortium was completed on 1 September 2021 and resulted in
Table D summarises the effects of provisional accounting for these
$2,883 million net cash proceeds. We retain control of the Trust and
two individually immaterial acquisitions.
Amplitel and thus we continue to consolidate these entities.
Table D
Other acquisitions
Year ended
30 June 2022
6.1 Changes in the group structure (continued)
6.1.1 Current year acquisitions (continued)
(b) Power Health (continued)
Table B summarises the effects of accounting for this acquisition.
Table B
Power Health
Year ended
30 June 2022
Consideration for acquisition
Cash consideration
Contingent consideration
Total purchase consideration
Cash balances acquired
Contingent consideration
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Right-of-use assets
Intangible assets
Deferred tax assets
Trade and other payables
Lease liabilities
Contract liabilities and other revenue received in
advance
Deferred tax liabilities
Other liabilities
Net assets
Goodwill on acquisition
Total purchase consideration
Contributions to the Group's performance from
acquisition date to 30 June 2022
Income
Profit before income tax expense
$m
98
53
151
(10)
(53)
88
10
18
1
57
2
(6)
(1)
(5)
(9)
(5)
62
89
151
18
6
(c) Fone Zone and licensee retail stores
On 12 November 2021, we acquired 100 per cent shareholding in
Fone Zone Pty Ltd and its controlled entities (Fone Zone) for a cash
consideration of $106 million. Fone Zone was Vita Group's Retail
Information and Communication Technology business and included
all of Vita's Telstra branded retail stores and the Sprout business.
The acquisition was prompted by our strategy to transition all
Telstra branded retail stores to corporate ownership. The fair value
of the net assets at acquisition date was $40 million. The
acquisition gave rise to $92 million goodwill representing workforce
with retail experience, cost and revenue synergies, growth
opportunities, and savings on dealer commissions.
Goodwill is not deductible for income tax purposes. However, as the
termination of the dealership agreement that occurred as part of
the transaction is treated as a termination of a licence for income
tax purposes, this residual balance will be claimed as a tax
deduction over a period of five years.
1
Table C
Year ended
Fair value
Fone Zone and licensee retail stores
30 June 2022
Consideration for acquisition
Cash consideration
Effective settlement of the pre-existing net
receivable in Telstra Group
Total purchase consideration
Cash balances acquired
Effective settlement of the pre-existing net
receivable in Telstra Group
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other assets
Trade and other payables
Lease liabilities
Deferred tax liabilities
Other liabilities
Net assets
Goodwill on acquisition
Total purchase consideration
$m
309
66
375
(27)
(66)
282
6
Fair value
27
4
30
83
25
10
8
(9)
(83)
(12)
(16)
67
308
375
Fair value
6.1.3 Prior year disposals
At the Telstra Group level, transactions with non-controlling
interests that do not result in a loss of control are treated as
transactions with equity owners of the towers business. As at 1
September 2021, we recognised $798 million non-controlling
interests reflecting the consortium’s relative interests in the Trust
and Amplitel as at the date of the transaction. The $2,085 million
difference between the amount recognised as non-controlling
interests and the consideration received was recognised in general
reserve within equity attributable to the Telstra Group.
Refer to note 7.2.1 for information about a net gain recognised by
the Telstra Entity on the transfer of the towers business assets and
liabilities.
Refer to note 6.3.1 for the summarised financial information of the
Trust and Amplitel amalgamated as at 30 June 2022.
In December 2020, we disposed of Telstra’s Velocity business for
total sales proceeds of $140 million, with $92 million received by 30
June 2022 and the remainder over the next two years. Following the
disposal, we leased back the assets sold until the network
integration and customer transition work is completed in each
region (expected by July 2023), subsequent to which we will service
the premises in those regions as a Retail Service Provider of the
purchaser. A $60 million net gain from disposal represented mainly
a gain on sale and leaseback transaction.
In December 2020, we disposed of the assets and liabilities of our
e-commerce platform for total sale proceeds of $55 million and
recognised a net gain of $45 million.
In March 2021, we disposed of our controlled entity Sunshine
NewCo Pty Limited, holding our minority investment in Project
Sunshine I Pty Ltd (Sensis), for total sale proceeds of $78 million
and recognised a net gain of $1 million, including the $34 million
impairment loss recognised on the remeasurement of this
investment to its fair value less costs to sell at 31 December 2020.
In total during the financial year 2021 we deconsolidated $186
million assets and $98 million liabilities on disposal of controlled
entities and other businesses.
$m
59
8
67
(1)
(8)
58
1
1
17
2
2
9
2
2
(8)
(4)
(2)
(3)
18
49
67
30
1
Consideration for acquisition
Cash consideration
Contingent consideration
Total purchase consideration
Cash balances acquired
Contingent consideration
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other assets
Trade and other payables
Lease liabilities
Deferred tax liabilities
Other liabilities
Net assets
Goodwill on acquisition
Total purchase consideration
Contributions to the Group's performance from
acquisition date to 30 June 2022
Income
Profit before income tax expense
(e) Telstra Group result if all acquisitions occurred on 1 July 2021
If all the acquisitions made during the financial year 2022 had
occurred on 1 July 2021, our adjusted consolidated income and
consolidated profit before income tax expense for the financial year
2022 would have been $22,136 million and $2,406 million,
respectively.
148 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F73
F74 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 73 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 74 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.1 Changes in the group structure (continued)
6.1.1 Current year acquisitions (continued)
(b) Power Health (continued)
Table B summarises the effects of accounting for this acquisition.
During the financial year 2022, we have also completed multiple
individually immaterial acquisitions of retail stores from various
licensees, and the accounting for some of which remains
provisional as at 30 June 2022. The total purchase consideration for
these acquisitions amounted to $243 million and resulted in
recognition of total goodwill of $216 million. The acquisitions were
prompted by our strategy to transition all Telstra branded retail
Table B
Power Health
Year ended
stores to corporate ownership.
30 June 2022
We have effectively settled the pre-existing relationships between
Consideration for acquisition
Cash consideration
Contingent consideration
Total purchase consideration
Cash balances acquired
Contingent consideration
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Right-of-use assets
Intangible assets
Deferred tax assets
Trade and other payables
Lease liabilities
advance
Deferred tax liabilities
Other liabilities
Net assets
Goodwill on acquisition
Total purchase consideration
Contract liabilities and other revenue received in
Contributions to the Group's performance from
acquisition date to 30 June 2022
Income
Profit before income tax expense
$m
98
53
151
(10)
(53)
88
10
18
57
1
2
(6)
(1)
(5)
(9)
(5)
62
89
151
18
6
us and the acquired entities and businesses, including the pre-
existing debtor/creditor balances netted off at their recorded
amounts. As the main source of income of the acquired entities and
businesses was the commissions they generated from us, we have
not disclosed the contributions to the Group's performance from
acquisition date to 30 June 2022 as they were not meaningful.
Table C summarises the effects of provisional and final accounting
for all these acquisitions. Goodwill recognised is part of Telstra
Consumer & Small Business CGU.
1
Table C
Year ended
Fair value
Fone Zone and licensee retail stores
30 June 2022
Effective settlement of the pre-existing net
Consideration for acquisition
Cash consideration
receivable in Telstra Group
Total purchase consideration
Cash balances acquired
Effective settlement of the pre-existing net
receivable in Telstra Group
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other assets
Fair value
$m
309
66
375
(27)
(66)
282
6
27
4
30
83
25
10
8
(9)
(83)
(12)
(16)
67
308
375
(c) Fone Zone and licensee retail stores
On 12 November 2021, we acquired 100 per cent shareholding in
Fone Zone Pty Ltd and its controlled entities (Fone Zone) for a cash
Lease liabilities
consideration of $106 million. Fone Zone was Vita Group's Retail
Information and Communication Technology business and included
all of Vita's Telstra branded retail stores and the Sprout business.
The acquisition was prompted by our strategy to transition all
Deferred tax liabilities
Other liabilities
Net assets
Telstra branded retail stores to corporate ownership. The fair value
Goodwill on acquisition
Trade and other payables
Total purchase consideration
of the net assets at acquisition date was $40 million. The
acquisition gave rise to $92 million goodwill representing workforce
with retail experience, cost and revenue synergies, growth
opportunities, and savings on dealer commissions.
Goodwill is not deductible for income tax purposes. However, as the
termination of the dealership agreement that occurred as part of
the transaction is treated as a termination of a licence for income
tax purposes, this residual balance will be claimed as a tax
deduction over a period of five years.
6.1 Changes in the group structure (continued)
6.1.2 Current year disposals
On 30 June 2021, we announced that a consortium comprising the
Future Fund, Commonwealth Superannuation Corporation and
Sunsuper agreed to acquire a 49 per cent interest and become a
strategic partner in Telstra’s towers business.
On 31 August 2021, the towers business became operational
following a transfer of business assets and liabilities to Towers
Business Operating Trust (Trust). The Trust also incurred $90
million estimated stamp duty costs related to the establishment of
the business. The trustee of the Trust is our subsidiary Amplitel Pty
Ltd (Amplitel).
The sale of 49 per cent interests in the Trust and Amplitel to the
consortium was completed on 1 September 2021 and resulted in
$2,883 million net cash proceeds. We retain control of the Trust and
Amplitel and thus we continue to consolidate these entities.
At the Telstra Group level, transactions with non-controlling
interests that do not result in a loss of control are treated as
transactions with equity owners of the towers business. As at 1
September 2021, we recognised $798 million non-controlling
interests reflecting the consortium’s relative interests in the Trust
and Amplitel as at the date of the transaction. The $2,085 million
difference between the amount recognised as non-controlling
interests and the consideration received was recognised in general
reserve within equity attributable to the Telstra Group.
Refer to note 7.2.1 for information about a net gain recognised by
the Telstra Entity on the transfer of the towers business assets and
liabilities.
Refer to note 6.3.1 for the summarised financial information of the
Trust and Amplitel amalgamated as at 30 June 2022.
6.1.3 Prior year disposals
In December 2020, we disposed of Telstra’s Velocity business for
total sales proceeds of $140 million, with $92 million received by 30
June 2022 and the remainder over the next two years. Following the
disposal, we leased back the assets sold until the network
integration and customer transition work is completed in each
region (expected by July 2023), subsequent to which we will service
the premises in those regions as a Retail Service Provider of the
purchaser. A $60 million net gain from disposal represented mainly
a gain on sale and leaseback transaction.
In December 2020, we disposed of the assets and liabilities of our
e-commerce platform for total sale proceeds of $55 million and
recognised a net gain of $45 million.
In March 2021, we disposed of our controlled entity Sunshine
NewCo Pty Limited, holding our minority investment in Project
Sunshine I Pty Ltd (Sensis), for total sale proceeds of $78 million
and recognised a net gain of $1 million, including the $34 million
impairment loss recognised on the remeasurement of this
investment to its fair value less costs to sell at 31 December 2020.
In total during the financial year 2021 we deconsolidated $186
million assets and $98 million liabilities on disposal of controlled
entities and other businesses.
6.1.1 Current year acquisitions (continued)
(d) Other acquisitions
On 28 February 2022, we acquired 100 per cent shareholding in
Alliance Automation Pty Ltd and its wholly-owned subsidiary for a
total consideration of $39 million. Alliance Automation Pty Ltd is a
provider of IoT industrial automation solutions and control
systems.
On 28 February 2022, we acquired 100 per cent shareholding in
Aqura Technologies Pty Ltd for a total consideration of $28 million.
Aqura Technologies Pty Ltd offers leading technology and
telecommunication infrastructure solutions.
Table D summarises the effects of provisional accounting for these
two individually immaterial acquisitions.
Table D
Other acquisitions
Year ended
30 June 2022
Consideration for acquisition
Cash consideration
Contingent consideration
Total purchase consideration
Cash balances acquired
Contingent consideration
Outflow of cash on acquisition
Acquisition costs incurred included in other
expenses in the income statement
Assets/(liabilities) at acquisition date
Cash and cash equivalents
Trade and other receivables
Property, plant and equipment
Right-of-use assets
Intangible assets
Deferred tax assets
Other assets
Trade and other payables
Lease liabilities
Deferred tax liabilities
Other liabilities
Net assets
Goodwill on acquisition
Total purchase consideration
Contributions to the Group's performance from
acquisition date to 30 June 2022
Income
Profit before income tax expense
$m
59
8
67
(1)
(8)
58
1
Fair value
1
17
2
2
9
2
2
(8)
(4)
(2)
(3)
18
49
67
30
1
(e) Telstra Group result if all acquisitions occurred on 1 July 2021
If all the acquisitions made during the financial year 2022 had
occurred on 1 July 2021, our adjusted consolidated income and
consolidated profit before income tax expense for the financial year
2022 would have been $22,136 million and $2,406 million,
respectively.
