Telstra
Annual Report
2023
Due to the inherent uncertainty and
limitations in measuring or quantifying
greenhouse gas (GHG) emissions under
the calculation methodologies used in the
preparation of such data, all GHG
emissions data or references to GHG
emissions volumes (including ratios or
percentages) in this report are estimates.
The accuracy of Telstra’s GHG emissions
data and other metrics may be impacted
by factors, including inconsistent data
availability, a lack of common definitions
and standards for reporting climate
related information, quality of historical
emissions data, reliance on assumptions
and changes in market practice. These
factors may impact Telstra’s ability to
meet commitments and targets or cause
Telstra’s results to differ materially from
those expressed or implied in this report.
There may also be differences in the
manner that third parties calculate or
report GHG emissions data compared to
Telstra, which means that third party data
may not be comparable to our data.
In FY23 Telstra finalised the acquisition of
Digicel Pacific. Telstra is working to
determine the necessary actions to
incorporate Digicel Pacific in its existing
climate scenario analysis, climate risk
financial quantification, adaptation
planning, emissions reduction plans and
to gather the relevant activity data to
calculate Digicel Pacific’s scope 1, 2 and 3
emissions profile in line with the GHG
Protocol so that Digicel Pacific can be
integrated into emissions disclosures and
targets. The disclosures in this report in
relation to the matters noted above do
not include Digicel Pacific unless
otherwise stated.
Telstra does not provide financial
guidance beyond the current financial
year. Telstra’s financial ambitions to FY25
and growth ambitions across our portfolio
are not guidance and there are greater
risks and uncertainties in connection with
these ambitions.
Investors should not place undue reliance
on the forward-looking statements. To the
maximum extent permitted by law, Telstra
gives no representation, warranty or other
assurance in connection with, and
disclaims all responsibility for, the
currency, accuracy, reliability and
completeness of any forward-looking
statements, whether as a result of new
information, future events or otherwise.
Telstra assumes no obligation to update
any forward-looking statements, and to
the maximum extent permitted by law,
disclaims any obligation or undertaking to
release any updates or revisions to the
information contained in this document to
reflect any change in expectations and
assumptions.
Defined terms are set out in the Glossary
of this report.
No offer, invitation or advice
This report is not intended to (nor does it)
constitute an offer or invitation by or on
behalf of Telstra, its subsidiaries, or any
other person to subscribe for, purchase or
otherwise deal in any equity, debt
instrument or other securities, nor is it
intended to be used for the purpose of or
in connection with offers or invitations to
subscribe for, purchase or otherwise deal
in any equity, debt instruments or other
securities.
Information in this report, including
forward-looking statements and
guidance, should not be considered as
investment, tax, legal or other advice. You
should make your own assessment and
seek independent professional advice in
connection with any investment decision.
Unaudited information
All forward-looking figures and proforma
statements in this report are unaudited
and based on A-IFRS unless otherwise
indicated. Certain figures may be subject
to rounding differences. All market share
information in this report is based on
management estimates having regard to
internally available information unless
otherwise indicated.
Other information
All amounts are in Australian Dollars
unless otherwise stated.
The ‘Telstra InfraCo’ trade mark is a
registered trade mark of Telstra
Corporation Limited. All other trade marks
of the Telstra Group are the property of
Telstra Limited. nbn co and other nbn
logos and brands are trade marks of nbn
co limited and used under licence. Other
trade marks are the property of their
respective owners.
Forward-looking statements
This report includes forward-looking
statements. The forward-looking
statements are based on assumptions
and information known by Telstra as at
the date of this report, are provided as a
general guide only and are not guarantees
or predictions of future performance.
Telstra believes the expectations
reflected in these statements are
reasonable as at the date of this report,
but acknowledges they involve known and
unknown risks, uncertainties and other
factors, many of which are beyond the
control of Telstra, which may cause
Telstra’s actual results, performance and
achievements to differ materially from
those expressed in, or implied by, the
forward-looking statements. These
factors include: general economic
conditions in Australia; competition in the
markets in which Telstra operates; the
continuing growth in the markets in which
Telstra operates; the inherent regulatory
risks in the businesses of Telstra;
technological changes taking place in the
telecommunications industry; future
changes to Telstra’s products and
services; the risk of cyber and data
security issues; the geopolitical
environment (including impacts of
sanctions and trade controls and broader
supply chain impacts); exchange rates;
the extent, nature and location of physical
impacts of climate change and their
impacts on our assets, service continuity
and supply chain; electricity grid
decarbonisation; and changes to forecast
supply chain emissions including but not
limited to failure of third parties to
achieve contractual environmental
targets or milestones that have direct or
indirect impact on our environmental
modelling.
A number of these risks, uncertainties and
other factors are described in the
"Chairman and CEO Message", "Our
material risks", "Outlook" and the
“Understanding our climate risk” sections
of this report and our Operating and
Financial Review (OFR). The OFR is set
out in Telstra's financial results for the
year ended 30 June 2023 and in the 2023
Annual Report which were lodged with
the ASX on 17 August 2023 and 1
September 2023 respectively, and are
available on Telstra's Investor Centre
website telstra.com/investor.
In addition, there are particular risks and
uncertainties in connection with the
implementation of Telstra’s T25 strategy
(T25). Those risks include the response
of customers to changes in products and
the way Telstra interacts with customers
as Telstra moves to a digital operating
model, the risks of disruption from
changes Telstra’s ways of working, and
Telstra’s ability to execute and manage
the elements of T25 in a sequenced,
controlled and effective manner and
realise the planned benefits, cost savings
and growth opportunities.
Our reporting suite
Our FY23 reporting suite includes:
Our 2023 Telstra Annual Report (this report) which describes
our strategy, financial performance and remuneration practices
for FY23 and also includes our climate-related governance,
strategy, risks, targets and activities aligned with the
recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD).
Our 2023 Corporate Governance Statement which provides
information about governance at Telstra.
Our 2023 Bigger Picture Sustainability Report which provides
an in-depth look at our approach and performance in relation to
our most material sustainability impacts during FY23.
Our 2023 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.
All reports are available at telstra.com/governance.
Telstra Group Limited
ABN 56 650 620 303
The sections of our Annual Report titled FY23
financial performance, FY23 highlights,
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 17 August 2023 in
the document titled ‘Financial results for the
year ended 30 June 2023’ which is available
at telstra.com/investor. The section titled
Chairman transition is not part of the OFR.
Contents
FY23 financial performance
FY23 highlights
Chairman and CEO message
Chairman transition
Strategy and performance
Our material risks
Outlook
Full year results and operations review
Board of Directors
Senior management team
Sustainability
Understanding our climate risk
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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1
Section Title | Telstra Annual Report 2023 About Telstra
Telstra is Australia’s leading telecommunications and
technology provider, offering a full range of communications
services and competing in all telecommunications markets.
Our origins date back to 1901, when the Postmaster-General’s
Department was established by the Australian government to
manage all domestic telephone, telegraph and postal services,
and to 1946, when the Overseas Telecommunications
Commission was established by the Australian government to
manage international telecommunications services.
Telstra Corporation Limited was incorporated as an Australian
public limited liability company in November 1991 and was
initially listed on the ASX on 17 November 1997. Since then, the
Telstra Group has undergone many changes, including a
corporate restructure in financial year 2023, that resulted in
Telstra Group Limited becoming the ASX-listed parent entity of
the Telstra Group on 31 October 2022.
As at 30 June 2023, Telstra is one of the 20 largest companies
listed on the ASX with a market capitalisation of approximately
A$49 billion and has over 31,000 employees.
Our purpose is to build a connected future so everyone can
thrive. We aim to build technology and content solutions that
are simple and easy to use, including Australia’s largest and
fastest national mobile network. Our world-leading mobile
network reaches approximately 99.6 per cent of the Australian
population. We have around 290 stores in Australia.
As at 30 June 2023, we provide around 22.5 million retail mobile
services and 3.4 million retail bundle and data services in
Australia. We also facilitate over 2,000 network points of
presence in more than 30 countries and territories around the
world. We bring innovative and intuitive products and services
to market, and offer a broad suite of media, content and
connectivity options in Australia, as well as connectivity and
enterprise services globally. Our customer base is diverse
including consumers, small business, large enterprises and
government organisations.
Acknowledgement of Country
We recognise and acknowledge the existing,
original, and ancient connection Aboriginal
and Torres Strait Islander peoples have to the
lands and waterways across the Australian
continent. We pay our respects to their Elders
past and present. At Telstra we are enriched by
Aboriginal and Torres Strait Islander peoples’
contribution to our organisation, and we commit
to working with you to build a prosperous and
inclusive Australia.
Our purpose
The telecommunications industry is experiencing enormous
growth. Network traffic is growing fast and digital technology is
changing our world.
Telstra is at the heart of this change—and we’re helping make it
happen by connecting everything to everyone.
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.
2
3
FY23 financial
performance
Total income
(excluding finance
income)
$23.2 billion
Earnings before Interest,
Tax, Depreciation and
Amortisation (EBITDA) $7.9 billion
Underlying EBITDA1 on
a guidance basis2
Net Profit After Tax
(NPAT)
$8.0 billion
$2.1 billion
Underlying
Return on
Invested
Capital
(ROIC)3 8.1%
Earnings
per share
16.7 cents
Total FY23
dividends
17 cents per
share fully
franked
$2.0 billion
returned to
shareholders
A-/A2 credit
rating from
Moody’s and
Standard &
Poors
1. Underlying EBITDA excludes guidance adjustments, and in FY23 and prior years also excludes net one-off nbn DA receipts less nbn net C2C.
2. Guidance adjustments include material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as determined by the
Board and management.
3. Underlying ROIC defined as Net Operating Profit After Tax (NOPAT) as a percentage of total capital, excluding net one-off nbn receipts and guidance adjustments (as defined above)
less tax.
4
FY23 financial performance and highlights | Telstra Annual Report 2023
FY23 highlights
As we progress through T25, our strategic focus is on customer experience, our network, growth,
employee engagement, digital leadership and doing business responsibly.
Our customers
Our episode NPS is at all time highs, lifting 6 points across C&SB
and Enterprise
Customer complaints are at a record low, with a 35% fall in TIO
escalations
We enabled multi-factor authentication for over 5 million
customers to keep their Telstra accounts safer
We’re blocking more email, SMS and phone call scams than
ever before
We helped more than 1 million customers in vulnerable
circumstances to stay connected and expanded our complimentary
Pre-Paid credit Top-Up program with our partner Infoxchange
We’ve supported more than 250,000 Australians growing digital
skills in the last two years, through customer and community digital
ability programs, including senior and First Nations Australians
Our network
Our mobile footprint reaches 99.6% of the Australian population,
reflecting our ongoing investment in improving regional coverage
This year we celebrated five years of 5G, and we’ve reached
more than 85% 5G population coverage and 41% of our mobile
traffic on 5G
World-first deal announced with Starlink in July 2023 to
provide voice service and broadband as a reseller to regional
consumer customers
Expanded our operations across six countries in the Pacific,
welcoming Digicel Pacific to the Telstra family
Our people
We are making Telstra the place people want to work –
our Experience Pulse results put us in the top 25% of
companies globally
We achieved 35.2% representation of women across all of
Telstra, beating our target of 34%
Our digital leadership
88% of C&SB sales are on our new digital stack
68% of service interactions are available digitally
33% of our core processes have been improved by AI, reducing
network energy consumption and solving customer issues faster
We’ve built 89% of our targeted APIs for Adaptive Networks,
using Open APIs to reduce cost and time to market
Our community
We’ve made Wi-Fi available for free at selected payphones across
the country to help keep disadvantaged Australians and those in
vulnerable circumstances connected
We responded in times of need, from floods in the south to
cyclones in the north – and provided support for customers
with friends and family in Türkiye, Syria, Ukraine and the Pacific
We launched our 2022–2025 Stretch Reconciliation Action
Plan (RAP) based on a theme of truth telling and committing
to important steps to talk about our past and the impact of our
decisions on First Nations people
We recorded our strongest reputation result in 15 years as
measured by RepTrak, driven by improvements in customer
experience, network leadership, and cyber leadership
Our environment
We’ve reduced our absolute scope 1+2 greenhouse gas emissions
by 30% (from a FY19 baseline), to less than 920K tonnes CO2e1,
beating our FY23 target of a 23% reduction
All Telstra branded packaging is now fully recyclable, and made
of renewable or recycled material
1. Greenhouse gas emissions are typically measured in tonnes of carbon dioxide equivalent (CO2e) gases.
5
Section Title | Telstra Annual Report 2023 Chairman and
CEO message
Dear Shareholders,
Thank you for your continued support of
and investment in Telstra during the 2023
financial year.
During the year we welcomed a transition in our leadership team with Vicki
Brady's succession to the role of CEO and Managing Director and Michael
Ackland becoming CFO on 1 September 2022.
Our results for the year show continued growth on a reported and
underlying basis, with positive momentum across our key indicators.
We maintained our disciplined approach, and our financial performance
enabled the Board to resolve to pay a final dividend for FY23 of 8.5 cents
per share, returning $2.0 billion to shareholders over FY23 when combined
with the interim dividend for FY23. This reflects the principle of our
capital management framework to seek to grow our fully franked
dividend over time.
This momentum is also reflected in the progress we have made in the first
year of delivery against our T25 strategy to improve customer experience,
build sustainable growth, enhance our reputation, and further invest in our
network and technology leadership.
While our overall trajectory is good, we have some parts of the business
performing well, and others where we continue to see challenges. Our
mobiles business is at the heart of our organisation, remains central to
growth and continues to perform strongly, and our International and
Infrastructure businesses are growing.
At the same time, there are aspects of our Enterprise fixed business that
are experiencing headwinds. The focus is retaining fibre SIOs, simplifying
our products to meet customer needs, reducing costs and driving further
growth across Network Applications and Services.
While we still have a lot to deliver, financial year 2023 has been an
important year. We re-prioritised the big things that will matter most for
customers, continued to invest in our network leadership and infrastructure
businesses, and elevated employee engagement and culture to support
these ambitions. Additionally, we remain disciplined on costs, particularly
considering the external economic environment.
While we have delivered a significant amount and made real progress on
our T25 ambitions, we have had to make some difficult choices like raising
prices on some of our products and services. There is also hard work ahead
to continue improving our customer experience and consumer value
propositions, optimise our cost base, and grow returns sustainably. Our
T25 goals are ambitious, but the progress we have made and the response
we have seen from customers are strong indicators of our early success.
6
Chairman and CEO message | Telstra Annual Report 2023
Looking beyond T25, as connectivity
increasingly underpins the way our
customers live and work, we are in
a strong position to play a big role
in Australia’s digital future.
The infrastructure investments we
are making today – from mobile
infrastructure to our intercity fibre
network – will enable a more digitised
future for the nation and see us
strategically positioned for growth.
We’ve made good progress on customer
experience, but we know there is more
work to do. We have achieved a more
than one third reduction in customer
complaints and customer satisfaction is
at a record high, while we outperformed
our episode NPS targets in both C&SB
and Enterprise. We have continued to
digitise our business, with all pre-paid
mobile sales and services and 88% of all
C&SB sales using our digital stack.
We have continued to invest in mobile
leadership – we achieved our FY23
target of 85% 5G population coverage,
expanded regional coverage by 80,000
square kilometres1 over the last two
years, broke speed records, and made a
world-first 100 kilometres long-range 5G
data call. We continue to look at how new
and evolving technologies can improve
the experience for our customers and
announced agreements with LEO satellite
providers OneWeb and Starlink to deliver
better services for our consumer
customers in regional and rural Australia.
We’ve made good progress on our
intercity fibre network – we now have
fibre in the ground and have conducted
speed tests that have exceeded our
expectations. We also launched our
400Gbps wavelength services between
Adelaide, Melbourne, Canberra, Sydney
and Brisbane.
We’ve grown our international operations,
welcoming Digicel Pacific to the Telstra
family in our largest ever acquisition
while Telstra International continued
to grow and deliver for customers.
Our Telstra Enterprise industry teams
are establishing deeper industry
expertise across the agriculture, supply
chain, retail, mining, energy, banking
and finance, and government sectors.
We see huge potential in unlocking the
value of data and AI, and formed our IT
and Data & AI functions to grow our focus
in those areas.
Protecting our network and defending
our customers is a constantly evolving
battle for our expert cyber security
teams. We are blocking more email,
SMS and phone call scams than
ever, including partnering with the
Commonwealth Bank to launch a pilot
tool to help detect and prevent mobile
phone scams for joint customers. We also
entered into a new Quantium Telstra
venture to combine our leading network
solutions with Quantium’s AI and data
science expertise, helping us identify
and react quickly to emerging AI trends.
Our corporate restructure was completed
during financial year 2023, and the
entities in the Telstra Group continue
to work together on creating innovative
products and services, supporting
customers and delivering an exceptional
customer experience. When we
established InfraCo and embarked on
our Group Restructure, our aim was to:
create transparency of our infrastructure
business, to run it as a standalone
business, and provide optionality. We
have achieved these three goals and
created a strong digital infrastructure
operator. Overall, there is now a clearer
understanding of the value of InfraCo
within the Telstra Group. As we’ve
demonstrated before, where we see the
opportunity to realise value through
monetisation, we will. For example,
through the 49 per cent sale of Amplitel.
After thoroughly examining alternatives,
we have concluded that the greatest
value to be created for shareholders is
by maintaining the current ownership
structure of InfraCo Fixed, for at least
the medium term.
Our focus remains on delivering long-
term, sustainable growth, and the
objectives and principles of our capital
management framework, including
seeking to grow our dividend. In our
current structure, InfraCo Fixed plays
an important role in enabling this,
particularly in an inflationary
environment.
1. The statutory full year financial results released on 17 August 2023 contained a typographical error which has now been corrected.
7
7
As we continue to grow through T25,
doing business responsibly has become
fundamental to how we work, and we
consider our commitment to the
environment and our community at all
levels of our operations. Telstra is a key
contributor to the economy, a major
employer and has a significant
environmental impact, so we have a
responsibility to contribute to the
betterment of society and our planet.
We outline how we are managing our
social and environmental impacts and
contributing to a more sustainable and
inclusive world in our 2023 Bigger Picture
Sustainability Report, which will be
available from 1 September 2023.
We have made meaningful contributions
to sustainability and community – we’ve
reduced our scope 1+2 emissions by 30%
(from a FY19 baseline) exceeding our
FY23 target, underwritten investment
in additional renewable energy projects,
and supported more than 250,000
Australians to build digital skills in
FY22 and FY23.
We have continued to support our
customers in a period of increased
global instability, market volatility, and
uncertainty, as the world continues to
recover from the effects of the COVID-19
pandemic, deals with a changing climate
and faces other geopolitical challenges
that create uncertainty around the world.
Telstra shareholders, customers and our
people reflect all walks of life, and cost of
living pressures and inflation challenges
are important to us as they are to our
community. We understand the
importance of consistent shareholder
returns and dividends, and we seek to
grow our fully franked dividend over
time as part of our approach to capital
management. This year we have
increased our support for customers in
vulnerable circumstances, be that from
natural disasters, from domestic and
family violence, or financial hardship.
This year we have supported more than
one million customers facing vulnerable
circumstances to stay connected.
Our leadership team remains focused
and committed as we continue to
position ourselves to respond to the new
challenges our transformed business
faces. In January 2023, we welcomed
Brad Whitcomb as Group Executive,
Consumer and Small Business, and
Kathryn van der Merwe joined us as
Group Executive, People, Culture and
Communications in July 2023.
We are very pleased to appoint two new
non-executive directors to our Board,
Ming Long AM and Maxine Brenner, and
we thank Nora Scheinkestel who retired
from the Board in October 2022 for
her years of service and invaluable
contributions. We are grateful to former
CEO Andrew Penn AO for his leadership
as Telstra CEO from May 2015 to
September 2022, which has set Telstra
up to thrive.
Through the work we have done, Telstra
is well positioned to lead through a
rapidly changing and evolving time – as
it has through disruption before. As our
country and our planet grapple with the
challenges and opportunities ahead, we
will respond and adapt, and we will help
our customers do the same
Thank you
The Telstra Board and management team
would like to sincerely thank our millions
of customers for their ongoing support
this year. Without you, there would be no
Telstra. Thank you also to all our Telstra
employees for the great work you have
done, and the successes we have
achieved together throughout our
transformation and shift to growth.
Most importantly, we would like to thank
you, our shareholders, for your continued
support.
We hope you enjoy reading about the
progress we have made to protect and
grow your business.
Vicki Brady
CEO and Managing Director
John P Mullen
Chairman
8
8
Chairman transition
On 28 August 2023, after the publication of Telstra’s Full Year
Results, I announced my intention to retire from the Telstra
Board at the conclusion of this year’s Annual General Meeting.
At the same time it was announced I would be succeeded as
chairman by my fellow director, Craig Dunn.
After 15 years on the Board, the past seven as Chairman,
and with a new leadership team in place, the time is right
to step down.
We have a strong leadership team in place, the company has
undergone a successful transformation through T22 and is now
growing again, and our strategy is set out to 2025.
We have recently added two new directors and we have a
diverse and capable Board guiding the future strategic direction
of the company.
It has been an absolute privilege to be a part of the Telstra team
and all we have delivered in my time with the company. I know
from working closely with him on the Board that Craig is the
right person to lead the Board and I will hand over the reins
confident that Telstra will continue to play a vital and strategic
role in building Australia’s digital future.
I thank shareholders for their support during my time on the
Board and the Telstra team for all of the hard work that has
gone into delivering for our shareholders and customers.
I would like to thank John for his enormous contribution
to the company and the country more broadly.
John’s time on the Board saw Telstra successfully
navigate through significant upheaval, including the two
negotiations with NBN Co and the Government and the
consequent rollout of the NBN and its impact on
Telstra’s business.
The period also saw Telstra announce and execute on
its transformative T22 Strategy, continue its investment
to build and maintain its world class mobile network,
rolling out 4G and 5G and expanding its coverage to be
around one million square kilometres greater than its
competition.
The company is leaner and more agile and strongly
positioned to grow, with a highly skilled workforce and
world class network and infrastructure assets that will
help underpin Australia’s digital economy for decades
to come.
Come October I look forward with energy and eagerness
to continuing to deliver growth for shareholders as we
execute on the T25 strategy in the coming years.
John Mullen
Chairman
Craig Dunn
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Chairman and CEO message | Telstra Annual Report 2022
Strategy and
performance
We are one year into T25 and are a simpler, more agile, more
customer-focussed and digitised business. As we enter FY24,
our goals are clearer and more refined than ever. We know we
are on the right path and we see the early results of our work.
10
Strategy and
performance
Strategy and performance | Telstra Annual Report 2023
Our strategic context and focus
We are approaching the mid-way point in our T25 strategy for sustainable growth, and our ambition remains to improve our core
business and improve our customer experience. FY24 will see us continue to deliver our T25 objectives, and we know what to focus on.
T25 is our strategy for growth, with four pillars:
1
2
3
Provide an exceptional
customer experience
you can count on
Provide leading network
and technology
solutions that deliver
your future
Create sustained growth
and value for our
shareholders
4
Be the place
you want to work
T25 scorecard
Customer
experience
Network &
Technology
Growth
and value
New ways
of working
Digital
leadership
Responsible
business
Market leading CX
with
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 network1
Expand regional
coverage
100,000km2 new
coverage by FY25
s
c
i
r
t
e
m
d
n
a
s
t
n
e
m
t
i
m
m
o
c
r
u
O
eNPS >40 by FY25
sNPS uplift of +25
by FY25
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
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
Move ~90% of
applications to
the public cloud
by FY25
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
4-7pt uplift in
RepTrak reputation
score by FY25
Legend
On track for
delivery
Progress made
but below target
Not on track
Completed
Not achieved
Target removed
Note: Commitments are baselined to FY21, except where stated otherwise and see disclaimer slide in relation to financial ambitions.
1. Fibre deployed target removed in August 2023 due to our focus on the highest priority routes. Double metro cell side target removed in August 2023 due to technology review.
11
Telstra Enterprise has also made strides in
speeding up key processes and delivering
for customers faster – 51% of Enterprise
service interactions are now through the
digital channel.
We are driven every day to help make
digital experiences safer and ensure trust
in the connectivity we provide. Our cyber
security initiatives have included
reviewing and changing how we retain
personal ID data, and joining forces with
the Commonwealth Bank to help protect
customers from phone scams with our
Scam Indicator pilot program. Through
our Cleaner Pipes program, we have also
blocked hundreds of millions of scam
calls and texts from reaching our
customers each year, and enabled a
service for Telstra customers who receive
scam texts to forward them to 7226
(SCAM) to help us identify and block
emerging scam techniques.
We have also helped our customers when
natural disasters hit, from floods affecting
Australia’s south-eastern states to
cyclones affecting the north. During FY23
we activated disaster relief in 101
postcodes following severe weather
events, and activated over 63,000 short
and long term packages totalling over
$1.26 million in customer assistance. We
also provided support internationally with
free calls to Türkiye, Syria and Ukraine, as
well as in the Pacific.
Maintaining our network leadership
and planning for the future
At the end of financial year 2023 our total
mobile coverage was more than 2.72
million square kilometres – an 80,000
square kilometre increase in the last two
years. We have around one million square
kilometres more mobile network coverage
than our nearest competitor.
We’ve successfully reached our target of
85% 5G population coverage, and now
have 41% of our mobile traffic on 5G. The
world-first 100km long-range 5G data call
we conducted in collaboration with
Ericsson in February broke speed records.
Our mobile network continues to win the
majority of key network surveys in
network coverage, performance and
resiliency, including umlaut mobile
network performance survey wins for
‘Best in Test’, ‘Reliability Score’ and the
highest 5G availability in all cities tested
in its latest results.
We enabled 5G Standalone technology on
our mobile network, allowing for end-to-
end 5G experiences across customer
devices and our network infrastructure
and core. This innovation allows for
software-defined features like network
slicing, letting us customise network
access for customers with different
requirements, and edge computing,
letting us deploy cloud processing power
into connected hardware at the edge of
our network map closest to the customer.
The decision by the Australian
Competition Tribunal and the ACCC to
not grant authorisation for our Multi-
Operator Core Network agreement with
TPG was a disappointing outcome for
customers in regional Australia. Despite
this, we remain committed to improving
customer experience outside metro areas,
and we continue to invest in new ways to
keep people in remote locations
connected. We will continue to advocate
for getting the best possible outcomes for
regional Australia and will continue to
look for commercially negotiated
arrangements to deliver better
experiences for customers.
Part of our T25 strategy is to assess
evolving satellite technologies and use
them to deliver better services for
customers, especially in rural and remote
Australia. After testing in Australia,
Telstra and OneWeb have agreed
commercial terms and will begin moving
hundreds of existing remote mobile base
stations currently using satellite backhaul
to OneWeb's LEO service, and we will
adopt OneWeb LEO services for future
sites where satellite backhaul is the
preferred or only viable option. We also
reached a world-first reseller agreement
with SpaceX to offer Starlink LEO satellite
voice and fixed broadband service, also
leveraging our local customer support and
providing the option for professional
installation.
We have begun laying ultra-high capacity,
low-latency fibre as part of our intercity
fibre network build across Australia – a
high performance national network for
customers who need reliable, ultra-high
bandwidth between capital cities and
connections to international submarine
cable landing stations. Hyperscale
businesses that deal in big data, cloud
computing and other enablers of our
digital future will rely on this network in
coming years.
In a simulated network trial of our planned
1,240 kilometre intercity fibre network
between Melbourne and Sydney, speeds
recorded reached almost seven times
today’s typical capacity per fibre pair,
enabling us to develop market-leading
solutions for our customers today and in
the future.
We are approaching another milestone in
the transition from our legacy network to
the future with almost 10 million premises
disconnected from our copper and HFC
networks, as a consequence of the nbn
network rollout. This work is central to our
digitisation efforts and is a huge feat in
both the transformation of our business
and the enablement of the digital
economy.
Building a better customer
experience
This past year, we have focussed closely
on improving the experience that our
customers have when they interact with
us, whether that is through a self-service
channel or by contacting our Customer
Service team. We beat our Episode NPS
targets, improving by six points to reach
+43 and exceeded our target of +40.
Strategic NPS also increased by four
points, however it is still not where we
want it to be.
The progress we have made on
digitisation has gone on behind the
scenes for most of our customers, but the
gains we have made mean that 88% of all
C&SB sales now occur on our new digital
stack. For customers this means
simplified billing, as well as faster
average activation times for their
services. For our teams this means
simpler processes freeing up more time
to spend with the customer.
Similarly, we completed the migration of
our existing mobile pre-paid services over
to our new digital stack, which allows
customers access to our latest offers and
provides them with faster, better support.
In total, 43% of all C&SB services are on
our new platform and we are on track for
all services to be on our new digital stack
by FY25.
70% of new Consumer fixed broadband
orders are now being placed in our new
digital stack, significantly reducing order
entry time and delivering strong eNPS
results. Through the effects of this
combined work, we have seen a 35% fall
in Telecommunications Industry
Ombudsman escalations. Much of this
progress has been achieved through
generally improved customer service
experiences in the last year, and
reductions in assurance – and
connection-related issues.
We have launched a customer service
platform for Consumer and Small
Business customers based on Amazon
Connect, enabling us to route customers
to the right agent with the right skill
based on their needs. It also allows for
more self-service capabilities and better
integration between telephone support
and other channels.
12
Strategy and performance | Telstra Annual Report 2023
Telstra International continued its growth.
We officially welcomed Digicel Pacific to
the Telstra family, in our largest ever
acquisition. Digicel Pacific is the biggest
mobile operator in the South Pacific
spanning six countries – Papua New
Guinea, Fiji, Samoa, Tonga, Vanuatu and
Nauru. We were already one of the biggest
providers of voice and data services
connecting the South Pacific to the rest of
the world through our Southern Cross
subsea cable, and we are experienced in
delivering and operating mobile networks
in Australia’s remote north and Torres
Strait Islands, so Digicel Pacific has a
strong alignment with our core strengths.
Extending our digital leadership
We created a new commercial partnership
in our Quantium Telstra venture following
our previous memorandum of
understanding, combining Quantium’s
leadership in data science and AI with our
leading network, IoT, cloud and edge
solutions into a ‘whole of tech stack’
proposition. Backed by our Telstra Purple
technology design and management
experts, this venture will explore tailored
solutions across cloud, cyber security and
software development to solve business
challenges.
To enable these innovative solutions to be
created at speed, we realigned our
network, product, IT and data teams to
bolster those capabilities within our
business, and separated our IT and Data &
AI teams into a standalone function to
better serve our future opportunities. Our
Global Networks & Technology function
will focus on maintaining our network
leadership, boosting automation and
orchestration capability as well as leading
on cyber security.
33% of our core processes have been
improved by AI through our digitisation
process, reducing network energy
consumption and solving customer issues
faster, and we’ve built 89% of our targeted
APIs for Enterprise Adaptive Networks
using Open APIs to reduce cost and time
to market.
Becoming the place where you want
to work
Making Telstra the place where you want
to work is a central pillar of our T25
strategy, and revolves around us listening
to our people to understand their needs.
We have focussed our attention on
improving customer experience and
simplifying our company-wide objectives
after asking our teams for their feedback
on where we could make maximum impact
across our organisation.
We also continued to invest this year in
our people as one of the world’s largest
Agile workforces and to set the standard
in hybrid working. Our employee
engagement score put us in the top 25% of
companies globally, and this year we were
named #9 on LinkedIn Top Companies list,
which recognises 25 workplaces across
Australia investing in talent and helping
their people build long-term careers.
Guided by our First Nations Strategy, we
have created opportunities to engage our
people on the First Nations Voice to
Parliament to learn about what it could
mean for Australia’s future. Other
initiatives include in-person cultural
learning, on-country immersion
opportunities, developing a First Nations
employment strategy, and a First Nations
procurement policy.
Doing business responsibly
We are committed to doing business
responsibly and having a positive social
impact on the communities in which we
operate. In FY22 and FY23 cumulatively,
we reached more than 250,000 Australians
through digital ability programs,
exceeding our FY23 target and well on the
way to 500,000 Australians by FY25. We
supported this through initiatives like the
NSW State Government’s Tech Savvy
Seniors program, the Good Things
Foundation’s Get Online Week and other
community-led initiatives that close the
digital divide.
We’ve helped keep more than one million
vulnerable customers connected through
activities such as providing lower-cost
services for people on a low income;
offering support during times of financial
hardship, including access to safe and
secure communications for victims of
domestic and family violence; and
ensuring we have accessible product and
service options for people with disability.
Unlocking value and sustained
growth for our shareholders
Our mobiles business is at the heart of our
organisation, remains central to growth
and continues to perform very strongly,
and our International and Infrastructure
businesses are growing. At the same time,
there are aspects of our Enterprise fixed
business that are experiencing headwinds.
Our corporate restructure was completed
during financial year 2023, and the entities
in the Telstra Group continue to work
together on creating innovative products
and services, supporting customers and
delivering an exceptional customer
experience.
When we established InfraCo and
embarked on our Group Restructure, our
aim was to: create transparency of our
infrastructure business, to run it as a
standalone business, and provide
optionality. We have achieved these three
goals and created a strong digital
infrastructure operator. Overall, there is
now a clearer understanding of the value
of InfraCo within the Telstra Group. As
we’ve demonstrated before, where we see
the opportunity to realise value through
monetisation, we will. For example,
through the 49 per cent sale of Amplitel.
After thoroughly examining alternatives,
we have concluded that the greatest value
to be created for shareholders is by
maintaining the current ownership
structure of InfraCo Fixed, for at least the
medium term.
We are seeing strong customer demand
for our infrastructure, while customer
needs and long-term demand continue to
evolve. This is being shaped by the shift to
the cloud and rapid AI adoption driving
data centre and edge requirements, along
with needs for domestic fibre and
undersea cable. Maintaining the current
ownership structure provides alignment
across the whole of Telstra to best capture
and maximise long-term value. First, by
providing the flexibility to meet evolving
customer needs through how we go to
market and deliver products and solutions.
Second, by continuing our work on
improving the efficiency of InfraCo Fixed,
including across our portfolio of fixed
network sites. Third, by delivering growth
projects including our intercity fibre build,
and exploring further growth
opportunities, and finally, because we are
best able to explore other operating and
financial infrastructure partnerships.
Our focus remains on delivering long-
term, sustainable growth, and the
objectives and principles of our capital
management framework, including
seeking to grow our dividend. In our
current structure, InfraCo Fixed plays an
important role in enabling this, particularly
in an inflationary environment.
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, as well
as a fresh appetite for growth as part of our T25 strategy.
Managing our material risks is an
important part of ensuring the success of
our strategy, as well as enhancing
customer experience, reputation,
financial position, and capacity to pay
dividends. We do this through our risk
management program, which includes
our “Top Risks” and “Watchlist Risks”
that have sustained visibility at a
leadership level – as well as other risks
managed by our risk and compliance
community.
Below we describe the material risks that
may affect Telstra in this context, 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 through
our risk management process.
Focus on growth
Our T25 strategy is about delivering
growth. This growth ambition include our
aspirations to grow in mobiles (grow
revenue, and differentiate via
experience), Network Applications &
Services (to become a recognised
market leader in key digital growth
categories including Internet of things,
Cybersecurity, Workplace & Digital, and
more), International (deliver profitable
growth and value by leveraging our
market leading international connectivity,
people and services), InfraCo (grow
external revenue with a focus on new
towers and securing long term tenants,
maximising the potential of existing
towers and infrastructure, developing
new products and driving growth through
a better customer experience) the Small
& Medium Business and Mid-Market &
Business sectors (through key product
optimisations, customer experience
improvements through digitisation and
strategic channel initiatives, and more)
and in our Health business.
We acknowledge that our greater focus
on growth after a period of
transformation poses a level of inherent
risk, including the design and delivery of
products and services which may not
sufficiently meet our customers’ needs.
We also recognise that Telstra operates in
a competitive environment, and that our
competitors have also made their own
strides during this time. More generally,
while identifying risks to actively
mitigate, we are also conscious that
managed risk-taking is essential for
growth.
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
allow us to rapidly respond to market
challenges. We 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 in which we operate. When our
growth is inorganic, we have robust due
diligence processes to ensure we make
appropriate investments.
Market and competition risks
The telecommunications industry in
Australia and internationally is
competitive and subject to change
(including accelerating technological
change). The effect of competitive
market conditions, including any decline
in the pricing as well as the purchase and
use of our products and services, may
adversely impact our earnings and
assets.
In the market for fixed broadband
services provided over the nbn™ network,
competition remains significant,
including discounted introductory offers.
In our mobile and fixed businesses, we
face increasing competition from satellite
operators, including from Low Earth Orbit
satellite services which will, over time,
provide alternative services to some
mobile and fixed services offered today.
We are also experiencing strong
competition in other parts of our
business, such as Network Applications &
Services, Data & Connectivity, and
International. In particular, we note the
expansion of NBN Co into the enterprise
data and connectivity market, along with
increasing adoption by enterprise
customers of lower margin SDWAN
solutions.
Other key competition risks include:
• Innovation and disruptive technologies
that may cause market discontinuity,
adversely impacting on business
models where there is failure to
transition and adapt quickly;
• Competition in the Australian
telecommunications market could
cause us to lose market share and
reduce our prices and profits from
current products and services. We may
also lose market share and revenue if
we don’t adapt to changes in the
industry and competitive landscape;
• Hyperscaler growth strategies could
result in disintermediating us from the
end-customer rather than their
partnering with us to grow if we are not
able to provide the exceptional end-
customer experience that they seek to
deliver.
Effective innovation is fundamental in
securing revenue streams and
withstanding challenges from a changing
competition and industry landscape. Our
capacity and ability to respond to the
innovation challenge are related to the
agility of our internal process and the
capability and flexibility of our people. To
compete effectively, we may be required
to make significant investments. However
there is no guarantee that such
investments will help us maintain or grow
market share or address these issues
(either fully or at all), and may affect the
performance of the Group.
Doing business responsibly
Doing business responsibly means doing
the right thing for our customers, our
people, and the communities we serve.
We believe every company has a
responsibility to operate sustainably and
actively consider its impact on
customers, communities and the
environment. This is why ‘doing business
responsibly’ is one of the key pillars in our
14
T25 strategy and the foundation of our
sustainability strategy.
Our purpose is to build a connected
future so everyone can thrive. This
underpins our belief that Telstra has a
real opportunity to play a leadership role
in creating a more sustainable and
inclusive world. We are harnessing
technology to create a better digital
world and minimise our impact on the
planet, as well as helping our customers,
suppliers and communities do the same.
The foundational connectivity and digital
solutions we provide create value for our
customers, people, communities and
shareholders.
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 damaging our
reputation with stakeholders through
negative regulatory and financial
implications.
In 2023, we began trialling new ways of
embedding sustainability into our
business, decision making and culture.
We know that building organisational
resilience and the capacity to respond to
emerging challenges will allow us to
anticipate and manage the future risk
landscape more effectively. It accelerates
innovation by driving the development of
new products, services and solutions that
lead to new customers and market
opportunities. As a purpose driven
organisation, we attract and retain the
best talent, build our reputation and
strengthen our stakeholder relationships.
Our responsibility to do the right thing
goes to the core of our operational
practices, particularly those that have the
potential to impact customers in
vulnerable circumstances.
Acknowledging the shortcomings of the
past, we have focused significant
attention and resources in the last few
years to learn from the past and improve.
We are committed to conducting our
business responsibly through a range of
measures. This means complying with
ethical and responsible business
practices such as anti-bribery and anti-
corruption, fair competition, compliance,
tax practices and transparency. It also
includes enabling renewable energy
generation, reducing absolute emissions,
helping Australians to build their digital
skills, focusing on keeping our customers
in vulnerable circumstances connected,
respecting human rights and embedding
a broader culture that supports our
people to act responsibly.