Telstra Corporation Limited and controlled entities | F73
F74 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 149
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 75 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 76 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
• Telstra Purple Pty Ltd
• Telstra Services Solutions Holdings Limited
• Telstra Software Group Pty Ltd
• Telstra Towerco No.2 Pty Ltd
• Telstra Ventures Pty Limited.
The following entities were added as parties to the Deed via an
assumption deed on 22 June 2022 and are also part of the Closed
Group:
• Alliance Automation Pty Ltd
• Clinical Technology Holdings Pty Limited
• Fone Zone Pty Ltd
• Health Communication Network Pty Limited
• Telstra PM Holdings Pty Ltd
• Telstra PM Pty Ltd
• Telstra Towerco No.2 Pty Ltd.
There are no other members of the Extended Closed Group (as
defined in the ASIC Instrument). Telstra Finance Limited is trustee
under the Deed. However, it is not a member of the Closed Group or
the Extended Closed Group.
6.2 Investments in controlled entities
6.2.1 Investments in controlled entities
Telstra Group has a direct or indirect interest in over 190
subsidiaries with our international presence spanning over 20
countries. We have controlled entities in Australia, Asia, New
Zealand, Europe, Middle East and the United States of America. We
conduct most of our business through the Telstra Entity and none
of our controlled entities is individually material to the Group’s
EBITDA.
A complete list of our controlled entities is available online at
www.telstra.com/financialresults.
6.2.2 Deed of cross guarantee
Telstra Corporation Limited and each of the wholly-owned
subsidiaries set out below (together the ‘Closed Group’), are
party to a deed of cross guarantee (Deed), as defined in
Australian Securities and Investments Commission (ASIC)
legislative instrument: ‘ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785’ (ASIC Instrument).
The effect of the Deed is that each entity in the Closed Group
guarantees the payment in full of all debts of the other entities
in the Closed Group in the event of their winding up.
Pursuant to the ASIC Instrument, the wholly-owned
subsidiaries within the Closed Group are relieved from the
requirement to prepare and lodge separate financial
statements, directors’ reports and auditors’ reports.
The statement of comprehensive income and statement of
financial position disclosed in this section present
consolidated results of the Closed Group.
The following entities are party to the Deed and part of the Closed
Group:
• Telstra Corporation Limited
• Alliance Automation Pty Ltd
• Bridge Point Communications Pty Ltd
• Clinical Technology Holdings Pty Limited
• Epicon IT Solutions Pty Ltd
• Fone Zone Pty Ltd
• Health Communication Network Pty Limited
• Merricks NewCo Pty Ltd
• Mobile Tracking and Data Pty Ltd
• MTData Holdings Pty Ltd
• Pacnet Internet (A) Pty Ltd
• Telstra Broadcast Services Pty Limited
• Telstra Communications Limited
• Telstra Energy (Generation) Pty Ltd
• Telstra Energy (Holdings) Pty Ltd
• Telstra Energy (Retail) Pty Ltd
• Telstra Health Pty Ltd
• Telstra Holdings Pty Ltd
• Telstra International (Aus) Limited
• Telstra International Networks Pty Limited (formerly Kloud
Solutions Pty Ltd)
• Telstra Limited (formerly Network Design and Construction
Limited)
• Telstra Multimedia Pty Limited
• Telstra Pay TV Pty Ltd
• Telstra Plus Pty Ltd
• Telstra PM Holdings Pty Ltd (formerly Telstra Serveco No.2 Pty
Ltd)
• Telstra PM Pty Ltd (formerly Telstra Serveco No.3 Pty Ltd)
Derivative financial liabilities
Deferred tax liabilities
Contract liabilities and other revenue
received in advance
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Table B
Closed Group
Equity available to the closed group
6.2 Investments in controlled entities (continued)
6.2.2 Deed of cross guarantee (continued)
Financial information of the members of the Closed Group
presented in Tables A to C excludes Telstra Finance Limited.
Transactions between the members have been eliminated.
Table A
Closed Group
Current assets
As at 30 June
2022
2021
$m
$m
Cash and cash equivalents
680
936
Trade and other receivables and
3,350
3,843
Table A (continued)
Closed Group
Non-current liabilities
Other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
contract assets
Deferred contract costs
Inventories
Derivative financial assets
Prepayments
Total current assets
Non-current assets
Trade and other receivables and
contract assets
Deferred contract costs
Inventories
Investments – controlled entities
Investments – accounted for using the
equity method
Investments – other
Property, plant and equipment
Right-of-use assets
Intangible assets
Derivative financial assets
Defined benefit asset
Total non-current assets
Total assets
Current liabilities
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Current tax payables
Contract liabilities and other revenue
received in advance
Total current liabilities
5,114
6,131
115
456
302
211
867
1,238
28
6,110
830
10
19,556
2,449
6,821
512
274
38,695
43,809
642
160
412
-
25
109
364
624
255
1,175
1,342
21
3,112
1,036
10
20,032
2,649
5,982
786
155
36,300
42,431
665
85
455
26
103
Trade and other payables
3,682
3,425
Table C
Closed Group
Profit for the year for the Closed Group
5,683
Total other comprehensive income for
the Closed Group
Total comprehensive income for the
year for the Closed Group
Table C provides a reconciliation of retained profits of the Closed
Group from the opening to the closing balance.
4,283
4,761
1,512
1,523
10,716
11,043
Group
Retained profits at the beginning of
the financial year available to the
Closed Group
Effect on retained profits from
addition of entities to the Closed
Effect on retained profits from
removal of entities to the Closed Group
Total comprehensive income
recognised in retained profits
Dividend
Group
Retained profits at the end of the
financial year available to the Closed
13,206
9,313
As at 30 June
2022
2021
$m
$m
757
774
183
131
112
2,394
11,008
305
1,612
16,502
27,218
16,591
3,098
287
13,206
16,591
5
149
118
2,577
11,913
331
1,529
17,396
28,439
13,992
4,436
243
9,313
13,992
Year ended 30 June
2022
2021
$m
147
$m
1,745
267
5,830
2,012
Year ended 30 June
2022
2021
$m
$m
9,313
9,402
(10)
4
23
3
5,787
1,787
(1,888)
(1,902)
150 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F75
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Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.2 Investments in controlled entities
6.2.1 Investments in controlled entities
Telstra Group has a direct or indirect interest in over 190
subsidiaries with our international presence spanning over 20
countries. We have controlled entities in Australia, Asia, New
Zealand, Europe, Middle East and the United States of America. We
conduct most of our business through the Telstra Entity and none
of our controlled entities is individually material to the Group’s
Group:
EBITDA.
A complete list of our controlled entities is available online at
www.telstra.com/financialresults.
6.2.2 Deed of cross guarantee
• Telstra Purple Pty Ltd
• Telstra Services Solutions Holdings Limited
• Telstra Software Group Pty Ltd
• Telstra Towerco No.2 Pty Ltd
• Telstra Ventures Pty Limited.
The following entities were added as parties to the Deed via an
assumption deed on 22 June 2022 and are also part of the Closed
• Alliance Automation Pty Ltd
• Clinical Technology Holdings Pty Limited
• Fone Zone Pty Ltd
• Health Communication Network Pty Limited
• Telstra PM Holdings Pty Ltd
• Telstra PM Pty Ltd
• Telstra Towerco No.2 Pty Ltd.
There are no other members of the Extended Closed Group (as
defined in the ASIC Instrument). Telstra Finance Limited is trustee
under the Deed. However, it is not a member of the Closed Group or
the Extended Closed Group.
Telstra Corporation Limited and each of the wholly-owned
subsidiaries set out below (together the ‘Closed Group’), are
party to a deed of cross guarantee (Deed), as defined in
Australian Securities and Investments Commission (ASIC)
legislative instrument: ‘ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785’ (ASIC Instrument).
The effect of the Deed is that each entity in the Closed Group
guarantees the payment in full of all debts of the other entities
in the Closed Group in the event of their winding up.
Pursuant to the ASIC Instrument, the wholly-owned
subsidiaries within the Closed Group are relieved from the
requirement to prepare and lodge separate financial
statements, directors’ reports and auditors’ reports.
The statement of comprehensive income and statement of
financial position disclosed in this section present
consolidated results of the Closed Group.
The following entities are party to the Deed and part of the Closed
Group:
• Telstra Corporation Limited
• Alliance Automation Pty Ltd
• Bridge Point Communications Pty Ltd
• Clinical Technology Holdings Pty Limited
• Epicon IT Solutions Pty Ltd
• Fone Zone Pty Ltd
• Health Communication Network Pty Limited
• Merricks NewCo Pty Ltd
• Mobile Tracking and Data Pty Ltd
• MTData Holdings Pty Ltd
• Pacnet Internet (A) Pty Ltd
• Telstra Broadcast Services Pty Limited
• Telstra Communications Limited
• Telstra Energy (Generation) Pty Ltd
• Telstra Energy (Holdings) Pty Ltd
• Telstra Energy (Retail) Pty Ltd
• Telstra Health Pty Ltd
• Telstra Holdings Pty Ltd
• Telstra International (Aus) Limited
• Telstra International Networks Pty Limited (formerly Kloud
Solutions Pty Ltd)
• Telstra Limited (formerly Network Design and Construction
Limited)
• Telstra Multimedia Pty Limited
• Telstra Pay TV Pty Ltd
• Telstra Plus Pty Ltd
• Telstra PM Holdings Pty Ltd (formerly Telstra Serveco No.2 Pty
Ltd)
• Telstra PM Pty Ltd (formerly Telstra Serveco No.3 Pty Ltd)
6.2 Investments in controlled entities (continued)
6.2.2 Deed of cross guarantee (continued)
Financial information of the members of the Closed Group
presented in Tables A to C excludes Telstra Finance Limited.
Transactions between the members have been eliminated.
Table A
Closed Group
Current assets
Cash and cash equivalents
Trade and other receivables and
contract assets
Deferred contract costs
Inventories
Derivative financial assets
Prepayments
Total current assets
Non-current assets
Trade and other receivables and
contract assets
Deferred contract costs
Inventories
Investments – controlled entities
Investments – accounted for using the
equity method
Investments – other
Property, plant and equipment
Right-of-use assets
Intangible assets
Derivative financial assets
Defined benefit asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Current tax payables
Contract liabilities and other revenue
received in advance
Total current liabilities
As at 30 June
2022
2021
$m
$m
680
3,350
115
456
302
211
5,114
867
1,238
28
6,110
830
10
19,556
2,449
6,821
512
274
38,695
43,809
3,682
642
160
412
4,283
-
25
1,512
936
3,843
109
364
624
255
6,131
1,175
1,342
21
3,112
1,036
10
20,032
2,649
5,982
786
155
36,300
42,431
3,425
665
85
455
4,761
26
103
1,523
10,716
11,043
Table A (continued)
Closed Group
Non-current liabilities
Other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Deferred tax liabilities
Contract liabilities and other revenue
received in advance
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Equity available to the closed group
Table B
Closed Group
Profit for the year for the Closed Group
Total other comprehensive income for
the Closed Group
Total comprehensive income for the
year for the Closed Group
As at 30 June
2022
2021
$m
$m
183
131
112
2,394
11,008
305
1,612
5
149
118
2,577
11,913
331
1,529
757
774
16,502
27,218
16,591
3,098
287
13,206
16,591
17,396
28,439
13,992
4,436
243
9,313
13,992
Year ended 30 June
2022
2021
$m
5,683
147
$m
1,745
267
5,830
2,012
Table C provides a reconciliation of retained profits of the Closed
Group from the opening to the closing balance.
Table C
Closed Group
Retained profits at the beginning of
the financial year available to the
Closed Group
Effect on retained profits from
addition of entities to the Closed
Group
Effect on retained profits from
removal of entities to the Closed Group
Total comprehensive income
recognised in retained profits
Dividend
Retained profits at the end of the
financial year available to the Closed
Group
Year ended 30 June
2022
2021
$m
$m
9,313
9,402
(10)
4
23
3
5,787
1,787
(1,888)
(1,902)
13,206
9,313
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Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 77 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Telstra Financial Report 2022
Section 6. Our investments (continued)
6.3 Non-controlling interests
The Telstra Group includes entities which have material non-
controlling interests.
6.3.1 Amplitel business
As detailed in note 6.1.2, on 1 September 2021 we completed the
sale of 49 per cent interests in the Trust and Amplitel and
recognised a non-controlling interest resulting from that
transaction.