People and culture
Our people – and the culture we
collectively create and live – are among
the cornerstones of our T25 and
sustainability strategies. Success will rely
upon us building a team with the right
talent, but also a culture where those
people share our values and expectations
and are proud to work. We recognise the
criticality of in-demand skill sets and the
need to develop a skilled and engaged
workforce.
In this regard, we recognise and continue
to manage the risk of failing to attract,
develop and retain the workforce required
to achieve our strategic objectives, as
well as the risk of failing to have effective
leadership that develops the culture of
simplicity, change, accountability and
collaboration that we need to embed
throughout our organisation.
To manage the risks related to our
workforce and talent and succession
more generally, we continue to invest
strongly in our people and in succession
planning. Our Learning Strategy and
Capability Investment Plan focuses on
developing and upskilling core
capabilities through credentials and
training for large staff cohorts. Further,
we continue to maintain focus on critical
role succession through the active
development and nurturing of a
succession cohort of team members. An
organisation-wide talent review is also
completed annually and will be revised
following the completion of our ongoing
T25 roadmap work, ensuring we have the
skills and talent to deliver on our
strategy. Where we need to recruit
externally, we augment these internal
programs of work through targeted
recruitment, ensuring roles are filled
through talent aligned to our values and
purpose.
To ensure that we develop a leadership
and broader culture that promotes
simplicity, accountability and other key
strategic priorities, we have developed
and rolled out the “Future Ready”
framework, which focuses investment on
the training of our leaders. These training
and skills development programs are
focused on developing attributes that
align with the ways of working we are
seeking to embed into our teams.
In both our internal training and
credentials as well as our external
recruitment, we prioritise and promote
attributes that align with our agile ways
of working, which position us to deliver
better and faster, and give us the ability
to adapt rapidly in times of change as an
organisation. Further, we continue to
embed the expectations and standards of
the broader community – as well as our
commitment to responsible business
practices – through our commitment to
our values and regular internal training
that emphasise these to our teams.
Safety and security
Telstra operates in a sector where the
safety and security of our teams is often
placed at risk. Our teams and contractors
are involved in major construction works,
working at significant heights and other
similarly dangerous situations. As well as
the physical safety risks our team
members face in our varied and
sometimes challenging work locations,
we also actively monitor a diverse range
of other health, safety and wellbeing
outcomes. These include the security of
our workplaces and premises, our teams’
mental health and wellbeing and the
potential for harm to our environment
and the communities in which we work.
We have zero tolerance for behaviours
that lead to potential injury,
environmental or reputational damage
because of our activities, products, or
infrastructure.
15
mental health and wellbeing services.
Our continued operationalisation of
the Mental Health and Wellbeing Plan
helps us manage mental health risks
by providing tailored communications
and support.
Privacy, data, and cybersecurity
The information and cybersecurity
threat environment in which we operate
continue to become more complex, both
in Australia and globally. This is taking
place at a time when the demand for and
dependence on being able to live, work
and learn online and from anywhere only
accelerates. Data privacy, information
security and cybersecurity are crucial
priorities for us. We understand that if
we fail in this respect, it has the potential
to allow crime, espionage, data breaches
and impact our business operations and
those of our customers.
Cyber attacks continue to be a persistent
threat in Australia and internationally.
The current threat landscape is varied,
complex and constantly evolving. Cyber
attacks are particularly significant risks
to companies like Telstra due to the
threat they pose to our network and
critical infrastructure. They have the
power to undermine networks and the
services provided through them. Further,
they can also have a devastating impact
from a privacy perspective, leading to the
breach of personal information and other
sensitive data.
We believe it is crucial to do all we can
to help our customers and stakeholders
to trust the connectivity we provide from
a security perspective, while noting that
it is not always possible to mitigate for
all cyber risks all the time. We use a
wide range of technologies and security
controls to minimise both the likelihood
and impact of unauthorised access to our
networks and systems, including logging
and monitoring capabilities to pre-empt
and proactively prepare for internal and
external threats, and industry-standard
infrastructure configurations. We
continuously invest in our security
capabilities, maintaining and enhancing
existing technologies to stay ahead of
new threats.
We also continue to monitor external
threats and the geopolitical environment.
We have developed comprehensive
response plans, reviewed our
infrastructure and systems to enhance
the integrity of the Telstra network
and we work closely with government
stakeholders to provide technical
capability to help defend the country
– and our customers – against cyber-
attacks.
More generally, our approach to
cybersecurity risk management means
appropriate ownership, oversight and
ongoing risk management are 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. 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.
Protecting the personal information
of our customers and employees is a
benchmark of trust, and we continue to
strive to meet our legal and regulatory
obligations in this regard. Our fraud
teams continue to implement changes to
respond to the evolving external threat
environment and we are proactively
working with law enforcement agencies
to report fraud scams. We continue to
remediate customer accounts that have
been affected and help mitigate risk
more generally through a new Account
Takeover model scheduled for
deployment in August 2023.
Data and AI
Artificial intelligence (AI) technology is
developing rapidly and is transforming
many aspects of modern life. As with
almost all companies, Telstra too is
exploring ways in which it can leverage
AI to better meet our customers’ needs.
AI presents clear opportunities in our
sector, for instance by way of creating
dynamic, responsive networks that are
more resilient, guarantee better service
to our customers and are robust through
proactive management and action.
As technology continues to evolve,
however, it also poses risks in relation
to data collection, standards, and
protection, as well as the machine
learning that underlies the potential
of AI. The biggest risks today include
threats to consumer privacy, biased
programming, danger to humans, and
unclear legal regulation. Our focus,
therefore, is on balancing opportunities
with risk-mitigation in a way that
satisfies our regulatory and stakeholder
expectations.
We recognise and face risks such as
not adequately protecting, securing, and
managing our data and AI assets across
their lifecycle. Further, inadequate data
and AI management policies, controls,
systems and practices may result in an
inability to trust our data and AI, leading
to substandard business decisions &
performance. This may in turn result in
data breaches, reputational damage and
regulatory attention.
We make safety and security a
responsibility all our teams, who shoulder
responsibility in maintaining a healthy
and safe workplace, whatever it may
physically look like. We view each team
member as forming part of our “first line
of defence” for the management of risks
relevant to them, and empower both
employees and contractors with the
training needed to ensure the safe
execution of their roles. Our SSW Risk
Governance Framework governs the way
we manage and report these risks, and
aligns with rigorous ISO standards.
We have seen improvement in key
performance metrics that measure safety
and security and maintain a constant
focus on risks that may undermine our
aspirations in this regard. We continue
to promote our health and wellbeing
services to increase awareness and
understanding of the services available
to employees and contractors, including
1616
Our response to these risks is governed
by our Data & AI Framework and key
forums (such as our Data & AI Council)
which have been set up specifically to
respond to these evolving risks. We have
in place several controls to manage the
risks associated with the adoption of AI
by Telstra, and have plans to extend
these controls and make our use of AI
safer through strategic investments.
As the adoption of AI gathers pace, both
within Telstra and by our technology
partners and customers, we will focus not
just on the management of risk at an
individual machine learning model level,
but also on how the risk landscape
changes when threat actors are operating
at scale and interacting with each other
and our data. We will operate within
defined guardrails when taking strategic
opportunities, purposefully leveraging
data and AI for growth, but working
proactively to identify and respond to
emerging risks to high standards of
compliance and transparency with
regulatory authorities.
Resilient networks and technology
One of Telstra’s key competitive
advantages continues to be the quality,
scale, speed, and resilience of our
network. As society continues to expand
the ways in which it is ever reliant on
connectivity to cater to the evolving
nature of work and education, the
demand for resilient networks and
technology has never been more
pronounced. Given so many customers
and stakeholders depend on the quality
of our network, we recognise the
significant impacts that flow from
network congestion and outages.
Where they occur, these events can be
disruptive and frustrating for customers
and enterprises, and significant for
Telstra in terms of financial loss,
regulatory scrutiny, reputational risk and
erosion of trust in our brand. Importantly,
they can also be particularly dangerous
where they interrupt Emergency 000
services and other health services on
which the community may rely. The
resilience of our networks can also be
undermined by natural disasters, the
activity of malicious actors, unforeseen
peaks in demand, human error,
equipment failure, data quality, or failure
in the underlying electricity grid that
powers our network.
We assess these scenarios through our
risk management approach and respond
to them through a range of strategies and
processes that seek to prevent or recover
from network and technology disruptions.
We have several indicators in place to
dynamically monitor network and
technology resilience, and we proactively
track risk remediations and improvements
in our network over time to progressively
reduce our risk exposure. 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.
Economic downside
Changing financial conditions are
contributing to key external
macroeconomic uncertainties today.
These include weaker than anticipated
economic growth, persistent high
inflation, a tight labour market, persistent
supply disruptions and a decline in non-
essential spending within households in
response to living cost pressures. As our
research has validated, many customers
carry the burden of high costs of living
into their spending attitudes and
behaviours.
We have elevated economic downside to
a “Top Risk” for the purposes of our FY24
risk management program and recognise
the challenge this could pose to the
business. To mitigate its impacts, we are
proactively monitoring demand
uncertainty and other key indicators to
dynamically adjust operating plans and
budgets if needed. Last year, we let our
customers know we would be doing a
yearly review on the prices of our mobile
plans, and that the prices of those plans
may increase in July each year in line with
CPI. This allows us to alter prices as
economic pressures act on our business.
We have also protected ourselves where
possible against supply side price
increases, by taking steps such as
hedging our energy expenditure and
foreign exchange rates.
As part of the T25 strategy, we are
looking to transform how we deliver in
a way that factors for macroeconomic
downside by looking at long-term
innovation and opportunities. We are
challenging existing workflows and
processes, automating where possible
and making them faster, simpler, and
more agile. In doing so, we are confident
we will be able to weather downside
scenarios by continuing to deliver as our
customers expect us to, while having
more efficient operations and processes
in place.
Geopolitical environment
The continued and increasing
international conflicts, volatility, tension,
and uncertainty whist operating our
business in 30+ countries present a
heightened risk that we must continue
to effectively plan for and respond to.
We have elevated geopolitical risk to a
“Top Risk” in our risk management
program for FY24 and recognise the
impact shifts in the global political
climate could have on our business,
including on safety, security and
wellbeing, cybersecurity, supply chain
and partner dependencies.
Our material risks | Telstra Annual Report 2023
We continue to evolve our mitigation
plan, conducting geopolitical risk analysis
as relating to our key operating regions
and mapping our key risks and obligations
in jurisdictions in which we operate. We
also utilise a Geopolitical Risk Index and
have recourse to independent risk
analysis, assessment, and advice, whilst
ensuring that we continue to operate in
accordance with our policies, standards,
and regulations.
While it is impossible to mitigate the
effects of unpredictability in the
geopolitical environment with certainty,
we will continue to actively consider risks
that will have material impact on the
security and value of our critical physical
assets, data, and will seek to capture
growth opportunities within our appetite.
To support our mitigation plan, we also
undertake several stakeholder workshops
and forums with corporate relation peers,
Australian government agencies
including DFAT & Home Affairs,
embassies, regulators and global peers.
This ensures we understand government
and corporate sentiment more broadly,
and factor that into our strategy and
operations an ongoing basis.
Compliance and Regulatory
Change
Telstra needs to comply with a broad
range of obligations, ranging from the
way we sell devices to how we maintain
our complex network of subsea cables.
It is on us as a responsible business to
understand and meet these compliance
obligations so that we do the right thing
by our people, our customers, our
communities and our shareholders.
Further, Telstra’s products and services
— and the way we deliver them — are
subject to constant scrutiny from a range
of regulators and agencies.
To maintain our compliance with key
regulatory requirements, we continue
to maintain proactive relations with
relevant regulators, consumer groups and
policy makers to ensure balanced and
socially appropriate policy decisions are
made. Key matters presently relevant to
Telstra relate to regulatory compliance,
responsible business practices,
regulations related to services on the
nbn Co network, consumer safeguards,
spectrum allocation, government security
policies, regional connectivity, and
universal service obligations (USOs).
Ongoing regulatory reforms that impact
us and with which we are presently
engaged include the Telecommunications
Consumer Protections Code, Privacy Act
reforms and cybersecurity regulation.
Failure to comply with our legal and
regulatory obligations may lead to
adverse impacts to our various
stakeholders, as well as to our reputation
more broadly. We have several measures
17
in place to manage our compliance risks,
including a robust framework which sets
out a standardised approach to
compliance and regular reporting on
material compliance issues to our Audit &
Risk Committee (that do or could lead to
a breach of our obligations). We also have
in place a mandatory compliance training
framework which includes monitoring
training completion across all teams and
consequences for non-completion.
In FY22, we established a Compliance
Uplift program to mitigate risks of non-
compliance across the whole of Telstra,
focusing on uplifting our control
environment after several compliance
breaches were identified. This Uplift
program seeks to embed awareness and
ownership of critical compliance
obligations (COAs) 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 creating a culture where
acting responsibly is core to decision
making and delivers compliant and
sustainable outcomes. We focus our
efforts on mitigating the risk of non-
compliance with the obligations that are
most impactful for our customers,
communities and people, and supporting
everyone at Telstra to understand the
compliance obligations relevant to them,
and to fulfil their compliance
responsibilities.
Climate change
Australia is already experiencing more
frequent and severe extreme events due
to climate change, with an emerging
consensus that these are only likely to
increase in the medium to long term.
We are committed to strong action to
further prepare for and adapt to the
impacts of climate change. We have
recruited an internal climate risk
specialist, evaluated the
Intergovernmental Panel on Climate
Change (IPCC) guidance, and in FY23
conducted climate scenario analysis on
chronic heat impacts to infrastructure
and staff. We are also currently
progressing with additional flood risk
analysis and expanding our climate risk
assessment to cover key linear assets
such as critical fibre routes.
Our preparation and adaption to climate
change also includes supporting the
natural environment. We have developed
policies for environmental protection and
remediation, and our carbon farming pilot
has been an important foray towards
developing processes and initiatives for
habitat restoration. We also continue to
deliver on our external Environment,
Social and Governance (sustainability)
commitments and adequately plan for
and respond to impacts and opportunities
in those areas.
More broadly, we are increasing our focus
on climate-related opportunities. We
have capitalised on commercial
opportunities including the launch of our
carbon neutral certified mobile plans and
an option for customers to redeem their
Telstra Plus points to drive further
investment in Australian and
international climate projects. These are
in addition to the carbon neutral
organisation certification which we have
had since 2020.
We continue to deliver towards our
existing external environment targets.
However, there is a risk to our target to
enable renewable energy generation
equivalent to 100% of our consumption
by 2025. The operational output of the
new renewable energy projects we are
underwriting may not reach that level by
the end of 2025 due to the complexity
and long lead times for planning,
construction and connection to the
electricity grid. In addition, there is a risk
to our target to reduce absolute scope 3
greenhouse gas emissions by at least
50% by 2030, while we work through
impacts and decarbonisation
opportunities from the acquisition of
Digicel Pacific. In 2022 we noted that we
were assessing the impact of retail
energy growth in relation to our scope 3
emissions reduction target. The scaling
of our retail energy products has since
been paused. We will communicate any
material impacts to our scope 3 target
from our retail energy product after
further guidance is provided to the
market in relation to any scaling of those
products. The Understanding our Climate
Risk chapter provides more detail on
these risks. We will continue to regularly
review these targets to ensure we take
appropriate steps to reduce our
environmental impact in accordance with
our stated ambitions.
Further detail on our risk management framework and our overall
approach to managing risk is provided in our 2023 Corporate
Governance Statement available at telstra.com/governance.
For more information about our material sustainability impacts,
please see the Material impacts section of our 2023 Bigger
Picture Sustainability Report on our reports page, available at
telstra.com.au/sustainability/report.
For more information about our climate-related risks, please see
the Understanding our climate risk section of this report.
1818
Outlook
For FY24 guidance1,
we anticipate continued
underlying business growth:
Total income $22.8 to $24.8 billion
Underlying EBITDA2 of $8.2 to
$8.4 billion
Capex3 of $3.6 to $3.7 billion
Free cashflow after lease
payments (FCFal)4 of $2.8 to
$3.2 billion
In the year ahead we will reach the
midpoint of our T25 strategy. Our
focus continues to be on improving the
customer experience and how customers
see us, maintaining and developing our
network leadership, and increasing our
employee engagement while conducting
our business responsibly and growing
returns for shareholders.
We are creating sustainable growth under
T25, so we will look to extend our
leadership in our mobiles business by
differentiating our products and their
advantages in an evolving market. We will
do this by delivering better experiences.
We will continue to make strides in
improving the experience for our
customers, with our digitisation process
well underway. The year ahead will see
crucial progress as we progress the
migration of C&SB customers to our new
digital stack and deliver further work to
digitise the Enterprise business.
We are targeting driving increased
revenues and improving operating
efficiency, remaining disciplined on
reducing our cost base and improving
underlying ROIC. While our cost reduction
ambition is being challenged by high
inflation, we are absolutely committed to
delivering our FY25 underlying EBITDA
and EPS growth ambitions.
Enhancing our reputation means building
and protecting value for your company.
We are elevating the importance of
growing community support for and
understanding of Telstra and its central
position in the Australian
telecommunications industry. We believe
we can improve and demonstrate our
customer service, better represent the
value for money that Telstra products and
services provide, and show our
commitment to ethical conduct in
everything we do.
Maintaining and extending our network
leadership will remain a focus, along with
delivering new network experiences for
our customers. We are committed to
delivering an additional 100,000 square
kilometres of mobile coverage by the end
of FY25, on top of the around 1 million
square kilometres of unique coverage we
already offer. We remain committed to
improving our customer experience
outside metro areas and our arrangements
with OneWeb and Starlink will see us
deliver new and improved services to
consumer customers in regional and
remote Australia.
We will make further progress on reducing
our emissions, continue to support the
growth of digital skills and the digital
economy, and improve how we support
vulnerable Australians – both our
customers and non-customers – to help
keep everyone connected.
We have listened to our people’s feedback
and have further simplified our company-
wide approach to our FY24 objectives, so
we can focus on the big things that matter
most for our customers. Our roadmap is
clearer than ever and includes further
engagement with our people by building a
culture of customer focus, operational
excellence and accountability.
Delivering upon our simplified objectives
and iterating further on those objectives
will unlock more value for our shareholders
and better position your company for
continued, sustainable growth.
While our strategic direction is clear and
we are sharpening our focus on
completing transformational changes and
culture shifts, we are navigating a number
of challenges and these are detailed in the
Material Risks section of this report.
These include the continued challenges in
the economy from increased cost of living
pressures and recent inflation, geopolitical
risks, and a variety of other risks we face.
The accelerating pace of technological
innovation, as well as growth of the digital
economy create changing market
dynamics that we will need to constantly
adapt to.
Within our business we are driving growth
in productivity, and developing culture and
capabilities that will help us centre our
focus on customer experience; we are
confident that we will start to see the
positive results in these areas in the year
ahead. We will be delivering a better
customer experience, faster, and this in
turn will help us reach our growth and
reputation goals.
We are experienced in riding the waves of
change and the changes we have made
allow us to react more quickly to the
uncertainty of modern times. The ever-
growing threat of climate change,
increasing the frequency and severity of
extreme weather events, will continue to
impact on our planet.
Keeping our networks secure and
heightening our cyber defences is central
to our business. Cyber security is crucial
for us and our customers, and we already
block millions of threats every day through
our Cleaner Pipes initiative. We will
continue to maintain our cyber defences,
develop new approaches to fight scams
and monitor for emerging threats.
The purpose and values that we have
adopted and held throughout our
transformation guide how we operate, and
are core to creating long-term value for
our shareholders. We are moving into the
tech-driven digital future at pace, and we
see many opportunities that Telstra is well
positioned to fulfil its purpose of building
a connected future so everyone can thrive.
1. 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.
2. Underlying EBITDA excludes guidance adjustments, and in FY23 and prior years also excludes net one-off nbn DA receipts less nbn net C2C.
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 defined as ‘operating cash flows’ less ‘investing cash flows’ less ‘payments for lease liabilities’ and excludes spectrum and guidance adjustments.
1919
Full year results and
operations review
Financial results
Summary reported results
Revenue (excluding finance income)
Total income (excluding finance income)
Operating expenses
Share of net loss from equity accounted entities
EBITDA
Depreciation and amortisation
EBIT
Net finance costs
Income tax expense
Profit for the period
Profit attributable to equity holders of Telstra Entity
Capex1
Free cashflow
Earnings per share (cents)
FY23
$m
22,702
23,245
15,356
(27)
7,862
4,470
3,392
529
812
2,051
1,928
3,597
851
16.7
FY22
$m
21,277
22,045
14,758
(31)
7,256
4,358
2,898
417
667
1,814
1,688
3,042
3,854
14.4
Change
%
6.7
5.4
4.1
12.9
8.4
2.6
17.0
26.9
21.7
13.1
14.2
18.2
(77.9)
16.0
1. Capex is measured on an accrued basis and excludes spectrum and guidance adjustments, externally funded capex, and capitalised leases.
Telstra delivered
FY23 results showing
continued financial
growth and positive
momentum through
the first year of its T25
strategy.
Financial performance in FY23 included:
• Total income (excluding finance
income) up 5.4 per cent to $23.2 billion
• EBITDA up 8.4 per cent to $7.9 billion
and Underlying EBITDA1 up 9.6 per cent
to $8.0 billion
• Net Profit After Tax up 13.1 per cent to
$2.1 billion
• ROIC up 0.8 percentage points to 7.9 per
cent and Underlying ROIC2 up 1.1
percentage points to 8.1 per cent
• Earnings Per Share was up 16.0 per cent
to 16.7 cents
Telstra's T25 strategy was on track
overall, including its growth ambitions in
underlying EBITDA and EPS. Our mobiles
business remains central to our growth
and continues to perform very strongly.
Our infrastructure, international,
Consumer and Small Business (C&SB)
fixed line and health businesses also
grew earnings. At the same time, there
are aspects of our Enterprise fixed
business that are experiencing
headwinds. We remain disciplined on
reducing our costs, particularly
considering the external economic
environment.
1. Underlying EBITDA excludes guidance adjustments, and in FY23 and prior years also excludes net one-off nbn DA receipts less nbn net C2C. Guidance adjustments
include material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as determined by the Board
and management.
2. Underlying ROIC defined as NOPAT as a percentage of total capital, excluding net one-off nbn receipts and guidance adjustments (as defined above) less tax.
20
On the back of continued growth in the
year, the Board resolved to pay a fully
franked final dividend of 8.5 cents per
share, bringing total dividends for the
year to 17.0 cents and representing a 3.0
per cent increase on the prior
corresponding period. The final dividend
is consistent with Telstra's policy to
maximise the fully franked dividend and
seek to grow it over time.
The positive progress in the year was
reflected in Telstra's T25 scorecard, which
showed the company was on track to
deliver the majority of T25 objectives. In a
few months’ time we will hit the halfway
point in delivering our strategy and the
response from customers tells us we are
absolutely on the right path.
We continue to see the positive impact of
product simplification, digitisation,
answering consumer and small business
calls in Australia, and bringing our retail
stores in house. Our Strategic Net
Promoter Score increased four points
during the year, Episode Net Promoter
Score is at historic highs and we achieved
our strongest reputation result in 15 years.
Australians are beginning to see a change
in us, driven by improvements in customer
experience, continued network leadership,
and our strength in cyber security.
Telstra continues to lead the industry on
stopping scams, and our Cleaner Pipes
program is detecting and blocking more
email, SMS and phone scams than ever
before. We are now blocking more than 9
million scam calls and around 20 million
scam SMS each month. We have also
taken steps to improve the way we collect
and retain customer ID data to help
reduce the risk of cybercrime for our
customers.
As a result of customer experience
improvements, customer complaints
reduced to a record low in the year.
Complaints from Telstra’s Consumer &
Small Business customers to the
Telecommunications Industry
Ombudsman reduced by more than a
third on the prior year, and 98 per cent of
Telstra Enterprise billing disputes are now
resolved within one billing cycle.
Full year results and operations review | Telstra Annual Report 2023
During the year significant progress on T25 also included:
• 5G population coverage reached the FY23 target of 85 per cent, and 41 per cent of
mobile traffic was on 5G. Total mobile coverage at the end of FY23 was 2.72 million
square kilometres, after adding 80,000 square kilometres in the last two years.
• Deals signed with Low Earth Orbit satellite providers OneWeb and Starlink mean
Telstra will soon deliver new and improved services in regional and remote Australia.
• Construction was well underway on Telstra's new intercity fibre project, with strong
interest from hyper-scalers, other operators, satellite providers and national
enterprises.
• Absolute scope 1+2 emissions have now been reduced by 30 per cent from an FY19
baseline – a great result towards the ambition to reduce absolute emissions by at
least 50 per cent by 2030.
Results on a guidance basis1
Total income
Underlying EBITDA
Capex
Free cashflow after lease payments (FCFaL)
FY23
FY23 Guidance
$b
23.2
8.0
3.6
2.8
$b
23.0 to 25.0
7.8 to 8.0
3.5 to 3.7
2.6 to 3.1
Guidance
versus
reported
results1
Total income
EBITDA
Free cashflow
FY23
Reported
results
FY23
Adjustments
FY23
Guidance
basis
FY22
Guidance
basis
$m
23,245
7,862
851
$m
–
88
$m
$m
23,245
21,958
7,950
1,933
2,784
7,251
3,961
1. These tables detail adjustments made to the reported results for the current period 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. Capex is
measured on an accrued basis and excludes spectrum and guidance adjustments, externally funded capex,
and capitalised leases. 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. Refer to
the guidance versus reported results schedule. The adjustments within the tables in this schedule have
been reviewed by our auditors.
Dividend
On 17 August 2023, the Directors of Telstra Group Limited resolved to pay a fully
franked final dividend of 8.5 cents per share in line with the interim dividend for the
first half of this financial year. The total dividend for FY23 is 17.0 cents per share
representing a 3.0 per cent increase on the prior corresponding period. Shares will
trade excluding entitlement to the final dividend from 30 August 2023 with payment
to be made on 28 September 2023.
The total dividend represents a 102 per cent payout ratio on FY23 reported earnings
per share and is in line with Principle 2 of our Capital Management Framework to
‘maximise fully franked dividend and seek to grow over time’.
Other information
The following commentary is provided for statutory and management financial
results. 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.
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)
2%
15%
2%
31%
3%
15%
1%
50%
51%
30%
Telstra Consumer and Small Business
Telstra Enterprise
Networks, IT and Product
Telstra InfraCo
All Other
Total external income
FY23
$m
FY22
Change
$m
Telstra Consumer and Small Business (C&SB)1,2
12,619
11,978
%
5.4
11.2
37.7
3.8
7,929
7,132
413
300
3,775
3,638
552
572
(3.5)
Telstra Enterprise2
Networks, IT and Product2
Telstra InfraCo2
All Other2
Total management reported income
25,288
23,620
7.1
Transactions between segments
(2,043)
(1,575)
(29.7)
Total income (excluding finance income)
23,245
22,045
5.4
1. Includes one-off nbn DA and Connection in FY22.
2. Includes internal income.
Total income (excluding finance income) increased by 5.4 per cent to $23,245 million
due to higher mobile services and hardware income, higher International income
(including Digicel Pacific income following acquisition), and income growth across
C&SB off-net fixed, Enterprise Network Applications and Services, Telstra InfraCo
Fixed and Amplitel. Income growth was partly offset by declines across C&SB on-net
fixed, Enterprise Data and Connectivity and Active Wholesale.
Total management reported income includes internal income between segments
eliminated from Total income. Internal income increased by 29.7% to $2,043 million
including new intercompany agreements post our corporate restructure related to
internal charges for infrastructure, power and international capacity. Internal income
comprised $1 million in Telstra C&SB, $125 million in Telstra Enterprise, $321 million in
Networks, IT and Product, $1,426 million in Telstra InfraCo and $528 million in ‘All
Other’.
22
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
contact centres, retail stores, a
dealership network, digital channels,
distribution systems and the Telstra Plus
customer loyalty program in Australia.
Income increased by 5.4 per cent to
$12,619 million including 9.5 per cent
growth in mobile income. Mobile services
revenue increased with growth in Average
Revenue Per User (ARPU) and Services In
Operation (SIOs) across mobile products,
and higher mobile hardware revenue from
increased sales volumes. Fixed product
income was relatively stable, decreasing
0.6 per cent, with growth in off-net
revenue offset by decline in on-net
revenue due to nbn migration.
Telstra Enterprise
Telstra Enterprise provides
telecommunication services and
advanced technology solutions for
government and large enterprise and
business customers in Australia and
globally. It provides advanced technology
solutions through Data and Connectivity
(DAC) and Network Applications and
Services (NAS) products such as unified
communications, cloud, security, industry
solutions and integrated services. It
provides wholesale services outside of
Australia, including voice and data, and
provides telecommunication, media and
technology products and services to
consumer, business and government
customers in the South Pacific through
Digicel Pacific, the acquisition of which
was completed on 13 July 2022.
Income increased by 11.2 per cent to
$7,929 million including $719 million for
Digicel Pacific. Domestic mobile income
increased by 2.7 per cent including
growth from Internet of Things (IoT)
value-add applications. Domestic fixed
revenue declined 2.5 per cent, with NAS
revenue gains offset by declines in DAC.
NAS revenue increased by 2.2 per cent
due to growth in professional services,
managed services and cloud including
from Telstra Purple acquisitions in the
prior period (Alliance Automation and
Aqura Technologies), partly offset by
calling applications legacy decline.
Networks, IT and Product
Networks, IT and Product consists of two
operating segments: Global Networks
and Technology and Product and
Technology. Global Networks and
Technology supports the other segments
and their respective revenue generating
activities by maintaining high level of
reliability and security of our global
network platforms and cloud
infrastructure, maintains our networks,
and is accountable for our network
intelligence and automation. Product and
Technology works with other functions to
create and deliver products and solutions
for our customers, builds and manages
our digital platforms underpinning our
customer digital experience, builds and
manages software, and provides
information technology services to all
internal functions.
Income increased by 37.7 per cent to $413
million including $105 million increase in
internal income.
Telstra InfraCo
Telstra InfraCo provides
telecommunication products and services
delivered over Telstra networks to other
carriers, carriage service providers and
internet service providers, and provides
other Telstra functions and wholesale
customers with access to network
infrastructure within Telstra InfraCo’s
asset accountabilities. It operates the
fixed passive network infrastructure
including data centres, exchanges, poles,
ducts, pits and pipes and fibre network. It
designs and constructs fibre, exchanges
and other infrastructure. It provides nbn
co with long-term access to certain
components of our infrastructure under
the Infrastructure Services Agreement
and operates the passive and physical
mobile tower assets owned or operated
by the Amplitel business.
Income increased by 3.8 per cent to
$3,775 million due to growth in recurring
nbn Definitive Agreement (DA) receipts
in line with CPI, increased internal and
external access charges, and growth in
wholesale mobility. This was partly offset
by expected declines from Fixed – Active
Wholesale legacy products and
commercial works supporting the nbn
rollout.
All Other
Certain items of income and expense
relating to multiple functions are
recorded by our corporate areas and
included in the ‘All Other’ category. This
category also includes Global Business
Services (GBS), Telstra Health and Telstra
Energy generation and markets.
Income decreased by $20 million
including a $263 million decline in one-off
nbn DA and connection income as the
nbn migration nears completion. Telstra
Health income increased by $62 million
to $305 million including organic growth
and prior year MedicalDirector and
PowerHealth acquisitions. Telstra Energy
income increased by $47 million from
energy generation revenue and fair value
gains on energy firming derivatives.
Internal income increased by $95 million
post our corporate restructure.
Full year results and operations review | Telstra Annual Report 2023
Product performance
Product income breakdown (including internal income)
0%
2%
4%
10%
2%
3%
2%
10%
10%
2%
14%
40%
6%
2%
16%
40%
18%
19%
Mobile
Fixed – C&SB
Fixed – Enterprise
Fixed – Active Wholesale
International
InfraCo – Fixed
Amplitel (Towers)
One-off nbn DA & connection
Other
Product income
Mobile
Fixed – C&SB
Fixed – Enterprise
Fixed – Active Wholesale
International
InfraCo Fixed
Amplitel (Towers)
One-off nbn DA & connection
Other
FY23
$m
10,258
4,457
3,636
403
2,429
2,556
401
72
1,076
FY22
Change
$m
9,470
4,486
3,729
%
8.3
(0.6)
(2.5)
477
(15.5)
1,501
2,456
368
378
755
61.8
4.1
9.0
(81.0)
42.5
7.1
Total management reported income
25,288
23,620
Eliminations
(2,043)
(1,575)
(29.7)
Total income (excluding finance income)
23,245
22,045
5.4
Product EBITDA margins
Mobile
Fixed – C&SB
Fixed – Enterprise
Fixed – Active Wholesale
International
InfraCo – Fixed
Amplitel (Towers)
One-off nbn DA & Connection
Other
FY23
2H23
%
44.9
3.0
11.3
29.0
29.4
65.1
79.3
51.4
(0.8)
%
46.5
3.9
10.6
23.7
26.4
64.4
77.5
42.3
(1.7)
1H23
%
FY22
%
43.2
2.2
12.0
34.0
32.7
65.8
81.2
56.5
0.5
42.2
1.2
17.9
33.3
25.8
67.4
79.9
61.6
6.3
23
Mobile
Mobile income increased by 8.3 per cent
to $10,258 million including 7.9 per cent
services revenue growth and 12.1 per cent
hardware growth. Growth in services
revenue was achieved across all mobile
sub-products. Retail mobile SIOs
increased by 1.7 million to 22.5 million.
We have 8.8 million postpaid handheld
retail SIOs, an increase of 86,000 in the
year.
Postpaid handheld services revenue
increased by 6.9 per cent to $5,391
million with a 1.0 per cent uplift in SIOs
and a 5.4 per cent ARPU increase from
$48.53 to $51.15 driven by price rises and
higher international roaming.
Prepaid handheld revenue increased by
16.5 per cent to $1,076 million with a
247,000 increase in unique users and 9.4
per cent increase in ARPU from increased
usage and one-off revenue in the first
half this year of $42 million from product
migration. Mobile broadband revenue
increased by 1.4 per cent to $664 million
driven by 2.8 per cent uplift in ARPU to
$18.53. Internet of Things (IoT) revenue
increased by 5.6 per cent to $283 million
with SIOs increasing by 1.4 million to 7.1
million, and growth in value-add
applications for Enterprise customers.
Wholesale revenue increased by 14.6 per
cent to $353 million driven by ARPU
growth and 298,000 increase in mobile
unique users (including postpaid services
in operation and prepaid unique users).
Wholesale mobile unique users increased
to 2.0 million from the continued
popularity of Mobile Virtual Network
Operator’s (MVNO) plans on the Telstra
Wholesale mobile network.
Hardware, interconnect and other
revenue increased by 9.8 cent to $2,473
million largely due to higher hardware
volumes.
Mobile EBITDA margin increased by 2.7
percentage points to 44.9 per cent due to
increased high-margin service revenue,
hardware margin growth and cost-out;
partly offset by increased costs
associated with internal infrastructure
and international roaming.
Fixed – Consumer and Small Business
(C&SB)
Fixed – C&SB income decreased by 0.6
per cent to $4,457 million impacted by
nbn migration. Off-net fixed revenue,
which is revenue from services for which
we are a reseller, increased by 4.6 per
cent to $3,295 million from ARPU growth
and as customers continue to migrate
onto the nbn network. On-net fixed
revenue, which is revenue from services
on the Telstra network, decreased by 29.4
per cent to $331 million. C&SB bundles
and standalone data ARPU increased by
3.6% to $80.15 and SIOs declined by
97,000 in the year to 3.4 million.
24
Consumer content and services revenue
decreased by 1.5 per cent to $591 million
including a decline in Foxtel from Telstra
SIOs and revenue, partly offset by growth
from our acquisition of a majority stake in
Fetch TV this period. Business apps and
services revenue decreased by 6.0 per
cent to $158 million due to legacy
product decline.
Fixed – C&SB EBITDA margin increased
by 1.8 percentage points to 3.0 per cent
with off-net fixed revenue growth and
cost-out; partly offset by reduction in on-
net fixed, and consumer content and
services revenue. Off-net nbn resale
contribution margin increased by 3
percentage points to over 8 per cent.
Fixed – Enterprise
Fixed – Enterprise income declined by 2.5
per cent to $3,636 million with declines in
DAC partly offset by gains in NAS. DAC
income declined by 16.2 per cent to $801
million driven by ARPU compression from
competition, renewals and technology
change. DAC SIOs reduced by 10.6 per
cent or 19,000 mostly in legacy. Our
T-Fibre and nbn Enterprise Ethernet
customer base increased with positive
momentum in second half net adds.
NAS income increased by 2.2 per cent to
$2,835 million with growth in professional
services, managed services, cloud
applications and equipment sales, partly
offset by decrease in calling applications
due to ISDN planned exit and market
shift from traditional voice calling
applications to integrated video
solutions.
Professional services revenue increased
by 23.5 per cent to $542 million due to
one-off infrastructure builds on large
strategic contracts and Telstra Purple
acquisitions in the prior period (Alliance
Automation and Aqura Technologies).
Managed services and maintenance
revenue increased by 4.6 per cent to $772
million due to an increase in large
customers attaching cyber security
services and service management. Cloud
applications revenue increased by 11.5
per cent to $311 million from growth in
demand for partner cloud products
including Amazon Web Services and
Microsoft Azure. Equipment sales
revenue increased by 3.8 per cent to $412
million.
Fixed – Enterprise EBITDA margin
declined by 6.6 percentage points to 11.3
per cent due to DAC and NAS EBITDA
margin declines, and an increased mix of
lower margin NAS income. DAC EBITDA
margin declined by 15.4 percentage
points to 20.8 per cent due to revenue
reduction and increased costs. NAS
EBITDA margin declined by 2.9
percentage points to 8.6 per cent due to
calling applications legacy product
decline, partly offset by growth in
professional services, managed services
and cloud.
Fixed – Active Wholesale
Fixed – Active Wholesale income
declined by 15.5 per cent to $403 million
impacted by ongoing migration to the
nbn network and legacy product decline.
Data and Connectivity revenue decreased
by 8.9 per cent to $276 million reflecting
decline in wideband products partly
offset by growth in Telstra Wholesale
Internet. Legacy calling and fixed revenue
declined by 27.0 per cent to $127 million
from continued legacy fixed product
decline.
Fixed – Active Wholesale EBITDA margin
decreased by 4.3 percentage points to
29.0 per cent due to continued legacy and
nbn revenue decline offset partly by cost-
out.
International
International income increased by 61.8
per cent to $2,429 million including $719
million for Digicel Pacific. We completed
our Digicel Pacific on 13 July 2022. Digicel
Pacific income was 2 per cent higher than
proforma income in constant currency
(CC) with growth in average mobile SIOs
across all South Pacific markets.
Excluding Digicel Pacific, International
income increased by 13.9 per cent to
$1,710 million with growth in Data and
Connectivity due to investment in
infrastructure, inclusion of internal
revenue of $113 million post corporate
restructure, partly offset by expected
declines in low margin legacy voice.
International income increased by 2.3 per
cent in CC excluding Digicel Pacific and
internal revenue.
International EBITDA margin increased by
3.6 percentage points to 29.4 per cent
due to the inclusion of Digicel Pacific
EBITDA margin of 46.8 per cent.
Excluding Digicel Pacific, and internal
revenue and costs post corporate
restructure, International EBITDA margin
increased by 0.8 percentage points in CC
due to Data and Connectivity revenue
growth.
InfraCo Fixed
InfraCo Fixed income increased by 4.1 per
cent to $2,556 million. Recurring nbn DA
income increased by 6.1 per cent to $987
million reflecting CPI linked price
increases. Recurring nbn DA income
includes infrastructure services across
ducts, racks and fibre provided to nbn co.
External infrastructure revenue increased
by 3.9 per cent to $266 million including
$122m from disposal of legacy network
assets. Internal infrastructure access
revenue increased by 9.3 per cent to
$1,067 million. Commercial and
recoverable works revenue declined by
19.7 per cent due to the initial nbn rollout
nearing completion.