Table A summarises financial information of the entities which
have material non-controlling interests, i.e. the Trust and Amplitel
(Amplitel business), amalgamated for the year ended and as at 30
June 2022. It represents the amounts before inter-company
eliminations of transactions with other entities within the Telstra
Group, with the exception of the transactions within the Amplitel
business which have been eliminated.
Table A
Amplitel business
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Accumulated non-controlling interests
Statement of comprehensive income
Revenue
Loss/total comprehensive income for the
period
Profit allocated to non-controlling interests
Distributions paid/payable to non-controlling
interests
Statement of cash flows
Net cash inflow from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net cash inflow
Year ended/
As at
30 June 2022
$m
339
2,071
2,410
217
809
1,026
1,384
794
141
(157)
83
87
82
129
(81)
130
6.3.2 The Exchange Trust
As at 30 June 2022, our controlled entity The Exchange Trust, which
holds a portfolio of 36 Telstra exchanges in Australia, had a 49 per
cent (2021: 49 per cent) non-controlling interest balance of $700
million (2021: $700 million). The trustee of the Exchange Trust is
Merricks NewCo Pty Ltd, our wholly-owned controlled entity.
During the financial year 2022, we paid the minority unit holder of
the trust a $32 million (2021: $30 million) dividend.
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Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.4 Investments in joint ventures and associated entities
We account for joint ventures and associated entities using
the equity method. Under this method, we recognise the
investment at cost and subsequently adjust it for our share of
profits or losses, which are recognised in the income
statement and our share of other comprehensive income,
which is recognised in the statement of comprehensive
income. Generally, dividend received reduces the carrying
value of the investment.
The movements in the carrying amount of equity accounted
investments in our joint ventures and associated entities are
summarised in Table A.
Table A
Telstra Group
Carrying amount of investments at beginning of year
Additions
Disposals
Net impairment loss recognised in the income statement
Share of net loss
Share of distributions
Share of reserves
Carrying amount of investments at end of year
Additions of associated entities includes $71 million (2021: $2
million) of new investments in Telstra Ventures Fund III, L.P.
Share of joint ventures’ reserves includes $199 million loss (2021:
$292 million gain) in our share of other comprehensive income.
As at 30 June
Joint ventures
Associated entities
2022
2021
2022
2021
$m
578
13
-
-
591
(4)
(104)
(199)
284
$m
266
79
-
-
345
(8)
(51)
292
578
$m
440
101
-
-
541
(27)
-
16
530
$m
631
13
(153)
(30)
461
(16)
(8)
3
440
6.3 Non-controlling interests
The Telstra Group includes entities which have material non-
controlling interests.
6.3.1 Amplitel business
As detailed in note 6.1.2, on 1 September 2021 we completed the
sale of 49 per cent interests in the Trust and Amplitel and
recognised a non-controlling interest resulting from that
transaction.
Table A summarises financial information of the entities which
have material non-controlling interests, i.e. the Trust and Amplitel
(Amplitel business), amalgamated for the year ended and as at 30
June 2022. It represents the amounts before inter-company
eliminations of transactions with other entities within the Telstra
Group, with the exception of the transactions within the Amplitel
business which have been eliminated.
Table A
Year ended/
Amplitel business
As at
30 June 2022
$m
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Accumulated non-controlling interests
Statement of comprehensive income
Revenue
period
Loss/total comprehensive income for the
Profit allocated to non-controlling interests
Distributions paid/payable to non-controlling
interests
Statement of cash flows
Net cash inflow from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net cash inflow
339
2,071
2,410
217
809
1,026
1,384
794
141
(157)
83
87
82
129
(81)
130
6.3.2 The Exchange Trust
As at 30 June 2022, our controlled entity The Exchange Trust, which
holds a portfolio of 36 Telstra exchanges in Australia, had a 49 per
cent (2021: 49 per cent) non-controlling interest balance of $700
million (2021: $700 million). The trustee of the Exchange Trust is
Merricks NewCo Pty Ltd, our wholly-owned controlled entity.
During the financial year 2022, we paid the minority unit holder of
the trust a $32 million (2021: $30 million) dividend.
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Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 79 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Telstra Financial Report 2022
Section 6. Our investments (continued)
6.4 Investments in joint ventures and associated entities
(continued)
6.4.1 List of our investments in joint ventures and associated
entities
Table B presents a list of our investments in joint ventures and
associated entities, their principal place of business/country of
incorporation and our ownership interest.
Table B
Telstra Group
Name of entity
Principal activities
Principal place of
business/country of
incorporation
Joint ventures
3GIS Pty Ltd
Reach Limited
Management of former 3GIS Partner-
ship (non-operating)
Australia
International connectivity services
Bermuda
Telstra Ventures Fund II, L.P.
Venture capital
Guernsey
Associated entities
Asia Netcom Philippines Corporation
Ownership of physical property
Philippines
Australia-Japan Cable Holdings Limited
Network cable provider
Dacom Crossing Corporation
Network cable provider
NXE Australia Pty Limited
Pay television
Bermuda
Korea
Australia
Pacific Carriage Holdings Limited Inc.
Network cable provider
United States
Pivotal Labs Sydney Pty Ltd
Software development
Southern Cross Cables Holdings Limited
Network cable provider
Australia
Bermuda
Telstra Converge Inc (formerly Digitel
Crossing Inc.)
Telecommunication services
Philippines
Telstra Super Pty Ltd
Superannuation trustee
Telstra Ventures Fund III, L.P.
Venture capital
Tianjin TenLink Electronic Technology Co.,
Ltd.
Control system of industrial internet
supplier
Australia
Guernsey
China
Ownership interest
As at 30 June
2022
2021
%
%
50.0
50.0
62.5
40.0
46.9
49.0
35.0
25.0
20.0
25.0
48.0
50.0
50.0
62.5
40.0
46.9
49.0
35.0
25.0
20.0
25.0
48.0
100.0
50.5
10.0
100.0
55.0
-
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Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.4 Investments in joint ventures and associated entities
6.4.1 List of our investments in joint ventures and associated
Table B presents a list of our investments in joint ventures and
associated entities, their principal place of business/country of
incorporation and our ownership interest.
(continued)
entities
Table B
Telstra Group
Name of entity
Principal activities
6.4 Investments in joint ventures and associated entities
(continued)
6.4.1 List of our investments in joint ventures and associated
entities (continued)
We apply judgement to determine if we have significant influence or
joint control over our investments as detailed below.
Ownership interest
As at 30 June
2022
2021
%
%
Joint control of
Telstra
Ventures Fund
II, L.P.
Principal place of
business/country of
incorporation
Joint ventures
3GIS Pty Ltd
Reach Limited
Associated entities
Telstra Ventures Fund II, L.P.
Venture capital
Guernsey
Management of former 3GIS Partner-
Australia
ship (non-operating)
International connectivity services
Bermuda
Asia Netcom Philippines Corporation
Ownership of physical property
Philippines
Australia-Japan Cable Holdings Limited
Network cable provider
Dacom Crossing Corporation
Network cable provider
NXE Australia Pty Limited
Pay television
Pacific Carriage Holdings Limited Inc.
Network cable provider
United States
Pivotal Labs Sydney Pty Ltd
Software development
Southern Cross Cables Holdings Limited
Network cable provider
Telstra Converge Inc (formerly Digitel
Telecommunication services
Philippines
Crossing Inc.)
Telstra Super Pty Ltd
Superannuation trustee
Telstra Ventures Fund III, L.P.
Venture capital
Tianjin TenLink Electronic Technology Co.,
Control system of industrial internet
China
Ltd.
supplier
Bermuda
Korea
Australia
Australia
Bermuda
Australia
Guernsey
50.0
50.0
62.5
40.0
46.9
49.0
35.0
25.0
20.0
25.0
48.0
50.0
50.0
62.5
40.0
46.9
49.0
35.0
25.0
20.0
25.0
48.0
100.0
50.5
10.0
100.0
55.0
-
Significant
influence over
Telstra Super
Pty Ltd
We applied judgement to determine
that we have joint control of our
investment in Telstra Ventures Fund
II, L.P.. While we hold 62.5 per cent of
the partnership interest on a fully
committed basis, key decisions for
the entity require the unanimous
approval of the Advisory Committee,
on which we hold one of the two seats,
or a majority of at least 75.0 per cent
of the fully committed capital.
We applied judgement to determine
that we do not control Telstra Super
Pty Ltd even though we own 100 per
cent of its equity.
Telstra Super Pty Ltd is a trustee for
the Telstra Superannuation Scheme.
We do not consolidate Telstra Super
Pty Ltd as we do not control the board
of directors. The board of directors
consists of an equal number of
employer and member
representatives and an independent
chairman. Our voting power over the
relevant activities is 44 per cent,
which is equivalent to our
representation on the board. The
entity is therefore classified as an
associated entity as we have
significant influence over it.
Significant
influence over
Telstra
Ventures Fund
III, L.P.
We applied judgement to determine
that we have significance influence of
our investment in Telstra Ventures
Fund III, L.P.. While we hold 50.5 per
cent (2021: 55.0 per cent) on a
committed capital amount basis, we
have a seat on the Advisory
Committee. This gives us the power to
participate in the financial and
operating policy decisions of the
investment.
(a) NXE Group
Telstra has a 35 per cent interest in NXE Australia Pty Limited and
its controlled entities (NXE Group), an associated entity which
provides subscription TV and streaming services. In the
consolidated financial statements Telstra's interest in NXE
Australia Pty Limited is accounted for using the equity method.
Financial information of NXE Group for the financial year 2022 is
summarised in Table C based on their consolidated management
financial statements prepared in accordance with the Australian
Accounting Standards. The information disclosed reflects the
amounts presented in the financial statements of NXE Group and
not Telstra’s share of those amounts. The management financial
information has been adjusted to reflect adjustments made by
Telstra when using the equity accounting method, including fair
value adjustments and modifications for differences in accounting
policy and impairment of our investment.
Table C
NXE Group
Year ended 30 June
2022
2021
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Telstra's share in equity 35% (2021:
35%)
Equity accounting adjustments
Telstra's carrying amount of the
investment
Revenue
Operating expenses
Loss before tax
Income tax benefit
Loss for the year
Other comprehensive income
Total comprehensive income for the
year
Equity accounting adjustments
Adjusted comprehensive income for
the period
Telstra's share of comprehensive
income for the year (35%)
$m
705
3,793
(1,224)
(2,319)
955
334
68
402
2,775
(2,887)
(112)
40
(72)
16
(56)
19
(37)
(13)
$m
575
4,039
(756)
(2,847)
1,011
354
61
415
2,767
(2,958)
(191)
54
(137)
9
(128)
86
(42)
(15)
Telstra Corporation Limited and controlled entities | F79
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Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 81 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 82 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 6. Our investments (continued)
6.4 Investments in joint ventures and associated entities
(continued)
6.4.2 Other joint ventures and associated entities
Table D presents our share of the aggregate financial information of
joint ventures and associated entities.
6.4.4 Transactions with our joint ventures and associated entities
Details of key transactions with our joint ventures and associated
entities recorded in the income statement and statement of
financial position are provided below.
(a) Sale and purchase of goods and services
Table D
Year ended/As at 30 June
Telstra Group
Joint ventures
Associated
entities
2022
2021
2022
2021
$m
284
$m
578
$m
530
$m
440
(4)
(8)
(27)
(16)
(199)
292
16
3
(203)
284
(11)
(13)
Carrying amount of
investment
Group's share of:
Loss
Other
comprehensive
income
Total
comprehensive
income
6.4.3 Suspension of equity accounting
Table E presents our unrecognised share of losses for the financial
year and cumulatively for our entities where equity accounting has
ceased and the investment is recorded at zero due to losses made
by these entities and/or reductions in the equity accounted
carrying amount.
Table E
Year ended 30 June
Telstra Group
Period
Cumula
-tive
Period
Cumula
-tive
We sold and purchased goods and services, and earned interest
from our associated entities. These transactions were in the
ordinary course of business and on normal commercial terms and
conditions.
Details of individually significant transactions were as follows:
• we purchased from NXE Group pay television services amounting
to $536 million (2021: $625 million). The purchases enabled
resale of Foxtel services, including Pay TV content, to our existing
customers as part of our ongoing product bundling initiatives.
• we sold to NXE Group broadband system services, network
access services and other professional services totalling $95
million (2021: $109 million) and wholesale services totalling $66
million (2021: $64 million).
(b) Amounts owed by joint ventures and associated entities
In February 2020, we entered into a subordinated loan agreement
with NXE Australia Pty Limited under which we made available to
NXE Australia Pty Limited a loan facility of up to $170 million at
commercial rates of interest. The facility matures on 22 December
2027. As at 30 June 2022 the balance drawn under this facility was
$132 million (2021: $79 million).
(c) Trade and other payables
As at 30 June 2022, we had $50 million (2021: $58 million) trade
payables to NXE Group for purchases of pay television services.
As at 30 June 2022, we had $74 million (2021: nil) other payables to
Telstra Ventures Fund III, L.P. for new investments in the Fund.
6.4.5 Recognition and measurement
(a) Investments in joint ventures
Joint ventures
Reach Limited
Associated entities
Australia-Japan
Cable Holdings
Limited
2022
2022
2021
2021
$m
$m
$m
$m
A joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the net assets of the
arrangement. Our interests in joint ventures are accounted for
using the equity method of accounting.
-
(553)
(3)
(553)
(b) Investments in associated entities
(1)
(1)
(69)
(622)
(1)
(4)
(68)
(621)
These are investments in entities over which we have the ability to
exercise significant influence but we do not control the decisions of
the entity. Our interests in associated entities are accounted for
using the equity method of accounting.
(c) Equity method of accounting
Investments in associated entities and joint ventures are carried in
the consolidated balance sheet at cost plus post-acquisition
changes in our share of the investment’s net assets and net of
impairment loss. Goodwill relating to an investment in an
associated entity or joint venture is included in the carrying value of
the investment and is not amortised. When Telstra’s share of losses
exceeds our investment in an associated entity or joint venture, the
carrying amount of the investment is reduced to nil and no further
losses are recognised.
The equity accounted investments are assessed for impairment
annually or when there are impairment indicators.
Section 7. Other information
This section provides information and disclosures not
included in the other sections, for example our external
auditor’s remuneration, commitments and contingencies,
parent entity disclosures and significant events occurring
after reporting date.
SECTION 7.
7.1 Auditor’s remuneration
OTHER INFORMATION
7.2 Parent entity disclosures
Our external auditor of the Group is Ernst & Young (EY). In
This note provides details of Telstra Entity’s financial
addition to the audit and review of our financial reports, EY
performance and financial position as a standalone entity.
provides other services throughout the year. This note details
The results include transactions with its controlled entities.
the total fees to our external auditors.
Tables A and B provide a summary of the financial information for
Fees to Ernst & Young (Australia)
Telstra Group
Category 1
Category 2
Category 3
Category 4
Category 1
Category 2
Category 4
Total fees to Ernst & Young (Australia)
12.556
Fees to other overseas member firms
of Ernst & Young (Australia)
Year ended 30 June
2022
2021
$m
$m
the Telstra Entity.
Table A
Telstra Entity
8.814
0.040
3.254
0.448
2.475
0.049
0.082
2.606
8.272
-
2.806
0.407
11.485
2.349
0.049
0.069
2.467
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Share capital
Cash flow hedging reserve
Foreign currency basis spread reserve
General reserve
Total equity
Total fees to other overseas member
firms of Ernst & Young (Australia)
Total auditor’s remuneration
15.162
13.952
Retained profits
Audit and non-audit fees are disclosed in the following categories:
• Category 1: fees to the group auditor for auditing the statutory
financial report of the parent covering the group, and for auditing
Table B
the statutory financial report of any controlled entities
• Category 2: fees for assurance services that are required by
Telstra Entity
legislation to be provided by the auditor
• Category 3: fees for other assurance and agreed-upon
Statement of comprehensive income
procedures services where there is discretion as to whether the
Profit for the year
service is provided by the auditor or another firm
• Category 4: fees for other services (e.g. tax compliance).
Total comprehensive income
As at 30 June
2022
2021
$m
$m
5,821
41,512
47,333
14,271
16,361
30,632
3,098
6
(8)
202
13,403
16,701
7,302
38,425
45,727
14,753
16,811
31,564
4,436
(126)
(63)
201
9,715
14,163
Year ended 30 June
2022
2021
$m
$m
5,472
5,787
2,042
2,097
Services in Category 3 included IT security control assessments,
various assurance and agreed-upon procedures services.
Services in Category 4 included tax and other advisory services.
We have processes in place to maintain the independence of our
external auditor, including the nature of expenditure on non-audit
services. EY also has specific internal processes and policies in
place to ensure auditor independence.
156 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F81
F82 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) Section 6. Our investments (continued)
6.4 Investments in joint ventures and associated entities
6.4.4 Transactions with our joint ventures and associated entities
(continued)
6.4.2 Other joint ventures and associated entities
Table D presents our share of the aggregate financial information of
joint ventures and associated entities.
(a) Sale and purchase of goods and services
Table D
Year ended/As at 30 June
Telstra Group
Joint ventures
Associated
entities
conditions.
2022
2021
2022
2021
$m
284
$m
578
$m
530
$m
440
(4)
(8)
(27)
(16)
Carrying amount of
investment
Group's share of:
Loss
Other
income
Total
income
comprehensive
(199)
292
16
3
comprehensive
(203)
284
(11)
(13)
6.4.3 Suspension of equity accounting
Table E presents our unrecognised share of losses for the financial
year and cumulatively for our entities where equity accounting has
ceased and the investment is recorded at zero due to losses made
by these entities and/or reductions in the equity accounted
carrying amount.
Details of key transactions with our joint ventures and associated
entities recorded in the income statement and statement of
financial position are provided below.
We sold and purchased goods and services, and earned interest
from our associated entities. These transactions were in the
ordinary course of business and on normal commercial terms and
Details of individually significant transactions were as follows:
• we purchased from NXE Group pay television services amounting
to $536 million (2021: $625 million). The purchases enabled
resale of Foxtel services, including Pay TV content, to our existing
customers as part of our ongoing product bundling initiatives.
• we sold to NXE Group broadband system services, network
access services and other professional services totalling $95
million (2021: $109 million) and wholesale services totalling $66
million (2021: $64 million).
(b) Amounts owed by joint ventures and associated entities
In February 2020, we entered into a subordinated loan agreement
with NXE Australia Pty Limited under which we made available to
NXE Australia Pty Limited a loan facility of up to $170 million at
commercial rates of interest. The facility matures on 22 December
2027. As at 30 June 2022 the balance drawn under this facility was
$132 million (2021: $79 million).
(c) Trade and other payables
As at 30 June 2022, we had $50 million (2021: $58 million) trade
payables to NXE Group for purchases of pay television services.
As at 30 June 2022, we had $74 million (2021: nil) other payables to
Telstra Ventures Fund III, L.P. for new investments in the Fund.
Table E
Year ended 30 June
Telstra Group
Period
Cumula
Period
Cumula
6.4.5 Recognition and measurement
(a) Investments in joint ventures
Joint ventures
Reach Limited
Associated entities
Australia-Japan
Cable Holdings
Limited
-tive
2022
2022
2021
-tive
2021
$m
$m
$m
$m
A joint venture is a joint arrangement whereby the parties that have
joint control of the arrangement have rights to the net assets of the
arrangement. Our interests in joint ventures are accounted for
using the equity method of accounting.
-
(553)
(3)
(553)
(b) Investments in associated entities
(1)
(1)
(69)
(622)
(1)
(4)
(68)
(621)
using the equity method of accounting.
(c) Equity method of accounting
These are investments in entities over which we have the ability to
exercise significant influence but we do not control the decisions of
the entity. Our interests in associated entities are accounted for
Investments in associated entities and joint ventures are carried in
the consolidated balance sheet at cost plus post-acquisition
changes in our share of the investment’s net assets and net of
impairment loss. Goodwill relating to an investment in an
associated entity or joint venture is included in the carrying value of
the investment and is not amortised. When Telstra’s share of losses
exceeds our investment in an associated entity or joint venture, the
carrying amount of the investment is reduced to nil and no further
losses are recognised.
The equity accounted investments are assessed for impairment
annually or when there are impairment indicators.
2022.Financial Report.book Page 81 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 82 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Notes to the financial statements (continued)
Section 7. Other information
Section 7. Other information
This section provides information and disclosures not
This section provides information and disclosures not
included in the other sections, for example our external
included in the other sections, for example our external
auditor’s remuneration, commitments and contingencies,
auditor’s remuneration, commitments and contingencies,
parent entity disclosures and significant events occurring
parent entity disclosures and significant events occurring
after reporting date.
after reporting date.
SECTION 7.
7.1 Auditor’s remuneration
OTHER INFORMATION
7.2 Parent entity disclosures
Our external auditor of the Group is Ernst & Young (EY). In
addition to the audit and review of our financial reports, EY
provides other services throughout the year. This note details
the total fees to our external auditors.
This note provides details of Telstra Entity’s financial
performance and financial position as a standalone entity.
The results include transactions with its controlled entities.
Tables A and B provide a summary of the financial information for
the Telstra Entity.
Table A
Telstra Entity
Statement of financial position
Total current assets
Total non-current assets
Total assets
Total current liabilities
Total non-current liabilities
Total liabilities
Share capital
Cash flow hedging reserve
Foreign currency basis spread reserve
General reserve
Retained profits
Total equity
Table B
Telstra Entity
Statement of comprehensive income
Profit for the year
Total comprehensive income
As at 30 June
2022
2021
$m
$m
5,821
41,512
47,333
14,271
16,361
30,632
3,098
6
(8)
202
13,403
16,701
7,302
38,425
45,727
14,753
16,811
31,564
4,436
(126)
(63)
201
9,715
14,163
Year ended 30 June
2022
2021
$m
$m
5,472
5,787
2,042
2,097
Telstra Group
Fees to Ernst & Young (Australia)
Category 1
Category 2
Category 3
Category 4
Total fees to Ernst & Young (Australia)
Fees to other overseas member firms
of Ernst & Young (Australia)
Category 1
Category 2
Category 4
Total fees to other overseas member
firms of Ernst & Young (Australia)
Total auditor’s remuneration
Year ended 30 June
2022
2021
$m
$m
8.814
0.040
3.254
0.448
12.556
2.475
0.049
0.082
2.606
8.272
-
2.806
0.407
11.485
2.349
0.049
0.069
2.467
15.162
13.952
Audit and non-audit fees are disclosed in the following categories:
• Category 1: fees to the group auditor for auditing the statutory
financial report of the parent covering the group, and for auditing
the statutory financial report of any controlled entities
• Category 2: fees for assurance services that are required by
legislation to be provided by the auditor
• Category 3: fees for other assurance and agreed-upon
procedures services where there is discretion as to whether the
service is provided by the auditor or another firm
• Category 4: fees for other services (e.g. tax compliance).
Services in Category 3 included IT security control assessments,
various assurance and agreed-upon procedures services.
Services in Category 4 included tax and other advisory services.
We have processes in place to maintain the independence of our
external auditor, including the nature of expenditure on non-audit
services. EY also has specific internal processes and policies in
place to ensure auditor independence.
Telstra Corporation Limited and controlled entities | F81
F82 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | 157
Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 83 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 84 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 7. Other information (continued)
Section 7. Other information (continued)
7.2 Parent entity disclosures (continued)
(b) Common law claims
7.3 Commitments and contingencies
7.4.1 Final dividend
Total non-current assets include $40 million (2021: $150 million)
impact of impairment losses recognised during the financial year.
Within that amount, impairment losses relating to our associated
entities were nil (2021: $34 million), and relating to our controlled
entities amounted to $14 million (2021: $106 million). The latter has
been eliminated on consolidation of the Telstra Group.
Certain common law claims by employees and third parties are yet
to be resolved. As at 30 June 2022, management believes that the
resolution of these contingencies will not have a significant effect
on the Telstra Entity’s financial results. The maximum amount of
these contingent liabilities cannot be reliably estimated.
(c) Indemnities, performance guarantees and financial support
7.2.1 Strategic partner in Telstra’s towers business
As detailed in note 6.1.2, on 31 August 2021, the Telstra Entity
transferred towers business assets and liabilities to Towers
Business Operating Trust (Trust), the trustee of which is our
subsidiary Amplitel Pty Ltd (Amplitel), in exchange for units in the
Trust held by our wholly-owned subsidiary Telstra Towerco No.2
Pty Ltd (Towerco No.2). As a result, the Telstra Entity recognised a
$4,058 million net gain on sale of the towers business, and a $5,790
million investment in Towerco No.2.
On 1 September 2021, Towerco No.2 completed the sale of 49 per
cent interests in the Trust and Amplitel to a consortium comprising
the Future Fund, Commonwealth Superannuation Corporation and
Sunsuper. The $2,883 million proceeds from the sale were
transferred by Towerco No.2 to the Telstra Entity via capital return.
Refer to note 6.1.2 for further information about the financial
impacts of that transaction at the Telstra Group level.