InfraCo Fixed income grew 7.6 per cent
excluding commercial and recoverable
works and legacy network disposals.
Full year results and operations review | Telstra Annual Report 2023
InfraCo Fixed EBITDA margin reduced by
2.3 percentage points to 65.1 per cent
reflecting a decline in commercial and
recoverable works income, increased
power and internal costs, and investment
in asset maintenance and growth
opportunities; partly offset by growth in
recurring nbn DA and internal income.
Amplitel (Towers)
Amplitel income grew by 9.0 per cent to
$401 million due to contracted growth,
continued demand for new tower builds
and 5G upgrades. Amplitel external
revenue grew by 10.0 per cent to $66
million.
Amplitel EBITDA margin reduced by 0.6
percentage points to 79.3 per cent due to
higher asset maintenance costs.
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 from
customers to connect to the nbn network.
Income decreased by 81.0 per cent to $72
million as the nbn migration nears
completion.
Other
Other income increased by 42.5 per cent
to $1,076 million including external and
internal product income. Other product
external income increased by $84 million
to $548 million including Telstra Health
and Telstra Energy. Telstra Health income
increased by $62 million to $305 million
including organic growth and prior year
MedicalDirector and PowerHealth
acquisitions. Telstra Energy income
increased by $47 million from energy
generation revenue and fair value gains
on energy firming derivatives.
Other product internal income increased
by $237 million to $528 million post our
corporate restructure.
Eliminations
Eliminations for internal income
increased to $2,043m comprising $1,067
million in InfraCo Fixed, $335 million in
Amplitel, $113 million in International and
$528 million in Other.
Expense performance
Operating expenses1
nbn payments
Non-nbn
Sales costs
Core
Other2
Fixed costs
Underlying
One-off nbn DA and nbn cost to connect
Guidance adjustments2
Total
FY23
$m
2,048
5,914
7,962
6,622
612
7,234
15,196
35
125
FY22
$m
2,081
5,448
7,529
6,663
106
6,769
14,298
145
315
15,356
14,758
Change
$m
(33)
466
433
(41)
506
465
898
(110)
(190)
598
%
(1.6)
8.6
5.8
(0.6)
n/m
6.9
6.3
(75.9)
(60.3)
4.1
1. The data in this table includes adjustments to historical numbers to reflect changes in sales and fixed costs. Core fixed costs include commissions.
2. Other fixed costs include Telstra Health; and current and prior year acquisitions including Digicel Pacific, Alliance Automation and Aqura Technologies.
3. Guidance adjustments include 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 operating expenses $m
14,298
FY22
466
-41
-33
Sales costs–
nbn payments
Sales costs –
non-nbn
Fixed costs –
core
Fixed costs –
other
FY23
506
15,196
25
Operating expenses on a statutory reported basis
Our progress on achieving our productivity target is reported through the above
operating expenses table. The detail below provides commentary on operating
expenses as disclosed in our statutory accounts.
Operating expenses on
a statutory reported basis
FY23
$m
FY22
Change
$m
Labour
3,967
3,620
Goods and services purchased
8,511
8,228
Net impairment losses on financial assets
90
98
Other expenses
Total
2,788
2,812
15,356
14,758
%
9.6
3.4
(8.2)
(0.9)
4.1
Labour
Total labour expenses increased by 9.6 per cent or $347 million to $3,967 million.
Salary and associated costs increased by $351 million due to increased total direct
full time staff equivalents (FTE), wage inflation as agreed in our Enterprise Agreement
and insourcing of our retail stores. Total direct FTE increased by 9.9 per cent or 2,872
to 31,761 largely due to acquisitions (including Digicel Pacific) and conversion of
contact centre workforce from indirect to direct FTE.
Goods and services purchased
Total goods and services purchased increased by 3.4 per cent or $283 million to $8,511
million. Cost of goods sold, which includes mobile handsets and accessories, tablets,
mobile broadband hardware, modems and other fixed hardware, increased by 7.7 per
cent or $205 million to $2,853 million mainly due to higher postpaid mobile hardware
volumes and inclusion of Digicel Pacific hardware sales costs following acquisition.
Network payments increased by 1.6 per cent or $51 million mostly due to inclusion of
Digicel Pacific network payments following acquisition.
Other expenses
Total other expenses decreased by 0.9 per cent or $24 million to $2,788 million.
Impairment losses (excluding net losses on financial assets) decreased by 10.4 per
cent or $15 million including lower deferred commissions due to insourcing of our
retail channel. Excluding impairment, other expenses decreased by $9 million due to
cost reduction initiatives partly offset by higher energy costs and inclusion of Digicel
Pacific other expenses following acquisition.
Total operating expenses increased by 4.1
per cent to $15,356 million. Excluding
Digicel Pacific, total operating expenses
increased by 3.6 per cent. Adjusted for
one-off nbn costs and guidance
adjustments, underlying operating
expenses increased by $898 million or 6.3
per cent due to higher sales and fixed
costs, including $382 million for Digicel
Pacific.
Sales costs, which are direct costs
associated with revenue and customer
growth, increased by 5.8 per cent to
$7,962 million. This included a $466
million increase in non-nbn sales costs,
associated with higher mobile hardware
sales volumes, and including $126 million
of Digicel Pacific sales costs.
Core fixed costs decreased by 0.6 per
cent or $41 million with productivity gains
partly offset by cost inflation (labour and
non-labour including energy), and costs
associated with onshoring of contact
centres. Productivity gains included
process simplification and improvement
across back of house and support
functions.
Other fixed costs increased by $506
million including $256 million for Digicel
Pacific, and fixed costs associated with
prior year acquisitions such as Alliance
Automation, Aqura Technologies,
MedicalDirector and PowerHealth.
One-off nbn DA and nbn cost to connect
declined by 75.9 per cent as the nbn
migration nears completion.
Guidance adjustments for operating
expenses decreased by $190 million
mostly due to prior period transaction
costs relating to InfraCo Towers (now
Amplitel); and prior period transaction
and integration costs related to our
MedicalDirector and PowerHealth
acquisitions.
26
Full year results and operations review | Telstra Annual Report 2023
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 $71
million. This foreign exchange impact was
partly offset by an increase in expenses
by $50 million across labour, goods and
services purchased, and other expenses
resulting in a favourable EBITDA
contribution of $21 million.
increased by 22.8 per cent or $273 million
due to the inclusion of Digicel Pacific and
higher software amortisation associated
with the exit of legacy systems.
Depreciation of property, plant and
equipment decreased by $148 million
including net reduction from an
assessment of useful lives and a subset
of legacy copper assets being fully
depreciated in the prior period.
Depreciation of right-of-use assets
decreased by $13 million.
Depreciation and amortisation
Depreciation and amortisation increased
by 2.6 per cent or $112 million to $4,470
million. Amortisation of intangible assets
Net finance costs
Net finance costs increased by 26.9 per
cent or $112 million to $529 million due to
a $126 million increase in interest on
borrowings and $9 million reduction in
finance income; partly offset by a $23
million net reduction in other financing
items (as set out in note 4.4.3 in the
Financial Report).
Interest on borrowings increased due to
higher interest rates and higher average
gross debt. Our average gross borrowing
rate increased from 3.7 per cent to 4.6
per cent reflecting higher market interest
rates and higher average borrowing rates
on the non-recourse borrowing facilities
used to fund the majority of the
consideration for the Digicel Pacific
acquisition. Our borrowing portfolio is
around 70 per cent fixed.
Cash flows
Operating expenses on a reported basis
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 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
Cash and cash equivalents at the end of the period
FY23
$m
6,802
FY22
$m
7,249
(5,951)
(3,395)
(3,870)
(3,094)
(2,081)
851
(969)
(118)
1,040
10
932
(301)
3,854
(3,971)
(117)
1,125
32
1,040
Change
%
(6.2)
(75.3)
(25.1)
n/m
(77.9)
75.6
(0.9)
(7.6)
(68.8)
(10.4)
Free cashflow used in operating and
investing activities was $851 million
representing a decrease of $3,003 million
due to reduction in net cash provided by
operating activities and increase in net
cash used in investing activities.
Significant acquisitions included Digicel
Pacific and Fetch TV in this period; and
Alliance Automation, Aqura Technologies,
MedicalDirector, PowerHealth and Fone
Zone in the prior period.
Net cash provided by operating activities
decreased by $447 million to $6,802
million mainly due to a $1,653 million
increase in payments to suppliers and
employees, partly offset by a $1,320
million increase in receipts from
customers. The reduction in net cash
provided by operating activities included
higher reported EBITDA; offset by a $33
million investment in working capital this
period compared to a $923 million
working capital benefit in the prior period
from reduced receivables including lower
handset sales.
Net cash used in investing activities
increased by $2,556 million to $5,951
million. This included a $1,717 million
increase in payments for shares in
controlled entities mostly due to the
acquisition of Digicel Pacific. Payments
for intangible assets increased by $478
million including increased spend on
software and spectrum renewals.
Accrued capital expenditure on a
guidance basis was $3,597 million or 16.1
per cent of sales revenue. This included
approximately $100 million for Digicel
Pacific and $300 million of strategic
investment for the inter-city fibre and
Viasat infrastructure projects.
Net cash used in financing activities
decreased by $3,002 million to $969
million. This decrease included an
increase in net proceeds from borrowings
of $3,840 million, $923 million of
proceeds from the issue of equity-like
securities to Export Finance Australia as
part funding for the Digicel Pacific
acquisition, and prior period payment of
$1,350 million for share buy back; partly
offset by prior period proceeds of $2,883
million from disposal of a 49 per cent
interest in our towers business (now
Amplitel).
On a guidance basis, free cashflow after
operating lease payments was $2,784
million. Free cashflow after operating
lease payments on a guidance basis
excludes mergers and acquisitions
($2,595 million including Digicel Pacific)
and spectrum payments ($112 million);
and includes lease payments ($774
million).
27
Debt position
Our gross debt position was $15,350
million comprising borrowings of $12,675
million, lease liabilities of $3,191 million,
partly offset by $516 million in net
derivative assets.
Gross debt increased by 11.6 per cent or
$1,590 million reflecting debt issuance of
$3,534 million, $30 million of non-cash
increase and net movement in lease
liabilities, partly offset by debt
repayments of $1,974 million including
commercial paper (net). Debt issuance
included 8-year €500 million Euro bond
($837 million Australian dollar
equivalent), 5-year $650 million
Australian dollar bond, $904 million in
revolving bank facilities (net); and $1,127
million in non-recourse debt facilities
entered into with the Australian
Government through Export Finance
Australia for the funding of the Digicel
Pacific acquisition.
Net debt increased by 13.3 per cent or
$1,698 million to $14,418 million
reflecting the increase in gross debt and
$108 million decrease in cash holdings.
Debt issuance
Euro bond
AUD bond
FY23
$m
Debt repayments
837
Euro bond
650
AUD bond
Revolving bank facilities (net)
904
Bank loan AUD
Debt facilities with
Australian Government
1,127
Other loans
Bilateral bank and other loans
16
Commercial paper (net)
Total
3,534
Total
FY23
$m
1,248
500
150
61
15
1,974
Financial settings
FY23
Comfort zone
Debt servicing1
Gearing2
Interest cover3
1.8x
1.5x to 2.0x
44.7%
50% to 70%
12.8x
>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 including impact from our acquisition of Digicel Pacific, gearing ratio is 44.7 per
cent and interest cover is 12.8 times.
28
Financial position
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 (%)
Full year results and operations review | Telstra Annual Report 2023
FY23
$m
6,733
38,296
45,029
10,092
17,121
27,213
17,816
17,816
7.9
12.5
FY22 Restated1
Change
$m
6,260
35,368
41,628
9,698
14,954
24,652
16,976
16,976
7.1
11.3
%
7.6
8.3
8.2
4.1
14.5
10.4
4.9
4.9
0.8pp
1.2pp
1. The data in this table includes adjustments to historical liabilities, net assets and total equity. Refer to Note 1.7 in the Financial report for further detail.
Our balance sheet is in a strong position
with net assets of $17,816 million. The
acquisition of Digicel Pacific increased
net assets by $1,058 million at acquisition
date. Refer to Note 6.1.2(a) in the
Financial Report for further detail on
Digicel Pacific.
Current assets increased by 7.6 per cent
to $6,733 million. Derivative financial
assets increased by $143 million due to
instruments maturing in the next 12
months and valuation impacts offset by
maturities. Trade and other receivables
and contract assets increased by $142
million due to increased trade receivables
from contracts with customers including
for Digicel Pacific. The allowance for
doubtful debts in respect of all our trade
and other receivables and contracts
assets reduced by $17 million in the
period. Prepayments increased by $93
million including for Digicel Pacific and
software licences. Current tax
receivables increased by $135 million due
to lower taxable profit and higher PAYG
instalments compared to prior year.
Inventories increased by $70 million
including due to insourcing of Telstra
branded retail stores and to mitigate
supply chain issues. Cash and cash
equivalent decreased by $108 million.
Non-current assets increased by 8.3 per
cent to $38,296 million. The increase was
mostly due to intangible assets
increasing by $2,834 million due to
acquisitions including Digicel Pacific.
Property, plant and equipment increased
by $484 million due to additions,
including Digicel Pacific, exceeding
depreciation expenses. Trade and other
receivables and contract assets increased
by $156 million consistent with current
trade and other receivables. Derivative
financial assets decreased by $179
million mostly due to instruments
maturing in the next 12 months and
valuation impacts. Deferred contract
costs decreased by $150 million due to a
reduction in commissions paid and
deferred following the insourcing of retail
stores. Investments accounted for using
the equity method decreased by $128
million including reduction in fair value of
investments held by Telstra Ventures
recognised in other comprehensive
income.
Current liabilities increased by 4.1 per
cent to $10,092 million. Trade and other
payables increased by $156 million
including for Digicel Pacific, partly offset
by payment of stamp duty in the period
relating to Amplitel. Other provisions
increased by $167 million including
Digicel Pacific.
Non-current liabilities increased by 14.5
per cent to $17,121 million. The increase
was primarily due to borrowings
increasing by $1,721 million including
non-recourse debt used for funding the
acquisition of Digicel Pacific. Deferred
tax liabilities increased by $434 million
due to the inclusion of deferred tax
liabilities recognised by Digicel Pacific
and resulting business combination
adjustments. Contract liabilities and
other revenue received in advance
increased by $146 million including
Digicel Pacific.
29
Board of
Directors
Key
B Board
A Audit and Risk Committee
N Nomination Committee
P People and Remuneration Committee
Denotes Chairman/Chair of Board/Committee
Denotes member of Board/Committee
Denotes previously Chairman of Committee (2009-2016)
Non-executive Director since July 2008, Chairman effective 27 April 2016 and last re-elected on 13 October
2020.
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 2016 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). Director, Brookfield Infrastructure Partners L.P
(from 2021 and previously 2017–2020) and Treasury Wine Estates Limited (from 1 May 2023).
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).
Vicki Brady became the CEO and Managing Director of Telstra, Australia’s largest telecommunications
company, on 1 September, 2022.
Vicki joined Telstra in 2016 and was most recently Chief Financial Officer and Strategy & Finance Group
Executive. In this role, Vicki guided the company’s financial performance and reporting, led the development
of and progress against its corporate strategy, and oversaw its risk and internal audit capabilities, with the aim
of delivering shareholder value over the long term.
Before this, Vicki was head of Telstra’s Consumer & Small Business function. In this role she led a business
unit with $14.6 billion of income and was one of the architects of the T22 and T25 strategies. She has also
held roles as Group Managing Director, Sales & Service and Group Managing Director, Consumer. Before
working at Telstra, Vicki gained extensive executive leadership experience in telecommunications and services
companies in Australia and internationally, working for organisations including Optus, SingTel and KPMG.
Vicki has a Bachelor of Commerce from the Australian National University and a Master of Science in
Management from Stanford University’s Graduate School of Business.
She is a member of the Groupe Speciale Mobile Association (GSMA) board; Patron, on behalf of Telstra, of the
National Aboriginal and Torres Strait Islander Art Awards (NATSIAA); a member of the Institute of Chartered
Accountants ANZ and is a Graduate of the Australian Institute of Company Directors.
John P Mullen
BSc
B N P
Vicki Brady
MScM (Stanford GSB),
BCom (ANU), CA
B
30
Board of Directors | Telstra Annual Report 2023
Non-executive Director appointed on 15 February 2019 and last re-elected on 11 October 2022.
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), Glow Financial Services (from June 2022) and Spotzer Digital
(from April 2023). Advisor, Reggeborgh Groep BV (from 2018).
Non-executive Director appointed on 17 February 2023.
Maxine is an experienced ASX top-20 director with over 20 years Board experience in some of Australia’s most
high-profile companies.
Maxine has a diverse background with strong experience in the corporate advisory, finance and regulatory
sectors. She has a strong customer perspective and is particularly focused on the changing nature of
customer expectations.
Maxine is a former Managing Director of Investment Banking at Investec Bank (Australia) Limited. She also
practised as a corporate lawyer with Freehill Hollingdale & Page (now Herbert Smith Freehills) and spent
several years as a lecturer in the Faculty of Law at both the University of NSW and the University of Sydney.
Other listed company directorships (past three years)
Director, Woolworths Group Limited (from December 2020), Qantas Airways Limited (from August 2013) and
Origin Energy Limited (from November 2013). Former – Director, Orica Limited (April 2013–December 2022).
Other directorships and appointments
Member of the University of NSW Council.
Non-executive Director appointed on 11 May 2018, last re-elected on 12 October 2021.
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 Tillman Global Holdings LLC.
Board Advisor, LotusFlare (from 2019).
Non-executive Director appointed on 12 April 2016 and last re-elected on 11 October 2022.
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, MLC Life Insurance (from March 2023), Lion Pty Limited and Lion Global Craft Beverages Pty
Limited (from 2021).
31
Eelco Blok
MS, BBA
B N
Maxine Brenner
BA, LLB
B A N
Roy H Chestnutt
BSc, BA, MBA
B A N
Craig W Dunn
BCom, FCA
B A N
Ming Long AM
BEc, LLB, MBA, FCA, GAICD
B A P N
Bridget Loudon
BCom (University College Galway)
B P N
Elana Rubin AM
BA (Hons), MA, SF Fin, FAICDLife
B P N
Non-executive Director effective 1 January 2023.
Ming is an experienced director with over a decade of board experience in areas including real estate,
infrastructure, funds and investment management and financial services. She also has a wealth of experience
in sustainability and diversity.
Ming has held senior executive and leadership positions in listed and private equity owned organisations
leading complex multi-year strategies to transform companies, as well as experience in corporate
restructuring. She is passionate about helping Australia drive better economic, social and environmental
outcomes.
Ming has played an influential role in industry leadership in Australia and is on the steering committee for
the Australian Institute of Company Directors Climate Governance Initiative and is a member of the ASIC
Corporate Governance Consultative Panel. In 2020, she was awarded a Member of the Order of Australia for
her significant service to the financial and real estate sectors, and to diversity and inclusion.
Other directorships and appointments
Director, IFM Investors (from 2022), QBE Insurance (Auspac) (from 2019), Committee for Economic
Development of Australia (CEDA) (from 2019) and Chair of the Diversity Council Australia Limited (from 2017).
Previously Chair of AMP Capital Funds Management Limited.
Non-executive Director appointed on 14 August 2020 and elected on 13 October 2020.
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).
Non-executive Director appointed on 14 February 2020 and elected on 13 October 2020.
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, Dexus Funds Management Limited (from September 2022), Slater and Gordon Limited (from 2018.
Acting Chair from August–November 2021). Former – Director, Afterpay Limited (2017–2022, Chair 2020–
2022).
Other directorships and appointments
Chair, Australian Business Growth Fund (ABGF) (from March 2023) and Victorian Managed Insurance
Authority (from 2016). Director, Reserve Bank of Australia (from 31 August 2023).
Non-executive Director elected on 16 October 2018, last re-elected on 12 October 2021.
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.
Niek Jan van Damme
Drs.
B P N
Other directorships and appointments
Chairman of the Supervisory Board, NGN Fiber Network (from February 2022). Chairman, Infrafibre Germany
GmbH (Director from November 2021, Chairman from January 2023). Director, Connectivitree Corporation
(from June 2023). Board Advisor, Glow Financial Services Ltd (from May 2022) and LotusFlare (from
November 2020).
32
Senior
management
team
Vicki Brady
Chief Executive Officer
Brendon Riley
CEO, Telstra InfraCo
Vicki became the CEO and Managing Director of Telstra on
1 September 2022. As the head of Telstra, she leads T25,
Telstra’s strategy for sustainable growth which is designed to
create exceptional customer experiences our customers can
count on; lead network and technology solutions that deliver
our future; deliver sustained growth and value for shareholders;
and create the place where people want to work.
Michael Ackland
Chief Financial Officer & Group Executive, Strategy & Finance
Michael became CFO on 1 September 2022 after leading
Telstra’s Consumer & Small Business for four years. He is
responsible for guiding the company’s financial performance,
reporting and progress against its corporate strategy. He also
oversees risk and internal audit capabilities ensuring we deliver
shareholder value long term.
Brendon became the CEO of Telstra InfraCo on 1 October 2018.
Telstra InfraCo is responsible for managing, developing and
growing Telstra’s significant portfolio of infrastructure assets
within Australia. This includes Amplitel, our mobile tower
business, which is 51% owned by Telstra. Brendon is also
responsible for Telstra Wholesale which provides both fixed and
mobile services to domestic and international wholesale
customers.
Dean Salter
Group Executive, Global Business Services
Dean is responsible for Global Business Services (GBS) which
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.
Kim Krogh Andersen
Group Executive, Product & Technology
Kim joined Telstra in January 2020 as Group Executive, Product &
Technology (P&T). P&T is responsible for creating and delivering
products and solutions for customers across all segments both
domestically and internationally. It has accountability for
product strategy, lifecycle, and profitability, as well as Telstra’s
strategic partner management, and technology and innovation
where products are incubated and brought to scale. P&T is also
accountable for Telstra's Software Engineering & IT and Data &
AI functions and accelerating Telstra’s digital leadership.
David Burns
Group Executive, Enterprise
David, as Group Executive Enterprise, is responsible for
delivering connectivity, platforms, applications and tailored
industry solutions to Telstra’s enterprise and government
customers. Enterprise is also responsible for Telstra’s
international operations,, the largest subsea cable network in
the Asia Pacific region, and Digicel Pacific.
Lyndall Stoyles
Group General Counsel and Group Executive, Sustainability,
External Affairs & Legal
Lyndall is Telstra’s Group General Counsel and Group Executive
for the Sustainability, External Affairs and Legal team which 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.
Kathryn van der Merwe
Group Executive, People, Culture & Communications
Kath joined Telstra in July 2023 and is a highly regarded people
and transformation leader with a track record of strengthening
organisational culture and capability. People, Culture &
Communications (PC&C) focus on our people so they can deliver
great outcomes for our customers through building the
capabilities and culture required to deliver T25. PC&C is also
responsible for improving Telstra’s reputation.
Nikos Katinakis
Group Executive, Global Networks & Technology
Brad Whitcomb
Group Executive Consumer & Small Business
Nikos leads Global Networks & Technology which is responsible
for ensuring Telstra delivers and operates next generation
network technologies to create one of the largest, smartest,
safest and most reliable networks in the world. This includes
Telstra’s cyber security capabilities, private and public cloud
infrastructure, identifying and deploying new technology, such
as those related to 5G and Edge Compute, and delivering
network automation and orchestration capabilities to provide
exceptional experiences for customers.
Brad joined Telstra in January 2023 and leads Consumer & Small
Business (C&SB), which is responsible for creating and
delivering exceptional customer experiences for our consumer
and small business customers across our retail, contact centre
and digital channels. Brad has accountability for driving growth
from our core business for those customer segments, and also
leads the Telstra Plus customer loyalty program and Telstra
brand and marketing activity.
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
For Telstra, doing business responsibly
means doing the right thing – for our
customers, our people and the
communities we serve. We believe every
company has a responsibility to operate
sustainably and actively consider the
impact it creates for customers,
communities and the environment. This is
why ‘doing business responsibly’ is one of
the pillars in our T25 strategy and the
foundation of our refreshed sustainability
strategy.
Our purpose is to build a connected
future so everyone can thrive. This
underpins our belief that Telstra has a
real opportunity to play a leadership role
in creating a more sustainable and
inclusive world. Technologies like
machine learning, data and artificial
intelligence, IoT and high-speed networks
can help address many of the challenges
our world is facing – especially as they all
work together to increase their impact.
Telstra is at the heart of this, providing
the foundational connectivity and
innovative solutions that enable us and
our customers to actively contribute to
addressing local and global challenges.
We are harnessing technology to create
a better digital world and minimise our
impact on the planet, as well as helping
our customers and Australia do the same.
A healthier planet and more inclusive
world are our two most ambitious goals
and are grounded in our commitment to
doing business responsibly.
At Telstra, we're managing sustainability by:
• Doing business responsibly – delivering
on our commitment to do business
responsibly and being transparent,
ethical and accountable, wherever we
operate. We recognise that the long-
term success of our company depends
on maintaining the trust of our
customers, community and partners,
not just within our own operations but
also across our broader supply chains.
• Creating a better digital world –
technology connects us all. We are
working to create a better digital world
by leveraging our advanced network
and technology capabilities to connect
people and support them to access
the skills and tools to get the most
out of their tech and stay safe online.
• Sustaining our planet – we take bold
climate action, protect nature and
biodiversity and contribute to a circular
economy. We work with our customers
and suppliers to minimise the impact of
climate change and enable the
transition to a low-carbon future.
In FY23, we have been trialling new ways
of embedding sustainability into our
business, our decision making and our
culture. We know that building
organisational resilience and capacity to
respond to emerging challenges will
position us well to anticipate and manage
the future risk landscape more
effectively. It accelerates innovation by
driving the development of new products,
services and solutions that lead to new
customers and market opportunities.
As a purpose driven organisation, it helps
attract and retain the best talent, builds
our reputation and strengthens our
stakeholder relationships.
For a detailed overview of our approach
and progress in relation to each of these
three strategic pillars, please see our
2023 Bigger Picture Sustainability
Report, available online at telstra.com/
sustainability/report.
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 2023 Human Rights and
Modern Slavery Act Statement, available
online at telstra.com/sustainability/
report.
We have aligned our reporting with the
recommendations of the Task Force on
Climate-related Financial Disclosures
(TCFD) and will continue to enhance our
climate-related disclosures to reflect our
response to the impacts of climate
change. Further information is provided
in the Understanding our climate risks
section of this report.
34
We are changemakersWe are better togetherHarnessing our technology to create a more sustainable and inclusive worldWe careWe make it simpleOur purposeand valuesOur commitmentSustainabilitypillarsTo build a connected future so everyone can thriveOur sustainability strategySustaining our planetCreating a better digital worldFair and transparent productsEthical supply chainLeading conduct and governanceOur peopleDoing business responsiblyOur foundationConnecting regional and remote communitiesBuilding responsible tech skillsAdvancing online safety, privacy and securitySupporting people in vulnerable circumstancesTaking bold climate actionProtecting nature and biodiversityProgressing a circular economyEnabling the transition for our customers Understanding
our climate risk
Since 2020, Telstra has aligned its climate-related disclosures with the
recommendations of the Task force on Climate-related Financial Disclosures
(TCFD)1, which cover four thematic areas: governance, strategy, risk
management, and metrics and targets.
Forward-looking statements
This section includes forward-looking
statements which are provided as a
general guide only. They reflect
expectations which involve risks,
uncertainties and other factors which
may be beyond Telstra’s control, many of
which are described in the following parts
of this section: “Strategy” and “Metrics
and Targets”.
Investors should not place undue reliance
on the forward-looking statements, and
to the maximum extent permitted by law,
Telstra gives no representation, warranty
or other assurance in connection with,
and disclaims all responsibility for, the
currency, accuracy, reliability and
completeness of any forward-looking
statements.
Due to the inherent uncertainty and
limitations in measuring or quantifying
greenhouse gas (GHG) emissions under
the calculation methodologies used in
the preparation of such data, all GHG
emissions data or references to GHG
emissions volumes (including ratios or
percentages) in this report are estimates.
The accuracy of Telstra’s GHG emissions
data and other metrics may be impacted
by factors, including inconsistent data
availability, a lack of common definitions
and standards for reporting climate-
related information, quality of historical
emissions data, reliance on assumptions
and changes in market practice. These
factors may impact Telstra’s ability to
meet commitments and targets or cause
Telstra’s results to differ materially from
those expressed or implied in this report.
There may also be differences in the
manner that third parties calculate or
report GHG emissions data compared to
Telstra, which means that third party
data may not be comparable to our data.
In FY23 Telstra finalised the acquisition of
Digicel Pacific. Telstra is working to
determine the necessary actions to
incorporate Digicel Pacific in its existing
climate scenario analysis, climate risk
financial quantification, adaptation
planning, emissions reduction plans and
to gather the relevant activity data to
calculate Digicel Pacific’s scope 1, 2 and
3 emissions profile in line with the GHG
Protocol so that Digicel Pacific can be
integrated into emissions disclosures and
targets. The disclosures in this report in
relation to the matters noted above do
not include Digicel Pacific unless
otherwise stated.
See the forward-looking statements
disclaimer at the front of this report for
more information.
1. https://assets.bbhub.io/company/sites/60/2021/10/
FINAL-2017-TCFD-Report.pdf.
35
35
Governance
Our approach to climate risk governance
Telstra recognises that climate change poses both risks and opportunities for how we do business, including how we best meet the
needs of the customers and communities we serve, and continue to deliver shareholder value. We have implemented a governance
model that enables our Board to have oversight of environment, social, and governance (ESG) issues including climate-related
issues and have defined management responsibilities for assessing and managing those issues. Roles and responsibilities for
overseeing, assessing, and managing climate-related issues include:
Telstra Board
Oversees Telstra Group's approach to ESG and monitors its performance, including approving key external
environmental targets and disclosures under the TCFD framework.
Audit and Risk
Committee (ARC)
Review significant developments in the areas of corporate governance and ESG relevant to the ARC's
responsibilities. Also reviews and monitors Telstra Group's ESG performance and considers significant issues
relating to ESG, including:
• reviewing reports from management on climate-related risks and the risk management plans which
management has put in place to deal with those risks
• making recommendations to the Board on key external environmental targets and disclosures under the
TCFD framework
• overseeing other selected external environmental disclosures.
CEO Leadership
Team (CEOLT)
The CEO, together with the senior leadership team including the CFO (together the CEOLT) is responsible
for management decisions and oversight in relation to Telstra Group's sustainability strategy (including
environment).
Sustainability
Executive
Chairs the Environment Executives Group and provides day-to-day management of climate-related activity,
risks and opportunities.
Environment
Executives Group
• Provides leadership on Telstra's environmental ambition, determining key priorities.
• Executes management decisions on environment-related matters, including making recommendations to the
CEOLT.
Other governance
forums
Provide leadership and governance in relation to specific elements of Telstra's environment strategy, such as
our climate and circular economy targets.
Working groups
• Deliver on our commitments and identify, assess and monitor environmental (including climate-related) risks
and opportunities which may impact our business.
• Provide updates to the Sustainability Executive, Environment Executives Group and other Governance
forums on the status and management of commitments, risks and opportunities relating to our environment
strategy.
Roles and responsibilities in relation to climate-related issues
Our Corporate Governance Statement at
telstra.com.au/aboutus/investors/
governance-at-telstra/documents-
charters provides an overview of Board,
Executive and management roles and
responsibilities as they relate to risk
management, including climate-related
risks.
Board accountability of climate-
related issues
The Board reviews our environment
strategy annually, including climate-
related issues, risks, opportunities and
progress against our targets and metrics.
Our Audit and Risk Committee (ARC)
receives twice yearly environment risk
updates, including summaries of
performance against our environment
strategy targets. The ARC also receives
regular updates on key cross company
risks, which includes consideration of
climate-related risks. These reviews and
updates are used by the Board and ARC
to monitor and oversee progress against
our climate goals and targets for
addressing climate-related issues.
In FY23, key climate-related topics
presented to the Board and ARC for their
strategic governance and oversight
included: performance against climate
targets and business activities to support
achievement of those targets, carbon
credits, external policy changes and
potential legal risks, emerging climate-
related disclosure standards and
frameworks, physical and transition
climate risks and opportunities, our
climate disclosures aligned to TCFD
recommendations, our National
Greenhouse gas and Energy Reporting
(NGER), and the evolution of our
environment strategy and overarching
sustainability strategy.
36
Understanding our climate risk | Telstra Annual Report 2023
Management accountability of
climate-related issues
Telstra has assigned management roles
related to assessing and managing
climate-related issues, as outlined above
in the figure titled Roles and
responsibilities in relation to climate-
related issues on page 36.
Climate-related issues are managed and
monitored via our governance and
environment risk forums under the
direction of the CEO Leadership Team
(CEOLT) and Environment Executives
Group (EEG). Material climate-related
issues or elevated climate-related risks
which have the potential to put our
environment commitments at risk are
escalated to CEOLT or CEOLT members
via regular quarterly or ad hoc briefings
and communicated to the ARC and/or
Board.
The Sustainability Centre of Expertise
(CoE) has accountability for the design
and delivery of our sustainability
strategy. The Sustainability CoE reports
directly to the Sustainability Executive,
with a remit that also includes helping
guide execution across the organisation,
preparing our sustainability disclosures,
managing priority sustainability
initiatives, and working across business
functions to provide sustainability
subject matter expertise.
In FY23 we further matured the reporting,
management, and mitigation of climate-
related risks. Areas of focus included:
• linking remuneration for most of our
employees to our scope 1+2 emissions
reduction target
• integrating climate-related issues into
annual planning
• enhancing due diligence requirements
for our carbon credit purchases
• progress against and risk mitigations for
our climate commitments
• further embedding of climate into
business processes (such as our
shadow carbon price)
• reviewing external developments across
climate-related policy, legal/regulatory
requirements, science, and markets,
and
• continuing to improve the power
resilience of our network to mitigate
climate impacts.
Strategy
Integrating climate into our corporate
strategy
At Telstra we typically set our corporate
strategy in three-to-five-year cycles,
reflective of the shifting nature of our
industry. This approach provides the
flexibility we require to respond to the
changing needs of our customers,
business, and external stakeholders. For
the same reasons, this strategic cadence
also applies to our sustainability strategy
(which includes addressing climate
change).
Given our infrastructure assets often
have long lifespans, our assessment of
the physical impacts of climate change
on our assets and longer-term climate
transition risks and opportunities covers a
longer period than our defined corporate
strategy. The design and stress-testing of
our planning, business strategy and
product development cycles therefore
consider multiple time horizons.
Climate is included in our company’s T25
strategy through the Responsible
business pillar. However, climate is also
relevant to other T25 pillars including
Customer experience, Network and
technology, and Growth and value. Two
of our climate commitments are part of
the T25 scorecard2, which tracks our
progress towards delivery of T25.
Beneath this, climate actions are
integrated into our sustainability
strategy, which includes an ambition to
“harness our technology to create a more
sustainable and inclusive world”. Our
climate focus includes taking bold
climate action through driving down
emissions in our own business and the
wider economy, adapting to climate
impacts by improving our network
resilience, and enabling the transition to
a low carbon economy through the
products, services, and solutions we
deliver for our customers.
Our climate-related risks and
opportunities and scenario analysis
To aid our short- and long-term planning,
we undertake scenario analysis to
understand how our exposure to climate-
related risk and opportunities may
change over time. We recognise our
business, assets, people, and the
communities we serve are exposed to
both physical (acute and chronic3) and
transition climate-related risks and
opportunities. We consider both types of
climate-related issues in our scenario
analysis. The assessment also includes
the potential impact of these risks over
short (<3 years), medium (3-10 years) and
long term (>10 years) time horizons. We
have assessed the impacts of these risks
under three different climate scenarios:
• Accelerated Action, where global
collaboration works to limit heating
below 2oC4,
• Divided World, which assumes global
heating will increase between 2-3oC,
and
• Changed Climate, with global heating
rising to greater than 4oC.
The outcomes of this scenario analysis
are detailed in the Physical risks and
Transition risks tables on pages 38 and
39. The results cover acute and chronic
physical climate risks identified and
assessed within our Australian operations
(where the majority of our infrastructure
assets are located) and transition risks
across our global operations. The severity
of risk is assessed based on the potential
financial impact to our business. Further
details of our methodology and full
results, including the processes used to
determine which risks and opportunities
could have a material financial impact,
can be found in our Climate Change
Report 2022 at telstra.com.au/content/
dam/tcom/about-us/community-
environment/pdf/Telstra-Climate-
Change-report-2022-Accessible.pdf.
In FY23 we finalised the acquisition of
Digicel Pacific and are working to
integrate and expand our understanding
of its physical and transition risk
exposure. With thousands of above
ground infrastructure assets spread
across a broad range of locations, many
with challenging access considerations,
network resilience in the face of our
changing climate is a key risk. At present
we are undertaking a gap analysis to
determine the necessary actions to
incorporate Digicel Pacific into our
existing climate scenario analysis,
climate risk financial quantification,
adaptation planning and emissions
reduction plans.
2. 1) Enabling renewable energy generation equivalent to 100 per cent of our consumption by 2025 and, 2) Reducing absolute emissions by at least 50 per cent by 2030
(from a FY19 baseline).
3. Acute climate-related risks relate to discrete events such as a tropical cyclone or bushfire. Chronic climate-related risks are those associated with long-term changes to
climate trends, such as increasing average annual temperatures or rising sea levels.
4. All temperature changes refer to the level of global mean surface temperature increase experienced by 2100 above pre-industrial levels.
37
Physical risks
Risk factor
Risk summary
Current
2030
2050
2030
2050
2030
2050
Inherent
risk5
Accelerated
Action (<2°C)
Divided World
(2-3°C)
Changed
Climate (>4°C)
Acute:
Bushfires
Acute:
Flooding
Acute:
Cyclones
Increase in bushfires – increase in frequency
and severity of bushfires leading to
infrastructure damage loss, extended service
disruption, and reputational impact
High
Increase in flooding – increase in flooding
frequency and severity leading to infrastructure
damage loss, extended service disruption, and
reputational impact
Medium
Increase in cyclones – increase in cyclone
severity leading to coastal infrastructure
damage loss and/or extended service disruption
Medium
---
---
---
---
---
Chronic:
Sea level rise
Rising sea levels – increase in sea levels
leading to coastal inundation and damage to
low-lying infrastructure increasing costs for
relocation or repair
Medium
---
---
---
Chronic:
Temperature
Increase in annual average temperature –
increase in maintenance requirements and
associated costs
Medium
Increase in annual average temperature –
higher energy costs from increased heat load
Medium
Chronic:
Precipitation
Increase in precipitation – increase in
maintenance requirements and associated
costs
Medium
---
---
---
---
Health and
welfare
Acute Risk: Potential injury or death – of
staff, contractors, or community members
associated with acute physical climate events,
the emergency response, and restoration of
telecommunications service
High
Chronic Risk: Work restrictions to avoid heat
morbidity – increased exposure to heat stress
conditions requires more frequent breaks or
prolongs essential work resulting in lost
productivity, greater risk of prolonged service
disruption, and inability to perform scheduled
maintenance
Medium
Compound risk of multiple events – increase
in number of backup power options required and
self-insurance costs
Medium
Compounding
risks
Compound risk of multiple events –
prolonged repair times due to site accessibility,
resource availability and safety issues
Medium
Compound risk of multiple events – supply
chain disruptions to purchased products and
services
Medium
Physical risks
Risk rating:
Critical
High
Medium
Low
Risk trend:
Increasing
--- Unchanged
Decreasing
5. The inherent risk rating takes account of the likelihood (probability and frequency) and consequence (both tangible and intangible) or a risk occurring. Consequences
consider financial, customer, health, safety, wellbeing, and environment, legal, regulatory and third party, reputation, and data impacts. When determining inherent risk
exposure both quantitative and qualitative inputs are used including business history and experiences, industry information, relevant incident data, market insights, and
independent subject matter expertise.