7.2.2 Capital expenditure commitments
As at 30 June 2022, the Telstra Entity’s commitments for the
acquisition of property, plant and equipment amounted to $160
million (2021: $124 million) and for intangible assets to $158 million
(2021: $281 million).
7.2.3 Contingent liabilities and guarantees
(a) Investigations by regulators
Telstra is subject to a range of laws and regulations in Australia and
overseas, including in the areas of telecommunications, corporate
law, consumer and competition law and occupational health and
safety. In Australia, the principal regulators who enforce these laws
and regulations and who Telstra interacts with are the Australian
Competition and Consumer Commission (ACCC), the Australian
Communications and Media Authority (ACMA), the Australian
Securities and Investments Commission (ASIC) and the Australian
Securities Exchange (ASX).
Telstra is subject to investigations and reviews from time to time by
regulators, including certain current investigations into whether
Telstra has complied with relevant laws and regulations. These are
taking place in an environment of heightened scrutiny and regulator
expectation and where Telstra has self-reported issues where it
has not complied with relevant laws and regulations. In the ordinary
course of our business, we identify, and may continue to identify,
issues that have the potential to impact our customers and
reputation, which do not meet relevant laws or regulations, or
which do not meet our standards. Where we identify these issues,
we make disclosures in accordance with the accounting standards,
or our other legal disclosure obligations, or provide for such
liabilities as required.
We have provided the following indemnities, performance
guarantees and financial support through the Telstra Entity:
• indemnities to financial institutions to support bank guarantees
to the value of $303 million (2021: $303 million) in respect of the
performance of contracts
• indemnities to financial institutions and other third parties in
respect of performance and other obligations of our controlled
entities, with the maximum amount of our contingent liabilities of
$118 million (2021: $126 million)
• letters of comfort to indicate support for certain controlled
entities to the amount necessary to enable those entities to meet
their obligations as and when they fall due, subject to certain
conditions (including that the entity remains our controlled
entity)
• during the financial year 1998, we resolved to provide IBM Global
Services Australia Limited (IBMGSA) with guarantees issued on a
several basis up to $210 million as a shareholder of IBMGSA.
During the financial year 2000, we issued a guarantee of $68
million on behalf of IBMGSA. During the financial year 2004, we
sold our shareholding in this entity. The $68 million guarantee,
provided to support service contracts entered into by IBMGSA
and third parties, was made with IBMGSA bankers or directly to
IBMGSA customers. As at 30 June 2022, this guarantee remains
unchanged and $142 million (2021: $142 million) of the $210
million guarantee facility remains unused. Upon sale of our
shareholding in IBMGSA and under the deed of indemnity
between shareholders, our liability under these performance
guarantees has been indemnified for all guarantees that were in
place at the time of sale. Therefore, the overall net exposure to
any loss associated with a claim has effectively been offset.
(d) Other
In addition to the above matters, entities within the Telstra Group
may be recipients of, or defendants in, certain claims, regulatory or
legal proceedings and/or complaints made, commenced or
threatened. At 30 June 2022, management believes that the
resolution of these contingencies will not have a material effect on
the financial position of the Telstra Group, or are not at a stage
which supports a reasonable evaluation of the likely outcome of the
matter.
7.2.4 Recognition and measurement
The accounting policies for the Telstra Entity are consistent with
those of the Telstra Group, except for those noted below:
• under our tax funding arrangements, amounts receivable (or
payable) recognised by the Telstra Entity for the current tax
payable (or receivable) assumed from our Australian wholly-
owned entities are booked as current assets or liabilities
Regulatory investigations and reviews may result in enforcement
action, litigation (including class action proceedings), and penalties
(both civil and in limited circumstances, criminal).
• investments in controlled entities, included within non-current
assets, are recorded at cost less impairment of the investment
value
• our interests in associated entities and joint ventures, including
partnerships, are accounted for using the cost method of
accounting and are included within non-current assets.
The details of the final dividend for the financial year 2022 are
This note provides details of our commitments for capital
disclosed in note 4.2.
expenditure arising from our contractual agreements.
7.4.2 Acquisition of Digicel Pacific
This note also includes information about contingent liabilities
for which no provisions have been recognised due to the
uncertainty regarding the outcome of future events and/or
inability to reliably measure such liabilities.
7.3.1 Capital expenditure commitments
Table A shows capital expenditure commitments contracted for at
balance date but not recorded in the financial statements. It
includes the Telstra Entity’s commitments disclosed in note 7.2.2.
On 13 July 2022, we completed the acquisition of 100 per cent of
the shares in Digicel Pacific Limited and its controlled entities
(Digicel Pacific). The consideration payable consists of $2,385
million (US$1,612 million) upfront cash payment, and up to $370
million (US$250 million) deferred payment contingent on Digicel
Pacific’s performance over the next three years. The consideration
was funded by Telstra’s contribution of $400 million (US$270
million) and a combination of non-recourse debt facilities from, and
equity like securities issued by the Telstra Group to, the Australian
Government, through Export Finance Australia.
Table A
Telstra Group
Property, plant and equipment
commitments
Intangible assets commitments
$m
169
774
$m
130
282
As at 30 June
2022
2021
Digicel Pacific is a leading provider of communication services
across Papua New Guinea (PNG), Fiji, Nauru, Samoa, Tonga and
Vanuatu. Acquisition of Digicel Pacific expands our international
footprint and supports our growth strategy.
Intangible assets commitments include $616 million commitment
to purchase spectrum in the Australian Communications and Media
Authority’s 850/950 MHz auction. Payment for the 20-year
spectrum licenses is not expected until shortly before they
completion.
commence in mid-2024.
7.3.2 Contingent liabilities and contingent assets
Details and estimated maximum amounts (where reasonable
estimates can be made) of contingent liabilities for the Telstra
Entity are disclosed in note 7.2.3.
Total indemnities to financial institutions issued by our controlled
entities totalled $114 million (2021: $10 million).
Other contingent liabilities identified for the Telstra Group relate to
the ASIC deed of cross guarantee. A list of the companies that are
part of the deed are included in note 6.2.2. Each of these companies
(except Telstra Finance Limited) guarantees the payment in full of
the debts of the other named companies in the event of their
winding up.
We have no significant contingent assets as at 30 June 2022.
7.4 Events after reporting date
We are not aware of any matter or circumstance that has occurred
since 30 June 2022 that, in our opinion, has significantly affected or
may significantly affect in future years:
• our operations
• the results of those operations, or
• the state of our affairs
other than the following:
With respect to the PNG Additional Company Tax, the vendor has
entered into legal arrangements with the PNG tax authorities to
resolve the matter for which a liability has been recognised. The
vendor has provided an indemnity to Telstra against the outcome of
the legal process without further recourse to Digicel Pacific or its
related entities. An indemnification asset will be recognised on
Due to the proximity to the completion date the provisional
acquisition accounting will be completed during the financial year
2023. The net assets acquired based on the audited financial
statements of Digicel Pacific for the financial year ended 31 March
2022 were $436 million. The net assets at completion are subject to
fair value adjustments.
The total transaction costs are expected to be $31 million, with $8
million recognised during the financial year 2022 as other expenses
in the income statement, and the remainder to be recorded in the
financial year 2023.
7.4.3 Acquisition of Fetch TV
On 2 August 2022, we completed the acquisition of a 51.4 per cent
controlling interest in Media Innovations Holdings Pty Ltd and its
controlled entities (Fetch TV) for a total consideration of $47 million
upfront cash payment and a commitment to onboard Telstra TV
customers onto the Fetch TV platform over the next two to three
years.
Fetch TV is a subscription-based TV service provider based in
Australia which operates its own proprietary streaming aggregation
platform. Its services are distributed in partnership with internet
service providers and major retailers. Fetch TV will be the new
platform for Telstra TV and will strengthen Telstra’s home and
entertainment offering.
Due to the proximity to the completion date the provisional
acquisition accounting will be completed during the financial year
2023. Transaction costs of $1 million were recognised in the
financial year 2022 as other expenses in the income statement.
158 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F83
F84 | Telstra Corporation Limited and controlled entities
Notes to the financial statements (continued) 2022.Financial Report.book Page 83 Thursday, August 11, 2022 7:54 AM
2022.Financial Report.book Page 84 Thursday, August 11, 2022 7:54 AM
Notes to the financial statements (continued)
Telstra Financial Report 2022
Notes to the financial statements (continued)
Section 7. Other information (continued)
Section 7. Other information (continued)
7.2 Parent entity disclosures (continued)
(b) Common law claims
7.3 Commitments and contingencies
7.4.1 Final dividend
Total non-current assets include $40 million (2021: $150 million)
Certain common law claims by employees and third parties are yet
impact of impairment losses recognised during the financial year.
to be resolved. As at 30 June 2022, management believes that the
Within that amount, impairment losses relating to our associated
resolution of these contingencies will not have a significant effect
entities were nil (2021: $34 million), and relating to our controlled
on the Telstra Entity’s financial results. The maximum amount of
entities amounted to $14 million (2021: $106 million). The latter has
these contingent liabilities cannot be reliably estimated.
been eliminated on consolidation of the Telstra Group.
7.2.1 Strategic partner in Telstra’s towers business
(c) Indemnities, performance guarantees and financial support
We have provided the following indemnities, performance
As detailed in note 6.1.2, on 31 August 2021, the Telstra Entity
guarantees and financial support through the Telstra Entity:
transferred towers business assets and liabilities to Towers
Business Operating Trust (Trust), the trustee of which is our
subsidiary Amplitel Pty Ltd (Amplitel), in exchange for units in the
Trust held by our wholly-owned subsidiary Telstra Towerco No.2
Pty Ltd (Towerco No.2). As a result, the Telstra Entity recognised a
$4,058 million net gain on sale of the towers business, and a $5,790
million investment in Towerco No.2.
• indemnities to financial institutions to support bank guarantees
to the value of $303 million (2021: $303 million) in respect of the
performance of contracts
• indemnities to financial institutions and other third parties in
respect of performance and other obligations of our controlled
entities, with the maximum amount of our contingent liabilities of
$118 million (2021: $126 million)
On 1 September 2021, Towerco No.2 completed the sale of 49 per
• letters of comfort to indicate support for certain controlled
cent interests in the Trust and Amplitel to a consortium comprising
entities to the amount necessary to enable those entities to meet
the Future Fund, Commonwealth Superannuation Corporation and
their obligations as and when they fall due, subject to certain
Sunsuper. The $2,883 million proceeds from the sale were
conditions (including that the entity remains our controlled
transferred by Towerco No.2 to the Telstra Entity via capital return.
entity)
Refer to note 6.1.2 for further information about the financial
• during the financial year 1998, we resolved to provide IBM Global
impacts of that transaction at the Telstra Group level.
7.2.2 Capital expenditure commitments
Services Australia Limited (IBMGSA) with guarantees issued on a
several basis up to $210 million as a shareholder of IBMGSA.
During the financial year 2000, we issued a guarantee of $68
As at 30 June 2022, the Telstra Entity’s commitments for the
million on behalf of IBMGSA. During the financial year 2004, we
acquisition of property, plant and equipment amounted to $160
sold our shareholding in this entity. The $68 million guarantee,
million (2021: $124 million) and for intangible assets to $158 million
provided to support service contracts entered into by IBMGSA
(2021: $281 million).
7.2.3 Contingent liabilities and guarantees
(a) Investigations by regulators
Telstra is subject to a range of laws and regulations in Australia and
overseas, including in the areas of telecommunications, corporate
law, consumer and competition law and occupational health and
safety. In Australia, the principal regulators who enforce these laws
and regulations and who Telstra interacts with are the Australian
Competition and Consumer Commission (ACCC), the Australian
(d) Other
Communications and Media Authority (ACMA), the Australian
Securities and Investments Commission (ASIC) and the Australian
Securities Exchange (ASX).
and third parties, was made with IBMGSA bankers or directly to
IBMGSA customers. As at 30 June 2022, this guarantee remains
unchanged and $142 million (2021: $142 million) of the $210
million guarantee facility remains unused. Upon sale of our
shareholding in IBMGSA and under the deed of indemnity
between shareholders, our liability under these performance
guarantees has been indemnified for all guarantees that were in
place at the time of sale. Therefore, the overall net exposure to
any loss associated with a claim has effectively been offset.
In addition to the above matters, entities within the Telstra Group
may be recipients of, or defendants in, certain claims, regulatory or
legal proceedings and/or complaints made, commenced or
Telstra is subject to investigations and reviews from time to time by
threatened. At 30 June 2022, management believes that the
regulators, including certain current investigations into whether
resolution of these contingencies will not have a material effect on
Telstra has complied with relevant laws and regulations. These are
the financial position of the Telstra Group, or are not at a stage
taking place in an environment of heightened scrutiny and regulator
which supports a reasonable evaluation of the likely outcome of the
expectation and where Telstra has self-reported issues where it
matter.
has not complied with relevant laws and regulations. In the ordinary
course of our business, we identify, and may continue to identify,
7.2.4 Recognition and measurement
issues that have the potential to impact our customers and
The accounting policies for the Telstra Entity are consistent with
reputation, which do not meet relevant laws or regulations, or
those of the Telstra Group, except for those noted below:
which do not meet our standards. Where we identify these issues,
we make disclosures in accordance with the accounting standards,
or our other legal disclosure obligations, or provide for such
liabilities as required.
• under our tax funding arrangements, amounts receivable (or
payable) recognised by the Telstra Entity for the current tax
payable (or receivable) assumed from our Australian wholly-
owned entities are booked as current assets or liabilities
Regulatory investigations and reviews may result in enforcement
• investments in controlled entities, included within non-current
action, litigation (including class action proceedings), and penalties
assets, are recorded at cost less impairment of the investment
(both civil and in limited circumstances, criminal).
value
• our interests in associated entities and joint ventures, including
partnerships, are accounted for using the cost method of
accounting and are included within non-current assets.
This note provides details of our commitments for capital
expenditure arising from our contractual agreements.
This note also includes information about contingent liabilities
for which no provisions have been recognised due to the
uncertainty regarding the outcome of future events and/or
inability to reliably measure such liabilities.
7.3.1 Capital expenditure commitments
Table A shows capital expenditure commitments contracted for at
balance date but not recorded in the financial statements. It
includes the Telstra Entity’s commitments disclosed in note 7.2.2.
Table A
Telstra Group
Property, plant and equipment
commitments
Intangible assets commitments
As at 30 June
2022
2021
$m
169
774
$m
130
282
Intangible assets commitments include $616 million commitment
to purchase spectrum in the Australian Communications and Media
Authority’s 850/950 MHz auction. Payment for the 20-year
spectrum licenses is not expected until shortly before they
commence in mid-2024.
7.3.2 Contingent liabilities and contingent assets
Details and estimated maximum amounts (where reasonable
estimates can be made) of contingent liabilities for the Telstra
Entity are disclosed in note 7.2.3.
Total indemnities to financial institutions issued by our controlled
entities totalled $114 million (2021: $10 million).
Other contingent liabilities identified for the Telstra Group relate to
the ASIC deed of cross guarantee. A list of the companies that are
part of the deed are included in note 6.2.2. Each of these companies
(except Telstra Finance Limited) guarantees the payment in full of
the debts of the other named companies in the event of their
winding up.
We have no significant contingent assets as at 30 June 2022.
7.4 Events after reporting date
We are not aware of any matter or circumstance that has occurred
since 30 June 2022 that, in our opinion, has significantly affected or
may significantly affect in future years:
• our operations
• the results of those operations, or
• the state of our affairs
other than the following:
The details of the final dividend for the financial year 2022 are
disclosed in note 4.2.
7.4.2 Acquisition of Digicel Pacific
On 13 July 2022, we completed the acquisition of 100 per cent of
the shares in Digicel Pacific Limited and its controlled entities
(Digicel Pacific). The consideration payable consists of $2,385
million (US$1,612 million) upfront cash payment, and up to $370
million (US$250 million) deferred payment contingent on Digicel
Pacific’s performance over the next three years. The consideration
was funded by Telstra’s contribution of $400 million (US$270
million) and a combination of non-recourse debt facilities from, and
equity like securities issued by the Telstra Group to, the Australian
Government, through Export Finance Australia.
Digicel Pacific is a leading provider of communication services
across Papua New Guinea (PNG), Fiji, Nauru, Samoa, Tonga and
Vanuatu. Acquisition of Digicel Pacific expands our international
footprint and supports our growth strategy.
With respect to the PNG Additional Company Tax, the vendor has
entered into legal arrangements with the PNG tax authorities to
resolve the matter for which a liability has been recognised. The
vendor has provided an indemnity to Telstra against the outcome of
the legal process without further recourse to Digicel Pacific or its
related entities. An indemnification asset will be recognised on
completion.
Due to the proximity to the completion date the provisional
acquisition accounting will be completed during the financial year
2023. The net assets acquired based on the audited financial
statements of Digicel Pacific for the financial year ended 31 March
2022 were $436 million. The net assets at completion are subject to
fair value adjustments.
The total transaction costs are expected to be $31 million, with $8
million recognised during the financial year 2022 as other expenses
in the income statement, and the remainder to be recorded in the
financial year 2023.
7.4.3 Acquisition of Fetch TV
On 2 August 2022, we completed the acquisition of a 51.4 per cent
controlling interest in Media Innovations Holdings Pty Ltd and its
controlled entities (Fetch TV) for a total consideration of $47 million
upfront cash payment and a commitment to onboard Telstra TV
customers onto the Fetch TV platform over the next two to three
years.
Fetch TV is a subscription-based TV service provider based in
Australia which operates its own proprietary streaming aggregation
platform. Its services are distributed in partnership with internet
service providers and major retailers. Fetch TV will be the new
platform for Telstra TV and will strengthen Telstra’s home and
entertainment offering.
Due to the proximity to the completion date the provisional
acquisition accounting will be completed during the financial year
2023. Transaction costs of $1 million were recognised in the
financial year 2022 as other expenses in the income statement.
Telstra Corporation Limited and controlled entities | F83
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Notes to the financial statements (continued)Telstra Financial Report 2022 2022.Financial Report.book Page 85 Thursday, August 11, 2022 7:54 AM
Directors’
Declaration
Directors’ Declaration
This Directors’ Declaration is required by the Corporations Act 2001
of Australia.
The Directors of Telstra Corporation Limited have made a resolution
that declared:
(a) in the Directors’ opinion, the financial statements and
notes of the Telstra Group for the financial year ended 30
June 2022 as set out in the financial report are in
accordance with the Corporations Act 2001, including:
(i)
complying with the Accounting Standards applicable
in Australia, International Financial Reporting
Standards and Interpretations (as disclosed in note
1.1 to the financial statements), and Corporations
Regulations 2001
(ii) giving a true and fair view of the financial position of
Telstra Corporation Limited and the Telstra Group as
at 30 June 2022 and of the performance of Telstra
Corporation Limited and the Telstra Group, for the
year ended 30 June 2022
(b) they have received declarations as required by section
295A of the Corporations Act 2001
(c) at the date of this declaration, in the Directors’ opinion,
there are reasonable grounds to believe that Telstra
Corporation Limited will be able to pay its debts as and
when they become due and payable
(d) at the date of this declaration there are reasonable
grounds to believe that the members of the extended
closed group identified in note 6.2.2 to the financial
statements, as parties to a Deed of Cross Guarantee, will
be able to meet any liabilities to which they are, or may
become, subject to because of the Deed of Cross
Guarantee described in note 6.2.2.
For and on behalf of the board
John P Mullen
Chairman
11 August 2022
Andrew R Penn
Chief Executive Officer and
Managing Director
160 | Telstra Corporation Limited and controlled entities
Telstra Corporation Limited and controlled entities | F85
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2022.Financial Report.book Page 86 Thursday, August 11, 2022 7:54 AM
Directors’
Declaration
Directors’ Declaration
This Directors’ Declaration is required by the Corporations Act 2001
The Directors of Telstra Corporation Limited have made a resolution
of Australia.
that declared:
(a) in the Directors’ opinion, the financial statements and
notes of the Telstra Group for the financial year ended 30
June 2022 as set out in the financial report are in
accordance with the Corporations Act 2001, including:
(i)
complying with the Accounting Standards applicable
in Australia, International Financial Reporting
Standards and Interpretations (as disclosed in note
1.1 to the financial statements), and Corporations
Regulations 2001
(ii) giving a true and fair view of the financial position of
Telstra Corporation Limited and the Telstra Group as
at 30 June 2022 and of the performance of Telstra
Corporation Limited and the Telstra Group, for the
year ended 30 June 2022
(b) they have received declarations as required by section
295A of the Corporations Act 2001
(c) at the date of this declaration, in the Directors’ opinion,
there are reasonable grounds to believe that Telstra
Corporation Limited will be able to pay its debts as and
when they become due and payable
(d) at the date of this declaration there are reasonable
grounds to believe that the members of the extended
closed group identified in note 6.2.2 to the financial
statements, as parties to a Deed of Cross Guarantee, will
be able to meet any liabilities to which they are, or may
become, subject to because of the Deed of Cross
Guarantee described in note 6.2.2.
For and on behalf of the board
John P Mullen
Chairman
11 August 2022
Andrew R Penn
Chief Executive Officer and
Managing Director
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor’s Report to the Shareholders of Telstra Corporation Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Telstra Corporation Limited (the Company) and its subsidiaries (collectively the Group), which
comprises the consolidated statement of financial position as at 30 June 2022, the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for
the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the Directors'
Declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2022 and of its consolidated financial
performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further
described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in
accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards)
(the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in
accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of
the current year. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion
thereon, but we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed
the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the financial report section of our report,
including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the financial report. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying financial report.
Revenue recognition
Why significant
The Group exercises significant judgement relating to revenue
recognition in the following areas:
• accounting for new products and plans including bundles of
products and/or services;
• accounting for large Network Application Services (NAS)
contracts; and
• accounting for NBN revenue under the revised Definitive
Agreements (DAs) with nbn co and the Commonwealth
Government.
The accuracy of amounts recorded as revenue is an inherent
industry risk due to the complexity of billing systems, the
complexity of products and services, the distribution channels and
the combination of products sold and price changes in the year.
The complexity of the billing systems was also considered as part
of the reliance on automated processes and controls Key Audit
Matter outlined below.
Disclosures relating to revenue recognition can be found at Section
2.2 Income.
How our audit addressed the key audit matter
We evaluated the design and operating effectiveness of key
controls over the capture and measurement of revenue
transactions across all significant revenue streams, including
evaluating the relevant IT systems.
We examined the processes and controls over the capture and
assessment of the timing of revenue recognised for new products
and plans.
We assessed the Group accounting policies as set out in Section
2.2, and the adequacy of disclosures for compliance with the
revenue recognition requirements of Australian Accounting
Standards. For all significant revenue streams, for a sample of
revenue transactions recorded during the year, we obtained
supporting evidence such as customer contracts, statements of
work, other contractual agreements, service detail records and
evidence of customer payment.
For customer contracts that include NAS revenues, we focused our
work on those which we regarded as higher risk because of the
nature of the contract, its stage of delivery and those which were
significant by size.
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Revenue recognition (continued)
Why significant
Reliance on automated processes and controls
Why significant
A significant part of the Group’s financial processes are reliant on
IT systems with automated processes and controls over the
valuation and recording of transactions. This is a key part of our
audit because of the:
• complex IT environment supporting diverse business
processes;
• mix of manual and automated controls;
• multiple internal and outsourced support arrangements; and
• complexity of the billing systems which calculate the revenue
being recognised.
The Group continued its implementation of new IT systems during
the year, many of which are significant to our audit.
How our audit addressed the key audit matter
In performing this testing, we assessed the appropriateness of the
assumptions and estimates supporting the accounting for these
contracts as follows:
• We tested the effectiveness of controls that operate across
the contract life cycle.
• We obtained and read the relevant sections of certain
contracts, to identify the contracted revenues, key provisions
in the event of contract termination (such as penalties or the
ability for the Group to recover costs) and assessed the
appropriateness of identified performance obligations and
contract transaction price.
• For a sample of contracts where performance obligations are
met at a point in time, we obtained evidence to support
delivery and/or customer acceptance for recorded revenue
transactions.
• For those contracts where performance obligations were met
over a period of time, we obtained evidence to support how the
respective performance obligations were transferred. This
included customer acknowledgement of service delivery and
comparison of actual contract costs incurred with estimated
costs to complete.
• We considered the future forecast profitability and the
contractual terms to assess the recoverability of the contract-
specific assets and to determine if any contracts required loss
provisions.
We assessed the appropriateness of the assumptions and
estimates supporting the accounting for the revised DAs including
understanding the timing of disconnections, the progress of the
NBN rollout and the transfer of the copper and Hybrid Fibre Coaxial
(HFC) networks to nbn co.
We also considered the impact of recent regulatory investigations
on the recognition of revenue to date.
How our audit addressed the key audit matter
Our IT specialists assessed the Group’s manual and automated
controls relating to IT systems relevant to financial reporting,
including the recognition of revenue. When testing controls was not
considered an appropriate or efficient testing approach,
alternative audit procedures were performed on the financial
information being produced by those systems.