38
38
Understanding our climate risk | Telstra Annual Report 2023
Transition risks
Risk factor
TCFD Risk
classification Risk summary
Inherent
risk5
Accelerated
Action (<2°C)
Divided World
(2-3°C)
Changed
Climate (>4°C)
Current
2030
2050
2030
2050
2030
2050
Change in policy and
regulations – increasing
compliance and regulatory
requirements for our products
and services, particularly as the
physical impacts of climate
change become more frequent
and extreme, leading to
increased cost
Carbon credit price increases
– increase in carbon credit price
to meet our carbon neutral
Climate Active certification, and
potential scarcity of high-quality
credits that meet our criteria
Low carbon technology
upgrades – products and
services substituted or phased
out before reaching maturity
Uncertainty of new
technologies – large capital
outlays with potential for
unsuccessful investment returns
Community reliance on
continuity of services –
inability to meet service
demands, particularly in the face
of physical climate impacts,
leading to negative customer
experiences and potential
market share loss
Changing consumer
preferences – changes in
demand for existing offerings
requiring quick pivots to new
offerings reducing competitive
advantage and leading to market
share loss
Price pass through – rise in
supply chain pass through costs
from an increase in carbon taxes
Costs to maintain ESG
reputation – inability to meet
ESG targets and rising
expectations of ESG
performance leading to negative
brand perceptions and erosion of
brand value
Policy and
regulation
Policy and
legal
Carbon
credits
Policy and
legal
Substitution Technology
New
technologies
Technology
Customer
expectations
Market
Consumer
preferences
Market
Carbon
taxation
Market
Brand and
reputation
Reputation
Transition risks
High
---
---
Medium
Medium
---
---
Medium
---
---
---
---
---
---
High
---
---
Medium
---
---
---
Low
---
---
---
High
---
---
Risk rating:
Critical
High
Medium
Low
Risk trend:
Increasing
--- Unchanged
Decreasing
39
39
Our resilience to a changing climate
As part of our scenario analysis process,
we have completed a top-down financial
quantification of the impacts of
bushfires, cyclones, coastal inundation,
urban flash flooding and increasing
temperatures on our above ground assets
in Australia. We have also explored the
operational impacts of chronic heat on
our people. We found the materiality of
the financial impact will depend on how
events manifest in the future, including
their timing, location, and magnitude.
Physical risk resilience
The increase in bushfire and flood
frequency and severity, and the health,
safety and wellbeing of our staff,
contractors, and community members,
represent the highest short term risk
areas when assessing our climate
physical risks. One example is the Black
Summer bushfires in 2019-2020 which
caused significant disruption to our
assets and services. Further information
about the impact of those bushfires on
our business is available in the Bigger
Picture 2020 Sustainability Report at
telstra.com.au/sustainability/
report#2020.
We found that over 306 per cent of our
above ground assets are currently
exposed to at least one climate hazard.
Under the Changed Climate scenario
(greater than 4°C rise above pre-
industrial levels) this increases to over 50
per cent in 2050. The most common
hazard exposure was to chronic
temperature7 increase, however its
impact to our operations is low.
In financial terms, we found the cost of
asset loss and service disruption between
now and 2030 under all three scenarios
would average $44 million per annum,
noting exposure will be non-linear.
Between FY30 and FY50 the financial
impact ranged from $50 million per
annum in the Accelerated Action scenario
to $86 million per annum in the Changed
Climate modelling. Full details of our
climate risk scenario analysis are
available in the 2022 Climate Change
Report at telstra.com.au/content/
dam/tcom/about-us/community-
environment/pdf/Telstra-Climate-
Change-report-2022-Accessible.pdf.
We found costs associated with service
disruption had a greater material impact
than asset damage in instances of acute
events. In addition, while our network has
inherent redundancy, the mains
electricity network, on which we are
reliant, may not. These findings have
given clearer direction to our operations
teams who continue to work on improving
the power resilience of our network to
reduce service disruption, including
building climate considerations into the
design and construction of future assets.
While the current average impact per
annum is not financially material, it is
possible that the consequences of a
particular event or multiple events in a
given year could be material. Analysis in
FY23 also shows that impacts from the
chronic increase in temperature to our
infrastructure (such as replacing failed
equipment or providing additional
cooling) and staff (for example, heat
related illness) are not operationally or
financially material, however we continue
to refine our data capture processes and
update findings accordingly.
Analysis of our key global suppliers found
that our supply chain is vulnerable to
disruption from the physical impacts of
climate change now and into the future.
There are locations and products where
this risk is concentrated. We mitigate
these impacts by requiring our suppliers
to have business continuity plans, having
backup suppliers in different locations,
and holding critical stock on hand.
We will continue to revisit and update our
physical risk scenario analysis as our
network, business, or the availability of
climate data changes. At present we are
awaiting the Australia-specific climate
model data which accompanies the
Intergovernmental Panel on Climate
Change’s (IPCC) sixth assessment report
(AR6) and will incorporate these datasets
if there has been a material change to the
observed trends.
Transition risk resilience
Our current scenario analysis found our
exposure to impacts from transition risks
is at its highest in the short to medium
term as the global community
accelerates action towards a
decarbonised economy. At Telstra we
believe these challenges also present
opportunities for sustainable business
growth. However, to better understand
the challenges we face in the short to
medium-term, we will be updating our
transition risk assessment in FY24 to
include a future scenario which limits
global heating to 1.5oC above pre-
industrial levels by the end of the
century.
Through our own journey of embedding
climate risk into our operational
processes we have identified
opportunities for telecommunications
and technology products which support
the transition to a low carbon world. More
information can be found in our Enabling
Positive Climate Action report at telstra.
com.au/content/dam/tcom/about-us/
community-environment/pdf/enabling-
positive-climate-action-report.pdf.
The nature of our business means we are
experienced in tactical prioritisation and
embracing of new and emerging
technologies and trends, mitigating our
risk to disruptive technology or market
shifts. Our relatively short duration
planning enables flexibility, enhancing
our ability to respond to changing
consumer preferences, stay ahead of
regulatory expectations, and pivot
service offerings to better meet the
needs and values of our customers. As an
example of transition risk resilience, while
our gross energy costs have increased
significantly during FY23, this has been
largely offset at an EBITDA level through
our Power Purchase Agreements (PPAs).
For more information on energy costs see
the Strategy and performance and Full
year results and operations review
sections.
When stress-testing our business
resilience against the three future climate
scenarios we found we are resilient now
and into the future. Inherent redundancy
within our network helps to minimise
service disruption from physical impacts.
Additionally, our relatively short duration
planning cycles allow us to adapt quickly
to regulatory change and leverage the
opportunities of a decarbonising
economy.
How climate informs our business
planning
The findings of the scenario analysis
highlighted our need to focus our climate
action planning on:
• building power resilience across our
network
• achieving tangible emissions reduction
• enabling the transition to a low carbon
economy for our customers and supply
chain.
This has informed the objectives of the
Sustaining our planet pillar in our
sustainability strategy.
Remuneration for our executives and the
majority of our global employees includes
a variable component linked to
performance against a range of personal
and company objectives. Company
objectives are aligned to selected T25
objectives and in FY23 included absolute
scope 1+2 emissions reduction. In
addition, executives and staff with
climate-related accountabilities have
climate-related outcomes incorporated in
their personal objectives and hence
variable remuneration tied to climate-
related outcomes.
To ensure we are funding programs which
reduce emissions, emissions reduction
potential is now a criterion in annual
budget planning for discretionary
initiatives. Since FY19 we have invested
over $75 million in emissions reduction
6. This figure was first disclosed in the FY22 Climate Change Report. There has been no material change to our Australian above ground assets in FY23.
7. An asset was determined to be at risk if it experienced greater than 30 days per year above 35oC.
40
40
Understanding our climate risk | Telstra Annual Report 2023
programs across our networks and
infrastructure, including over $49 million
in FY23 which will deliver over
100,000tCO2e annualised emissions
reduction. In addition to decarbonisation,
these projects have also reduced our
operational costs through reducing our
annual energy, maintenance, and carbon
credit expenses. These initiatives only
reflect the specific investment in
emissions reduction activities and do not
include broader investment to upgrade
our network, which also delivers
emissions reduction benefits. We plan to
disclose our detailed decarbonisation
transition plan as part of our FY24
reporting.
In FY23 we have also embedded a climate
risk screening process for potential
merger or acquisition candidates. More
information can be found in the Risk
Management section.
To minimise our transition risk exposure,
product teams are leveraging circular
economy principles to design out
emissions and waste streams, and our
operations teams are looking to utilise
new and emerging technologies to deploy
a net-zero emissions network of the
future. Further information regarding
these programs can be found in our
Bigger Picture 2023 Sustainability Report
at telstra.com.au/sustainability#Reports.
Risk Management
Identifying and assessing climate-
related risks
Guidance on climate risk appetite,
prioritisation and ambition is sought from
the Board, ARC, CEOLT, Sustainability
Executive, EEG members and other
Executives with relevant climate-related
accountabilities. Our risk registers are
reviewed and updated regularly, and all
risks are reviewed at least yearly.
The significance of a climate-related risk
is determined based upon our Enterprise
Risk Exposure Matrix which identifies,
assesses, and manages business risks
through a five-step process aligned to
international standard ISO 31000:2018.
This process assesses our overall
exposure across a range of risk areas
including environment (which contains
climate considerations). We use this
approach when considering both existing
and emerging climate-related risks, such
as emerging regulatory requirements.
New and emerging climate-related risks
are typically first identified from regular
monitoring of external drivers, such as
electricity grid emissions factors or
legislative reform, or triggered by specific
internal processes, such as monitoring
progress towards our climate
commitments. We also conduct a
sustainability materiality assessment
each year using a survey of internal and
external stakeholders, which identifies
and prioritises topics of greatest
significance from both a community
impact and financial risk perspective.
Managing climate-related risks
When managing our climate-related risks,
we draw upon our overall risk
management approach. We consider the
likelihood of a risk occurring and the
consequence if it did. We then ensure we
take action to operate within our risk
appetite or adapt to the risk where we
cannot mitigate it fully.
In FY23, three of our key risk
management activities included
developing a climate risk screening
process for mergers and acquisitions,
improving our network power resilience,
and ensuring our carbon credit due
diligence is robust.
Assessing climate risk for mergers and
acquisitions
In FY23 we have incorporated a staged
screening mechanism into our mergers
and acquisitions process to review
possible merger/acquisition candidates
for impacts to our emissions reduction
target and a range of physical and
transition climate-related risks. Initial
screening and subsequent risk profiling is
based on factors including industry type,
location, and scale of operations. This
test is applied prior to a non-binding
indicative offer and, depending on the
risk rating outcome, will determine if a
more detailed assessment is required. For
candidates with a climate risk rating of
medium or high, further review and
assessment will be carried out during due
diligence to determine estimated costs
for mitigation and adaptation measures.
These cost impacts, alongside risk
mitigation plans, will inform the
investment decision and be considered as
part of the business case.
Network resilience
The scenario analysis highlighted that
while our network is resilient to acute and
chronic physical climate-related risks, we
are reliant upon the mains electricity
network having a similar level of
resilience. To mitigate this exposure our
operations teams have worked to improve
the power resilience at high priority sites
through the deployment of extended
battery backup, and piloting of automatic
transfer units (ATUs) which automatically
switch our assets to backup generation, if
deployed, when a mains electricity
outage is detected.
We have incorporated both the insights
and underlying climate data from our
scenario analysis into our network
resilience and adaptation plans. Our
infrastructure assets will likely be
exposed to the same acute and chronic
physical climate hazards now and into
the future. However, the nature of the
exposure and impact may change in time.
Through embedding future climate risk
data into our existing systems, we have:
• assessed the risk exposure of network
sites to fire, flood, and cyclones
• tested infrastructure design standards
to improve resilience
• revised the standards of backup power
systems with the aim of providing
longer duration power reserves to sites
deemed at risk
• prioritised lifecycle funding to those
sites assessed at risk.
Carbon credits
As we see accelerated action towards a
low carbon economy, there is increasing
scrutiny upon the climate actions of
organisations and, in particular, the use
of carbon credits and green claims.
We believe that carbon credit criteria and
standards are critical to ensure the
environmental integrity and liquidity of
carbon credits and markets. We have
developed a governance framework to
manage risks associated with the
purchase of carbon credits towards our
carbon neutral commitment. This
framework is underpinned by corporate
policies and carbon principles, an
assessment framework and approval
process for credit purchases. Our
framework for project assessment
exceeds the global standards for quality
carbon credits in the voluntary market.
When sourcing carbon credits our
overarching objectives include:
• robust determination of the project’s
emissions impact (additionality) and
governance around the carbon credit
program
• avoiding double counting of emissions
reduction
• addressing non-permanence and carbon
leakage issues
• alignment to Telstra corporate policies,
commitments, and brand
• enhancing adoption of low, zero or
negative emissions technology and
practices
• improving environmental and social
impact.
Telstra’s carbon credit assessment
framework considers both risks
associated with the project proponent
and project partner aligned to our
supplier governance framework. Applying
this framework, Telstra has assessed
hundreds of carbon credit projects with
only a small number of projects meeting
our due diligence criteria.
Our carbon credits have been sourced
from projects that avoid, reduce, or
remove greenhouse gas emissions. All
credits purchased exceed the Australian
Government’s Climate Active program
guidelines and our annual product
disclosure statements provide details
around our portfolio and the projects, as
well as page 43 below.
41
41
We are reviewing the language we use in
relation to our carbon neutral
certifications and carbon offsetting
programs, to increase transparency and
help consumers understand the actions
we are taking, both to reduce our
emissions by 50 per cent by 2030 and
offset our remaining emissions.
Metrics and targets
The concentration of greenhouse gases in
the atmosphere is the driver of climate
change. As a result, our greenhouse gas
emissions across scopes 1, 2, and 38 are
our most important metric. Emissions
reduction is our most significant climate
target and energy and emissions volumes
underpin our two other climate targets.
In 2020 we set three climate-related
goals as part of our commitment to
sustainability:
• reduce our absolute emissions9 by at
least 50 per cent by 2030 (from a FY19
baseline)
• enable renewable energy generation
equivalent to 100 per cent of our
consumption by 2025
• to be carbon neutral in our operations
from 2020.
In 2021 we extended our 50 per cent
emissions reduction target that focused
on scope 1+2 emissions to also include
our scope 3 emissions. Our carbon
neutral commitment focuses on first
reducing emissions aligned to this target
then fully offsetting the residual
emissions related to our business on our
journey to net zero emissions.
Our emissions
Our reported emissions are those of
Telstra Group, including both our
domestic and international operations.
These emissions are calculated according
to Greenhouse Gas (GHG) Protocol
methodology10.
Telstra’s emissions
(tCO2e11)
FY19
FY20
FY21
FY22
FY23
Scope 1 total
47,204
36,905
33,085
31,869
30,738
Scope 2 total
1,259,292
1,210,145
1,130,584
1,092,011
879,870
Reduction since
FY19
30% across
scope 1+2 combined
Scope 3 total12
2,601,807
2,299,132
1,799,820
1,793,312
1,865,812
28%
Telstra greenhouse gas emissions
8. Scope 1 and 2 emissions are those associated with the fuels (such as natural gas, petrol, or diesel) and grid electricity we use directly as part of our operations. Scope 3
emissions are the indirect upstream and downstream emissions from value chain activities.
9. Covers scopes 1, 2, and 3. Target was extended to include scope 3 in 2021.
10. Full details of our emissions profile can be found in the Bigger Picture 2023 Sustainability Report Data Pack at telstra.com.au/sustainability#Reports.
11. Tonnes of carbon dioxide equivalent.
12. In preparing our FY23 reporting we identified that the emissions associated with joint ventures and associated investments were not being captured in our reporting of
scope 3 emissions, in addition we identified an instance of duplicated emissions within scope 3 category 15. Both these anomalies have been rectified and the updates
applied to previous years’ data. As a result, the figures listed here differ from those reported in previous years.
42
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Understanding our climate risk | Telstra Annual Report 2023
The Digicel Pacific acquisition (which
closed in FY23) has been excluded from
Telstra’s emissions reporting and targets
in FY23 as we have not yet been able to
compile timely and quality environment
data that aligns to the GHG Protocol. A
detailed program of work has been
launched to align environment data
processes and controls with the aim to
quantitatively disclose the Digicel Pacific
impact in our FY24 reporting.
Reduce our absolute emissions by at
least 50 per cent by 2030 (from an FY19
baseline)
In 2020, we set a target to reduce our
global absolute scope 1+2 emissions by
50 per cent by 2030 (from a FY19
baseline). We extended this target to
include our scope 3 emissions in
December 2021. Our targets have been
validated by the Science Based Targets
Initiative (SBTi) as consistent with the
level of decarbonisation required to keep
global temperature increase below 1.5oC
compared to pre-industrial levels.
We track performance against our
combined scope 1+2 emissions and scope
3 emissions separately, requiring a 50 per
cent reduction by 2030 in each of these
categories. We calculate our emissions
according to GHG Protocol and report
progress via our Bigger Picture 2023
Sustainability Report.
We model and update our scope 1+2
emissions target trajectory to 2030
regularly, taking account of actual
monthly scope 1+2 emissions, emissions
reduction project performance,
anticipated business growth, and a range
of grid decarbonisation scenarios from
the Australian Energy Market Operator
(AEMO) Integrated System Plan.
Since FY19 we have reduced scope 1+2
emissions by 30 per cent, ahead of the
trajectory required to reach our FY30
target. We have also performed strongly
in reducing scope 3 emissions by 28 per
cent since FY19. However, there is still
some risk to our scope 3 target while we
work through impacts and
decarbonisation opportunities from the
acquisition of Digicel Pacific. In 2022 we
noted that we were assessing the impact
of retail energy growth in relation to our
scope 3 emissions reduction target. The
scaling of our retail energy products has
since been paused. If we make a decision
to scale our energy retail products, we
will communicate any material impacts
to our scope 3 target.
Each year Telstra reports to the Carbon
Disclosure Project (CDP) to track our
progress and performance of climate-
related issues against the global index.
We use this metric as a barometer of our
performance and in FY23 received an ‘A’
Leadership rating for our CDP
submission, placing us among the top
two per cent of respondents globally. We
use the insights from our CDP submission
to focus attention on areas to improve
management of climate-related issues.
The emissions of our suppliers represent
a significant portion of our scope 3
emissions. Climate considerations are
embedded in our supplier contracts via
Telstra’s Supplier Code of Conduct.
Through our Sustainability Champions
Network, we support our suppliers to
measure their emissions, set meaningful
targets, and disclose to CDP, and in FY23
we were recognised by the CDP as a
supplier engagement leader. We monitor
our progress, influence, and reach
through a range of metrics. Two of these
metrics include 1) the number of our
suppliers that also provide climate-
related data to CDP, both as a total
number of suppliers and as a percent of
our total supplier spend; and 2) the
number of our top suppliers with
emissions reduction targets, including
those with contract clauses requiring
emissions reduction.
Enable renewable energy generation
equivalent to 100 per cent of our
consumption by 2025
As one of Australia’s largest electricity
users, in 2020 we set a target to enable
renewable energy generation equivalent
to 100 per cent of our consumption by
2025. To meet this target, we are
underwriting the development of new
Australian renewable generation capacity
such as solar parks and wind farms to
accelerate the decarbonisation of the
electricity grid for all users through long-
term renewable energy contracts. By the
end of FY23, the operational output of
projects we support was equivalent to 30
per cent of our consumption.
We recently signed a Power Purchase
Agreement (PPA) for the new Munna
Creek Solar Farm near Gympie in
Queensland. That agreement is expected
to deliver at least 124GWh annually once
it becomes fully operational. As a result,
we have now contracted renewable
energy generation equivalent to over 80
per cent of our consumption.
There is a risk that the operational output
of those projects will not reach the
equivalent of 100 per cent of our
consumption by the end of 2025. At this
stage we believe it is more likely than not
that the target will be achieved by that
date. However, utility-scale renewable
projects have long lead times to become
operational, with complexity in planning,
construction, and grid connection. More
recently, these factors (especially supply
chain issues) have been exacerbated by
COVID-19 and the Ukrainian conflict. Our
target is based on long term financial
commitments that support the build of
new renewable energy sites, with a
lasting and additive impact on the
decarbonisation of Australia’s electricity
grid for all users. We do not plan to
change the principles or parameters for
our renewable energy investments in
response to these challenges. To help
mitigate the risk to this target we will
continue to implement projects which
reduce our energy consumption.
We are also executing initiatives (and
investigating opportunities) to improve
the capacity of the electricity grid and
the market to absorb more renewable
electricity.
Carbon neutral in our operations from
2020
Telstra has been certified carbon neutral
(by fully offsetting our residual emissions
after achieving emissions reduction
across our global operations) by Climate
Active since 2020. Our investment in
carbon credits complements our focus on
decarbonising our operations, the
electricity grid, and the economy. Our
carbon neutral certifications include
organisation and selected product and
services. During FY23 Telstra-branded
consumer (pre- and post-paid), small
business and enterprise mobile plans and
mobile broadband plans were also
certified carbon neutral.
We achieve carbon neutral certification
by following Climate Active standards
which require Telstra to measure the
emissions of our business, reduce our
emissions then surrender carbon credits
to offset any remaining emissions on our
pathway to net zero.
In FY23, to maintain the Telstra Group’s
carbon neutral certifications we
purchased approximately 2.26 million
carbon credits with over 99 per cent from
wind, solar and energy efficient
manufacturing processes in India, and
the remaining volume from savanna
burning projects in Australia.
Telstra is working not just to acquire
carbon credits but to improve the supply
of Australian Carbon Credit Units
(ACCUs) through our investments and
partnerships in carbon sequestration,
such as our carbon farm pilot in
Yarrowyck, NSW.
More information about our due diligence
arrangements and carbon credit portfolio
can be found in the earlier Risk
Management section, in our Bigger
Picture 2023 Sustainability Report at
telstra.com.au/sustainability#Reports
and our carbon neutral website at telstra.
com.au/exchange/carbon-neutral.
For further information about our
climate-related risks, opportunities and
progress please refer to our Bigger
Picture 2023 Sustainability Report at
telstra.com.au/sustainability#Reports.
43
43
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 2023 Corporate Governance Statement, which provides
more information about governance at Telstra and summarises
our governance arrangements and practices during FY231, can
be found on our website at telstra.com/governance.
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Shareholders and stakeholders
Telstra Group Limited Board
Audit & Risk
Committee
People &
Remuneration
Committee
Nomination
Committee
CEO
CEO Leadership Team
Our People
Policies, systems and processes
Key
Delegation, oversight
Accountability, reporting
P
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,
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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 and Telstra
Group 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.
1. On 31 October 2022, Telstra Group Limited became the new listed head entity of the Telstra Group following implementation of the top hat component of the scheme of
arrangement between Telstra Corporation Limited and its shareholders. Telstra Group Limited has substantially the same corporate governance framework and
arrangements as Telstra Corporation Limited had when it was the listed head entity of the Telstra Group.
44
Directors'
Report
45
Directors'
Report
In accordance with a resolution of the Board, the Directors present their
report on the consolidated entity (Telstra Group) consisting of Telstra Group
Limited (Telstra) and the entities it controlled at the end of, or during, the
year ended, 30 June 2023. Financial comparisons used in this report are of
results for the year ended 30 June 2023 compared with the results for the
year ended 30 June 2022.
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, FY23
Financial performance, FY23 highlights, 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
• Maximise fully franked dividend and seek to grow over time1
• Ongoing business-as-usual capex of circa $3 billion per
annum excluding spectrum2
• Invest for growth and return excess cash to shareholders.
On 16 February 2023, the Directors resolved to pay a fully
franked interim dividend for the financial year 2023 of 8.5 cents
per share.
On 17 August 2023, the Directors resolved to pay a fully franked
final dividend for the financial year 2023 of 8.5 cents per share
($982 million). The record date for the final dividend will be 31
August 2023, with payment to be made on 28 September 2023.
Shares will trade excluding entitlement to the final dividend on
30 August 2023.
Further information regarding the financial year 2023 dividends
is set out in the Full year results and operations review
accompanying this Directors’ Report.
The Board determined that the Dividend Reinvestment Plan
(DRP) will continue to operate for the final dividend for the
financial year 2023. The election date for participation in the
DRP is 1 September 2023.
Dividends paid during the year were as follows:
Dividend
Date
resolved
Date
paid
Fully
franked
dividend
per share
Total
dividend
($m)
Total final
dividend for
the year ended
30 June 2022
Total interim
dividend for
the year ended
30 June 2023
11 Aug
2022
21 Sep
2022
8.5 cents
982
16 Feb
2023
31 Mar
2023
8.5 cents
982
1. The dividend is subject to no unexpected material events and is subject to Board discretion having regard to financial and market conditions, business needs and maintenance of
financial strength and flexibility consistent with the Telstra Group's capital management framework.
2. Capex is measured on an accrued basis and excludes spectrum and guidance adjustments, externally funded capex, and capitalised leases.
46
Significant changes in the state of affairs
During the reporting period, Telstra Corporation Limited
implemented a scheme of arrangement (Scheme) to support
the restructure of the Telstra Group (Restructure) first
announced in November 2020. The Restructure was an internal
legal reorganisation and did not, by itself, result in any
immediate change to the underlying assets or business
activities of the Telstra Group.
The Scheme was comprised of two components: the top hat
component which established the Telstra Entity as the parent
entity of the Telstra Group, and the business restructure
component which was used to transfer certain assets and
liabilities within the Telstra Group. The Restructure also
involved certain other steps in addition to the Scheme.
While these steps were completed over a period of time,
for accounting purposes, all the steps should be considered
together as they were undertaken in contemplation of the
Restructure as a whole.
The top hat component of the Scheme was implemented on
31 October 2022 and the business restructure component of
the Scheme was implemented on 1 January 2023.
On implementation of the top hat component, all of the shares
in Telstra Corporation Limited (11,554,427,353 in total) were
transferred to the Telstra Entity in exchange for the issue of
11,554,427,353 shares in Telstra Group Limited to eligible Telstra
Corporation Limited shareholders under the Scheme, and
Telstra Group Limited became the parent entity of Telstra
Corporation Limited and its controlled entities.
On 31 October 2022, Telstra Group Limited became the new
head entity of the Australian tax consolidated group.
On 30 November 2022, Telstra Group Limited became the
sponsoring employer in our Telstra Superannuation Scheme.
On 1 January 2023, the final steps of the Restructure (including
the business restructure component of the Scheme) were
completed. Those steps involved Telstra Corporation Limited
transferring the retail and active wholesale business assets
and liabilities and related investments to Telstra Limited, and
the international business assets and liabilities and related
investments to Telstra International Holdings Pty Ltd and its
controlled entities. Telstra Corporation Limited also transferred
its interest in Telstra Towerco No.2 Pty Ltd, being the wholly-
owned entity which holds an interest in the Amplitel towers
business and related investments, to Telstra Group Limited.
Following the Restructure, Telstra Corporation Limited
continues to operate our passive fixed infrastructure business
and service our nbn Definitive Agreements.
The businesses and investments transferred between Telstra
Corporation Limited and Telstra Group Limited or other
entities within the Telstra Group under the Restructure did
not result in business combinations for accounting purposes.
Accordingly, the Restructure was accounted for as an internal
reorganisation, i.e. assets and liabilities transferred were
recognised at their existing values in the statement of financial
position. From the Telstra Group perspective, the internal
reorganisation transfers eliminate on consolidation, i.e. they
do not impact the Telstra Group financial results.
Accordingly, the consolidated financial statements have
been presented as a continuation of the existing financial
performance and financial position of the Telstra Group.
As such, as at and for the period ended 30 June 2023, the
consolidated financial statements of the Telstra Group include
the historical financial information of the Telstra Group for both
the period before and after the Restructure.
Refer to notes 1.2, 6.1 and 7.3 of the 2023 financial report for
further details about the Restructure.
Directors’ Report | Telstra Annual Report 2023
Business strategies, prospects and likely
developments
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 2023 and that the DRP will
operate in respect of that dividend.
Refer to note 7.5, Events after reporting date, of the 2023
Financial Report for details.
Details of Directors and executives
Changes to the Directors of the parent entity of the Telstra
Group (i.e. Telstra Corporation Limited prior to 31 October 2022
and Telstra Group Limited on and from 31 October 2022) during
the financial year and up to the date of this report were:
• Andrew R Penn (MBA (Kingston), AMP (Harvard), FCCA,
HFAIPM) retired as Managing Director and Chief Executive
Officer on 31 August 2022. Mr Penn joined the Board in May
2015.
• Vicki Brady commenced as Managing Director and Chief
Executive Officer on 1 September 2022.
• Nora L Scheinkestel (LLB (Hons), PhD, FAICD) retired as a
non-executive Director on 11 October 2022. Dr Scheinkestel
joined the Board in August 2010 and was a member of the
Audit & Risk Committee (previously Chairman Audit & Risk
Committee 2012-2019), the Nomination Committee and the
People & Remuneration Committee.
• Ming Long joined as a non-executive Director on 1 January
2023.
• Maxine Brenner joined as a non-executive Director on 17
February 2023.
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.
47
Board and Committee meeting attendance
Details of the number of meetings held by the Board and its Committees during financial year 20232, and attendance by Board
members, are set out below:
Board
Audit and Risk
Nomination
People and
Remuneration
Committees6
a
12
10
2
12
4
12
12
6
12
12
3
12
b
11
10
2
12
4
12
12
6
12
12
3
12
a
–
–
–
–
3
10
10
5
–
4
3
–
b
(5)
(8)
(2)
(2)
3
10
10
5
(2)
6 (2)
3
(2)
a
6
–
–
6
2
6
6
3
6
6
1
6
b
6
(5)
(1)
6
2
6
5
3
5
6
1
6
a
–
–
–
–
–
–
–
1
2
4
2
4
b
(1)
(3)
(1)
–
–
–
–
1
1
4
2
4
John Mullen
Vicki Brady3
Andrew R Penn4
Eelco Blok
Maxine Brenner3
Roy H Chestnutt
Craig W Dunn
Ming Long3
Bridget Loudon5
Elana Rubin
Nora L Scheinkestel4
Niek Jan van Damme
Total number of meetings held
12
10
6
4
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. The details of the number of meetings held by the Board and its Committees and attendance by Board members are reflective of Board and Committee meetings of
Telstra Corporation Limited prior to 31 October 2022 and Telstra Group Limited on and from 31 October 2022.
3. Vicki Brady commenced as Chief Executive Officer and Managing Director on 1 September 2022, Ming Long joined as a non-executive Director on 1 January 2023,
and Maxine Brenner joined as a non-executive Director on 17 February 2023.
4. Andrew R Penn retired as Chief Executive Officer and Managing Director on 31 August 2022. Nora L Scheinkestel retired as a non-executive Director on 11 October
2022.
5. The Board granted Bridget Loudon leave of absence from 1 May to 30 June 2023.
6. From time to time the Board establishes ad hoc committees to support the Board in carrying out its responsibilities. Details of those ad hoc committees have not
been included in the table.
Director shareholdings in Telstra
Group Company Secretary
Sue Laver BA, LLB (Hons) (Monash), GAICD, FGIA
Sue was appointed Company Secretary of Telstra Corporation
Limited effective 1 February 2018 and of Telstra Group Limited
effective 31 May 2021.
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 around 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.
Details of Directors’ shareholdings in Telstra as at 17 August
2023 are shown in the table below:
Director
John P Mullen
Vicki Brady2
Eelco Blok
Maxine Brenner
Roy H Chestnutt
Craig W Dunn
Ming Long
Bridget Loudon
Elana Rubin
Niek Jan van Damme
Number of shares held1
126,159
771,888
75,000
–
70,000
70,073
51,589
12,500
67,961
77,000
1. The number of shares held refers to shares held either directly or indirectly by
Directors as at 17 August 2023. 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 2023.
2. Vicki Brady also holds 760,902 Performance Rights.
48
Directors’ Report | Telstra Annual Report 2023
(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 2023 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 2023 Sustainability
Report, which is available from 1 September 2023 online at
telstra.com/sustainability/report.
Non-audit services
During the financial year 2023, 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 2023 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 2023 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 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 Group Limited and forms part of this report.
Directors’ and officers’ indemnity and insurance
(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 past
and present (amongst others):
• directors, secretaries, senior managers and public officers of
Telstra and its wholly owned controlled subsidiaries;
• certain directors, secretaries, senior managers and other
specified positions of Telstra’s partly-owned companies; and
• certain Telstra Group directors, employees and other persons
that act as nominee directors or secretaries, or in other
positions (at Telstra’s request) for entities or industry
associations,
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 use best endeavours 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.
Environmental regulation and performance
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.
49
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 FY23
Remuneration Report.
FY23 is the first year of delivery against
our T25 strategy to improve customer
experience, build sustainable growth,
enhance our reputation, and further
invest in our network and technology
leadership. The Board continues to
balance this strategic momentum and
the interests of shareholders while
motivating and retaining the best
management talent that we can attract.
While the Remuneration Report focuses
on the remuneration of our senior
management, the People and
Remuneration Committee has spent
much time overseeing the significant
investment in talent and skills
enhancement in our company that
underpins our T25 strategy. We have
focused on promoting an environment
that is inclusive, accessible and
supportive and have elevated employee
engagement and culture to support these
ambitions.
Senior Executive changes in FY23
During the year our previously announced
changes to our Senior Executive team
took effect with the departure of Andrew
Penn, our former CEO, and Alex
Badenoch, our former Group Executive
Transformation, Communications and
People. We are very grateful for their
leadership in their time at Telstra. Other
changes were the promotion of Vicki
Brady to CEO, Michael Ackland to CFO
and the commencement of Brad
Whitcomb as Group Executive Consumer
and Small Business (C&SB). We were also
very pleased to appoint two new non-
executive directors to our board, Ming
Long and Maxine Brenner, and thank Nora
Scheinkestel who retired from the Board
in October 2022 for her significant
contribution throughout her time on the
Board. Further details on these changes
are provided in the Key Management
Personnel Section of our Remuneration
Report.
FY23 executive remuneration
outcomes
Telstra’s Executive Variable
Remuneration Plan (EVP) is designed to
ensure a significant portion of
remuneration is variable and at-risk.
Individual outcomes under the EVP
depend on performance against primary
performance measures (comprising
financial, customer, and strategic
measures) and the Performance Rights
component is also subject to a secondary
performance measure (being Telstra’s
Relative Total Shareholder Return (RTSR)
performance condition).
As we noted in our last Remuneration
Report, in FY23 the percentage of
variable remuneration payable at target
(200%) and maximum performance
(300%) was aligned for the CEO and the
Group Executives (GEs), and Individual
EVP Outcomes were determined by
multiplying the EVP Scorecard Outcome
by a percentage, based on each Senior
Executive's individual performance. Of
course, the Board continues to have
complete discretion in determining the
final outcomes. Further details are
provided in Section 2.3 of our
Remuneration Report.
The FY23 primary performance measures
and targets were selected by the Board to
ensure that the CEO and GEs delivered
against the first year of our T25 strategy,
and their rewards are directly linked to
individual contribution, company
performance and long-term shareholder
value creation. The key remuneration
outcomes under the FY23 EVP include:
• The CEO’s Individual EVP Outcome was
75.0% of the maximum opportunity.
• The average Individual EVP Outcome for
all other Senior Executives (i.e.
excluding the CEO) was 62.1% of the
maximum opportunity.
Positive outcomes were achieved across
many of the financial and non-financial
primary performance measures for FY23
demonstrating strong delivery against
our FY23 Corporate Plan and T25
strategy. The Board determined that the
primary performance measure outcomes
and the EVP Scorecard Outcome would
be driven by the results achieved and no
adjustments were made. Further detail
regarding the key FY23 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.
Vesting of the FY19 EVP Performance
Rights was assessed over the five year
performance period of 1 July 2018 to 30
June 2023 against the RTSR metric. The
FY19 EVP Performance Rights vested at
100% based on RTSR at the 93rd
percentile relative to the peer group over
the performance period. Further details
are provided in Section 2.4 of our
Remuneration Report.
Diversity, Equity and Inclusion
Telstra recognises that strong diversity,
equity and inclusion at work drives strong
performance. We remain committed to
addressing barriers to achieving greater
diversity, equity and inclusion and
encourage you to read about our
initiatives in our 2023 Corporate
Governance Statement when it is
released on 1 September 2023.
This year, we were proud to extend our
parental leave provisions to non-
executive directors. Bridget Louden was
the first Telstra non-executive director to
access paid parental leave and we look
forward to this provision supporting
greater diversity of non-executive
directors in the future.
Looking ahead
In FY24 we were delighted to welcome
our new Group Executive People, Culture
and Communications, Kathryn van der
Merwe, who commenced on 3 July 2023.
The Board conducts a market review of
Senior Executive remuneration and Board
fees on an annual basis and there will be
some increases in FY24. Further details
are provided in Sections 3.1(a) and 4.2 of
our Remuneration Report.
We continue to provide market leading
transparency and disclosure on our
remuneration framework and targets for
the coming year. These are disclosed in
Section 4 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 FY24, 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 FY24
Corporate Plan and FY24 guidance (as
announced on 17 August 2023).
I especially want to take this opportunity
to thank every Telstra employee for the
great job you have done delivering the
first year of our T25 strategy and
positioning Telstra strongly 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
50
Remuneration
Report
This audited report details the
remuneration framework and outcomes for
Key Management Personnel of Telstra for
the year ended 30 June 2023 (FY23).
51
51
Remuneration at Telstra and FY23 Remuneration Outcomes – Key Highlights
The following table includes the key highlights and remuneration outcomes for FY23.
Key area of focus
Highlights / Details
Remuneration
structure
The following changes were made to the EVP in FY23:
• The threshold EVP opportunity for GEs was increased from 90% to 100% of Fixed Remuneration. The at-target EVP
opportunity for GEs was increased from 180% to 200% of Fixed Remuneration. This aligns with the CEO’s threshold and
at-target EVP opportunity of 100% and 200% of Fixed Remuneration respectively. The maximum EVP opportunity of
300% of Fixed Remuneration for all Senior Executives remains unchanged.
• We adjusted 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 determine variable remuneration for other employees under our Short-
Term Incentive (STI) plan.
– The Individual EVP Outcome for each Senior Executive is now determined by multiplying the EVP Scorecard Outcome
by a percentage reflecting the executive’s individual performance relative to their peers in the executive team.
– For each Senior Executive assessed with a performance rating of 3 (on our 1 to 5 scale), this percentage was in the
range 90% to 110%. For those with a performance rating of 4 or 5, the percentage used was higher – as was appropriate
to reflect their relative individual performance.
In all cases, the maximum possible Individual EVP Outcome is 300% of the executive’s Fixed Remuneration.
The Board continues to have complete discretion in determining the EVP Scorecard Outcome, each executive’s multiplier
and therefore each executive’s Individual EVP Outcome. In determining any adjustments to the Individual EVP Outcomes
in accordance with its decision framework, the Board considers (among other things) any material risk events identified,
the severity of their impact, and the executive’s accountability for the event.
The FY23 EVP scorecard aligned with the Company’s T25 Strategy. Refer to Section 2.2 for detail on the metrics and
outcomes in FY23.
The Individual EVP Outcomes for FY23 were as follows:
Individual EVP
Outcomes for
FY23
CEO
Other Senior Executives (average)
Individual EVP Outcomes (% of maximum)
75.0%
62.1%
Each Senior Executive’s Individual EVP Outcome for FY23 was determined having regard to the EVP Scorecard Outcome,
their at-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 FY23 EVP. Positive outcomes were achieved across many of the financial and non-
financial measures demonstrating strong delivery against our FY23 Corporate Plan and T25 strategy. Further details on the
EVP Scorecard Outcome can be found in Section 2.2.
The form in which Senior Executives receive their Individual EVP Outcome for FY23 is:
Award
25% Cash
Timing and conditions
Payable in September 2023.
35% Restricted Shares
25% eligible to vest each year over 4 years through to 30 June 2027, subject to a
continuing employment condition.
40% Performance Rights
Only vest at the end of FY27 if a Relative Total Shareholder Return (RTSR) performance
condition and continuing employment condition are achieved.
Refer to Section 2.1 for further information.
Fixed
Remuneration
Apart from Fixed Remuneration changes on promotion for the CEO and CFO, there have been no Fixed Remuneration
increases for Senior Executives during FY23 except to reflect the increase in legislated Superannuation Guarantee
contributions from 1 July 2022 (refer to Section 2.1(b) for further information).
Non-executive
director fees
As described in our FY22 Remuneration Report, the Chair and non-executive Director annual base fees, which had not
changed since 2014 and 2012 respectively, increased by 1.9% and 2.1% respectively from 1 October 2022. The People and
Remuneration Committee member fee had not changed since 2017 and, from 1 October 2022, increased by 1.8%.
Refer to Section 3 for information regarding remuneration paid to non-executive Directors in FY23 and planned increases
for FY24.
52
Remuneration Report | Telstra Annual Report 2023
Key area of focus
Highlights / Details
FY19 EVP
Performance
Rights RTSR
outcome
The RTSR performance condition for the Performance Rights awarded under the FY19 EVP was tested following the end of
the performance period on 30 June 2023. The result and vesting outcome are detailed below and the Performance Rights
fully vested. Refer to Section 2.4 for further information.
Performance Condition
Telstra’s
Percentile Rank
% of Performance
Rights vested
RTSR – ASX100 (excluding resource companies)
as at 1 July 2018
93rd percentile
100%
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 FY23, unless stated otherwise.
Non-executive Directors
Senior Executives
Current
John P Mullen
Eelco Blok
Maxine Brenner (from 17 February 2023)
Roy H Chestnutt
Craig W Dunn
Ming Long (from 1 January 2023)
Bridget Loudon
Elana Rubin
Niek Jan van Damme
Former
Nora L Scheinkestel
(retired 11 October 2022)
Current
Vicki Brady
KMP Position
Chief Financial Officer and Group Executive (GE) Strategy and
Finance (CFO) until 31 August 2022 and Chief Executive Officer &
Managing Director (CEO) from 1 September 2022
Michael Ackland
GE Telstra Consumer & Small Business (C&SB) until 31 August
2022 and CFO from 1 September 2022
Kim Krogh Andersen
GE Product & Technology (P&T)
David Burns
GE Telstra Enterprise (TE)
Nikos Katinakis
GE Global Networks & Technology (GN&T)
Brendon Riley
Dean Salter
GE and CEO Telstra InfraCo
GE Global Business Services (GBS)
Brad Whitcomb
GE C&SB from 16 January 2023
Former
Andrew Penn
CEO until 31 August 2022
Alex Badenoch
GE Transformation, Communications & People (TC&P) until 23
December 2022
53
Table of contents
1. Policy
1.1 Remuneration policy, strategy and governance
2. Senior Executive remuneration
2.1 FY23 Remuneration structure
2.2 FY23 EVP Scorecard Outcome
2.3 Individual performance and the exercise of Board discretion in determining Individual EVP Outcomes
2.4 FY19 EVP Performance Rights RTSR Outcome
2.5 Detailed remuneration and interests in Telstra shares
3. Non-executive Director remuneration
3.1 FY23 Fee structure
3.2 Detailed remuneration and interests in Telstra shares
4. Looking forward to FY23
4.1 Senior Executive Leadership Changes
4.2 FY24 Senior Executive Remuneration Framework
4.3 FY24 EVP Performance Measures and Targets
5. Glossary
54
Remuneration Report | Telstra Annual Report 2023
1.0 Policy
1.1 Remuneration policy, strategy and governance
Our remuneration policy and framework are designed to support our strategy and reinforce our culture and values. Further detail
on our strategy is provided in this Annual Report under Strategy and 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 and recommends CEO and other Senior Executive
remuneration packages that achieve a balance between fixed
and variable 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 internal and
external relativity for roles of a similar size and complexity, any
proven and persistent high performance and/or any 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 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 multiplied by a percentage based on
the relevant Senior Executive’s individual performance to
determine the 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 FY23 EVP.
(e) Engagement with consultants
During FY23, Telstra did not seek a remuneration
recommendation from a remuneration consultant in relation to
any of our KMP.
55
(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
align the interests of all executives with the generation of long-term shareholder value. During FY23, 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 of Telstra. The
intent of these policies is to align the interests of the CEO, GEs and non-executive Directors with the interests of our shareholders.
The recently appointed CEO has five years to meet the shareholding requirement under our 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 2023. 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 5 years or more have met their minimum shareholding requirement
with the exception of two Directors (including the Chair) who marginally fell below the requirements due to a small increase in the
Director base fee in October 2022. The two Directors have confirmed that they will address this as soon as they are permitted to
purchase shares in accordance with Telstra’s Securities Trading Policy. Directors' shareholdings as at 17 August 2023 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
Minimum holding requirement within 5 years of appointment to the position
200% of Fixed Remuneration
Group Executives
100% of Fixed Remuneration
Chair of the Board
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
CEO and GEs
Securities
Basis of valuation under the policies
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.
56
Remuneration Report | Telstra Annual Report 2023
(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 People, Culture and Communications (previously the GE 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. If the whole Committee has a conflict of interest, the investigation team bypasses the Committee and takes their
recommendations directly to the CEO, the People and Remuneration Committee Chair and/or the Chair of the Telstra Board, as
appropriate.
Following the Clawback Committee’s review and recommendations, no clawback of unvested securities held by Senior Executives
was recommended or approved during FY23.
2.0 Senior Executive remuneration
2.1 FY23 Remuneration Structure
The following diagram illustrates the remuneration framework that applied to our Senior Executives during FY23.
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 customer, strategic, and financial priorities),
their target EVP opportunity and their individual performance, and was ultimately at the discretion
of the Board
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
25% of the FY23
Individual EVP Outcome is
provided in cash
35% of the FY23 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 FY23 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) FY23 Remuneration mix for Senior Executives
The graph below shows the FY23 remuneration mix for Senior Executives expressed as a percentage of Fixed Remuneration (FR).
100%
Fixed Remuneration
50%
EVP Cash1
70%
EVP Restricted Shares1
80%
EVP Performance Rights1
Individual EVP Outcome at Target = 200% of Fixed Remuneration comprised of:
Total Equity = 150% of Fixed Remuneration
1. The percentages shown are calculated from the 25% Cash, 35% Restricted Share and 40% Performance Right components of the FY23 EVP multiplied by the FY23 EVP
target opportunity of 200% of Fixed Remuneration.
57
(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 of 17 August 2023.
Name
Vicki Brady
Title
CEO
Fixed
Remuneration
Notice
period
Termination
payment
$2,390,0001
6 months
6 months
Michael Ackland
CFO
$1,250,0002
6 months
6 months
Kim Krogh Andersen GE P&T
$1,101,2053
6 months
6 months
David Burns
GE TE
$1,151,2053
6 months
6 months
Nikos Katinakis
GE GN&T
$1,101,2053
6 months
6 months
Brendon Riley
GE & CEO Telstra InfraCo
$1,401,2053
6 months
12 months4
Dean Salter
GE GBS
$951,2053
6 months
6 months
Brad Whitcomb
GE C&SB
$1,151,205
6 months
6 months
1. As announced on 30 March 2022, Vicki Brady’s Fixed Remuneration increased to $2,390,000 when she commenced as CEO on 1 September 2022.
2. As disclosed in our FY22 Remuneration Report, Michael Ackland’s Fixed Remuneration increased to $1,250,000 when he commenced as CFO on 1 September 2022.
3. Senior Executive Fixed Remuneration increased by $1,205 on 1 July 2022 to reflect the legislated increase in Superannuation Guarantee Contribution from 10% to 10.5%.
4. 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) FY23 Executive Variable Remuneration Plan (EVP) structure
The Senior Executives participated in the FY23 EVP. The construct of the FY23 EVP is illustrated in the diagram below:
EVP Equity Allocated
(75%)
EVP Cash Paid
(25%)
FY23
Results
Release
2023
AGM
Restricted Shares
(1st tranche)
End of restriction
30 June 2024
Restricted Shares
(2nd tranche)
End of restriction
30 June 2025
Restricted Shares
(3rd tranche)
End of restriction
30 June 2026
Restricted Shares
(4th tranche)
End of restriction
30 June 2027
Restricted
Shares – T1
Restricted
Shares – T2
Restricted
Shares – T3
Restricted
Shares –T4
Performance Rights
FY23 EVP Performance Rights RTSR Performance Period
1 July 2022 to 30 June 2027
Performance Rights
Final RTSR Test
30 June 2027
FY23 EVP Initial
Performance
Period
1 July 2022 to
30 June 2023
FY23
FY24
FY25
FY26
FY27
FY28
Jul
Jun
Aug
Oct
Nov
Jun
Jul
Jun
Jul
Jun
Jul
Jun
Jul
At the 2023 AGM to be held on 17 October 2023, we will seek shareholder approval for the Restricted Shares and Performance
Rights to be allocated to Vicki Brady under the FY23 EVP
58
The table below outlines the key features of the FY23 EVP.
Remuneration Report | Telstra Annual Report 2023
FY23 EVP
design
attributes
EVP
Reward
opportunity
Initial
Performance
Period
Calculation
of Individual
EVP
Outcomes
Detail
As a % of Fixed Remuneration
Threshold
Target
Maximum
100%
200%
300%
1 year (1 July 2022 to 30 June 2023)
Overview
Each Senior Executive’s Individual EVP Outcome for FY23 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 GEs 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
Each primary
performance
measure
outcome and
total scorecard
outcome
subject to
Board
discretion
=
EVP
Scorecard
Outcome
%
Multiplier
used to
differentiate
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 2023 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 commensurate with the following range.
Metric Performance Range
Threshold
Target
Max
Senior Executive Performance Outcome
50%
100%
150%
The Board had discretion to adjust the outcome against each primary performance measure to ensure there were no windfall gains
or losses. No adjustments were approved by the Board in FY23.
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 FY23.
The EVP Scorecard Outcome was then multiplied by a percentage based on the Senior Executive’s individual performance, to
determine each Senior Executive’s Individual EVP Outcome. Refer to Section 2.3 for further information on discretion exercised in
determining FY23 Individual EVP Outcomes.
59
FY23 EVP
design
attributes
Detail
Primary
performance
measures
The primary performance measures outlined below were selected for FY23 because they provide the critical link between
delivering Telstra’s T25 strategy and Telstra’s Corporate Plan and increasing shareholder value. The Board believes that the
strategic, customer and financial measures directly demonstrate the delivery of critical components of the T25 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)
• Key indicator of financial performance.
• Ensures continued focus on customer retention and growth.
• Aligns to the growth and value pillar of our T25 scorecard.
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
Free Cash Flow (FCF)
Free Cash flow after lease payments
defined as ‘operating cash flows’ less
‘investing cash flows’, less ‘payments for
lease liabilities, and excludes spectrum
and guidance adjustments
Underlying Return on
Invested Capital (ROIC)
Total NOPAT (net operating profit after
tax) less guidance adjustments after
tax, less net nbn one-off earnings after
tax, divided by Average Invested Capital
Episode NPS
Measures our customer experience from
feedback on each transaction using a
Net Promoter Score (NPS)
• 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.
• Aligns to the growth and value pillar of our T25 scorecard.
• Focuses leaders on continuously improving the customer service experience,
driving both customer attraction and retention.
• Underpins company-wide 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.
RepTrak
Measures our reputation score on the
RepTrak index
• Includes the sentiment of customers and non-customers, but also provides a
broader, more holistic measure which picks up on all the drivers of company
reputation.
• Focuses 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.
Responsible Business
Our % reduction in absolute scope 1 + 2
greenhouse gas emissions from our FY19
baseline (excludes Digicel Pacific)
• 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.
• Excludes Digicel Pacific which was acquired during FY23.
Digital Leadership
% achievement of our target build of
Application Programming Interfaces
(APIs)
• 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
• Focusses leaders on our employee engagement and the importance of
employees as stakeholders.
• Supports our ability to have both the key leadership and technical talent
required to deliver on our ambitious strategy.
• Aligns to the new ways of working pillar of our T25 scorecard.
)
%
0
6
(
i
l
a
c
n
a
n
F
i
)
%
5
2
(
r
e
m
o
t
s
u
C
i
)
%
5
1
(
c
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.
60
Remuneration Report | Telstra Annual Report 2023
FY23 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)
No. of Restricted Shares allocated
40% Performance Rights (subject to 5 year RTSR
Performance Condition)
÷
5 Day
VWAP
=
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 FY23 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 2023 (being the end of the Initial Performance Period). i.e. on 30 June 2024, 30 June 2025, 30 June 2026, and 30 June 2027.
Performance Rights
The Performance Rights are subject to an RTSR performance condition, tested over a five-year performance period from 1 July
2022 to 30 June 2027. 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 2023) 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 2027. 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
FY27 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 2022 (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 FY23 EVP is $3.87.1
1. As a result of the Restructure, Telstra’s RTSR performance over the RTSR Performance Period for the FY23 EVP Performance Rights (and for all other Performance
Rights on issue) will take into account Telstra Corporation Limited’s performance up until 31 October 2022 (the date it was replaced by Telstra Group Limited as the
parent entity of the Telstra Group) and Telstra Group Limited’s performance after that time.
61
FY23 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 FY23. 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.
62
Remuneration Report | Telstra Annual Report 2023
(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
FY23
$m
FY22
$m
23,245
22,045
7,862
1,928
4.30
17.0
7,256
1,688
3.85
16.0
FY21
$m
23,132
7,638
1,857
3.76
16.0
FY20
$m
26,161
8,905
1,819
3.13
16.0
FY19
$m
27,807
7,984
2,154
3.85
19.0
1. For the year ended 30 June 2023, Telstra’s financial results include the historical financial information of the Telstra Group for both the period before and after the
Restructure. Refer to Note 1.2 to the financial statements in the Financial Report for further information about the Restructure. The results for FY19 – FY22 are the
consolidated results of Telstra Corporation Limited and its controlled entities when Telstra Corporation Limited was the parent entity of the Telstra Group before the
Restructure. 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’. Prior periods have not been restated for matters referred to in Note 1.7 to the
financial statements.
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 FY18 was $2.62.
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 FY23.
(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 FY19 through
to FY23 as a percentage of the target opportunity, relative to the performance of Telstra’s share price over the past five years. For
the purposes of the graph, Telstra means Telstra Corporation Limited up until 31 October 2022 (the date it was replaced by Telstra
Group Limited as the head entity of the Telstra group) and Telstra Group Limited after that time.
)
$
(
e
c
i
r
P
e
r
a
h
S
a
r
t
s
l
e
T
5
4.5
4
3.5
3
2.5
2
111.8%
43.6%
29.1%
39.1%
96.6%
96.2%
96.9%
100%
120%
81.9%
32.8%
28.7%
20.4%
38.6%
33.8%
24.2%
38.5%
33.7%
38.8%
33.9%
24.0%
24.2%
1
t
e
g
r
a
T
f
o
%
P
V
E
80%
60%
40%
20%
0%
FY19 EVP
30/06/2019
FY20 EVP
30/06/2020
FY21 EVP
30/06/2021
FY22 EVP
30/06/2022
FY23 EVP
30/06/2023
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 and former Senior Executives) 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.
63
2.2 FY23 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 2022 Remuneration Report) were set to be robust and appropriately demanding, taking into
account the key deliverables and milestones outlined in our T25 strategy, planned financial outcomes contained within our
Corporate Plan and FY23 guidance as announced on 11 August 2022. The changes to the EVP scorecard in FY23 were described in
our FY22 Remuneration Report. The levels for all financial measures 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
Weighted Result
(% of Target)
$23,000m
$23,953m
$25,000m
Total Income ($m)
is Telstra External Income excluding
finance income
15%
$23,245m
auditor, EY.
9.4%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore $23,245m, which was between the FY23 EVP threshold and target.
Threshold
Target
Max
Total Income of $23,245m was reported by Telstra for FY23. The calculation of this result was audited by our external
50%
100%
150%
63%
$7,800m
$7,954m
$8,050m
Threshold
50%
Target
$7,950m
100%
99%
Max
150%
$2,600m
$2,760m
$3,100m
Threshold
50%
7.7%
Threshold
50%
+38
Threshold
Target
$2,784m
100%
104%
8.0%
Target
Max
150%
8.2%
Max
8.1%
100%
150%
125%
+40
Target
50%
100%
+42
Max
+43
150%
150%
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 FY23 our Episode NPS was +43, which was above the FY23 EVP maximum. The calculation of this result was
22.5%
reperformed by our external auditor, EY.
This result is largely an outcome of the ongoing focus across the business on digitisation, simplification and customers.
Migration of customer sales onto our strategic stack has meant our people and customers benefit from faster and improved
support using the latest tools and simplified processes. This has improved straight through processing and reduced cycle
times, resulting in increased NPS and reduced complaints.
Underlying EBITDA of $7,950m was reported by Telstra for FY23. The calculation of this result was reviewed by our external
auditor, EY.
14.8%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore $7,950m, which was between the FY23 EVP threshold and target.
FCF on a guidance basis of $2,784m was reported by Telstra for FY23. The calculation of this result was reviewed by our
external auditor, EY.
15.5%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore $2,784m, which was between the FY23 EVP target and maximum.
Underlying ROIC of 8.1% was reported by Telstra for FY23. The calculation of this result was reperformed by our external
auditor, EY.
18.8%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore 8.1%, which was between the FY23 EVP target and maximum.
Underlying EBITDA ($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 ($m)
Free Cash flow after lease payments defined as
‘operating cash flows’ less ‘investing cash flows’,
less ‘payments for lease liabilities, and excludes spectrum
and guidance adjustments
Underlying Return on Capital
Total NOPAT less guidance adjustments after tax,
less net nbn one-off earnings after tax,
divided by Average Invested Capital
Episode NPS
Measures our customer experience from feedback
on each transaction using a Net Promoter Score
15%
15%
15%
15%
64
Remuneration Report | Telstra Annual Report 2023
The Board maintained absolute discretion to ensure the EVP Scorecard Outcome was appropriate, taking into account matters
including Telstra’s performance, customer experience and shareholder expectations. The Board determined that the primary
performance measure outcomes and the EVP Scorecard Outcome for FY23 would be driven by the results achieved. No
adjustments were made.
The EVP Scorecard Outcome for FY23 was 93.7% of the target opportunity (62.5% of maximum).
Measures
Weighting
Targets and Performance Outcomes
Weighted Result
(% of Target)
Additional information
Total Income ($m)
is Telstra External Income excluding
finance income
15%
$23,245m
Total Income of $23,245m was reported by Telstra for FY23. The calculation of this result was audited by our external
auditor, EY.
9.4%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore $23,245m, which was between the FY23 EVP threshold and target.
Underlying EBITDA of $7,950m was reported by Telstra for FY23. The calculation of this result was reviewed by our external
auditor, EY.
14.8%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore $7,950m, which was between the FY23 EVP threshold and target.
FCF on a guidance basis of $2,784m was reported by Telstra for FY23. The calculation of this result was reviewed by our
external auditor, EY.
15.5%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore $2,784m, which was between the FY23 EVP target and maximum.
Underlying ROIC of 8.1% was reported by Telstra for FY23. The calculation of this result was reperformed by our external
auditor, EY.
18.8%
There have been no adjustments to the actual results included for the EVP scorecard outcome.
Assessed performance on this measure was therefore 8.1%, which was between the FY23 EVP target and maximum.
22.5%
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 FY23 our Episode NPS was +43, which was above the FY23 EVP maximum. The calculation of this result was
reperformed by our external auditor, EY.
This result is largely an outcome of the ongoing focus across the business on digitisation, simplification and customers.
Migration of customer sales onto our strategic stack has meant our people and customers benefit from faster and improved
support using the latest tools and simplified processes. This has improved straight through processing and reduced cycle
times, resulting in increased NPS and reduced complaints.
65
$23,000m
$23,953m
$25,000m
Threshold
Target
Max
50%
100%
150%
63%
$7,800m
$7,954m
$8,050m
$2,600m
$2,760m
$3,100m
Target
$7,950m
100%
99%
Target
$2,784m
100%
104%
8.0%
Target
Threshold
50%
Threshold
Threshold
50%
7.7%
50%
+38
100%
150%
8.1%
125%
Threshold
+40
Target
50%
100%
Max
150%
Max
150%
8.2%
Max
+42
Max
+43
150%
150%
Underlying EBITDA ($m)
15%
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 defined as
‘operating cash flows’ less ‘investing cash flows’,
less ‘payments for lease liabilities, and excludes spectrum
and guidance adjustments
Underlying Return on Capital
Total NOPAT less guidance adjustments after tax,
less net nbn one-off earnings after tax,
divided by Average Invested Capital
Episode NPS
Measures our customer experience from feedback
on each transaction using a Net Promoter Score
15%
15%
15%
Measures
Weighting
Targets and Performance Outcomes
Weighted Result
(% of Target)
Additional information
63.6
Threshold
63.8
Target
64.5
Max
RepTrak
Measures our reputation score
on the RepTrak index
10%
63.5
100%
150%
50%
0%
17%
Threshold
20%
Target
50%
100%
23%
Max
30%
150%
150%
88%
FY23 target
build
achieved
100%
FY23 target build achieved
and first product using APIs
being in market
100%
Threshold
Target
Max
88.6%
50%
53%
80
100%
150%
Threshold
Target
82
84
Max
80
50%
50%
100%
150%
Total
% of Target
93.7%
% of Max
62.5%
Telstra’s FY23 annual RepTrak Reputation Score was 63.5, measured as the average of four quarters.
The calculation of this result was reperformed by our external auditor, EY.
Our performance on this measure has been climbing steadily since Q1 and in Q4 we achieved our highest
0.0%
results in 15 years. This improvement was achieved despite a decline of -0.8 points in the year-on-year
average of the RepTrak Benchmark 60 (an index of the largest 60 brands in Australia by revenue and
market presence).
Despite strong second half results, our overall annual average was below the FY23 EVP threshold.
7.5%
2.6%
Telstra’s FY23 Responsible Business score was a 30% reduction in absolute scope 1 +2 greenhouse
gas emissions from our FY19 baseline. The calculation of this result was reperformed by our external
auditor, EY.
The assessed performance on this measure was above the FY23 EVP maximum.
Our FY23 result of a 30% reduction was driven from grid decarbonisation (reducing emissions from
Australian grid electricity consumption) and Telstra's equipment decommissioning and energy
efficiency programs.
Excludes Digicel Pacific which Telstra acquired during FY23.
Telstra’s FY23 Digital Leadership score was 88.6%. The calculation of this result was reperformed by
our external auditor, EY.
The assessed performance on this measure was between the FY23 EVP threshold and target.
During the year we completed 31 of 35 APIs required to support the launch of Adaptive Networks –
SD-WAN (software-defined wide area network). The remaining four APIs are scheduled for delivery in
FY24 and we expect the launch of Adaptative Networks during 2024.
The employee engagement result for the last quarter of FY23 was 80. The calculation was reperformed
by our external auditor, EY.
The assessed performance on this measure was at the FY23 EVP threshold.
2.5%
Our employee engagement score of 80 places us above the 75th percentile for engagement (a score of
79), but two points below our target, being in the 90th percentile of global companies (a score of 82).
In FY23, company-wide and function-wide action plans were introduced to tackle the main opportunity
areas raised by our employees. The actions in these plans were influenced by previous Experience Pulse
surveys. An example is our commitment to improving how we support people to build unique and fulfilling
careers. We are investing in AI-driven talent technology that delivers clear career paths and promotes job
mobility and upskilling.
Responsible Business
Our % reduction in absolute scope 1 + 2 greenhouse
gas emissions from our FY19 baseline
(excludes Digicel Pacific)
Digital Leadership
% achievement of our target build of
Application Programming Interfaces
People Capability
& Engagement
Maintain employee engagement in the
high-performing norm (90th percentile)
5%
5%
5%
66
Measures
Weighting
Targets and Performance Outcomes
Weighted Result
(% of Target)
Additional information
Remuneration Report | Telstra Annual Report 2023
RepTrak
Measures our reputation score
on the RepTrak index
10%
63.5
100%
150%
63.8
Target
20%
Target
63.6
Threshold
50%
0%
17%
Threshold
88%
88.6%
50%
53%
80
80
50%
50%
Responsible Business
5%
Our % reduction in absolute scope 1 + 2 greenhouse
gas emissions from our FY19 baseline
(excludes Digicel Pacific)
50%
100%
Digital Leadership
% achievement of our target build of
Application Programming Interfaces
People Capability
& Engagement
Maintain employee engagement in the
high-performing norm (90th percentile)
5%
5%
FY23 target
build
achieved
100%
FY23 target build achieved
and first product using APIs
being in market
100%
Threshold
Target
Max
100%
150%
82
Threshold
Target
100%
150%
64.5
Max
23%
Max
30%
150%
150%
84
Max
Total
Telstra’s FY23 annual RepTrak Reputation Score was 63.5, measured as the average of four quarters.
The calculation of this result was reperformed by our external auditor, EY.
0.0%
Our performance on this measure has been climbing steadily since Q1 and in Q4 we achieved our highest
results in 15 years. This improvement was achieved despite a decline of -0.8 points in the year-on-year
average of the RepTrak Benchmark 60 (an index of the largest 60 brands in Australia by revenue and
market presence).
Despite strong second half results, our overall annual average was below the FY23 EVP threshold.
7.5%
2.6%
Telstra’s FY23 Responsible Business score was a 30% reduction in absolute scope 1 +2 greenhouse
gas emissions from our FY19 baseline. The calculation of this result was reperformed by our external
auditor, EY.
The assessed performance on this measure was above the FY23 EVP maximum.
Our FY23 result of a 30% reduction was driven from grid decarbonisation (reducing emissions from
Australian grid electricity consumption) and Telstra's equipment decommissioning and energy
efficiency programs.
Excludes Digicel Pacific which Telstra acquired during FY23.
Telstra’s FY23 Digital Leadership score was 88.6%. The calculation of this result was reperformed by
our external auditor, EY.
The assessed performance on this measure was between the FY23 EVP threshold and target.
During the year we completed 31 of 35 APIs required to support the launch of Adaptive Networks –
SD-WAN (software-defined wide area network). The remaining four APIs are scheduled for delivery in
FY24 and we expect the launch of Adaptative Networks during 2024.
The employee engagement result for the last quarter of FY23 was 80. The calculation was reperformed
by our external auditor, EY.
The assessed performance on this measure was at the FY23 EVP threshold.
2.5%
Our employee engagement score of 80 places us above the 75th percentile for engagement (a score of
79), but two points below our target, being in the 90th percentile of global companies (a score of 82).
In FY23, company-wide and function-wide action plans were introduced to tackle the main opportunity
areas raised by our employees. The actions in these plans were influenced by previous Experience Pulse
surveys. An example is our commitment to improving how we support people to build unique and fulfilling
careers. We are investing in AI-driven talent technology that delivers clear career paths and promotes job
mobility and upskilling.
% of Target
93.7%
% of Max
62.5%
67
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 GEs, their
performance relative to each other). The Individual EVP
Outcome for each Senior Executive was 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 each Senior Executive
with a performance rating of 3 (on our 1 to 5 scale), this
percentage was in the range 90% to 110%. For those with a
performance rating of 4 or 5, the percentage used was higher 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
always be 300% of the individual’s Fixed Remuneration.
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 2023 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 her 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 GEs. 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 FY23 Individual EVP
Outcomes.
2.4 FY19 EVP Performance Rights RTSR Outcome
Performance Rights that were awarded under the FY19 EVP and
allocated in November 2019, were subject to an RTSR
performance condition measured over a five year performance
period from 1 July 2018 to 30 June 2023. The Performance
Rights were only to vest if Telstra’s RTSR ranked at the 50th
percentile or greater against a comparator group comprising
the ASX100 (excluding resource companies) as at 1 July 2018
over the performance period. Each Performance Right that
vested following testing of the performance condition entitled 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 Performance Rights
was tested following the conclusion of the performance period
on 30 June 2023 and the results and vesting outcome are
detailed below. The results were calculated by an external
provider.
FY19 EVP Vesting Outcomes1
Test
date
30 June
2023
Performance
Condition
Percentile
Rank
Vesting
RTSR measured against
the ASX100 (excluding
resource companies) as
at 1 July 2018
93rd
Percentile
100%
1. As a result of the Restructure, Telstra’s RTSR performance over the performance
period took into account Telstra Corporation Limited’s performance up until 31
October 2022 (the date it was replaced by Telstra Group Limited as the parent
entity of the Telstra Group) and Telstra Group Limited’s performance after that
time.
The Board had discretion to remove companies from the
comparator group in circumstances such as acquisitions,
insolvency and de-listings. The Board exercised its discretion
under the FY19 EVP terms to remove the following companies
from the comparator group prior to the calculation of the
vesting results.
FY19 EVP Peer Group Removals
Company removed
from the Peer Group
Investa Office Fund
Reason
for removal
Acquisition
Spark Infrastructure Group
Merger
Healthscope
Duluxgroup
Acquisition
Acquisition
TPG Telecom Limited
Merger
Coca-Cola Group Limited
Acquisition
Ausnet Services Limited
Sydney Airport
Cimic Group Limited
Pendal Group Limited
Crown Resorts
Merger
Merger
Acquisition
Acquisition
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 FY23 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 FY23
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.
68
Remuneration Report | Telstra Annual Report 2023
The statutory tables for Senior Executive remuneration can be found in Sections 2.5(b) to (e).
The following table details the actual remuneration Vicki Brady (the CEO from 1 September 2022) received, or became entitled to
receive, during FY23 in comparison to FY22. The increase in actual remuneration received by Vicki Brady reflects the fact that she
was CFO in FY22 and promoted to the CEO role on 1 September 2022 on the Fixed Remuneration of her predecessor. The increase
in Vicki Brady’s Fixed Remuneration on promotion increased the dollar value of her variable remuneration (EVP) at target. Her
leadership performance in FY23 and strong delivery of the first year of our T25 strategy is reflected in her FY23 EVP award. As
flagged last year, the new EVP methodology is designed to deliver a higher level of reward at higher levels of individual
performance. The value of equity increased year on year due to the vesting of performance rights under the FY19 EVP and more
Restricted Shares (relating to variable remuneration earned in prior financial years) became unrestricted in FY23 relative to FY22 .
Restricted Shares under Tranche 3 of the FY20 EVP, Tranche 2 of the FY21 EVP and Tranche 1 of the FY22 EVP became unrestricted
on 30 June 2023. In addition, equity in FY23 is valued at a five year high of $4.30 per share. In FY22 it was valued at $3.85 per share.
Name
Vicki Brady CFO/CEO
CFO
Year
2023
20221
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)3,5
Fixed
Remuneration
($000)
2,164
1,200
1,231
570
637
381
359
–
Total
($000)
4,391
2,151
1. As reported in our 2022 Remuneration Report.
2. For FY23, amount relates to the cash component of the FY23 EVP, earned in FY23 and payable in September 2023. For FY22, the amount relates to the cash component
of the FY22 EVP, earned in FY22 and paid in September 2022.
3. Equity in this table has been valued based on Telstra’s share price at 30 June for each respective year. For FY23 this price is $4.30 and for FY22 this price is $3.85.
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 FY23, the
Restriction Period for these shares ended on 30 June 2023 and relates to Tranche 3 of the FY20 EVP, Tranche 2 of the FY21 EVP and Tranche 1 of the FY22 EVP. For the
amount reported for FY22, the Restriction Period for these shares ended on 30 June 2022 and relates to the Tranche 2 of the FY20 EVP and Tranche 1 of the FY21 EVP.
5. The outcome of the FY19 EVP was that 100% 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 FY23.
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
1,208
1,076
1,126
1,076
1,376
926
519
703
511
432
511
670
437
240
605
442
568
541
731
197
–
870
–
873
706
1,177
–
–
Name
Michael Ackland
Kim Krogh Andersen
David Burns
Nikos Katinakis
Brendon Riley
Dean Salter
Brad Whitcomb
Total
($000)
3,386
2,029
2,999
2,834
3,954
1,560
759
The table only includes Senior Executives (other than the CEO) who held that position as at 30 June 2023.
1. Amount relates to the cash component of the FY23 EVP, earned in FY23 and payable in September 2023.
2. Equity in this table has been valued based on the Telstra closing share price on 30 June 2023 of $4.30.
3. Amount relates to the value of Restricted Shares awarded under the FY20 (Tranche 3), FY21 (Tranche 2) and FY22 (Tranche 1) EVPs which were earned in a previous
year, but subject to a Restriction Period ending 30 June 2023.
4. The outcome of the FY19 EVP was that 100% of the Performance Rights vested.
69
(b) Senior Executive remuneration (main table)
The table below has been prepared in accordance with the requirements of the Corporations Act and the relevant Australian
Accounting Standards and relates only to the periods that the person was a Senior Executive. The figures provided under the
equity settled share-based payments columns are based on accounting values and do not reflect actual payments received by
Senior Executives. As continuing employment conditions and/or performance conditions apply, not all Restricted Shares,
Performance Rights and Cash Rights may vest.
Short term
employee benefits
Post–
employment
benefits
Termination
Benefits
Other long term benefits
Share–based payments
Accounting value (at risk)($)8
Salary & fees
($000)1
EVP cash
($000)2
Non–monetary
benefits
($000)3
Other
($000)4
Superannuation
($000)5
Termination
benefits ($000)6
Accrued
leave benefits
($000)7
Restricted
Performance
rights
($000)10
Cash Rights
($000)11
Total
($000)
2,164
1,176
1,208
1,100
1,076
1,025
1,126
1,126
1,076
1,076
1,376
1,376
926
926
519
–
400
2,366
437
906
10,308
11,077
1,231
570
703
600
511
431
432
440
511
410
670
553
437
375
240
–
228
1,113
210
495
5,173
4,987
50
33
–
1
4
120
10
3
18
31
45
38
10
1
7
–
18
43
–
2
162
272
41
(20)
24
54
21
15
(35)
(19)
(51)
-
(16)
(46)
(4)
21
111
–
(6)
(26)
28
(5)
113
(26)
25
24
25
24
25
24
25
24
25
24
25
24
25
24
13
–
6
24
19
24
213
216
Dividend
Equivalent
Payment
Accrual
($000)
shares
($000)9
1,025
110
69
124
81
66
31
123
85
112
76
160
110
23
5
–
–
54
198
58
84
830
739
618
786
605
596
482
598
544
614
520
828
713
415
258
62
–
111
1,220
785
532
5,820
5,492
543
321
411
309
244
169
360
296
350
274
484
411
138
76
18
–
152
1,439
703
313
3,403
3,608
59
30
31
28
27
27
28
28
27
27
35
35
23
23
13
–
10
59
11
23
264
280
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
838
838
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
978
1,965
225
–
1,203
1,965
5,248
2,821
3,312
2,802
2,570
2,324
2,667
2,527
2,682
2,438
3,607
3,214
1,993
1,709
983
–
1,951
8,401
3,314
2,374
28,327
28,610
Name
and title
Vicki Brady
CEO
Michael Ackland
CFO
Kim Krogh
Andersen
GE P&T
David Burns
GE TE
Nikos Katinakis
GE G&NT
Brendon Riley
GE & CEO InfraCo
Dean Salter
GE GBS
Brad Whitcomb
GE C&SB
Andrew Penn
Former CEO
Alex Badenoch
Former GE TC&P
Total current
and former KMP
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
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.
1.
Includes salary and salary sacrifice benefits (excluding salary sacrifice superannuation which is included under Superannuation), and where applicable is adjusted for
leave without pay. Andrew Penn entered into a consultancy agreement to provide ongoing advice and guidance to Telstra for 6 months following his retirement (until 30
March 2023) and received fees of $10,000 per month. As he was no longer KMP following his retirement, these fees are not included in the table above.
2. For FY23, the amounts relate to performance in FY23 under the FY23 EVP, which will be paid in September 2023. For FY22, the amounts relate to cash amounts paid for
performance in FY22 under the FY22 EVP. Those cash amounts were paid in September 2022.
3. 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.
4. Includes the net movement of annual leave entitlement balance and, for Brad Whitcomb a sign on payment of $70,500.
5.
Represents company contributions to superannuation. Telstra does not provide any other post-employment benefits. Includes an increase in super contributions for
FY23, partially funded from salary and fees, due to indexation of the Maximum Superannuation Contribution Base.
Termination benefits for Alex Badenoch of $837,792 comprised of a $362,190 payment in lieu of notice and a $475,602 termination payment as per her employment
contract. No termination benefits were paid to Andrew Penn on retirement, only statutory leave was paid out. The termination benefits provided to Alex Badenoch were
paid in compliance with Part 2D.2, Division 2 of the Corporations Act.
6.
70
Remuneration Report | Telstra Annual Report 2023
Short term
employee benefits
Post–
employment
benefits
Termination
Benefits
Other long term benefits
Share–based payments
Accounting value (at risk)($)8
Salary & fees
($000)1
EVP cash
($000)2
Non–monetary
benefits
($000)3
Other
Superannuation
($000)4
($000)5
Termination
benefits ($000)6
Accrued
leave benefits
($000)7
Dividend
Equivalent
Payment
Accrual
($000)
Restricted
shares
($000)9
Performance
rights
($000)10
Cash Rights
($000)11
Total
($000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
838
–
838
–
59
30
31
28
27
27
28
28
27
27
35
35
23
23
13
–
10
59
11
23
264
280
110
69
124
81
66
31
123
85
112
76
160
110
23
5
–
–
54
198
58
84
830
739
1,025
618
786
605
596
482
598
544
614
520
828
713
415
258
62
–
111
1,220
785
532
5,820
5,492
543
321
411
309
244
169
360
296
350
274
484
411
138
76
18
–
152
1,439
703
313
3,403
3,608
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
978
1,965
225
–
1,203
1,965
5,248
2,821
3,312
2,802
2,570
2,324
2,667
2,527
2,682
2,438
3,607
3,214
1,993
1,709
983
–
1,951
8,401
3,314
2,374
28,327
28,610
Name
and title
Vicki Brady
CEO
Michael Ackland
CFO
Kim Krogh
Andersen
GE P&T
David Burns
GE TE
Nikos Katinakis
GE G&NT
Brendon Riley
GE & CEO InfraCo
Dean Salter
GE GBS
Brad Whitcomb
GE C&SB
Andrew Penn
Former CEO
Alex Badenoch
Former GE TC&P
Total current
and former KMP
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2,164
1,176
1,208
1,100
1,076
1,025
1,126
1,126
1,076
1,076
1,376
1,376
926
926
519
–
400
2,366
437
906
10,308
11,077
1,231
570
703
600
511
431
432
440
511
410
670
553
437
375
240
–
228
1,113
210
495
5,173
4,987
120
50
33
–
1
4
10
3
18
31
45
38
10
1
7
–
18
43
–
2
162
272
41
(20)
24
54
21
15
(35)
(19)
(51)
-
(16)
(46)
(4)
21
111
–
(6)
(26)
28
(5)
113
(26)
25
24
25
24
25
24
25
24
25
24
25
24
25
24
13
–
6
24
19
24
213
216
Includes the net movement of long service leave entitlement balances.
7.
8. 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.
This includes the amortised value of the Restricted Share component of the FY23, FY22, FY21 and FY20 EVPs. As the Board exercised discretion to permit Andrew Penn
to retain his 404,414 FY21 EVP Restricted Shares in FY22, 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. No Board discretion was exercised in relation to Alex Badenoch’s Restricted
Shares.
9.
10. This includes the amortised value of the Performance Right component of the FY23, FY22, FY21, FY20 and FY19 EVPs. (This footnote included in the statutory full year
financial results on 17 August 2023 contained a typographical error which has now been corrected.)