Our IT specialists analysed the impact on our audit of new systems
that are significant to our audit. This included assessing the design
of relevant automated processes and controls and evaluating the
effectiveness of the controls in new systems.
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Notes to the financial statements (continued) 2022.Financial Report.book Page 88 Thursday, August 11, 2022 7:54 AM
Capitalisation of assets, including useful lives, amortisation and impairment
Why significant
There are a number of areas where judgements significantly impact
the carrying value of property, plant and equipment, software
intangible assets and their respective depreciation and
amortisation profiles. These areas are as follows:
• the decision to capitalise or expense costs;
• the annual asset life review;
How our audit addressed the key audit matter
Our audit procedures included the following:
• Assessed the effectiveness of the Group’s controls over the
acquisition and disposal of assets;
• Evaluated the appropriateness of capitalisation policies;
• Selected a sample of costs capitalised during the year to
determine whether capitalisation was appropriate; and
• the timeliness of the transfer from assets in the course of
• Assessed the appropriateness of the date from which assets
construction; and
commenced being depreciated.
• significant changes that have taken place during the period or
are expected to take place in the near future, which will impact
the extent to which, or manner in which, an asset is used or is
expected to be used.
Changes in these judgements can have a significant impact on the
results of the Group. Accordingly, this was considered a key audit
matter.
Disclosures relating to the capitalisation and write-off of assets
can be found at Section 3.1 Property, Plant and Equipment and
Intangible Assets.
We assessed the application of the Group’s annual asset life
review. This included assessing judgements made by the Group on:
• the nature of underlying costs capitalised; and
• the appropriateness of asset lives applied in the calculation of
depreciation and amortisation.
We evaluated management’s impairment assessment of property,
plant and equipment and software intangible assets. This included
assessing judgements made by the Group on:
• the nature and impact of changes on the business from the
Telstra 2022 (T22) strategy, including which specific assets are
impacted;
• the extent of the impact of these changes on the carrying value
of identified property, plant and equipment and software
intangible assets; and
• the completeness of the listing of impacted assets.
We evaluated the adequacy of disclosures included in Section 3.1.
Information other than the financial report and auditor’s report thereon
The directors are responsible for the other information. The other information comprises the information included in the Group’s 2022
Annual Report other than the financial report and our auditor’s report thereon. We obtained the Directors’ Report that is to be included in
the Annual Report, prior to the date of this auditor’s report, and we expect to obtain the remaining sections of the Annual Report after the
date of this auditor’s report.
Our opinion on the financial report does not cover the other information and we do not and will not express any form of assurance
conclusion thereon, with the exception of the Remuneration Report and our related assurance opinion.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there
is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud
or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.
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Auditor’s responsibilities for the audit of the financial report (continued)
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial
report represents the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group
to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We
remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated to the directors, we determine those matters that were of most significance in the audit of the financial
report of the current year and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public
interest benefits of such communication.
Report on the audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in the Directors' Report for the year ended 30 June 2022.
In our opinion, the Remuneration Report of Telstra Corporation Limited for the year ended 30 June 2022, complies with section 300A of
the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with
section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Ernst & Young
Sarah Lowe
Partner
Melbourne
11 August 2022
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Notes to the financial statements (continued) Shareholder
information
165165
Section Title | Telstra Annual Report 2022 Shareholder information
Listing information
Voting rights
Stock Exchange Listing
We are listed, and our issued shares are quoted, on the
Australian Securities Exchange (ASX).
Markets on which our debt securities are listed
We also have debt securities listed on the ASX, the London
Stock Exchange and the Singapore Stock Exchange.
Shareholders (whether residents or non-residents of Australia)
may vote at a meeting of shareholders in person, directly or by
proxy, attorney or representative, depending on whether the
shareholder is an individual or a company.
Subject to any rights or restrictions attaching to our shares, on a
show of hands each shareholder present in person or by proxy,
attorney or representative has one vote and, on a poll, has one
vote for each fully paid share held. Presently, we have only one
class of fully paid ordinary shares and these do not have any
voting restrictions. If shares are not fully paid, on a poll the
number of votes attaching to the shares is pro-rated accordingly.
Distribution of securities and security holdings
The following table shows the number of listed shares on issue at 25 July 2022:
Title of class
Listed shares
Identity of person or group
Amount owned
Listed shareholders
11,554,427,353
%
100
Distribution of shares
The following table summarises the distribution of our listed shares as at 25 July 2022:
Size of holding
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
Number of shareholders
%
Number of shares
%
582,719
48.04%
317,300,521
2.75%
428,429
35.32%
1,019,777,954
8.83%
105,656
8.71%
756,253,398
6.55%
92,954
7.66%
2,235,504,944
19.35%
3,158
0.26%
7,225,590,536
62.54%
1,212,916
100.00%
11,554,427,353
100.00%
The number of shareholders holding less than a marketable parcel of shares was 26,686 holding 1,857,902 shares (based on the
closing market price on 25 July 2022).
166
Shareholder information | Telstra Annual Report 2022
Substantial shareholders
As at 25 July 2022, we are not aware of any substantial shareholders.
Twenty largest shareholders as at 25 July 2022
The following table sets out the Top 20 holders of our shares (when multiple holdings are grouped together):
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Shareholder name
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
NETWEALTH INVESTMENTS LIMITED
ARGO INVESTMENTS LIMITED
AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
NAVIGATOR AUSTRALIA LTD
NULIS NOMINEES (AUSTRALIA) LIMITED
UBS NOMINEES PTY LTD
BNP PARIBAS NOMS (NZ) LTD
MCCUSKER HOLDINGS PTY LTD
TELSTRA GROWTHSHARE PTY LTD
THE SENIOR MASTER OF THE SUPREME COURT
ECAPITAL NOMINEES PTY LIMITED
BKI INVESTMENT COMPANY LIMITED
TSIX PTY LTD
Total for Top 20
Total other Investors
Grand Total
Amount owned
2,589,331,866
1,324,065,652
1,049,083,122
654,866,158
482,614,756
49,210,663
48,514,800
48,105,221
43,756,459
33,113,103
20,369,628
15,496,768
11,394,544
10,843,293
10,300,000
10,132,961
8,639,311
8,589,729
8,524,451
8,000,000
6,434,952,485
5,119,474,868
11,554,427,353
%
22.41%
11.46%
9.08%
5.67%
4.18%
0.43%
0.42%
0.42%
0.38%
0.29%
0.18%
0.13%
0.10%
0.09%
0.09%
0.09%
0.07%
0.07%
0.07%
0.07%
55.69%
44.31%
100.00%
On-market share buy-back
On 12 August 2021, we announced that during the financial year 2022 we intended to return up to $1.35 billion of net proceeds
from the towers business transaction to shareholders via an on-market share buy-back. During the financial year ended 30 June
2022, we completed the buy-back and purchased 338.9 million shares for the total amount of $1.35 billion. The shares were
subsequently cancelled.
167
168
Reference
tables
169
Reference tables
Guidance versus reported results schedule
This schedule details adjustments made to the reported results for the current and comparative periods to reflect the
performance of the business on the basis on which we provided guidance to the market, which excludes material one-offs, such
as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as determined by the
Board and management. Underlying EBITDA excludes net one-off DA receipts less nbn net C2C and guidance adjustments. FY21
underlying EBITDA also includes depreciation of mobile lease right-of-use assets. Free cashflow after lease payments (FCFaL)
defined as 'operating cash flows' less 'investing cash flows' less 'payments for lease liabilities', and excludes spectrum and
guidance adjustments. The following adjustments provide a detailed reconciliation from reported to guidance results for each
guidance measure:
Total Income
FY21
$m
FY22
$m
Underlying EBITDA
FY21
$m
FY22
$m
Reported
Total Income
23,132
22,045
Reported
EBITDA
7,638
7,256
Reported
Free Cashflow
Free Cashflow
FY21
$m
FY22
$m
4,887
4,887
M&A adjustment1
(106)
(87) M&A adjustment1
Sensis impairment2
n/a
n/a
Sensis impairment2
(96)
34
Adjustments
157 M&A adjustment1
(164)
841
n/a
Sensis impairment2
0
Pitt St sale
and leaseback3
(102)
n/a
Pitt St sale
and leaseback3
(102)
n/a
Pitt St sale
and leaseback3
n/a
Restructuring costs4
211
71
Restructuring costs4
n/a
Net one-off
NBN receipts5
(802)
(233)
Net one-off
NBN receipts5
n/a
Spectrum payments6
n/a
n/a
Spectrum payments6
n/a
n/a
n/a
n/a
41
(282)
n/a
n/a
88
n/a
Lease7
(194)
0
Lease7
(789)
(775)
22,924
21,958
Guidance
Underlying EBITDA
6,689
7,251
Guidance
Free Cashflow
3,740
3,961
The adjustments set out in the above tables have been reviewed by our auditor for consistency with the guidance basis as set out
on this page.
Notes:
1. Adjustments relating to acquisition and disposals of controlled entities, joint ventures, associates and other investments and any associated net gains or losses and
contingent consideration.
During FY22 we disposed of a 49 per cent interest in our towers business to non-controlling interests.
During FY22 we acquired:
– Power Solutions Holdings Pty Ltd and its subsidiaries (PowerHealth);
– Clinical Technology Holdings Pty Ltd and its subsidiaries (MedicalDirector);
– Alliance Automation Pty Ltd and its subsidiary;
– Aqura Technologies Pty Ltd; and
– Fone Zone Pty Ltd (Fone Zone) and its controlled entities and multiple individually immaterial retail stores from various licensees. Consistent with the guidance we
provided to the market we are not adjusting Income, EBITDA or Free Cashflow for the trading results of these stores.
FY21 includes the disposal of our e-commerce platform business, our FTTP Velocity business and the acquisition of Epicon IT Solutions Pty Ltd (including its wholly
owned subsidiary, Service Potential Pty Ltd) and Epicon Software Pty Ltd and assets of Mediacloud Ltd.
2. Adjustment relating to impairment loss for our investment in Project Sunshine 1 Pty Limited (Sensis) in FY21.
3. Adjustment relating to the sale and leaseback transaction of the Pitt Street exchange property in FY21.
4. Adjustments for the strategic focus (T22 program) to establish a standalone infrastructure business, simplify structure, improve customer experience and cut costs, in
addition to our normal business as usual redundancies for the period. FY22 adjustments include costs for Telstra's legal restructure including legal and IT costs.
5. Adjustments for net one-off nbn receipts which is defined as net nbn one off Definitive Agreement receipts (consisting of PSAA and Infrastructure Ownership) less nbn
net cost to connect.
6. Adjustment relating to the impact on free cashflow associated with our spectrum purchases and renewals for the period including:
– $28m for renewal of our national spectrum licence in the 900 MHz band
– $13m payments for spectrum and apparatus licenses in various spectrum bands.
7. Adjustment to EBITDA for depreciation of mobile lease right-of-use assets in FY21.
Adjustment to Free Cashflow for payment of lease liabilities and interest.
n/a Adjustment is not relevant to the respective guidance measure.
170
Restructuring costs4
Net one-off
NBN receipts5
Spectrum payments6
Lease7
Guidance
Total Income
n/a
n/a
n/a
n/a
Reference tables | Telstra Annual Report 2022
2022
2021
2020
2019
20181
Continuing operations
$m
$m
$m
$m
$m
Total income (excluding finance income)
22,045
23,132
26,161
27,807
28,841
EBITDA2
EBIT
7,256
7,638
8,905
7,984
10,197
2,898
2,992
3,567
3,702
5,727
Profit for the year
1,814
1,902
1,839
2,149
3,557
Dividends declared per share (cents)
16.5
16.0
16.0
16.0
22.0
Total assets
Gross debt
Net debt
Total equity
41,628
42,525
44,403
42,589
42,634
13,760
16,388
17,343
15,331
15,368
12,720
15,263
16,844
14,727
14,739
16,837
15,275
15,147
14,530
14,556
Capital expenditure3
3,042
3,020
3,233
4,140
4,717
Free cashflow
3,854
4,887
4,034
3,068
4,695
Earnings per share (cents)
Dividend payout ratio (%)4
14.4
115
15.6
103
15.3
99
18.1
88
30.2
73
1. FY18 results have been restated to account for the adoption of AASB15.
2. Operating profit before interest, depreciation and amortisation and income tax expense. EBITDA is used as a measure of financial performance by excluding certain
variables that affect operating profits but which may not be directly related to all financial aspects of the operations of the company. EBITDA is not a measure of
operating income, operating performance or liquidity under A-IFRS. Other companies may calculate EBITDA in a different manner to us.