11. As required under AASB 2, the accounting expense for the FY22 Cash Rights awarded to Andrew Penn and FY23 Cash Rights that will be awarded to Andrew Penn and
Alex Badenoch in lieu of Restricted Shares and Performance Rights have been fully recognised in this reporting period even though the EVP Cash Rights will not be
eligible to vest until the end of their respective restriction and performance periods. The FY23 Cash Rights are subject to the same time conditions and performance
measures as those applying to FY23 Restricted Shares and Performance Rights to be allocated to other Senior Executives.
71
(c) FY23 EVP Payments (cash and equity)
Breakdown of FY23 Individual EVP Outcomes1
Maximum
potential
EVP
opportunity
($000)2
25% Cash
component
($000)
35%
Restricted
Shares
component
($000)3
40%
Performance
Rights
component
($000)
Individual
EVP
Outcome
($000)
% of
maximum
opportunity
earned
% of
maximum
opportunity
forfeited
6,564
3,750
3,304
3,454
3,304
4,204
2,854
1,571
1,219
1,376
1,231
1,722
703
511
432
511
670
437
240
228
210
984
715
604
715
937
612
337
320
295
1,968
1,124
817
690
817
1,071
700
385
365
337
4,921
2,811
2,043
1,726
2,043
2,678
1,749
962
913
842
75.0%
25.0%
75.0%
25.0%
61.8%
38.2%
50.0%
50.0%
61.8%
38.2%
63.7%
36.3%
61.3%
61.2%
38.7%
38.8%
75.0%
25.0%
61.2%
38.8%
Name
Vicki Brady
Michael Ackland
Kim Krogh Andersen
David Burns
Nikos Katinakis
Brendon Riley
Dean Salter
Brad Whitcomb
Andrew Penn4
Alex Badenoch4
1. The FY23 Individual EVP Outcomes were approved by the Board on 15 August 2023.
2. Represents the maximum potential EVP opportunity specific to their time as Senior Executives for FY23, adjusted for any variation in Fixed Remuneration or any leave
without pay taken throughout FY23 that impacts the maximum potential EVP opportunity available. If the minimum threshold performance is not met, the minimum
possible EVP payment is nil.
3. The Restricted Shares and Performance Rights awarded are expected to be allocated shortly after Telstra’s 2023 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 and Alex Badenoch ceased employment for Permitted Reasons before the allocation of their FY23 Restricted Shares and Performance Rights under
the EVP, they will be granted Cash Rights in lieu of those Restricted Shares and Performance Rights.
72
Remuneration Report | Telstra Annual Report 2023
(d) Number and value of rights over equity instruments allocated, vested and exercised during FY23
As a result of the Restructure, Performance Rights and Restricted Shares under the FY22 EVP were granted by the new parent
entity of the Telstra Group, Telstra Group Limited. All Restricted Shares on issue at the time the top hat component of the scheme
forming part of the Restructure was implemented (being 31 October 2022) were treated in the same way as shares held by other
Telstra shareholders. Telstra Corporation Limited Restricted Shares were exchanged for Telstra Group Limited Restricted Shares
on a one-for-one basis. All Performance Rights on issue at the time the top hat component of the scheme was implemented were
amended to provide that a Telstra Group Limited share (or cash amount equivalent to such share) will be provided on the vesting
of any Performance Right. There was no change to the fair market value of the Performance Rights as a result of the amendment.
The closing price of Telstra Group Limited shares on the ASX on 31 October 2022 was $3.92.
Equity Movements
Total
rights held
at 1 July
20221
Rights
allocated
during
FY232
Value of
rights
allocated
($000)3
Rights
vested /
exercised
during FY234
Value of
rights
vested/
exercised
($000)5
Other
changes
(lapsed
rights)
Total
rights held
at 30 June
20235
Name
Vicki Brady
535,984
224,918
551
(83,562)
Michael Ackland
608,332
236,756
400
(202,232)
Kim Krogh Andersen
300,255
170,168
David Burns
633,796
173,621
Nikos Katinakis
577,110
161,783
Brendon Riley
832,639
218,013
Dean Salter
61,108
147,972
Brad Whitcomb
–
Andrew Penn
1,471,653
–
–
288
293
273
368
250
–
–
–
(203,130)
(164,095)
(273,721)
–
–
(558,281)
Alex Badenoch
615,277
195,324
330
(224,842)
165
400
–
402
325
542
–
–
1,407
445
–
–
–
–
–
–
–
–
–
–
677,340
642,856
470,423
604,287
574,798
776,931
209,080
–
913,372
585,759
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 FY23 (where applicable) in the table above was issued by Telstra Corporation Limited (if issued prior to the Restructure)
or Telstra Group Limited (if issued after the Restructure) and resulted or will result (on vesting and exercise) in one ordinary Telstra Group Limited share (or, at Telstra
Group Limited’s discretion, a cash amount equal to the value of one ordinary Telstra Group Limited 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.
1. The balance reflects the number of equity instruments held on the later of 1 July 2022 or the date on which the executive commenced as a KMP. Refer to the list of KMP
at the end of the Key Highlights section of this report for further information.
2. Rights allocated during FY23 were the FY22 EVP Performance Rights allocated on 21 November 2022. Approval for the issue of FY22 EVP Performance Rights allocated
to Vicki Brady was obtained from shareholders at our 2022 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 FY23 EVP Performance Rights will be allocated shortly after Telstra’s 2023 AGM, refer to Section 2.1 for more information.
Approval for the issue of FY23 EVP Performance Rights to be allocated to Vicki Brady will be sought from shareholders at our 2023 AGM, and as a result the grant date
of those awards for accounting purposes will be considered to be the date of the 2023 AGM (rather than 12 August 2022).
3. 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 FY23 under the FY22 EVP are based on the grant dates of 11 October 2022 for the CEO and 11 August 2021 for all other Senior Executives,
respectively. The fair value of Performance Rights granted under the FY22 EVP are $2.45 for the CEO, and $1.69 for Senior Executives.
4. Rights vested in this column relate to the Performance Rights awarded under the FY19 EVP that was performance tested following the conclusion of the performance
period on 30 June 2023 and resulted in 100% of the Performance Rights vesting. These will be provided as shares following the date of this report.
5. 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 vested under the FY19 EVP are based on the grant dates of 15 October 2019 for Andrew Penn and 11 October 2018 for all other Senior Executives, respectively.
The fair value of Performance Rights vested under the FY19 EVP are $2.52 for Andrew Penn and $1.98 for all other Senior Executives.
6. The balance reflects the number of shares held at 30 June 2023 or, if earlier, the date on which the executive ceased to hold the KMP position. Refer to the list of KMP at
the end of the Key Highlights section of this report for further information.
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 2023, there were no options or Performance Rights vested, or vested and exercisable or vested and unexercisable, except for the FY19 EVP Performance Rights. As
outlined in Section 2.4, the secondary performance condition applying to the FY19 EVP Performance Rights was tested following the conclusion of the performance period
on 30 June 2023 and 100% of those Performance Rights vested. Shares will be provided in respect of those vested Performance Rights following the date of this report.
73
(e) Senior Executive interests in Telstra Shares
During FY23, our Senior Executives and their related parties held Telstra shares directly, indirectly or beneficially as follows:
Name
Vicki Brady
Michael Ackland
Kim Krogh Andersen
David Burns
Nikos Katinakis
Total shares
held at
1 July 20221,2
Restricted
Shares
allocated3
Net shares
acquired or
disposed of and
other changes4
Total shares
held at
30 June 20235
Number of
shares held
nominally at
30 June 20235,6
575,085
886,513
262,723
740,018
530,785
196,803
–
771,888
441,137
207,161
(55,000)
1,038,674
1,038,674
148,897
–
151,918
(400,000)
411,620
491,936
325,996
384,967
141,560
–
672,345
366,445
Brendon Riley
1,507,606
190,761
(500,000)
1,198,367
1,198,367
Dean Salter
58,969
129,476
Brad Whitcomb
–
Andrew Penn
2,556,435
–
–
Alex Badenoch
597,980
170,908
–
–
–
–
188,445
175,078
–
2,556,435
768,888
–
559,505
380,832
Total
7,716,114
1,337,484
(955,000)
8,098,598
4,871,001
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 FY23 were on an arms length basis at market price.
2. Reflects the number of shares held on the later of 1 July 2022 or the date on which the executive commenced as a KMP. Refer to the list of KMP at the end of the Key
Highlights section of this report for further information.
3. Restricted Shares in this column were allocated on 21 November 2022 and relate to the FY22 EVP. The approval for the issue of Restricted Shares allocated to Vicki
Brady was obtained from shareholders at our 2022 Annual General Meeting. For his FY22 EVP award, Andrew Penn was awarded Cash Rights and not Restricted Shares.
The Restricted Shares under the FY23 EVP will be made after the reporting date of 30 June 2023, therefore they have not been included in the table above.
4. For Michael Ackland, David Burns and Brendon Riley the movement relates to sale of shares.
5. The balance reflects the number of shares held at 30 June 2023 or, if earlier, the date on which the executive ceased to hold the KMP position. Refer to the list of KMP at
the end of the Key Highlights section of this report for further information.
6. 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.
74
3.0 Non-executive Director remuneration
3.1 FY23 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 provides full details of
non-executive Director remuneration for FY23.
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 FY23
remained within the approved fee pool.
(a) FY23 Board and standing Committee fees
On an annual basis the Board conducts a market review of
Board fees. Before FY23, the Chair fee and non-executive
Director annual base fee had not changed since 2014 and 2012
respectively.
As reported in our 2022 Remuneration Report, from 1 October
2022, the Board 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,
increased by 1.8% from $28,000 to $28,500. The total of Board
and Committee fees remains within the approved fee pool.
The Board and standing Committee fee structure (inclusive of
superannuation) during FY23 was:
FY23
Board Fees
Board
FY23
Committee Fee
Audit & Risk Committee
People and Remuneration
Committee
Chair
$790,000
Chair
$70,000
$56,000
Nomination Committee*
–
Non-executive
Director (annual
base fee)
$240,000
Committee
Member
$35,000
$28,500
–
* 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. No remuneration for additional
or special duties was paid to non-executive Directors in FY23.
Following the FY23 market review of Board fees, from 1 October
2023 the Board has determined to increase the People and
Remuneration Committee Chair annual fee from $56,000 to
$58,000 (3.6% increase) and the People and Remuneration
Committee member fee from $28,500 to $29,500 (3.5%
increase). The total of Board and Committee fees will remain
within the approved fee pool.
(b) Changes to the Board and Committee composition
There were a number of changes to Board and Committee
composition during FY23.
• Nora Scheinkestel retired as a non-executive Director effective
11 October 2022;
• Bridget Loudon was appointed as a member of the People and
Remuneration Committee on 13 October 2022;
• Ming Long was appointed to the Board and as a member of
the Nomination Committee on 1 January 2023;
• Ming Long was appointed as a member of the People and
Remuneration Committee and as a member of the Audit and
Risk Committee on 15 February 2023;
• Maxine Brenner was appointed to the Board and as a member
of the Nomination Committee and Audit and Risk Committee
on 17 February 2023; and
• Elana Rubin was appointed to the Audit and Risk Committee
on 13 October 2022 and ceased to be a member of the Audit
and Risk Committee from 17 February 2023.
75
3.2 Detailed remuneration and interests in Telstra shares
(a) Non-executive Director remuneration
Name and title
John P Mullen
Chair
Eelco Blok4
Director
Maxine Brenner5
Director
Roy H Chestnutt4
Director
Craig W Dunn
Director
Ming Long5
Director
Bridget Loudon6
Director
Elana Rubin7
Director
Nora L Scheinkestel8
Director
Niek Jan van Damme4
Director
Total
Year
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
Short term employee benefits
Post–employment
benefits
Salary and fees
($000)1
Non-monetary
benefits ($000)2
Superannuation
($000)3
Total
($000)9
761
751
234
231
93
–
269
265
283
292
131
–
235
214
349
253
76
283
262
258
2,693
2,547
15
11
–
–
–
–
–
–
1
1
–
–
–
1
4
1
–
1
–
–
20
15
25
24
5
4
9
–
5
5
25
24
13
–
24
21
–
6
7
24
5
5
118
113
801
786
239
235
102
–
274
270
309
317
144
–
259
236
353
260
83
308
267
263
2,831
2,675
1. Includes fees for membership on Board standing committees and remuneration for payroll adjustments, 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 L Scheinkestel ($9,000). No remuneration for
additional or special duties was paid to non-executive Directors in FY23.
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 FY23, funded from salary and fees, due to indexation of the Maximum Superannuation Contribution Base.
4. As Eelco Blok, Roy Chestnutt, and Niek Jan van Damme are overseas residents, their superannuation contributions for FY23 and FY22 are less than the contributions
for Australian resident non-executive Directors.
5. Maxine Brenner and Ming Long qualified as KMP from 17 February 2023 and 1 January 2023 respectively, when they were appointed as non-executive Directors of
Telstra.
6. Includes a period of paid parental leave.
7. Includes $42,162 payable from payroll reconciliation relating to prior periods. An employer superannuation guarantee shortfall exemption certificate has been granted
by the ATO for the 2023 financial year. Based on the exemption approval Telstra has met the required Superannuation Guarantee obligation.
8. Nora L Scheinkestel (Director since August 2010) retired from the Board of Directors on 11 October 2022.
9. The total for FY22 of $2,675 million in this table is different to the total for FY22 in the FY22 Remuneration Report of $2,902 million as it does not include
remuneration for Peter Hearl of $147,000 or Margaret Seale of $80,000.
76
Remuneration Report | Telstra Annual Report 2023
(b) Non-executive Directors’ interests in Telstra shares
During FY23, our non-executive Directors and their related parties held Telstra shares directly, indirectly or beneficially as follows:
Name
John P Mullen
Eelco Blok
Maxine Brenner
Roy H Chestnutt
Craig W Dunn
Ming Long
Bridget Loudon
Elana Rubin
Nora L Scheinkestel
Niek Jan van Damme
Total
Total shares held at
1 July 20221,2
Net shares acquired
or disposed of and
other changes1
Total shares held at
30 June 20231,3
Shares held nominally
at 30 June 20233,4
126,159
75,000
–
70,000
73,173
26,000
2,500
67,961
161,685
77,000
679,478
–
–
–
–
–
25,589
10,000
–
3,459
–
39,048
126,159
75,000
–
70,000
73,173
51,589
12,500
67,961
165,144
77,000
718,526
100,000
–
–
70,000
72,473
–
12,500
–
131,206
–
386,179
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 FY23 were on an arm's length basis at market price.
2. For Maxine Brenner and Ming Long, the balance as at 1 July 2022 represents shares held as at the date they became KMP.
3. For Nora L Scheinkestel, the balance as at 30 June 2023 represents shares held as at the date on which she ceased to be KMP.
4. 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 FY24
4.1 Senior Executive Leadership Changes
During the year we were delighted to announce the
appointment of Kathryn van der Merwe as Group Executive
People, Culture and Communications. Kathryn commenced with
Telstra on 3 July 2023.
4.2 FY24 Senior Executive Remuneration Framework
On an annual basis the Board conducts a market review of
Senior Executive remuneration along with other factors
including internal relativities and any growth in the
accountabilities of Senior Executive roles.
Dean Salter commenced with Telstra on 19 February 2021 on a
fixed remuneration of $950,000. With an increase in the
Superannuation Guarantee Charge, his fixed remuneration
increased to $951,205 on 1 July 2022. Since commencement,
the accountabilities of Dean Salter’s role have expanded and
have become critical to the delivery of our T25 strategy. Field
services and wideband construction teams have moved into
Global Business Services to enable consistent investment in our
critical field services capabilities and to ensure a consistent
customer experience. Dean Salter also plays an increasingly
critical role in Telstra delivering net cost reductions through
productivity improvements, including the expansion and
maturation of our global shared services operations.
The Board has determined to increase the fixed remuneration of
Dean Salter, Group Executive Global Business Services, from
$951,205 to $1,050,000. This change will take effect on 1
October 2023 and, with the exception of the regulated increase
in the Superannuation Guarantee Charge, is the first increase in
fixed remuneration for Dean Salter since his commencement
nearly three years ago.
For FY24 we do not anticipate any other increases in Senior
Executive Fixed Remuneration other than on appointment or
promotion to a new role or due to a significant increase in
accountabilities, nor do we intend on making any significant
changes to the EVP remuneration structure.
4.3 FY24 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.
The performance measures and targets selected by the Board
are designed to focus the Senior Executives on delivering
against the second 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 FY24 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 FY24
Corporate Plan and FY24 guidance (as announced on 17 August
2023).
The targets that apply to the FY24 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.
77
FY24 EVP Performance Measures and Targets
Performance
Measure
Metric
Weighting
FY23 EVP
Actual^
FY24
Threshold
Target
Max
Rationale for
why chosen
i
l
a
c
n
a
n
F
i
Total Income
Underlying
EBITDA
Free Cash Flow
g
n
i
t
h
g
e
w
i
l
a
t
o
t
f
o
%
0
6
Underlying Return On
Invested Capital
Telstra Income (excluding finance income)
15%
$23,245m
Underlying EBITDA is Earnings Before Interest, Tax,
Depreciation & Amortisation, and excludes guidance
adjustments
15%
$7,950m
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%
$2,784m
Underlying ROIC is Total NOPAT less guidance adjustments
after tax, divided by Average Invested Capital
15%
8.1%
Aligned to
bottom end
of Market
Guidance*
Aligned to
Midpoint of
Market
Guidance*
Aligned to
top end of
Market
Guidance*
r
e
m
o
t
s
u
C
g
n
i
t
h
g
e
w
i
l
a
t
o
t
f
o
%
5
2
c
i
g
e
t
a
r
t
S
g
n
i
t
h
g
e
w
i
l
a
t
o
t
f
o
%
5
1
Episode NPS
RepTrak
Measures our customer experience from their feedback on
each transaction using a Net Promoter Score
15%
+43
+43
+44
+45
Measures our reputation score on the RepTrak index
10%
63.5
63.5
64.2
64.9
Responsible Business
Our % reduction in absolute scope 1 + 2 greenhouse gas
emissions and % reduction in absolute scope 3 greenhouse gas
emissions, both from our FY19 baseline (excluding Digicel
Pacific)
5%
Digital
Leadership
Launching Application Programming Interface (API)-first
products
5%
30%
reduction in
scope 1 + 2
emissions
28%
reduction in
scope 3
emissions
89% of FY23
target build
achieved
Build 100%
of the APIs
required to
launch our
first API-first
product
Release 2
API-first
products
Release 3
API-first
products
32%
33%
34%
electricity we use. Added for FY24 are scope 3 greenhouse gas emissions which are
People Engagement
Maintain employee engagement in the high performing norm
(90th percentile)
5%
80
80
81
82
• A highly engaged workforce is critical for attracting and retaining the talent required to
^ For metrics continuing from FY23, the FY23 EVP Actual refers to the FY23 EVP performance outcomes as outlined in Section 2.2. For Underlying EBITDA and Underlying
ROIC refer to section 2.1 for the FY23 definitions. For Responsible Business the FY23 EVP Actual refers to the actual performance outcomes for the reduction in scope 1,
2 and 3 greenhouse gas emissions in FY23. For metrics that are new in FY24, the FY23 EVP Actual (where available) is our current internal measurement to the end of
June 2023 where this provides relevant context to the determination of Threshold, Target and Maximum for FY24.
* Market Guidance means guidance for FY24 as set out in Telstra’s ASX announcement dated 17 August 2023. Threshold, Target and Maximum levels for Underlying ROIC
align to the corresponding Threshold, Target and Maximum for Underlying EBITDA (which align to Market Guidance as described above).
78
• 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.
• 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 company-wide 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.
• To account for macro changes in consumer sentiment, we will review Telstra’s
performance against the year-on-year movement in the RepTrak Benchmark 60
average score which measures the reputation of the 60 largest brands in Australia by
revenue and market presence.
• Aligns to the responsible business pillar of our T25 scorecard.
• 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.
• Scope 1 + 2 greenhouse gas emissions are those caused by fossil fuels and grid
mainly those from our value chain (e.g. suppliers and customers). Both metrics will be
assessed separately and combined with an equal weighting (50% each), as set out
below this table.
• Aligns to the responsible business pillar of our T25 scorecard.
• 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.
• API-first involves building our underlying network, IT and data capabilities as services
that can be used by teams building product and channel experiences. These services
will be reusable for multiple products and channels, so we can make changes to them
faster and more cheaply.
• 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.
• Focusses leaders on our employee engagement and the importance of our employees
as stakeholders.
deliver on our ambitious strategy.
• Aligns to the new ways of working pillar of our T25 scorecard.
Total Income
Underlying
EBITDA
Episode NPS
RepTrak
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
Responsible Business
Pacific)
Our % reduction in absolute scope 1 + 2 greenhouse gas
emissions and % reduction in absolute scope 3 greenhouse gas
5%
emissions, both from our FY19 baseline (excluding Digicel
30%
reduction in
scope 1 + 2
emissions
28%
reduction in
scope 3
emissions
Digital
Leadership
Launching Application Programming Interface (API)-first
products
5%
89% of FY23
target build
achieved
People Engagement
Maintain employee engagement in the high performing norm
(90th percentile)
FY24 EVP Performance Measures and Targets
Performance
Measure
Metric
Weighting
FY23 EVP
Actual^
FY24
Threshold
Target
Max
Rationale for
why chosen
Remuneration Report | Telstra Annual Report 2023
Telstra Income (excluding finance income)
15%
$23,245m
Underlying EBITDA is Earnings Before Interest, Tax,
Depreciation & Amortisation, and excludes guidance
adjustments
15%
$7,950m
Free Cash Flow
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%
$2,784m
Underlying Return On
Invested Capital
Underlying ROIC is Total NOPAT less guidance adjustments
after tax, divided by Average Invested Capital
15%
8.1%
Aligned to
bottom end
of Market
Guidance*
Aligned to
Midpoint of
Market
Guidance*
Aligned to
top end of
Market
Guidance*
Measures our customer experience from their feedback on
each transaction using a Net Promoter Score
15%
+43
+43
+44
+45
Measures our reputation score on the RepTrak index
10%
63.5
63.5
64.2
64.9
32%
33%
34%
Build 100%
of the APIs
required to
launch our
first API-first
product
Release 2
API-first
products
Release 3
API-first
products
• 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.
• 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 company-wide 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.
• To account for macro changes in consumer sentiment, we will review Telstra’s
performance against the year-on-year movement in the RepTrak Benchmark 60
average score which measures the reputation of the 60 largest brands in Australia by
revenue and market presence.
• Aligns to the responsible business pillar of our T25 scorecard.
• 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.
• Scope 1 + 2 greenhouse gas emissions are those caused by fossil fuels and grid
electricity we use. Added for FY24 are scope 3 greenhouse gas emissions which are
mainly those from our value chain (e.g. suppliers and customers). Both metrics will be
assessed separately and combined with an equal weighting (50% each), as set out
below this table.
• Aligns to the responsible business pillar of our T25 scorecard.
• 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.
• API-first involves building our underlying network, IT and data capabilities as services
that can be used by teams building product and channel experiences. These services
will be reusable for multiple products and channels, so we can make changes to them
faster and more cheaply.
• 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.
• Focusses leaders on our employee engagement and the importance of our employees
as stakeholders.
5%
80
80
81
82
• A highly engaged workforce is critical for attracting and retaining the talent required to
deliver on our ambitious strategy.
• Aligns to the new ways of working pillar of our T25 scorecard.
Calculation of Blended Responsible Business Metric for FY24:
Reduce emissions
Weight
Threshold
Target
Scope 1 + 2
Scope 3
Blended targets (rounded to nearest whole %)
50%
50%
100%
32%
31%
32%
33%
32%
33%
Max
35%
33%
34%
79
5.0 Glossary
Cash Rights
EBITDA
EVP
EVP Scorecard
Outcome
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.
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, after 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 2022 – 30 June 2023).
KMP
Key Management Personnel, being people with authority and responsibility for planning, directing and
controlling the activities of Telstra and the Group, directly or indirectly.
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.
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
80
Remuneration Report | Telstra Annual Report 2023
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.
Restructure
The corporate restructure of the Telstra Group implemented during FY23, which included Telstra Group.
Limited becoming the new parent entity of the Telstra Group with effect from 31 October 2022 (Telstra
Corporation Limited was the parent entity of the Telstra Group prior to that date).
Relative Total
Shareholder Return
(RTSR)
Measures the performance of a 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 entities in a comparator group over the same period.
RTSR Performance
Period
The five-year performance period ending on 30 June 2027 over which the RTSR performance condition
for the FY23 EVP Performance Rights will be measured.
Senior Executive
Refers to the CEO and those GEs who are KMP.
Underlying EBITDA
Underlying EBITDA is Earnings Before Interest, Tax, Depreciation & Amortisation. It excludes guidance
adjustments. In FY23 and prior years, it also excluded net one-off nbn DA receipts less nbn net C2C.
81
SignOffs with signatures for Print Report.fm Page 95 Wednesday, August 16, 2023 5:22 PM
SignOffs with signatures for Print Report.fm Page 95 Wednesday, August 16, 2023 5:22 PM
Directors’
Report
Ernst & Young
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
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, as amended from time to time 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 17 August 2023 in accordance with
a resolution of the Directors.
Auditor’s Independence Declaration to the
Directors of Telstra Group Limited
As lead auditor for the audit of the financial report of
Telstra Group Limited for the financial year ended 30 June
2023, I declare to the best of my knowledge and belief,
there have been:
(a) No contraventions of the auditor independence
requirements of the Corporations Act 2001 in relation
to the audit;
(b) No contraventions of any applicable code of
professional conduct in relation to the audit; and
(c) No non-audit services provided that contravene any
applicable code of professional conduct in relation to
the audit.
This declaration is in respect of Telstra Group Limited and
the entities it controlled during the financial year.
John P Mullen
Chairman
17 August 2023
Vicki Brady
Chief Executive Officer and Managing Director
17 August 2023
Ernst & Young
Sarah Lowe
Partner
17 August 2023
A member firm of Ernst & Young Global Limited
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
F95
82
Financial
Report
83
Telstra Group Limited and controlled entities | 83
Telstra Financial Report 2023 Telstra Group Limited
and controlled entities
Australian Business Number (ABN): 56 650 620 303
Telstra Financial Report 2023
Financial report: introduction and contents
As at 30 June 2023
About this report
This is the financial report for Telstra Group 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 2023.
Telstra Group Limited is a ‘for profit’ company limited by shares
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange (ASX) following the exchange of
shares in Telstra Corporation Limited for shares in Telstra Group
Limited under the Telstra Group restructure described in note 1.2
(Restructure).
The Restructure took place during the financial year 2023, with the
final steps completed on 1 January 2023. Telstra Group Limited
replaced Telstra Corporation Limited as the new parent entity of the
Telstra Group on 31 October 2022. Our full year financial report has
been prepared as a continuation of the existing financial
performance and financial position of Telstra Corporation Limited
and its controlled entities. As such, as at and for the year ended 30
June 2023, the consolidated financial statements of the Group
include the historical financial information of the Telstra Group for
both the period before and after the Restructure.
This financial report was authorised for issue in accordance with a
resolution of the Telstra Group Limited Board of Directors on 17
August 2023. 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
85
86
87
89
90
Notes to the Financial Statements
Section 1: Basis of preparation
1.1 Basis of preparation of the financial report
1.2 Telstra Group restructure
1.3 Terminology used in our income statement
1.4 Principles of consolidation
1.5 Key accounting estimates and judgements
1.6 Other accounting policies
1.7 Restatement of prior periods
Income
Section 2: Our performance
2.1 Segment information
2.2
2.3 Expenses
2.4
Income taxes
2.5 Earnings per share
2.6 Notes to the statement of cash flows
91
91
91
92
92
93
94
95
100
110
111
114
115
Section 3: Our core assets, lease arrangements and working
capital
116
3.1 Property, plant and equipment and intangible assets
122
3.2 Lease arrangements
3.3 Trade and other receivables and contract assets
127
3.4 Contract liabilities and other revenue received in advance 130
130
3.5
131
3.6 Deferred contract costs
132
3.7
132
3.8 Trade and other payables
Net contract assets and contract liabilities
Inventories
Section 4: Our capital and risk management
4.1 Capital management
4.2 Dividend
4.3 Equity
4.4 Net debt
4.5 Financial instruments and risk management
Section 5: Our people
5.1 Employee benefits
5.2 Employee share plans
5.3 Post-employment benefits
5.4 Key management personnel compensation
Section 6: Our investments
6.1 Changes in the group structure
6.2
6.3 Non-controlling interests
6.4
Investments in controlled entities
Investments in joint ventures and associated entities
Section 7: Other information
7.1 Auditor’s remuneration
7.2 Other provisions
7.3 Parent entity disclosures
7.4 Commitments and contingencies
7.5 Events after reporting date
Directors’ Declaration
Independent Auditor’s Report
133
133
134
136
140
152
153
156
159
160
162
165
166
170
170
171
172
173
174
175
84 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F1
Notes to the financial statements (continued) 2023.Financial Report.book Page 1 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 2 Wednesday, August 16, 2023 4:21 PM
Income
Statement
For the year ended 30 June 2023
Telstra Group
Income
Revenue (excluding finance income)
Other income
Expenses
Labour
Goods and services purchased
Net impairment losses on financial assets
Other expenses
Share of net loss from joint ventures and associated entities
Earnings before interest, income tax expense, depreciation and amortisation (EBITDA)
Depreciation and amortisation
Earnings before interest and income tax expense (EBIT)
Finance income
Finance costs
Net finance costs
Contract liabilities and other revenue received in
F47
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
Earnings per share (cents per share)
Basic
Diluted
Some narrative disclosures are presented in a tabular format to
provide readers with a clearer understanding of the information
Key management personnel compensation
The notes following the financial statements form part of the financial report.
Telstra Financial Report 2023
Telstra Group Limited is a ‘for profit’ company limited by shares
Principles of consolidation
Financial report: introduction and contents
Telstra Group Limited
and controlled entities
Australian Business Number (ABN): 56 650 620 303
As at 30 June 2023
About this report
This is the financial report for Telstra Group 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 2023.
incorporated in Australia whose shares are publicly traded on the
Australian Securities Exchange (ASX) following the exchange of
shares in Telstra Corporation Limited for shares in Telstra Group
Limited under the Telstra Group restructure described in note 1.2
(Restructure).
The Restructure took place during the financial year 2023, with the
final steps completed on 1 January 2023. Telstra Group Limited
replaced Telstra Corporation Limited as the new parent entity of the
Telstra Group on 31 October 2022. Our full year financial report has
been prepared as a continuation of the existing financial
performance and financial position of Telstra Corporation Limited
and its controlled entities. As such, as at and for the year ended 30
June 2023, the consolidated financial statements of the Group
include the historical financial information of the Telstra Group for
both the period before and after the Restructure.
This financial report was authorised for issue in accordance with a
resolution of the Telstra Group Limited Board of Directors on 17
August 2023. The Directors have the power to amend and reissue
the financial report.
Reading the financials
Section introduction
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.
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.
Narrative table
being presented.
Information panel
Contents
Financial Statements
Income Statement
Statement of Comprehensive Income
Statement of Financial Position
Statement of Cash Flows
Statement of Changes in Equity
1.1
1.2
1.3
1.4
1.5
1.6
1.7
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
5.1
5.2
5.3
5.4
6.1
6.2
6.3
6.4
7.1
7.2
7.3
7.4
7.5
Notes to the Financial Statements
Section 1: Basis of preparation
Basis of preparation of the financial report
Telstra Group restructure
Terminology used in our income statement
Key accounting estimates and judgements
Other accounting policies
Restatement of prior periods
Section 2: Our performance
Segment information
Income
Expenses
Income taxes
Earnings per share
Notes to the statement of cash flows
Section 3: Our core assets, lease arrangements and
working capital
3.1
Property, plant and equipment and intangible
F33
assets
Lease arrangements
Trade and other receivables and contract assets
advance
Net contract assets and contract liabilities
Deferred contract costs
Inventories
Trade and other payables
Dividend
Equity
4.4 Net debt
4.5
Financial instruments and risk management
Section 5: Our people
Employee benefits
Employee share plans
Post-employment benefits
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
Other provisions
Parent entity disclosures
Commitments and contingencies
Events after reporting date
Directors’ Declaration
Independent Auditor’s Report
F2
F3
F4
F6
F7
F10
F11
F8
F8
F8
F9
F9
F12
F17
F27
F28
F31
F32
F39
F44
F47
F48
F49
F49
F50
F50
F51
F53
F57
F69
F70
F73
F76
F77
F79
F82
F83
F87
F87
F88
F89
F90
F91
F92
The introduction at the start of each section outlines the focus of
the section and explains the purpose and content of that section.
Section 4: Our capital and risk management
Capital management
Telstra Financial Report 2023
Year ended 30 June
2023
2022
Note
$m
$m
2.2
2.2
2.3
6.4
2.3
2.2
2.3
2.4
2.5
2.5
22,702
543
21,277
768
23,245
22,045
3,967
8,511
90
2,788
15,356
3,620
8,228
98
2,812
14,758
(27)
(31)
15,383
14,789
7,862
4,470
3,392
101
630
529
2,863
812
2,051
1,928
123
2,051
7,256
4,358
2,898
110
527
417
2,481
667
1,814
1,688
126
1,814
cents
cents
16.7
16.7
14.4
14.3
Telstra Group Limited and controlled entities | F1
F2 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 85
Telstra Financial Report 2023 2023.Financial Report.book Page 3 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 4 Wednesday, August 16, 2023 4:21 PM
Statement of
Comprehensive Income
For the year ended 30 June 2023
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
Telstra Financial Report 2023
Year ended 30 June
2023
2022
Note
$m
$m
Statement of
Financial Position
As at 30 June 2023
Telstra Group
1,928
123
2,051
1,688
126
1,814
28
(9)
(94)
71
(3)
(7)
149
(45)
(189)
40
2
(43)
Trade and other receivables and contract assets
Trade and other receivables and contract assets
Investments – accounted for using the equity method
Translation differences of foreign operations attributable to equity holders of Telstra Entity
50
49
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.
4.5
4.5
(112)
-
33
(13)
4
(38)
(45)
204
6
(54)
79
(24)
260
217
2,006
2,031
1,886
120
1,903
128
86 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F3
F4 | Telstra Group Limited and controlled entities
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
Intangible assets
Right-of-use 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 liabilities
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
2023
2022
Restated
Note
$m
$m
6,733
6,260
932
4,216
114
546
445
152
328
1,017
1,088
36
686
22
20,969
10,989
2,825
333
46
285
38,296
45,029
684
327
448
73
38
1,495
10,092
208
125
186
2,743
10,013
189
2,112
11
1,534
17,121
27,213
17,816
1,040
4,074
116
476
302
17
235
861
1,238
28
814
15
20,485
8,155
2,926
512
60
274
35,368
41,628
667
160
490
-
79
1,403
9,698
233
132
119
2,797
8,292
305
1,678
10
1,388
14,954
24,652
16,976
4,365
4,209
2,662
2,690
2.6
3.3
3.6
3.7
4.4
2.4
3.3
3.6
3.7
6.4
3.1
3.1
3.2
4.4
2.4
5.3
3.8
5.1
7.2
3.2
4.4
4.4
2.4
3.4
3.8
5.1
7.2
3.2
4.4
4.4
2.4
5.3
3.4
Notes to the financial statements (continued) 2023.Financial Report.book Page 3 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 4 Wednesday, August 16, 2023 4:21 PM
Statement of
Comprehensive Income
For the year ended 30 June 2023
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
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 2023
Year ended 30 June
2023
2022
Note
$m
$m
1,928
123
2,051
1,688
126
1,814
28
(9)
(94)
71
(3)
(7)
(112)
-
33
(13)
4
(38)
(45)
149
(45)
(189)
40
2
(43)
204
6
(54)
79
(24)
260
217
2,006
2,031
1,886
120
1,903
128
4.5
4.5
Translation differences of foreign operations attributable to equity holders of Telstra Entity
50
49
Statement of
Financial Position
As at 30 June 2023
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
Intangible assets
Right-of-use 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 liabilities
Contract liabilities and other revenue received in advance
Total non-current liabilities
Total liabilities
Net assets
Telstra Financial Report 2023
As at 30 June
2023
Note
$m
2022
Restated
$m
2.6
3.3
3.6
3.7
4.4
2.4
3.3
3.6
3.7
6.4
3.1
3.1
3.2
4.4
2.4
5.3
3.8
5.1
7.2
3.2
4.4
4.4
2.4
3.4
3.8
5.1
7.2
3.2
4.4
4.4
2.4
5.3
3.4
932
4,216
114
546
445
152
328
1,040
4,074
116
476
302
17
235
6,733
6,260
1,017
1,088
36
686
22
20,969
10,989
2,825
333
46
285
38,296
45,029
861
1,238
28
814
15
20,485
8,155
2,926
512
60
274
35,368
41,628
4,365
4,209
684
327
448
667
160
490
2,662
2,690
73
38
1,495
10,092
208
125
186
2,743
10,013
189
2,112
11
1,534
17,121
27,213
17,816
-
79
1,403
9,698
233
132
119
2,797
8,292
305
1,678
10
1,388
14,954
24,652
16,976
Telstra Group Limited and controlled entities | F3
F4 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 87
Telstra Financial Report 2023 2023.Financial Report.book Page 5 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 6 Wednesday, August 16, 2023 4:21 PM
Statement of
Financial Position (continued)
Telstra Financial Report 2023
As at 30 June 2023
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
Telstra Group
2023
Note
$m
2022
Restated
$m
4.3
4.3
3,095
2,196
10,116
15,407
2,409
17,816
3,098
2,333
10,057
15,488
1,488
16,976
Statement of
Cash Flows
For the year ended 30 June 2023
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 of intangibles
Proceeds from sale of equity accounted and other investments
Distributions received from equity accounted investments
Receipts of the principal portion of finance lease receivables
Government grants received for investing activities
Interest received
Other
Repayment of loans by associated entity
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 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
Dividends paid to equity holders of Telstra Entity
Proceeds from issuance of equity-like instrument
Proceeds from sale of non-controlling interests
Net cash used in financing activities
Net decrease 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
Year ended 30 June
2023
2022
Note
$m
$m
25,196
23,876
(17,640)
(15,987)
179
8,068
(819)
7,249
(2,176)
(918)
(3,094)
(771)
(30)
(50)
155
-
156
93
92
24
14
-
16
(697)
(1,350)
(5)
(534)
(100)
-
2,883
(3,971)
(117)
1,125
32
1,040
(6,465)
(3,945)
(5,951)
(3,395)
851
3,854
8,627
1,470
(7,067)
(3,750)
(1,964)
(1,888)
179
7,735
(933)
6,802
(2,474)
(1,396)
(3,870)
(2,488)
(103)
(4)
201
16
51
40
82
58
37
25
4
(675)
-
(21)
(636)
(163)
923
7
(969)
(118)
1,040
10
932
2.4
2.6
3.2
4.2
6.1
6.1
2.6
88 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F5
F6 | Telstra Group Limited and controlled entities
The notes following the financial statements form part of the financial report.