3. Capex is defined as additions to property, plant and equipment and intangible assets including capital lease additions, excluding expenditure on spectrum, measured
on an accrued basis. Capex excludes externally funded capex.
4. Ordinary dividend as a proportion of underlying earnings.
171
Task Force on Climate-related Financial Disclosures Index
Our 2022 Climate Change Report summarises Telstra’s climate-related governance, planning, strategy, activities and results for the
financial year 2022 and is available online at telstra.com/sustainability/report/data. The Climate Change Report aligns with the
Task Force on Climate-related Financial Disclosures (TCFD) framework. Our response to the recommendations of the TCFD and the
location of these disclosures are summarised in the table below.
TCFD Recommendations
2022 Climate Change
Report section reference
Governance
a) Describe the board’s oversight of climate-related risks and
6–6.2
Disclose the organisation’s
governance around
climate-related risks and
opportunities
Strategy
Disclose the actual and
potential impacts of
climate-related risks and
opportunities on the
organisation’s businesses,
strategy, and financial
planning where such
information is material
Risk Management
Disclose how the
organisation identifies,
assesses, and manages
climate-related risks
Metrics & Targets
Disclose the metrics and
targets used to assess and
manage relevant
climate-related risks and
opportunities where such
information is material
opportunities
b) Describe management’s role in assessing and managing
6 & 6.3–6.4
climate-related risks and opportunities
a) Describe the climate-related risks and opportunities the
organisation has identified over the short, medium, and
long term
5, 5.1,5.2, 5.6, Appendix 2
b) Describe the impact of climate-related risks and
1, 2.1, 4.2, 5.2, 5.3, 5.4, 5.5
opportunities on the organisation’s businesses, strategy,
and financial planning
c) Describe the resilience of the organisation’s strategy, taking
5.3, Appendix 2
into consideration different climate-related scenarios,
including a 2°C or lower scenario
a) Describe the organisation’s processes for identifying and
4.1
assessing climate-related risks
b) Describe the organisation’s processes for managing
climate-related risks
4.1, 4.2
c) Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management
a) Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its
strategy and risk management process
b) Disclose Scope 1, Scope 2, and if appropriate, Scope 3
greenhouse gas GHG emissions, and the related risks
c) Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets
4.2
3.3
3.1
3.1
172
Reference tables | Telstra Annual Report 2022
Glossary
173
Glossary
4G
Carbon neutral
Dark fibre
The fourth generation of wireless mobile
networks, with typically faster download
and upload speeds and better response
times than previous generations.
5G
The fifth generation of wireless mobile
networks, 5G delivers a step change in
typical network speeds, with lower
latency and much greater capacity to
help address the explosion in wireless
devices and data usage.
Agile
Agile is a way of working that brings
people with different skills into one team
and where work is performed in short
sprints to deliver faster speed to market,
at a lower cost, and with a better
experience for our people and customers.
Average Revenue Per User (ARPU)
The measure of the average revenue
generated per unit or user.
Broadband
Describes a class of internet access
technologies, such as ADSL, HFC cable
and Wi-Fi, offering a data rate
significantly higher than narrowband
services. These services typically do
not tie up a telephone line exclusively
for data.
Bundle
A combination of products. For example,
a customer can bundle a fixed-line home
phone service and internet connection.
C2C
Cost to connect.
To become carbon neutral, businesses
and organisations calculate the
greenhouse gas emissions generated by
their activity, such as fuel or electricity
use and travel. They reduce these
emissions as much as possible by
investing in new technology or changing
the way they operate. Any remaining
emissions can be offset by purchasing
carbon credits to become carbon neutral.
Cleaner Pipes
An initiative to help reduce instances of
customer data being compromised
through malware, ransomware and
phishing. It involves significantly
upscaling our Domain Name System
(DNS) filtering, where millions of malware
communications are being proactively
and automatically blocked every week as
they try to cross Telstra’s infrastructure.
Cloud
The provision of services, software,
storage and security over the internet,
typically on a pay-for-use basis. Cloud
can allow access to information and
programs on multiple devices in multiple
locations.
COVID-19
The name of the illness caused by the
coronavirus SARS-CoV-2 virus.
Corporate Restructure
The legal re-organisation of the Telstra
Group. Under the Corporate Restructure,
a new structure will be established
with the New Telstra Corp as the head
entity of the Telstra Group. Four key
subsidiaries will sit under Telstra Corp:
ServeCo, InfraCo Fixed, Amplitel and
Telstra International.
Capital expenditure (capex)
Funds invested to purchase, upgrade or
improve long-term assets such as
property, infrastructure or equipment to
create future benefit.
Cyber security
The safe use of information and
telecommunications technology
(including mobile phones) and the
internet.
Fibre optic cables are made up of
hundreds, sometimes thousands, of
smaller fibre optic strands arranged in
pairs. Dark Fibre are pairs that haven’t
been ‘lit up’ and can be licensed to
organisations that require very high
bandwidth.
Definitive Agreement (DA)
The documents that record the final,
binding arrangements between Telstra
and nbn co for Telstra’s participation in
the nbnTM network rollout.
Digital transformation
The adoption of digital technologies to
improve processes and productivity, and
deliver better customer and employee
experiences.
Dividend per share (DPS)
A dividend is a payment of a portion of
our earnings to our shareholders and is
most often quoted in terms of the
amount each share receives.
Earnings before interest, income tax
expense, depreciation and
amortisation (EBITDA)
An indicator of a company’s operational
profitability.
Earnings per share (EPS)
The portion of profit allocated to each
share.
Episode Net Promoter Score (eNPS)
A measurement of customers advocacy
as a result of their experience with
Telstra during a pre-defined episode –
this is determined by their likelihood to
recommend or promote Telstra.
Fixed line
Refers to the delivery of telephone and/or
internet services over a cable, rather than
the mobile or wireless phone network.
Fixed line is also a term used to describe
a customer segment, for example ‘fixed
line customers’.
nbn™, nbn co and other nbn™ logos and brands are trade marks of nbn co limited and used under licence.
Foxtel is a registered trade mark of Twentieth Century Fox Film Corporation.
All amounts are expressed in Australian dollars ($A) unless otherwise stated.
174
Glossary | Telstra Annual Report 2022
Free cashflow
Mobile data
Spectrum
The cash that a company is able to
generate from its operations after
spending money required to maintain
or expand its asset base.
Wireless internet access delivered over
the mobile network to computers and
other digital devices using portable
modems.
Wireless communications signals travel
through the air via radio frequency,
known also as spectrum. The government
grants licences for dedicated use of
portions (bands) of spectrum.
Mobile Virtual Network Operator
(MVNO)
T22
Hybrid Fibre Coaxial (HFC)
A way of delivering video, voice and data
using both coaxial and fibre optic cables.
Hybrid working
A way of working which enhances our
flexibility to include working from home
or the office.
Internet of Things (IoT)
The connectedness of ‘things’ (for
example machinery, vehicles, appliances)
to the internet via sensors and actuators
that collect information about the state
and condition of those things, and
transmit that data to software platforms
that can help people make sense of the
information and take appropriate action.
Memorandum of Understanding
(MoU)
A document describing the broad
outlines of an agreement that two or
more parties have reached.
Mobile providers re-selling services via
the Telstra wholesale mobile network.
Narrowband (NB) IoT
An Internet of Things (IoT) technology
that operates over Telstra’s mobile
network. Narrowband IoT is suited to
stationary applications that send very
small amounts of data infrequently and
operate with longer battery life.
Net profit after tax (NPAT)
The total revenue minus all expenses and
taxes.
Reconciliation Action Plan (RAP)
A three-year plan which outlines our
commitment and actions built around
better connectivity, better digital literacy
and inclusion, more employment and
training opportunities and more spending
with First Nations businesses.
Messaging
Return on Invested Capital (ROIC)
A way for Telstra customers to
communicate with a Telstra consultant
via the My Telstra app regarding queries
with billing, service, faults, and sales for
consumer and small business customers.
A measure of how efficiently a company
is using capital to generate income. If
ROIC is greater than a company’s
weighted average cost of capital (WACC),
value is being created for investors.
Millimetre wave (mmWave)
Roaming
A technology that operates on short
range, high-frequency spectrum and will
play an important role in delivering on
5G’s full potential with faster speeds and
greater capacity.
A service which allows customers to use
their mobile phone while in a service area
of another carrier.
Service in Operation (SIO)
Refers to an active telecommunications
service to an end-user.
Telstra’s previous strategy, announced on
20 June 2018 and concluded in June
2022, to lead the Australian market by
simplifying our operations and product
set, improving customer experience and
reducing our cost base.
T25
Telstra’s current strategy, announced in
September 2021, to focus on growth. It
aims to enhance customer experiences,
continue our network and technology
leadership and capitalise on permanent
shifts in how people work and live.
Transacting Minimum Monthly
Commitment (TMMC)
This represents the average minimum
monthly commitment, excluding
hardware, of new and existing customers
that have taken up new plans in the
period.
Universal service obligation (USO)
Obligations placed on Telstra to ensure
that standard telephone services,
payphones and prescribed carriage
services are reasonably accessible to all
people in Australia on an equitable basis,
wherever they reside or carry on
business.
Wi-Fi
The most prevalent form of wireless local
area network (WLAN) technology. WLANs
are small-scale wireless networks with a
typical radius of several hundred feet.
175
Indicative financial calendar1
Half Year Results announcement
Thursday 16 February 2023
Ex-dividend share trading commences
Wednesday 1 March 2023
Record date for interim dividend
Thursday 2 March 2023
DRP election date
Friday 3 March 2023
Interim dividend paid
Friday 31 March 2023
Director nominations open
Friday 9 June 2023
Annual Results announcement
Thursday 17 August 2023
Ex-dividend share trading commences
Wednesday 30 August 2023
Record date for final dividend
Thursday 31 August 2023
DRP election date
Friday 1 September 2023
Final dividend paid
Thursday 28 September 2023
Annual General Meeting
Tuesday 17 October 2023
Director nominations close (by 5pm)
Friday 11 August 2023
1. Timing of events may be subject to change. Any change will be notified to the
Australian Securities Exchange (ASX).
Contact details
Registered Office
Online Shareholder information
Telstra’s Investor Centre at telstra.com/investor has the latest
news and information available for shareholders.
Shareholders can also easily manage their shareholding online
at www.linkmarketservices.com.au/telstra. Use the Portfolio
Login to securely access your shareholding. If you do not have a
Portfolio Login, please click 'Register Now' to create your login.
To add your Telstra shareholding to your portfolio you need your
SRN or HIN. This can be found on your Holding Statement.
Select the following menu to access or update your details:
• Payments & Tax – for dividend payment history, tax
information, payment instructions and to provide your TFN.
This is where you update your payment instructions (bank
account details or register for the DRP if eligible. Please read
the DRP rules at telstra.com/drp). A foreign currency payment
service is also available to individual registered holders to pay
dividends in various currencies.
• Communication – to update your postal and email addresses.
Telstra Corporation Limited
ABN 33 051 775 556
Incorporated in the Australian Capital Territory. Telstra’s shares
are listed on the Australian Securities Exchange.
Websites
Telstra Investor Centre: telstra.com/investor
Telstra Sustainability: telstra.com/sustainability/report/data
Telstra Corporate Governance: telstra.com/governance
Telstra Customer Enquiries: telstra.com
Contact Telstra: telstra.com.au/aboutus/contactus
Level 41, 242 Exhibition Street
Melbourne, Victoria 3000 Australia
Sue Laver
Company Secretary
Email: companysecretary@team.telstra.com
General Enquiries – Registered Office
Website: telstra.com.au/aboutus/contactus
Customer enquiries: 13 2200
Shareholder Enquiries
Australia: 1300 88 66 77
All Other: +61 1300 88 66 77
Fax: +61 2 9287 0303
Email: telstra@linkmarketservices.com.au
Website: linkmarketservices.com.au/telstra
Link Market Services Limited
PO Box A942, Sydney South NSW 1234 Australia
Investor Relations
Level 28, 242 Exhibition Street
Melbourne, Victoria 3000 Australia
Australia: 1800 880 679
All Other: +61 3 8647 4954
Email: investor.relations@team.telstra.com
Sustainability
Level 28, 242 Exhibition Street
Melbourne, Victoria 3000 Australia
Email: sustainability@team.telstra.com
176
Keeping informed
To keep up to date with the latest news about Telstra:
• follow us on Twitter @Telstra_news
• follow us on LinkedIn
• subscribe to our media releases on our website at
telstra.com.au/aboutus/media/rss-feeds
• subscribe to our sustainability newsletter by emailing
us at sustainability@team.telstra.com
• visit Telstra Exchange at exchange.telstra.com.au
177
telstra.com/investor