Notes to the financial statements (continued) As at 30 June 2023
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
2023
2022
Restated
4.3
4.3
3,095
2,196
10,116
15,407
2,409
17,816
3,098
2,333
10,057
15,488
1,488
16,976
2023.Financial Report.book Page 5 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 6 Wednesday, August 16, 2023 4:21 PM
Statement of
Financial Position (continued)
Telstra Financial Report 2023
Statement of
Cash Flows
For the year ended 30 June 2023
Telstra Group
Note
$m
$m
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 of intangibles
Proceeds from sale of equity accounted and other investments
Distributions received from equity accounted investments
Receipts of the principal portion of finance lease receivables
Government grants received for investing activities
Interest received
Repayment of loans by associated entity
Other
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 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
Dividends paid to equity holders of Telstra Entity
Proceeds from issuance of equity-like instrument
Proceeds from sale of non-controlling interests
Net cash used in financing activities
Net decrease 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
Telstra Financial Report 2023
Year ended 30 June
2023
2022
Note
$m
$m
25,196
23,876
(17,640)
(15,987)
179
7,735
(933)
6,802
(2,474)
(1,396)
(3,870)
(2,488)
(103)
(4)
179
8,068
(819)
7,249
(2,176)
(918)
(3,094)
(771)
(30)
(50)
(6,465)
(3,945)
201
16
51
40
82
58
37
25
4
155
-
156
93
92
24
14
-
16
(5,951)
(3,395)
851
3,854
8,627
1,470
(7,067)
(3,750)
(675)
-
(21)
(636)
(163)
(697)
(1,350)
(5)
(534)
(100)
(1,964)
(1,888)
923
7
(969)
(118)
1,040
10
932
-
2,883
(3,971)
(117)
1,125
32
1,040
2.4
2.6
3.2
4.2
6.1
6.1
2.6
The notes following the financial statements form part of the financial report.
Telstra Group Limited and controlled entities | F5
F6 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 89
Telstra Financial Report 2023 2023.Financial Report.book Page 7 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 8 Wednesday, August 16, 2023 4:21 PM
Statement of
Changes in Equity
For the year ended 30 June 2023
Telstra Group
Share
capital
Reserves Retained
Total
profits
Balance at 1 July 2021 (reported)
Net effect of a restatement of prior periods
Balance at 1 July 2021 (restated)
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Share buy-back (net of income tax)
Transactions with non-controlling interests
Additional shares purchased
Share-based payments
Note
1.7
6.3
4.3
$m
4,436
-
4,436
-
-
-
-
(1,350)
-
(5)
17
$m
138
-
138
-
111
111
-
-
2,084
-
-
$m
10,014
139
10,153
1,688
104
1,792
(1,888)
-
-
-
-
Balance at 30 June 2022 (restated)
3,098
2,333
10,057
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Non-controlling interests on acquisitions
Transactions with non-controlling interests
Transfer of fair value of equity instruments reserve
to retained earnings
Additional shares purchased
Share-based payments
Balance at 30 June 2023
6.3
4.3
-
-
-
-
-
-
-
(21)
18
-
(61)
(61)
-
-
-
(76)
-
-
1,928
19
1,947
(1,964)
-
-
76
-
-
3,095
2,196
10,116
The notes following the financial statements form part of the financial report.
$m
14,588
139
14,727
1,688
215
1,903
(1,888)
(1,350)
2,084
(5)
17
15,488
1,928
(42)
1,886
(1,964)
-
-
-
(21)
18
15,407
Telstra Financial Report 2023
Notes to the financial statements
Non-
control-
ling
interests
$m
687
-
687
126
2
128
-
-
673
-
-
1,488
123
(3)
120
-
941
(140)
-
-
-
2,409
Total
equity
$m
15,275
139
15,414
1,814
217
2,031
(1,888)
(1,350)
2,757
(5)
17
16,976
2,051
(45)
2,006
(1,964)
941
(140)
-
(21)
18
17,816
Section 1. Basis of preparation
This section explains the basis of preparation of our
financial report, describes changes in our accounting
policies and provides a summary of our key accounting
estimates and judgements.
SECTION 1.
BASIS OF PREPARATION
1.1 Basis of preparation of the financial report
This financial report is a general purpose financial report, prepared
by a ‘for profit’ entity, in accordance with the requirements of the
On 31 October 2022, Telstra Group Limited became the new head
entity of the Australian tax consolidated group. Refer to note 2.4.4
for further details on accounting for the tax consolidated group.
Australian Corporations Act 2001, Accounting Standards applicable
On 30 November 2022, Telstra Group Limited became the
in Australia and other authoritative pronouncements of the
sponsoring employer in our Telstra Superannuation Scheme
Australian Accounting Standards Board (AASB). It also complies
(Telstra Super). Refer to note 5.3.2 for further details on accounting
with International Financial Reporting Standards (IFRS) and
for Telstra Super.
Interpretations published by the International Accounting
Standards Board (IASB).
On 1 January 2023, the final steps of the Restructure (including the
business restructure component of the Scheme) were completed.
The financial report is presented in Australian dollars and, unless
Those steps involved Telstra Corporation Limited transferring the
otherwise stated, all values have been rounded to the nearest
retail and active wholesale business assets and liabilities and
million dollars ($m) under the option available under the Australian
related investments to Telstra Limited, and the international
Securities and Investments Commission (ASIC) Corporations
business assets and liabilities and related investments to Telstra
(Rounding in Financial/Directors’ Report) Instrument 2016/191 as
International Holdings Pty Ltd and its controlled entities. Telstra
amended from time to time. The functional currency of the Telstra
Corporation Limited also transferred its interest in Telstra Towerco
Entity and its Australian controlled entities is Australian dollars.
No.2 Pty Ltd, being the wholly-owned entity which holds an interest
The functional currency of certain non-Australian controlled
in the Amplitel towers business and related investments, to Telstra
entities is not Australian dollars. The results of these entities are
Group Limited. Following the Restructure, Telstra Corporation
translated into Australian dollars in accordance with our accounting
Limited continues to operate our passive fixed infrastructure
policy described in note 1.4.1.
business and service our nbn Definitive Agreements.
The financial report is prepared on a historical cost basis, except for
The businesses and investments transferred between Telstra
some categories of financial instruments, which are recorded at fair
Corporation Limited and Telstra Group Limited or other entities
value.
presentation.
Where relevant, comparative information has been reclassified to
ensure comparability with the current year disclosures and
1.2 Telstra Group restructure
During the financial year 2023, Telstra Corporation Limited
implemented a scheme of arrangement (Scheme) to support the
restructure of the Telstra Group (Restructure) first announced in
November 2020. The Restructure was an internal legal
reorganisation and did not, by itself, result in any immediate change
to the underlying assets or business activities of the Telstra Group.
within the Telstra Group under the Restructure did not result in
business combinations for accounting purposes and the
Restructure was accounted for as an internal reorganisation, i.e.
assets and liabilities transferred were recognised at their existing
values in the statement of financial position. From the Telstra
Group perspective the internal reorganisation transfers are
eliminated on consolidation, i.e. they do not impact the Telstra
Group financial results.
Accordingly, the consolidated financial statements have been
presented as a continuation of the existing financial performance
and financial position of the Telstra Group. As such, as at and for
the year ended 30 June 2023, the consolidated financial statements
of the Telstra Group include the historical financial information of
the Telstra Group for both the period before and after the
Refer to notes 6.1 and 7.3 for further details about changes in our
group structure and for new parent entity disclosures.
The Scheme was comprised of two components: the top hat
Restructure.
component which established the Telstra Entity as the parent entity
of the Telstra Group, and the business restructure component
which was used to transfer certain assets and liabilities within the
Telstra Group. The Restructure also involved certain other steps in
addition to the Scheme. While these steps were completed over a
period of time, for accounting purposes, all the steps were
considered together as they were undertaken in contemplation of
EBITDA reflects earnings before interest, income tax, depreciation
the Restructure as a whole.
The top hat component of the Scheme was implemented on 31
and amortisation. EBIT is a similar measure to EBITDA, but takes
into account depreciation and amortisation.
October 2022 and the business restructure component of the
We believe EBITDA is useful as it is a widely recognised measure of
Scheme was implemented on 1 January 2023.
operating performance.
1.3 Terminology used in our income statement
On implementation of the top hat component, all of the shares in
Telstra Corporation Limited (11,554,427,353 in total) were
transferred to the Telstra Entity in exchange for the issue of
11,554,427,353 shares in Telstra Group Limited to eligible Telstra
Corporation Limited shareholders under the Scheme, and Telstra
Group Limited became the parent entity of Telstra Corporation
Limited and its controlled entities.
90 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F7
F8 | Telstra Group Limited and controlled entities
Notes to the financial statements (continued) Statement of
Changes in Equity
For the year ended 30 June 2023
Telstra Group
Balance at 1 July 2021 (reported)
Net effect of a restatement of prior periods
Balance at 1 July 2021 (restated)
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Share buy-back (net of income tax)
Transactions with non-controlling interests
Additional shares purchased
Share-based payments
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Dividends
Non-controlling interests on acquisitions
Transactions with non-controlling interests
Transfer of fair value of equity instruments reserve
to retained earnings
Additional shares purchased
Share-based payments
Balance at 30 June 2023
Note
1.7
6.3
4.3
6.3
4.3
Share
capital
Reserves Retained
Total
profits
Total
equity
Non-
control-
ling
interests
$m
$m
10,014
14,588
$m
4,436
4,436
(1,350)
(5)
17
-
-
-
-
-
-
-
-
-
-
-
-
-
(21)
18
$m
138
138
111
111
2,084
(61)
(61)
-
-
-
-
-
-
-
-
-
-
-
-
139
10,153
1,688
104
1,792
(1,888)
10,057
1,928
19
1,947
(1,964)
-
-
-
-
-
-
-
-
139
14,727
1,688
215
1,903
(1,888)
(1,350)
2,084
(5)
17
1,928
(42)
1,886
(1,964)
-
-
-
(21)
18
(76)
76
$m
687
-
687
126
2
128
673
123
(3)
120
941
(140)
-
-
-
-
-
-
-
-
$m
15,275
139
15,414
1,814
217
2,031
(1,888)
(1,350)
2,757
(5)
17
16,976
2,051
(45)
2,006
(1,964)
941
(140)
-
(21)
18
3,095
2,196
10,116
15,407
2,409
17,816
Balance at 30 June 2022 (restated)
3,098
2,333
15,488
1,488
The notes following the financial statements form part of the financial report.
2023.Financial Report.book Page 7 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 8 Wednesday, August 16, 2023 4:21 PM
Telstra Financial Report 2023
Notes to the financial statements
Section 1. Basis of preparation
This section explains the basis of preparation of our
financial report, describes changes in our accounting
policies and provides a summary of our key accounting
estimates and judgements.
SECTION 1.
BASIS OF PREPARATION
1.1 Basis of preparation of the financial report
This financial report is a general purpose financial report, prepared
by a ‘for profit’ entity, in accordance with the requirements of the
Australian Corporations Act 2001, Accounting Standards applicable
in Australia and other authoritative pronouncements of the
Australian Accounting Standards Board (AASB). It also complies
with International Financial Reporting Standards (IFRS) and
Interpretations published by the International Accounting
Standards Board (IASB).
The financial report is presented in Australian dollars and, unless
otherwise stated, all values have been rounded to the nearest
million dollars ($m) under the option available under the Australian
Securities and Investments Commission (ASIC) Corporations
(Rounding in Financial/Directors’ Report) Instrument 2016/191 as
amended from time to time. 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 1.4.1.
The financial report is prepared on a 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 Telstra Group restructure
During the financial year 2023, Telstra Corporation Limited
implemented a scheme of arrangement (Scheme) to support the
restructure of the Telstra Group (Restructure) first announced in
November 2020. The Restructure was an internal legal
reorganisation and did not, by itself, result in any immediate change
to the underlying assets or business activities of the Telstra Group.
The Scheme was comprised of two components: the top hat
component which established the Telstra Entity as the parent entity
of the Telstra Group, and the business restructure component
which was used to transfer certain assets and liabilities within the
Telstra Group. The Restructure also involved certain other steps in
addition to the Scheme. While these steps were completed over a
period of time, for accounting purposes, all the steps were
considered together as they were undertaken in contemplation of
the Restructure as a whole.
The top hat component of the Scheme was implemented on 31
October 2022 and the business restructure component of the
Scheme was implemented on 1 January 2023.
On implementation of the top hat component, all of the shares in
Telstra Corporation Limited (11,554,427,353 in total) were
transferred to the Telstra Entity in exchange for the issue of
11,554,427,353 shares in Telstra Group Limited to eligible Telstra
Corporation Limited shareholders under the Scheme, and Telstra
Group Limited became the parent entity of Telstra Corporation
Limited and its controlled entities.
On 31 October 2022, Telstra Group Limited became the new head
entity of the Australian tax consolidated group. Refer to note 2.4.4
for further details on accounting for the tax consolidated group.
On 30 November 2022, Telstra Group Limited became the
sponsoring employer in our Telstra Superannuation Scheme
(Telstra Super). Refer to note 5.3.2 for further details on accounting
for Telstra Super.
On 1 January 2023, the final steps of the Restructure (including the
business restructure component of the Scheme) were completed.
Those steps involved Telstra Corporation Limited transferring the
retail and active wholesale business assets and liabilities and
related investments to Telstra Limited, and the international
business assets and liabilities and related investments to Telstra
International Holdings Pty Ltd and its controlled entities. Telstra
Corporation Limited also transferred its interest in Telstra Towerco
No.2 Pty Ltd, being the wholly-owned entity which holds an interest
in the Amplitel towers business and related investments, to Telstra
Group Limited. Following the Restructure, Telstra Corporation
Limited continues to operate our passive fixed infrastructure
business and service our nbn Definitive Agreements.
The businesses and investments transferred between Telstra
Corporation Limited and Telstra Group Limited or other entities
within the Telstra Group under the Restructure did not result in
business combinations for accounting purposes and the
Restructure was accounted for as an internal reorganisation, i.e.
assets and liabilities transferred were recognised at their existing
values in the statement of financial position. From the Telstra
Group perspective the internal reorganisation transfers are
eliminated on consolidation, i.e. they do not impact the Telstra
Group financial results.
Accordingly, the consolidated financial statements have been
presented as a continuation of the existing financial performance
and financial position of the Telstra Group. As such, as at and for
the year ended 30 June 2023, the consolidated financial statements
of the Telstra Group include the historical financial information of
the Telstra Group for both the period before and after the
Restructure.
Refer to notes 6.1 and 7.3 for further details about changes in our
group structure and for new parent entity disclosures.
1.3 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.
Telstra Group Limited and controlled entities | F7
F8 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 91
Telstra Financial Report 2023 Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 1. Basis of preparation (continued)
Section 1. Basis of preparation (continued)
2023.Financial Report.book Page 10 Wednesday, August 16, 2023 4:21 PM
1.4 Principles of consolidation
1.5 Key accounting estimates and judgements
1.6 Other accounting policies
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.
Preparation of the financial report requires management to make
estimates and judgements.
1.5.1 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
Note Page
introduces:
The effects of intra-group transactions and balances are eliminated
from our consolidated financial statements.
Assessment of a significant financing component in
mass market contracts
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 the Group’s controlled entities are
prepared using consistent accounting policies as the Telstra Entity.
Adjustments are made to bring the reporting periods in line with
those of the Group where necessary.
1.4.1 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.
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 other
income
Assessment of a significant financing component 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
Equity-like securities issued to the Australian
Government
Determining non-controlling interests in Power
Health
Joint control of Telstra Ventures Fund II, L.P.
Significant influence over Telstra Super Pty Ltd
Significant influence over Telstra Ventures Fund III,
L.P.
2.2
104
2.2
105
2.2
105
2.2
107
2.2
107
2.4
3.1
113
118
3.1
118
3.1
119
3.1
120
3.2
122
3.2
124
3.3
3.6
5.1
5.3
128
131
152
158
6.1
160
6.2
162
6.4
6.4
168
168
6.4
168
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.
1.6.1 Changes in accounting policies
In June 2023, the AASB issued AASB 2023-2 ‘Amendments to
Australian Accounting standards - International tax reform - Pillar
Two Model Rules’, which amends AASB 112 ‘Income Taxes’ and
• a temporary exception to recognise and disclose information
about deferred tax assets and liabilities related to Pillar Two
income taxes. The exception is effective from issue date of the
amendment, therefore we have adopted it in the financial year
2023 and relevant disclosures have been included in note 2.4.3.
• requirements for entities to disclose qualitative and quantitative
information about its exposure to Pillar Two income taxes,
including a separate disclosure of current income tax related to
Pillar Two income taxes. These disclosures are effective for the
Telstra Group from 1 July 2023 and the impact on our financial
report is yet to be assessed. We will continue to monitor
developments in tax legislation and assess the impact of the new
requirements in the financial year 2024.
In addition to the effective part of AASB 2023-2, a number of other
new or amended accounting standards became effective in the
current reporting period but none of those had a material impact on
our accounting policies.
1.6.2 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. This
includes the parts of AASB 2023-2 ‘Amendments to Australian
Accounting standards - International tax reform - Pillar Two Model
Rules’ issued by the AASB in June 2023 as detailed in note 1.6.1, the
impact of which we are yet to assess.
We do not expect any other recently issued accounting standards to
have a material impact on our financial results upon adoption.
1.6.3 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.
92 | Telstra Group Limited and controlled entities
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2023.Financial Report.book Page 9 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 10 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 1. Basis of preparation (continued)
Section 1. Basis of preparation (continued)
1.4 Principles of consolidation
1.5 Key accounting estimates and judgements
1.6 Other accounting policies
The effects of intra-group transactions and balances are eliminated
Assessment of a significant financing component
Our financial report includes the consolidated assets and liabilities
Preparation of the financial report requires management to make
of the Telstra Entity and its controlled entities as a whole as at the
estimates and judgements.
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.
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 the Group’s controlled entities are
prepared using consistent accounting policies as the Telstra Entity.
Adjustments are made to bring the reporting periods in line with
those of the Group where necessary.
other income
in nbn DAs
1.4.1 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
intangible assets
method:
Foreign currency
amount
Exchange rate
Assets and liabilities
including goodwill and fair
value adjustments arising
on consolidation
Income statements
rate
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.
1.5.1 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
Note Page
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
2.2
2.2
2.2
F21
F22
F22
2.2
F24
2.2
F24
3.1
F36
Unrecognised deferred tax assets
Capitalisation of development costs
Useful lives and residual values of tangible and
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
Amortisation period of deferred contract costs
Long service leave provision
Defined benefit plan
Government
Health
Determining non-controlling interests in Power
Joint control of Telstra Ventures Fund II, L.P.
Significant influence over Telstra Super Pty Ltd
Significant influence over Telstra Ventures Fund III,
L.P.
2.4
3.1
3.1
3.1
3.2
3.2
3.3
3.6
5.1
5.3
6.1
6.2
6.4
6.4
6.4
F30
F35
F35
F37
F39
F41
F45
F48
F69
F75
F77
F79
F85
F85
F85
Equity items
The initial investment date
Equity-like securities issued to the Australian
The reporting date rate
Estimating expected credit losses
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.
1.6.1 Changes in accounting policies
In June 2023, the AASB issued AASB 2023-2 ‘Amendments to
Australian Accounting standards - International tax reform - Pillar
Two Model Rules’, which amends AASB 112 ‘Income Taxes’ and
introduces:
• a temporary exception to recognise and disclose information
about deferred tax assets and liabilities related to Pillar Two
income taxes. The exception is effective from issue date of the
amendment, therefore we have adopted it in the financial year
2023 and relevant disclosures have been included in note 2.4.3.
• requirements for entities to disclose qualitative and quantitative
information about its exposure to Pillar Two income taxes,
including a separate disclosure of current income tax related to
Pillar Two income taxes. These disclosures are effective for the
Telstra Group from 1 July 2023 and the impact on our financial
report is yet to be assessed. We will continue to monitor
developments in tax legislation and assess the impact of the new
requirements in the financial year 2024.
In addition to the effective part of AASB 2023-2, a number of other
new or amended accounting standards became effective in the
current reporting period but none of those had a material impact on
our accounting policies.
1.6.2 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. This
includes the parts of AASB 2023-2 ‘Amendments to Australian
Accounting standards - International tax reform - Pillar Two Model
Rules’ issued by the AASB in June 2023 as detailed in note 1.6.1, the
impact of which we are yet to assess.
We do not expect any other recently issued accounting standards to
have a material impact on our financial results upon adoption.
1.6.3 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.
Telstra Group Limited and controlled entities | F9
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2023.Financial Report.book Page 11 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 12 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 1. Basis of preparation (continued)
1.7 Restatement of prior periods
During the financial year 2023, we have finalised migration of our
prepaid customers to a new billing and provisioning system. On
completion, a $219 million current contract liability balance relating
to our prepaid legacy plans could not be substantiated, because the
services had been provided in the prior periods and this contract
liability should have been recognised as revenue at that time. This
balance was related to the reporting periods prior to the financial
year 2022. Therefore, in the statement of financial position we have
restated the related balances, including their tax impacts where
relevant, as at 1 July 2021 and as at 30 June 2022. The income
statement for the financial year 2022 did not require a restatement
because the comparative financial results were not impacted.
Table A summarises the restatement of all impacted line items in
the statement of financial position as at 30 June 2022 and 1 July
2021. Adjustments to retained earnings have been reflected in the
statement of changes in equity.
Table A
Telstra Group
30 June 2022 Adjustments 30 June 2022
1 July 2021
Adjustments
1 July 2021
Reported
Restated
Reported
Restated
$m
$m
$m
$m
$m
$m
for reportable segments.
2.1.1 Operating segments
Restated line items in the
statement of financial position
Current liabilities
Trade and other payables
Contract liabilities and other
revenue received in advance
Current tax payables
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Retained profits
Equity available to Telstra
Entity shareholders
Total Equity
4,189
1,622
42
9,860
1,655
14,931
24,791
16,837
9,918
15,349
16,837
20
(219)
37
(162)
23
23
(139)
139
139
139
139
4,209
1,403
79
9,698
1,678
14,954
24,652
16,976
10,057
15,488
16,976
3,766
1,605
124
10,424
1,580
16,826
27,250
15,275
10,014
14,588
15,275
20
(219)
(18)
(217)
78
78
(139)
139
139
139
139
3,786
1,386
106
10,207
1,658
16,904
27,111
15,414
10,153
14,727
15,414
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, only
some of our operating segments meet the disclosure criteria
During the financial year 2023 our IT function moved from Networks
and IT to Product and Technology, and Networks and IT was
renamed to Global Networks and Technology. Following this
realignment, the ‘Networks and IT’ reportable segment has been
replaced by a new reportable segment, ‘Networks, IT and Product’.
It consists of two operating segments, being Global Networks and
Technology and Product and Technology (previously included in
the ‘All Other’ category), which have been combined for reporting
purposes as they have similar economic characteristics and provide
support functions underpinning operations of the other segments.
There were no other changes to our operating segments. The
Restructure described in note 1.2 did not change our operating
segments as it focused on internal legal reorganisation.
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 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-
We have four reportable segments as follows:
for-like view.
Segment
Operation
Telstra Consumer
• provides telecommunication, media and technology products and services to Consumer and Small
and Small
Business customers in Australia using mobile and fixed network technologies
Business (TC&SB)
• operates contact centres, retail stores, a dealership network, digital channels, distribution systems and
the Telstra Plus customer loyalty program in Australia
Telstra Enterprise
• provides telecommunication services, advanced technology solutions, network capacity and
(TE)
management, unified communications, cloud, security, industry solutions, integrated and monitoring
services to government and large enterprise and business customers in Australia and globally
• provides telecommunication, media and technology products and services to consumer, business and
government customers in the South Pacific through our Digicel Pacific business
• provides wholesale services outside of Australia, including voice and data
• manages Telstra’s networks outside Australia, including international subsea cables, in conjunction with
Networks, IT and Product and Telstra InfraCo segments
Networks, IT and
Product (NIT&P)
• Global Networks and Technology supports the other segments and their respective revenue generating
activities by maintaining high level of reliability and security of our global network platforms and cloud
infrastructure. It maintains our networks and is accountable for our network intelligence and automation.
• Product and Technology works with other functions to create and deliver products and solutions for
customers across all segments. It has accountability for product strategy, life cycle, as well as technology
and innovation where products are incubated and brought to scale. It is also accountable for Telstra’s IT
and Data & AI functions and our digital platforms underpinning our customer digital experience.
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
• operates the fixed passive network infrastructure including data centres, exchanges, poles, ducts, pits
Telstra InfraCo’s asset accountabilities
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
94 | Telstra Group Limited and controlled entities
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F12 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 11 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 12 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 1. Basis of preparation (continued)
1.7 Restatement of prior periods
During the financial year 2023, we have finalised migration of our
prepaid customers to a new billing and provisioning system. On
completion, a $219 million current contract liability balance relating
to our prepaid legacy plans could not be substantiated, because the
services had been provided in the prior periods and this contract
liability should have been recognised as revenue at that time. This
balance was related to the reporting periods prior to the financial
year 2022. Therefore, in the statement of financial position we have
restated the related balances, including their tax impacts where
relevant, as at 1 July 2021 and as at 30 June 2022. The income
statement for the financial year 2022 did not require a restatement
because the comparative financial results were not impacted.
Table A summarises the restatement of all impacted line items in
the statement of financial position as at 30 June 2022 and 1 July
2021. Adjustments to retained earnings have been reflected in the
statement of changes in equity.
Table A
Telstra Group
30 June 2022 Adjustments 30 June 2022
1 July 2021
Adjustments
1 July 2021
Reported
Restated
Reported
Restated
$m
$m
$m
$m
$m
$m
Restated line items in the
statement of financial position
Current liabilities
Trade and other payables
Contract liabilities and other
revenue received in advance
Current tax payables
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Retained profits
Equity available to Telstra
Entity shareholders
Total Equity
4,189
1,622
42
9,860
1,655
14,931
24,791
16,837
9,918
15,349
16,837
20
(219)
37
(162)
23
23
(139)
139
139
139
139
4,209
1,403
79
9,698
1,678
14,954
24,652
16,976
10,057
15,488
16,976
3,766
1,605
124
10,424
1,580
16,826
27,250
15,275
10,014
14,588
15,275
20
(219)
(18)
(217)
78
78
(139)
139
139
139
139
3,786
1,386
106
10,207
1,658
16,904
27,111
15,414
10,153
14,727
15,414
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, only
some of our operating segments meet the disclosure criteria
for 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 2023 our IT function moved from Networks
and IT to Product and Technology, and Networks and IT was
renamed to Global Networks and Technology. Following this
realignment, the ‘Networks and IT’ reportable segment has been
replaced by a new reportable segment, ‘Networks, IT and Product’.
It consists of two operating segments, being Global Networks and
Technology and Product and Technology (previously included in
the ‘All Other’ category), which have been combined for reporting
purposes as they have similar economic characteristics and provide
support functions underpinning operations of the other segments.
There were no other changes to our operating segments. The
Restructure described in note 1.2 did not change our operating
segments as it focused on internal legal reorganisation.
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 contact centres, retail stores, a dealership network, digital channels, distribution systems and
the 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 telecommunication, media and technology products and services to consumer, business and
government customers in the South Pacific through our Digicel Pacific business
• provides wholesale services outside of Australia, including voice and data
• manages Telstra’s networks outside Australia, including international subsea cables, in conjunction with
Networks, IT and Product and Telstra InfraCo segments
Networks, IT and
Product (NIT&P)
• Global Networks and Technology supports the other segments and their respective revenue generating
activities by maintaining high level of reliability and security of our global network platforms and cloud
infrastructure. It maintains our networks and is accountable for our network intelligence and automation.
• Product and Technology works with other functions to create and deliver products and solutions for
customers across all segments. It has accountability for product strategy, life cycle, as well as technology
and innovation where products are incubated and brought to scale. It is also accountable for Telstra’s IT
and Data & AI functions and our digital platforms underpinning our customer digital experience.
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 Group Limited and controlled entities | F11
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Telstra Financial Report 2023 2023.Financial Report.book Page 13 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 14 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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.
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 notional charges under the
arrangements not governed by legal
agreements, i.e. those governing
internal arrangements prior to the
completion of the Restructure. The
notional charges were determined
based on a variety of internally and
externally observable inputs to
reflect an arm’s length basis.
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.
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
From 1 January 2023
EBITDA contribution does not include those expenses
EBITDA contribution does not include those expenses
our segment results.
Nature of
transaction
Income from nbn
disconnection fees
and associated
expenses
Network service
delivery expenses
other than those
supporting passive
infrastructure
Telstra Limited’s
redundancy and
restructuring
expenses
Until 31 December
2022 Telstra
Corporation Limited’s
redundancy and
restructuring
expenses
inter-company
transactions for
international
connectivity disclosed
as internal income and
internal expenses
Until 31 December
2022 inter-company
transactions for
international
connectivity disclosed
as revenue from
external customers
and external expenses
TC&SB
TE
NIT&P
All Other
EBITDA contribution does not
include these transactions
n/a
EBITDA contribution does not
EBITDA
include the network service delivery
contribution
expense for TC&SB and TE
customers
includes network
service delivery
expenses
related to
TC&SB, TE and
Telstra InfraCo
customers
Telstra InfraCo’s
customers
EBITDA
contribution
includes these
transactions
EBITDA
contribution
includes network
service delivery
expenses
related to
TC&SB, TE and
Telstra InfraCo
EBITDA
contribution
includes those
expenses
EBITDA
contribution
includes those
expenses
Telstra
InfraCo
EBITDA
contribution
does not include
these
transactions
EBITDA
contribution
does not include
the network
service delivery
expense for
customers
serviced by
passive
infrastructure
EBITDA
contribution
includes inter-
segment internal
expenses
(recharged by
TE)
EBITDA
contribution
includes inter-
segment
revenue (earned
from TE) and
expenses
(recharged by
TE)
n/a
Elimination of
inter-company
transactions
contribution
includes inter-
segment
internal
expenses
recharged by
TE
EBITDA
contribution
includes inter-
segment
expenses
recharged by
TE
EBITDA
contribution
includes inter-
segment internal
income (earned
from TC&SB and
Telstra InfraCo)
EBITDA
contribution
includes inter-
segment
revenue (earned
from TC&SB and
Telstra InfraCo)
and expenses
(recharged by
Telstra InfraCo)
From 1 January 2023
EBITDA
n/a
n/a
96 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F13
F14 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 14 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
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
Income from nbn
disconnection fees
and associated
expenses
Network service
delivery expenses
other than those
supporting passive
infrastructure
From 1 January 2023
Telstra Limited’s
redundancy and
restructuring
expenses
Until 31 December
2022 Telstra
Corporation Limited’s
redundancy and
restructuring
expenses
From 1 January 2023
inter-company
transactions for
international
connectivity disclosed
as internal income and
internal expenses
Until 31 December
2022 inter-company
transactions for
international
connectivity disclosed
as revenue from
external customers
and external expenses
TC&SB
TE
NIT&P
Telstra
InfraCo
All Other
EBITDA contribution does not
include these transactions
n/a
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
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
EBITDA
contribution
includes these
transactions
EBITDA
contribution
includes network
service delivery
expenses
related to
TC&SB, TE and
Telstra InfraCo
customers
EBITDA
contribution
includes those
expenses
EBITDA
contribution
includes those
expenses
EBITDA
contribution
includes inter-
segment
internal
expenses
recharged by
TE
EBITDA
contribution
includes inter-
segment
expenses
recharged by
TE
n/a
n/a
EBITDA
contribution
includes inter-
segment internal
income (earned
from TC&SB and
Telstra InfraCo)
EBITDA
contribution
includes inter-
segment
revenue (earned
from TC&SB and
Telstra InfraCo)
and expenses
(recharged by
Telstra InfraCo)
n/a
EBITDA
contribution
includes inter-
segment internal
expenses
(recharged by
TE)
Elimination of
inter-company
transactions
EBITDA
contribution
includes inter-
segment
revenue (earned
from TE) and
expenses
(recharged by
TE)
F14 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 97
Telstra Financial Report 2023 2023.Financial Report.book Page 15 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 16 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
NIT&P
Telstra Group
Telstra
InfraCo
All Other Subtotal
Elimina-
tions
Total
$m
$m
$m
$m
$m
$m
$m
$m
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 profit/(loss) from
equity accounted entities
EBITDA contribution
Depreciation and amortisation
Telstra Group EBIT
Net finance costs
Telstra Group profit before
income tax expense
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
8,156
4,457
-
-
-
-
-
-
6
12,619
(1)
12,618
-
1,721
-
3,636
-
-
-
2,534
-
38
7,929
(125)
7,804
(4)
Year ended 30 June 2023
-
-
-
-
-
-
-
-
413
413
381
-
-
2,556
401
403
-
-
34
3,775
-
-
-
-
-
-
(105)
72
585
10,258
4,457
3,636
2,556
401
403
2,429
72
1,076
-
-
-
(1,067)
(335)
-
(113)
-
(528)
10,258
4,457
3,636
1,489
66
403
2,316
72
548
552
25,288
(2,043)
23,245
(321)
92
(10)
(1,426)
2,349
(18)
(170)
382
5
(2,043)
23,245
(27)
5,729
3,152
(2,466)
2,628
(1,181)
7,862
Year ended 30 June 2022
7,449
4,486
-
-
-
-
-
43
-
11,978
-
11,978
1,675
-
3,729
-
-
-
1,705
-
23
7,132
-
7,132
-
(1)
-
-
-
-
-
-
-
-
300
300
(216)
84
(11)
332
-
-
2,456
368
477
-
-
5
3,638
(1,284)
2,354
-
14
-
-
-
-
-
(204)
335
427
9,470
4,486
3,729
2,456
368
477
1,501
378
755
(75)
497
(19)
(1,575)
22,045
(31)
5,139
3,066
(2,455)
2,480
(974)
7,256
572
23,620
(1,575)
22,045
2,043
-
-
-
-
-
-
(976)
(308)
-
-
-
(291)
-
23,245
(27)
7,862
(4,470)
3,392
(529)
2,863
9,470
4,486
3,729
1,480
60
477
1,501
378
464
1,575
-
-
-
-
22,045
(31)
7,256
(4,358)
2,898
(417)
2,481
98 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F15
F16 | Telstra Group Limited and controlled entities
2.1 Segment information (continued)
2.1.2 Segment results (continued)
Until 31 December 2022 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
$105 million (2022: $204 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 $3 million (2022:
$5 million) of inter-segment expenses treated as external
revenue in the Telstra InfraCo and eliminated in the ‘All Other’
category.
Following the completion of the Restructure, these transactions are
governed by the new inter-company agreements, reported as
internal revenue in the TE segment and eliminated at the Group
level.
2023.
The transactions between segments in ‘All Other’ category exclude
$163 million inter-company revenue and $163 million inter-
company expenses reflecting costs of employees transferred to
Telstra Limited on 8 December 2022 in contemplation of the retail
and active wholesale business transfer completed on 1 January
Negative revenue amounts in ‘All Other’ category related to certain
corporate level adjustments.
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
2023
2022
$m
$m
30,374
5,095
35,469
30,630
1,750
32,380
Our geographical operations are split between our Australian and
offshore operations. No individual foreign country within our
offshore operations has material revenue or non-current assets.
The carrying amount of our segment non-current assets excludes
financial assets, inventories, defined benefit assets, deferred
contract costs and deferred tax assets.
2023.Financial Report.book Page 15 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 16 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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.
12,619
7,929
25,288
(2,043)
23,245
Table A
TC&SB
TE
NIT&P
All Other Subtotal
Elimina-
Total
Telstra
InfraCo
tions
$m
$m
$m
$m
$m
$m
$m
$m
Year ended 30 June 2023
EBITDA contribution
5,729
3,152
(2,466)
2,628
(1,181)
7,862
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
Total external income
Share of net profit/(loss) from
equity accounted entities
12,618
(1)
-
Depreciation and amortisation
Telstra Group EBIT
Net finance costs
Telstra Group profit before
income tax expense
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
8,156
4,457
-
-
-
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,721
3,636
2,534
38
(125)
7,804
(4)
1,675
3,729
1,705
23
(1)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
413
413
(321)
92
(10)
300
300
(216)
84
(11)
381
2,556
401
403
-
-
-
-
34
3,775
(1,426)
2,349
(18)
-
-
-
-
5
-
2,456
368
477
3,638
(1,284)
2,354
(105)
72
585
552
(170)
382
5
-
-
-
-
-
-
-
-
-
-
-
(204)
335
427
572
(75)
497
(19)
10,258
4,457
3,636
2,556
401
403
2,429
72
1,076
(2,043)
23,245
(27)
9,470
4,486
3,729
2,456
368
477
1,501
378
755
(1,575)
22,045
(31)
7,449
4,486
Year ended 30 June 2022
332
14
5,139
3,066
(2,455)
2,480
(974)
7,256
(1,067)
(335)
(113)
(528)
2,043
(976)
(308)
(291)
1,575
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,258
4,457
3,636
1,489
66
403
2,316
72
548
-
23,245
(27)
7,862
(4,470)
3,392
(529)
2,863
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
One-off nbn DA and connection
43
Total external income
11,978
7,132
11,978
7,132
23,620
(1,575)
22,045
2.1 Segment information (continued)
2.1.2 Segment results (continued)
Until 31 December 2022 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
$105 million (2022: $204 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 $3 million (2022:
$5 million) of inter-segment expenses treated as external
revenue in the Telstra InfraCo and eliminated in the ‘All Other’
category.
Following the completion of the Restructure, these transactions are
governed by the new inter-company agreements, reported as
internal revenue in the TE segment and eliminated at the Group
level.
The transactions between segments in ‘All Other’ category exclude
$163 million inter-company revenue and $163 million inter-
company expenses reflecting costs of employees transferred to
Telstra Limited on 8 December 2022 in contemplation of the retail
and active wholesale business transfer completed on 1 January
2023.
Negative revenue amounts in ‘All Other’ category related to certain
corporate level adjustments.
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
2023
2022
$m
$m
30,374
5,095
35,469
30,630
1,750
32,380
Our geographical operations are split between our Australian and
offshore operations. No individual foreign country within our
offshore operations has material revenue or non-current assets.
The carrying amount of our segment non-current assets excludes
financial assets, inventories, defined benefit assets, deferred
contract costs and deferred tax assets.
Telstra Group Limited and controlled entities | F15
F16 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 99
Telstra Financial Report 2023 2023.Financial Report.book Page 17 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 18 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
Year ended 30 June
2023
2022
$m
22,365
337
22,702
178
6
14
69
222
11
43
543
23,245
91
10
101
23,346
$m
20,920
357
21,277
158
7
3
329
223
-
48
768
22,045
102
8
110
22,155
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.
Revenue from contracts with customers
Other revenue from contracts with customers
Telstra Group
Sale of services
Sale of goods
Sale of services
Sale of goods
Other revenue from contracts with customers
Table B
TC&SB
TE
NIT&P
Telstra
InfraCo
All
Other
Total
$m
$m
$m
$m
$m
$m
Year ended 30 June 2023
12,336
7,727
Year ended 30 June 2022
10,239
2,079
18
9,767
1,881
18
6,878
797
52
6,267
734
47
1,981
1,981
2,007
-
-
2
-
66
66
-
-
-
-
52
52
227
27
1
255
133
9
3
19,325
2,969
71
22,365
18,174
2,678
68
11,666
7,048
2,009
145
20,920
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 related to lease arrangements
nbn disconnection fees
Government grants
Net gain on derivative financial instruments not related to financing
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).
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.
100 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F17
F18 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 18 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
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
NIT&P
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 2023
10,239
2,079
18
12,336
9,767
1,881
18
11,666
6,878
797
52
7,727
-
66
-
66
1,981
-
-
1,981
Year ended 30 June 2022
6,267
734
47
7,048
-
52
-
52
2,007
2
-
2,009
227
27
1
255
133
9
3
145
19,325
2,969
71
22,365
18,174
2,678
68
20,920
F18 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 101
Telstra Financial Report 2023 2023.Financial Report.book Page 19 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 foreign country within our
offshore operations has material revenue.
Table C
TC&SB
TE
NIT&P
Telstra Group
Telstra
InfraCo
All
Other
Total
$m
$m
$m
$m
$m
$m
Year ended 30 June 2023
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
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
Total revenue from contracts with customers
Total revenue from other sources
Other income
8,156
8,120
36
4,263
4,206
57
-
-
-
-
-
-
-
-
-
-
-
-
10
10
-
12,336
93
12,429
189
12,618
12,429
12,336
93
-
-
12,336
93
12,429
189
12,618
1,721
1,721
-
-
-
-
3,635
3,613
22
-
-
-
-
-
-
-
2,407
2,407
(14)
(14)
-
7,727
22
7,749
55
7,804
5,573
5,551
22
2,176
2,176
7,727
22
7,749
55
7,804
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
66
66
-
66
-
66
26
92
66
66
-
-
-
66
-
66
26
92
381
381
-
-
-
-
-
-
-
1,341
1,125
216
62
62
403
403
-
-
10
10
-
1,981
216
2,197
152
2,349
2,197
1,981
216
-
-
1,981
216
2,197
152
2,349
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(105)
(105)
366
360
6
255
6
261
121
382
363
357
6
(102)
(102)
255
6
261
121
382
10,258
10,222
36
4,263
4,206
57
3,635
3,613
22
1,341
1,125
216
62
62
403
403
2,302
2,302
438
432
6
22,365
337
22,702
543
23,245
20,628
20,291
337
2,074
2,074
22,365
337
22,702
543
23,245
102 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F19
2023.Financial Report.book Page 20 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Table C (continued)
TC&SB
TE
NIT&P
Telstra Group
Telstra
InfraCo
All
Other
Total
$m
$m
$m
$m
$m
$m
Year ended 30 June 2022
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
52
52
-
52
-
52
32
84
52
52
-
-
-
-
52
-
52
32
84
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)
-
-
-
339
335
4
145
4
149
348
497
351
347
4
(202)
(202)
-
145
4
149
348
497
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
F20 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 103
Telstra Financial Report 2023 2023.Financial Report.book Page 21 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.1 Disaggregated revenue (continued)
Revenue from other products and services includes miscellaneous
income, revenue generated by Telstra Health, and revenue from the
sale of energy under our power purchase agreements.
By and large we recognise revenue from the sale of goods on their
delivery and from sale of services based on the 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.
‘All Other’ category includes eliminations of the inter-segment
transactions described in the segment results in note 2.1.2.
We offer deferred payment terms when customers purchase certain
handsets and other devices under a device repayment contract.
Negative revenue amounts disclosed in the tables above related to
certain corporate level adjustments and consolidation eliminations.
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 to 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 (month to month) post-paid service
plans to our fixed and mobile mass market customers. In those
arrangements, our customers can purchase a device, 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 device 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 the device 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 device 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. We also recognise revenue
when, based on customers redemption patterns, we expect that the
likelihood of the customers utilising the points is remote (i.e.
breakage). 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 post-paid service plans are month to
month contracts, customers can change plans once 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.
104 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F21
2023.Financial Report.book Page 22 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
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 certain
customer premise 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.
During the financial year 2023, we recognised $41 million
(2022: $46 million) interest expense for our IRU arrangements.
F22 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 105
Telstra Financial Report 2023 2023.Financial Report.book Page 23 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 24 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
(d) Agreements with nbn co
The main contracts with nbn co are nbn DAs and related
arrangements.
Revenue from contracts with nbn co is reported within the Telstra
InfraCo segment. Amounts recognised as other income are
recorded in the TC&SB segment and in ‘All Other’ category.
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.
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.
2.2.2 Our contracts with customers (continued)
(b) Telstra Enterprise (TE) contracts (continued)
During the financial year 2023, TE earned revenue through our new
acquisition, Digicel Pacific, which mainly offers prepaid and post-
paid mobile services to consumer, and small to medium business
customers, as well as technology solutions to business customers.
Where goods and services are provided as a bundle, we allocate the
consideration and any relevant discounts to all products in the
bundle based on their estimated relative standalone selling prices.
Where observable prices are not available, we estimate standalone
selling prices based on the cost plus margin approach. Refer to note
6.1.2 for further details on the acquisition of Digicel Pacific.
(c) Telstra InfraCo contracts (excluding contracts with nbn co)
Telstra InfraCo typically 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.
Some of our Telstra InfraCo contracts grant customers access to
our passive infrastructure assets. Lease component(s) in those
contracts are largely classified as operating leases and we
recognise revenue from other sources for those leases.
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 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 24 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
compounding interest calculated from the historical period applicable to the adjustments.
The nbn network rollout is substantially complete but its 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, will not be known until
the nbn network rollout is complete in accordance with the DAs. nbn co may also choose to negotiate an earlier effective date for the
final price adjustments. Should that date extend past our current assumption, additional interest payable by us of approximately $30
million would accrue annually. However, these amounts whilst paid upon settlement would be recognised in the income statement
over the remaining average contracted period of 24 years. Upon the final price adjustments, we expect to incur a significant cash
outflow. Had the cash settlement occurred as at 30 June 2023, the estimated cash outflow would have been approximately $200
million.
As described above, we have applied judgement in determining the amounts of IAP and IOP recognised for the financial year 2023
and related balance sheet positions. We did not identify material impacts resulting from reassessment of the assumptions described
above. Should evidence exist in future reporting periods that changes these judgements and estimates, revenue and other income
will be adjusted in the future reporting periods.
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.
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.
106 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F23
F24 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 24 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
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 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 24 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
compounding interest calculated from the historical period applicable to the adjustments.
The nbn network rollout is substantially complete but its 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, will not be known until
the nbn network rollout is complete in accordance with the DAs. nbn co may also choose to negotiate an earlier effective date for the
final price adjustments. Should that date extend past our current assumption, additional interest payable by us of approximately $30
million would accrue annually. However, these amounts whilst paid upon settlement would be recognised in the income statement
over the remaining average contracted period of 24 years. Upon the final price adjustments, we expect to incur a significant cash
outflow. Had the cash settlement occurred as at 30 June 2023, the estimated cash outflow would have been approximately $200
million.
As described above, we have applied judgement in determining the amounts of IAP and IOP recognised for the financial year 2023
and related balance sheet positions. We did not identify material impacts resulting from reassessment of the assumptions described
above. Should evidence exist in future reporting periods that changes these judgements and estimates, revenue and other income
will be adjusted in the future reporting periods.
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.
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.
F24 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 107
Telstra Financial Report 2023 (a) Revenue from contracts with customers (continued)
relates to the purchase of ongoing services under the same (or
2.2 Income (continued)
2.2.4 Recognition and measurement (continued)
(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 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
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.
We recognise revenue over time when the customer simultaneously
receives and consumes the benefits provided to them or we create
(c) Government grants
or enhance an asset controlled by the customer. Otherwise, we
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.
2023.Financial Report.book Page 25 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 26 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 2. Our performance (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
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 2023. 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
2023
2022
Restated
$m
4,455
2,811
4,900
7,491
15,460
7,116
$m
4,141
2,394
4,100
6,988
14,385
8,368
42,233
40,376
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
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.
2.2.4 Recognition and measurement
Our revenue recognition accounting policies are described below.
(a) Revenue from contracts with customers
Revenue from contracts with customers arises from goods and
services sold as part of our ordinary activities.
(i) Accounting contracts with customer
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.
(v) Allocation of revenue to goods and services
to that third party.
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.
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
(b) Revenue from other sources
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.
108 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F25
F26 | Telstra Group Limited and controlled entities
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.
2023.Financial Report.book Page 26 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
2.2 Income (continued)
2.2.4 Recognition and measurement (continued)
(a) Revenue from contracts with customers (continued)
(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.
(b) Revenue from other sources
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.
F26 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 109
Telstra Financial Report 2023 2023.Financial Report.book Page 27 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 28 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
General and administration
Service contracts and other agreements
Promotion and advertising
Expenses related to lease arrangements
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 $95 million (2022: $107 million)
impairment of deferred contract costs
• interest on borrowings has been capitalised using a capitalisation
rate of 4.6 per cent (2022: 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
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.
Year ended 30 June
2023
2022
$m
$m
80
20
240
45
3,274
2,853
129
1,060
1,056
272
16
12
243
2,788
2,424
574
1,472
4,470
570
99
32
701
(71)
630
80
19
215
45
3,223
2,648
144
915
1,167
248
21
95
222
2,812
2,572
587
1,199
4,358
444
78
61
583
(56)
527
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.
2.4.1 Income tax expense
Table A
Telstra Group
Table A provides a reconciliation of notional income tax expense to
actual income tax expense.
Major components of income tax expense
Current tax expense
Deferred tax resulting from the origination and reversal of temporary differences
Under/(over) 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% (2022: 30%)
Notional income tax expense differs from actual income tax expense due to the tax effect of:
2,863
859
2,481
744
Net non-deductible and (non-taxable) items
Deferred tax liabilities derecognised
Amended assessments
Under/(over) provision of tax in prior years
Different tax rates in overseas jurisdictions
Income tax expense on profit
equity
The comparative amounts have been restated to reflect the
different split between our current income tax expense and the
deferred income tax expense resulting from the restatement of
contract liabilities (refer to note 1.7 for details), however the total
income tax expense for the financial year 2022 has not changed.
Income tax (benefit)/expense recognised during the year directly in other comprehensive income or
Year ended 30 June
2023
2022
Restated
$m
748
54
10
812
5
(10)
(9)
10
(43)
812
(99)
$m
752
(78)
(7)
667
(5)
(15)
(18)
(7)
(32)
667
83
110 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F27
F28 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 28 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (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.
2.4.1 Income tax expense
Table A provides a reconciliation of notional income tax expense to
actual 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
Under/(over) 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% (2022: 30%)
Notional income tax expense differs from actual income tax expense due to the tax effect of:
Net non-deductible and (non-taxable) items
Deferred tax liabilities derecognised
Amended assessments
Under/(over) provision of tax in prior years
Different tax rates in overseas jurisdictions
Income tax expense on profit
Income tax (benefit)/expense recognised during the year directly in other comprehensive income or
equity
The comparative amounts have been restated to reflect the
different split between our current income tax expense and the
deferred income tax expense resulting from the restatement of
contract liabilities (refer to note 1.7 for details), however the total
income tax expense for the financial year 2022 has not changed.
Year ended 30 June
2023
2022
Restated
$m
748
54
10
812
$m
752
(78)
(7)
667
2,863
859
2,481
744
5
(10)
(9)
10
(43)
812
(99)
(5)
(15)
(18)
(7)
(32)
667
83
F28 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 111
Telstra Financial Report 2023 2023.Financial Report.book Page 29 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 30 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
Table C provides a reconciliation of income tax expense to income
tax paid during the year.
2.4 Income taxes (continued)
2.4.2 Deferred tax assets/(liabilities)
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 C
Telstra Group
Year ended 30 June
2023
2022
Restated
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.
Table B
Year ended 30 June
Telstra Group
2023
2022
Effective income
tax rate
Tax Transparency
Code effective
income tax rate
Group Australia Group
Australia
28.4%
26.2%
26.9%
28.4%
28.3%
26.5%
28.3%
29.3%
The effective income tax rate for the Telstra Group of 28.4 per cent
(2022: 26.9 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 below.
The TTC ETR for the Telstra Group of 28.3 per cent (2022: 28.3 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 2022 TTC ETRs have been updated to include the
impact of the net over provision of tax and amended 2022
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.
Non-taxable and non-deductible items include the tax effect of:
• $145 million of overseas profits taxed at lower corporate tax rates
(i.e. below 30%)
• $72 million related to withholding taxes with no tax offset
• $66 million lease termination deductions relating to the
acquisition of Telstra dealership stores in the prior reporting
period
• $55 million non-assessable gains on property disposals
• $33 million non-deductible amortisation of intangibles.
Income tax expense
(Under)/over 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 receivable/(payable) next
year
Other
Income tax paid
$m
812
(10)
13
44
-
(28)
38
(7)
(28)
(2)
(53)
2
(17)
(16)
(54)
748
66
114
5
933
$m
667
7
3
52
(1)
62
50
(84)
26
(4)
(50)
(5)
50
(21)
78
752
130
(62)
(1)
819
The comparative amounts have been restated to reflect tax impacts
of the restatement of contract liabilities detailed in note 1.7.
(1,990)
(1,359)
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
2023
2022
Restated
$m
$m
Property, plant and equipment
(1,844)
(1,545)
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
received in advance
Capital tax losses
Income tax losses
Undistributed reserves and
withholding taxes
Other
Deferred tax items recognised in
other comprehensive income or
equity
Investments
instruments
Other
Defined benefit asset
Borrowings and derivative financial
(203)
40
(284)
(8)
(736)
(819)
177
240
104
776
128
46
473
10
5
(96)
1
2
6
-
(215)
131
(76)
Tax impact of restatement of retained
earnings
Net deferred tax liability
(2,066)
(1,618)
Comprising:
Deferred tax assets
Deferred tax liabilities
46
(2,112)
(2,066)
60
(1,678)
(1,618)
The comparative amounts have been restated to reflect tax impacts
of the restatement of contract liabilities detailed in note 1.7.
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
2023
2022
$m
$m
2,622
213
99
2,934
1,253
255
111
1,619
As at 30 June 2023, deferred tax assets on capital tax losses not
recognised in the statement of financial position include capital tax
losses crystallised during the financial year 2023 on liquidation of
an offshore dormant controlled entity.
2.4.3 International tax reform - Pillar Two income taxes
The Telstra Group is expected to be within the scope of the Pillar
Two top up tax being implemented in Australia as it will apply to
569
entities with revenues exceeding EUR750 million and the Telstra
Group revenues exceed this threshold. The Group has applied the
mandatory exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income
taxes as detailed in note 1.6.1.
2.4.4 Tax consolidated group
Under the Australian taxation law, the Telstra Entity and its eligible
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 tax consolidated group.
As detailed in note 1.2, on 31 October 2022, Telstra Group Limited
replaced Telstra Corporation Limited as the new head entity of the
Australian tax consolidated group. Under Australian taxation law
and confirmed by a ruling of the Australian Tax Office, Telstra has
elected that the tax consolidated group will continue in existence,
with Telstra Group Limited as the head company. This has been
accounted for as a continuation of the antecedent tax consolidated
group with Telstra Corporation Limited as the head entity, with the
franking credits account being inherited by Telstra Group Limited.
There were no income tax implications to the tax consolidated
group resulting from the Restructure.
Entities within the tax consolidated group have entered into a new
tax sharing agreement and a tax funding agreement with Telstra
Group Limited as the head entity.
(217)
52
(318)
(12)
(600)
(688)
196
244
99
665
123
44
26
8
-
(5)
(69)
(206)
94
-
(181)
(78)
112 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F29
F30 | Telstra Group Limited and controlled entities
(203)
(217)
Table E
Telstra Group
2023.Financial Report.book Page 30 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 2. Our performance (continued)
2.4 Income taxes (continued)
2.4.2 Deferred tax assets/(liabilities)
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
Undistributed reserves and
withholding taxes
Other
Deferred tax items recognised in
other comprehensive income or
equity
Investments
Defined benefit asset
Borrowings and derivative financial
instruments
Other
Tax impact of restatement of retained
earnings
Net deferred tax liability
Comprising:
Deferred tax assets
Deferred tax liabilities
30 June
2023
2022
Restated
$m
$m
40
(284)
(8)
(1,844)
(736)
(819)
177
240
104
776
128
46
473
10
58
(96)
1
52
(318)
(12)
(1,545)
(600)
(688)
196
244
99
665
123
44
569
26
-
(5)
(1,990)
(1,359)
2
(215)
131
6
(76)
-
(69)
(206)
94
-
(181)
(78)
(2,066)
(1,618)
46
(2,112)
(2,066)
60
(1,678)
(1,618)
The comparative amounts have been restated to reflect tax impacts
of the restatement of contract liabilities detailed in note 1.7.
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.
Deferred tax assets not recognised
Capital tax losses
Income tax losses
Deductible temporary differences
Year ended 30 June
2023
2022
$m
$m
2,622
213
99
2,934
1,253
255
111
1,619
As at 30 June 2023, deferred tax assets on capital tax losses not
recognised in the statement of financial position include capital tax
losses crystallised during the financial year 2023 on liquidation of
an offshore dormant controlled entity.
2.4.3 International tax reform - Pillar Two income taxes
The Telstra Group is expected to be within the scope of the Pillar
Two top up tax being implemented in Australia as it will apply to
entities with revenues exceeding EUR750 million and the Telstra
Group revenues exceed this threshold. The Group has applied the
mandatory exception to recognising and disclosing information
about deferred tax assets and liabilities related to Pillar Two income
taxes as detailed in note 1.6.1.
2.4.4 Tax consolidated group
Under the Australian taxation law, the Telstra Entity and its eligible
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 tax consolidated group.
As detailed in note 1.2, on 31 October 2022, Telstra Group Limited
replaced Telstra Corporation Limited as the new head entity of the
Australian tax consolidated group. Under Australian taxation law
and confirmed by a ruling of the Australian Tax Office, Telstra has
elected that the tax consolidated group will continue in existence,
with Telstra Group Limited as the head company. This has been
accounted for as a continuation of the antecedent tax consolidated
group with Telstra Corporation Limited as the head entity, with the
franking credits account being inherited by Telstra Group Limited.
There were no income tax implications to the tax consolidated
group resulting from the Restructure.
Entities within the tax consolidated group have entered into a new
tax sharing agreement and a tax funding agreement with Telstra
Group Limited as the head entity.
F30 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 113
Telstra Financial Report 2023 2023.Financial Report.book Page 31 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 2. Our performance (continued)
2.4 Income taxes (continued)
2.4.4 Tax consolidated group (continued)
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 agreement, the head entity will pay the tax
consolidated group liabilities to the Commissioner of Taxation and
each of the members has 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 relevant member. The Telstra Entity will also compensate the
members for any deferred tax assets relating to unused tax losses
and tax credits.
Amounts receivable (net of allowance for doubtful debts) by the
Telstra Entity of $624 million (2022: $74 million receivable by
Telstra Corporation Limited) and payable by the Telstra Entity of
$76 million (2022: $87 million payable by Telstra Corporation
Limited) under the tax funding agreement are due in the next
financial year upon final settlement of the current tax payable for
the tax consolidated group.
2.4.5 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.
2.5 Earnings per share
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
Weighted average number of
ordinary shares
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
Year ended 30 June
2023
2022
$m
$m
1,928
1,688
Number of shares
(millions)
11,543
11,755
11
9
11,554
11,764
cents
cents
16.7
16.7
14.4
14.3
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.
114 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F31
2023.Financial Report.book Page 13 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 14 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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.
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 notional charges under the
arrangements not governed by legal
agreements, i.e. those governing
internal arrangements prior to the
completion of the Restructure. The
notional charges were determined
based on a variety of internally and
externally observable inputs to
reflect an arm’s length basis.
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.
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
From 1 January 2023
EBITDA contribution does not include those expenses
EBITDA contribution does not include those expenses
our segment results.
Nature of
transaction
Income from nbn
disconnection fees
and associated
expenses
Network service
delivery expenses
other than those
supporting passive
infrastructure
Telstra Limited’s
redundancy and
restructuring
expenses
Until 31 December
2022 Telstra
Corporation Limited’s
redundancy and
restructuring
expenses
inter-company
transactions for
international
connectivity disclosed
as internal income and
internal expenses
Until 31 December
2022 inter-company
transactions for
international
connectivity disclosed
as revenue from
external customers
and external expenses
TC&SB
TE
NIT&P
All Other
EBITDA contribution does not
include these transactions
n/a
EBITDA contribution does not
EBITDA
include the network service delivery
contribution
expense for TC&SB and TE
customers
includes network
service delivery
expenses
related to
TC&SB, TE and
Telstra InfraCo
customers
Telstra InfraCo’s
customers
EBITDA
contribution
includes these
transactions
EBITDA
contribution
includes network
service delivery
expenses
related to
TC&SB, TE and
Telstra InfraCo
EBITDA
contribution
includes those
expenses
EBITDA
contribution
includes those
expenses
Telstra
InfraCo
EBITDA
contribution
does not include
these
transactions
EBITDA
contribution
does not include
the network
service delivery
expense for
customers
serviced by
passive
infrastructure
EBITDA
contribution
includes inter-
segment internal
expenses
(recharged by
TE)
EBITDA
contribution
includes inter-
segment
revenue (earned
from TE) and
expenses
(recharged by
TE)
n/a
Elimination of
inter-company
transactions
contribution
includes inter-
segment
internal
expenses
recharged by
TE
EBITDA
contribution
includes inter-
segment
expenses
recharged by
TE
EBITDA
contribution
includes inter-
segment internal
income (earned
from TC&SB and
Telstra InfraCo)
EBITDA
contribution
includes inter-
segment
revenue (earned
from TC&SB and
Telstra InfraCo)
and expenses
(recharged by
Telstra InfraCo)
From 1 January 2023
EBITDA
n/a
n/a
96 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F13
F14 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 33 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 34 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
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
This section describes our core long-term tangible (owned
and leased) and intangible assets underpinning the Group’s
and leased) and intangible assets underpinning the Group’s
performance and provides a summary of our asset
performance and provides a summary of our asset
impairment assessment. This section also describes our
impairment assessment. This section also describes our
short-term assets and liabilities, i.e. our working capital
short-term assets and liabilities, i.e. our working capital
supporting the operating liquidity of our business.
supporting the operating liquidity of our business.
Section 3. Our core assets, lease arrangements and working capital (continued)
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 (PPE) assets during the financial year.
Table A
Telstra Group
Land and
buildings
Communication
assets
Other plant and
equipment
Total property,
plant and
equipment
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
Net book value at 1 July 2022
Additions
Additions due to acquisitions of controlled entities
Depreciation expenses
Other movements
Net book value at 30 June 2023, comprising:
Cost
Accumulated depreciation and impairment
$m
588
59
27
(60)
1
615
1,274
(659)
615
52
33
(74)
(30)
596
1,184
(588)
$m
20,057
2,093
-
(2,433)
(53)
19,664
62,475
(42,811)
19,664
2,286
469
(2,253)
(8)
20,158
62,453
(42,295)
$m
218
79
6
(79)
(18)
206
1,130
(924)
206
90
21
(97)
(5)
215
1,159
(944)
$m
20,863
2,231
33
(2,572)
(70)
20,485
64,879
(44,394)
20,485
2,428
523
(2,424)
(43)
20,969
64,796
(43,827)
116 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F33
F34 | Telstra Group Limited and controlled entities
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.1 Property, plant and equipment (continued)
The following paragraphs provide further information about our
fixed asset classes:
• additions to PPE include $46 million (2022: $42 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 network land and buildings that
are essential to the operation of our communication assets
• our buildings and communication assets are mainly used by us to
generate revenue, however we also generate rental income from
these assets. Given their dual purpose, it is impractical to
separately present the assets under the operating lease
arrangements. As at 30 June 2023, the total net book value of the
assets used for dual purpose was $2,826 million (2022: $2,998
million).
• as at 30 June 2023, $1,338 million (2022: $1,137 million) of PPE
was under construction and not installed nor ready for use
• other movements include $54 million (2022: $83 million) net
transfers to intangible assets, $42 million (2022: $44 million)
increase due to net foreign exchange differences, and other
individually insignificant transactions.
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
Software
Licences
Other intan-
Total intan-
assets
gible assets
gible assets
Telstra Group
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:
Accumulated amortisation and impairment
Net book value at 1 July 2022
Additions
Additions due to acquisitions of controlled entities
Amortisation expense
Other movements
Net book value at 30 June 2023, comprising:
Cost
Cost
Accumulated amortisation and impairment
$m
1,052
676
-
-
41
1,769
1,856
(87)
1,769
1,633
-
-
62
3,464
3,555
(91)
$m
3,455
891
103
(823)
83
3,709
12,048
(8,339)
3,709
1,272
(998)
10
52
4,045
13,050
(9,005)
$m
2,043
238
-
(282)
(4)
1,995
3,547
(1,552)
1,995
100
-
(296)
(37)
1,762
3,523
(1,761)
$m
581
42
147
(94)
6
682
1,735
(1,053)
682
39
1,147
(178)
28
1,718
2,929
(1,211)
$m
7,131
1,171
926
(1,199)
126
8,155
19,186
(11,031)
8,155
1,411
2,790
(1,472)
105
10,989
23,057
(12,068)
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 (PPE) assets during the financial year.
Table A
Communication
Other plant and
Total property,
Land and
buildings
assets
equipment
plant and
equipment
Telstra Group
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:
Accumulated depreciation and impairment
Net book value at 1 July 2022
Additions
Additions due to acquisitions of controlled entities
Depreciation expenses
Other movements
Net book value at 30 June 2023, comprising:
Cost
Cost
Accumulated depreciation and impairment
$m
588
59
27
(60)
1
615
1,274
(659)
615
52
33
(74)
(30)
596
1,184
(588)
$m
20,057
2,093
-
(2,433)
(53)
19,664
62,475
(42,811)
19,664
2,286
469
(2,253)
(8)
20,158
62,453
(42,295)
$m
218
79
6
(79)
(18)
206
1,130
(924)
206
90
21
(97)
(5)
215
1,159
(944)
$m
20,863
2,231
33
(2,572)
(70)
20,485
64,879
(44,394)
20,485
2,428
523
(2,424)
(43)
20,969
64,796
(43,827)
2023.Financial Report.book Page 33 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 34 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
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)
3.1.1 Property, plant and equipment (continued)
The following paragraphs provide further information about our
fixed asset classes:
• additions to PPE include $46 million (2022: $42 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 network land and buildings that
are essential to the operation of our communication assets
• our buildings and communication assets are mainly used by us to
generate revenue, however we also generate rental income from
these assets. Given their dual purpose, it is impractical to
separately present the assets under the operating lease
arrangements. As at 30 June 2023, the total net book value of the
assets used for dual purpose was $2,826 million (2022: $2,998
million).
• as at 30 June 2023, $1,338 million (2022: $1,137 million) of PPE
was under construction and not installed nor ready for use
• other movements include $54 million (2022: $83 million) net
transfers to intangible assets, $42 million (2022: $44 million)
increase due to net foreign exchange differences, and other
individually insignificant transactions.
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 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
Net book value at 1 July 2022
Additions
Additions due to acquisitions of controlled entities
Amortisation expense
Other movements
Net book value at 30 June 2023, comprising:
Cost
Accumulated amortisation and impairment
$m
1,052
-
676
-
41
1,769
1,856
(87)
1,769
-
1,633
-
62
3,464
3,555
(91)
$m
3,455
891
103
(823)
83
3,709
12,048
(8,339)
3,709
1,272
10
(998)
52
4,045
13,050
(9,005)
$m
2,043
238
-
(282)
(4)
1,995
3,547
(1,552)
1,995
100
-
(296)
(37)
1,762
3,523
(1,761)
$m
581
42
147
(94)
6
682
1,735
(1,053)
682
39
1,147
(178)
28
1,718
2,929
(1,211)
$m
7,131
1,171
926
(1,199)
126
8,155
19,186
(11,031)
8,155
1,411
2,790
(1,472)
105
10,989
23,057
(12,068)
Telstra Group Limited and controlled entities | F33
F34 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 117
Telstra Financial Report 2023 2023.Financial Report.book Page 35 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 36 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
3.1.2 Goodwill and other intangible assets (continued)
The following paragraphs detail further information about our
intangible asset classes:
• additions to software assets include $25 million (2022: $14
million) of capitalised borrowing costs directly attributable to
qualifying assets
• software assets mostly comprise internally generated assets
• licences comprise of spectrum and apparatus licences obtained
to operate a range of radiocommunications devices
• other movements include $54 million (2022: $83 million) net
transfers from property, plant and equipment to intangible
assets, $92 million (2022: $48 million) increase due to net foreign
exchange differences, $45 million disposal of licence 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 2023, $638 million (2022: $434 million) of
software assets were not installed and ready for use.
3.1.3 Depreciation and amortisation
Table C presents the weighted average useful lives of our property,
plant and equipment and identifiable intangible assets with a
definite useful life.
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
2023
2022
30
27
7
8
14
19
30
25
7
9
14
17
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.
During the financial year 2023, the net effect of the
assessment of useful lives was $35 million and $33 million
decrease in depreciation and amortisation expenses,
respectively. There was no material net effect of assessment
of useful lives in the financial year 2022.
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.
Indicators of impairment may include changes in our operating and economic assumptions or possible impacts from risks such as
changing economic and market conditions and climate change. We apply judgement in determining whether certain trends with an
adverse impact on our cash flows are considered impairment indicators.
We continue to operate in uncertain economic environments with rising inflation and other economic pressures. However, given the
long-lived nature of the majority of our assets and the nature of the services we provide, the expected return on the assets is not
significantly impacted. As a result, we did not consider the uncertain economic environment as an impairment indicator of our
ubiquitous telecommunications network.
We continue to assess the potential impacts of climate change, including physical climate risks on our assets associated with
bushfires, cyclones, coastal inundation, urban flash flooding and increasing temperatures, as well as the impact of extreme weather
events on our operations and service delivery.
While we have already incorporated in our management forecasts some financial impacts related to our short-medium term
environmental goals associated with both maintaining our carbon neutral operational certification, and with enabling renewable
energy generation equivalent to 100 per cent of our consumption by 2025, work is ongoing to incorporate the potential long-term
financial impacts of climate change and our relevant adaptation strategies in our forward plans.
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 service
disruption payments and asset loss/replacement costs, 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.
118 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F35
F36 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 35 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 36 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
3.1.2 Goodwill and other intangible assets (continued)
The following paragraphs detail further information about our
intangible asset classes:
• additions to software assets include $25 million (2022: $14
million) of capitalised borrowing costs directly attributable to
qualifying assets
• software assets mostly comprise internally generated assets
• licences comprise of spectrum and apparatus licences obtained
to operate a range of radiocommunications devices
• other movements include $54 million (2022: $83 million) net
transfers from property, plant and equipment to intangible
assets, $92 million (2022: $48 million) increase due to net foreign
exchange differences, $45 million disposal of licence 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 2023, $638 million (2022: $434 million) of
software assets were not installed and ready for use.
3.1.3 Depreciation and amortisation
Table C presents the weighted average useful lives of our property,
plant and equipment and identifiable intangible assets with a
definite useful life.
Table C
Expected benefit
Telstra Group
Property, plant and equipment
Buildings
Communication assets
Other plant and equipment
Intangible assets
Software assets
Licences
Other intangibles
(years)
As at 30 June
2023
2022
30
27
7
8
14
19
30
25
7
9
14
17
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.
During the financial year 2023, the net effect of the
assessment of useful lives was $35 million and $33 million
decrease in depreciation and amortisation expenses,
respectively. There was no material net effect of assessment
of useful lives in the financial year 2022.
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.
Indicators of impairment may include changes in our operating and economic assumptions or possible impacts from risks such as
changing economic and market conditions and climate change. We apply judgement in determining whether certain trends with an
adverse impact on our cash flows are considered impairment indicators.
We continue to operate in uncertain economic environments with rising inflation and other economic pressures. However, given the
long-lived nature of the majority of our assets and the nature of the services we provide, the expected return on the assets is not
significantly impacted. As a result, we did not consider the uncertain economic environment as an impairment indicator of our
ubiquitous telecommunications network.
We continue to assess the potential impacts of climate change, including physical climate risks on our assets associated with
bushfires, cyclones, coastal inundation, urban flash flooding and increasing temperatures, as well as the impact of extreme weather
events on our operations and service delivery.
While we have already incorporated in our management forecasts some financial impacts related to our short-medium term
environmental goals associated with both maintaining our carbon neutral operational certification, and with enabling renewable
energy generation equivalent to 100 per cent of our consumption by 2025, work is ongoing to incorporate the potential long-term
financial impacts of climate change and our relevant adaptation strategies in our forward plans.
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 service
disruption payments and asset loss/replacement costs, 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 Group Limited and controlled entities | F35
F36 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 119
Telstra Financial Report 2023 2023.Financial Report.book Page 37 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 38 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
The carrying amount of goodwill has been allocated to the CGUs as
detailed in Table D.
We have used the following key assumptions in determining the
recoverable amount of our material CGUs to which goodwill has
been allocated:
Table E
Telstra Group
Discount rate
Terminal value
growth rate
2023
2022
2023
2022
Table D
Telstra Group
As at 30 June
2023
2022
Digicel Pacific1
Telstra Enterprise International Group1,2
Telstra Enterprise Australia Group2
Telstra Consumer & Small Business
Group2
Health Group (including
MedicalDirector)2,3
MedicalDirector Group
PowerHealth Group
Fetch TV
Other4
$m
1,614
612
437
341
251
-
89
32
88
$m
-
585
437
323
-
224
89
-
111
3,464
1,769
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 International Group, Telstra Enterprise Australia Group, Telstra
Consumer and Small Business, and Health Group include goodwill from past acquisitions
integrated into these businesses.
3 During the financial year 2023, the operations of MedicalDirector were integrated into
Health Group to generate combined cash inflows for the Group.
4 Other includes individually immaterial CGUs.
In regard to goodwill recognised on acquisitions completed during
the financial year 2023, there were no impairment indicators in
relation to these assets since their acquisition date. For all other
CGUs including Digicel Pacific with allocated goodwill, we used a
value in use calculation to determine the recoverable amount.
Digicel Pacific
Telstra Enterprise
International Group
Telstra Enterprise
Australia Group
Telstra Consumer &
Small Business
Group
Health Group
(including
MedicalDirector)
PowerHealth Group
%
13.4
8.5
%
n/a
9.9
13.3
14.0
12.2
n/a
13.3
15.9
n/a
n/a
%
3.0
2.0
2.5
2.5
-
2.5
%
n/a
2.0
2.5
n/a
n/a
n/a
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 90 basis points (2022: 364
basis points) or the terminal value growth rate would need to
decrease by 135 basis points (2022: 697 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 discounted cash flows generated
continue to support the carrying values of our CGUs, thus no
impairment has been identified.
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.5 Recognition and measurement
Asset class
Recognition and measurement
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.
120 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F37
F38 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 37 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 38 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
We have used the following key assumptions in determining the
recoverable amount of our material CGUs to which goodwill has
3.1 Property, plant and equipment and intangible assets
(continued)
3.1.5 Recognition and measurement
Asset class
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 Group Limited and controlled entities | F37
F38 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 121
(continued)
(b) Goodwill
3.1.4 Impairment assessment (continued)
The carrying amount of goodwill has been allocated to the CGUs as
detailed in Table D.
Table D
Telstra Group
Digicel Pacific1
Telstra Enterprise International Group1,2
Telstra Enterprise Australia Group2
Telstra Consumer & Small Business
Group2
Health Group (including
MedicalDirector)2,3
MedicalDirector Group
PowerHealth Group
Fetch TV
Other4
As at 30 June
2023
2022
$m
1,614
612
437
341
251
-
89
32
88
$m
-
585
437
323
-
224
89
-
111
been allocated:
Table E
Telstra Group
Digicel Pacific
Telstra Enterprise
International Group
Telstra Enterprise
Australia Group
Telstra Consumer &
Small Business
Group
Health Group
(including
MedicalDirector)
PowerHealth Group
Discount rate
Terminal value
growth rate
2023
2022
2023
2022
%
%
%
13.4
8.5
13.3
%
n/a
9.9
14.0
12.2
n/a
13.3
15.9
n/a
n/a
3.0
2.0
2.5
2.5
-
2.5
n/a
2.0
2.5
n/a
n/a
n/a
The discount rate represents the pre-tax discount rate applied to
the cash flow projections. The discount rate reflects the market
3,464
1,769
determined, risk-adjusted discount rate that is adjusted for specific
risks relating to the CGU and the countries in which it operates.
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 International Group, Telstra Enterprise Australia Group, Telstra
Consumer and Small Business, and Health Group include goodwill from past acquisitions
integrated into these businesses.
3 During the financial year 2023, the operations of MedicalDirector were integrated into
Health Group to generate combined cash inflows for the Group.
4 Other includes individually immaterial CGUs.
In regard to goodwill recognised on acquisitions completed during
the financial year 2023, there were no impairment indicators in
relation to these assets since their acquisition date. For all other
CGUs including Digicel Pacific with allocated goodwill, we used a
value in use calculation to determine the recoverable amount.
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 90 basis points (2022: 364
basis points) or the terminal value growth rate would need to
decrease by 135 basis points (2022: 697 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 discounted cash flows generated
continue to support the carrying values of our CGUs, thus no
impairment has been identified.
Telstra Financial Report 2023 2023.Financial Report.book Page 39 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 40 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
• modem devices
• 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.
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 one 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 and exchanges 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 remeasurement to lease liabilities
resulting from such escalation clauses were recognised during the
financial year 2023.
Table A
Telstra Group
Additions
Depreciation expense
Terminations
Other movements
Net book value at 1 July 2021 (reclassified)
Additions due to acquisitions of controlled entities and businesses
Net book value at 30 June 2022 (reclassified), comprising:
Additions due to acquisitions of controlled entities and businesses
Cost
Additions
Accumulated depreciation and impairment
Net book value at 1 July 2022 (reclassified)
Depreciation expense
Terminations
Derecognition due to finance subleases
Other movements
Net book value at 30 June 2023, comprising:
Accumulated depreciation and impairment
Cost
assets.
We reclassified right-of-use assets related to leases of towers and
tower-like structures from ‘land and buildings’ to ‘other’ class of
underlying assets to best reflect the nature of such right-of-use
The following amounts have been reclassified:
• $649 million of net book value as at 1 July 2021
• $41 million of additions during the financial year 2022
• $76 million of depreciation expense during the financial year 2022
• $614 million of net book value as at 1 July 2022.
This change in presentation did not impact our reported results.
Other movements include other individually insignificant
transactions.
Right-of-use assets for underlying assets
Other
Total
Land and
buildings
$m
2,044
472
96
(406)
(32)
1
2,175
3,361
(1,186)
2,175
295
55
(407)
(23)
(17)
3
2,081
3,437
(1,356)
$m
808
162
-
(181)
(13)
(25)
751
1,139
(388)
751
275
2
(167)
(17)
(70)
(30)
744
1,265
(521)
$m
2,852
634
96
(587)
(45)
(24)
2,926
4,500
(1,574)
2,926
570
57
(574)
(40)
(87)
(27)
2,825
4,702
(1,877)
122 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F39
F40 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 39 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 40 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
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.
leases
3.2 Lease arrangements
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
• modem devices
• 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.
Determining lease term for property
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 one 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 and exchanges 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.
(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
2,044
472
96
(406)
(32)
1
2,175
3,361
(1,186)
2,175
295
55
(407)
(23)
(17)
3
2,081
3,437
(1,356)
$m
808
162
-
(181)
(13)
(25)
751
1,139
(388)
751
275
2
(167)
(17)
(70)
(30)
744
1,265
(521)
$m
2,852
634
96
(587)
(45)
(24)
2,926
4,500
(1,574)
2,926
570
57
(574)
(40)
(87)
(27)
2,825
4,702
(1,877)
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 remeasurement to lease liabilities
resulting from such escalation clauses were recognised during the
financial year 2023.
Table A
Telstra Group
Net book value at 1 July 2021 (reclassified)
Additions
Additions due to acquisitions of controlled entities and businesses
Depreciation expense
Terminations
Other movements
Net book value at 30 June 2022 (reclassified), comprising:
Cost
Accumulated depreciation and impairment
Net book value at 1 July 2022 (reclassified)
Additions
Additions due to acquisitions of controlled entities and businesses
Depreciation expense
Terminations
Derecognition due to finance subleases
Other movements
Net book value at 30 June 2023, comprising:
Cost
Accumulated depreciation and impairment
We reclassified right-of-use assets related to leases of towers and
tower-like structures from ‘land and buildings’ to ‘other’ class of
underlying assets to best reflect the nature of such right-of-use
assets.
The following amounts have been reclassified:
• $649 million of net book value as at 1 July 2021
• $41 million of additions during the financial year 2022
• $76 million of depreciation expense during the financial year 2022
• $614 million of net book value as at 1 July 2022.
This change in presentation did not impact our reported results.
Other movements include other individually insignificant
transactions.
Telstra Group Limited and controlled entities | F39
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Telstra Financial Report 2023 2023.Financial Report.book Page 41 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 42 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
Table C presents maturity analysis of our lease liabilities.
3.2 Lease arrangements (continued)
(ii) Subleases
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
2023
2022
$m
$m
539
591
1,021
1,571
3,722
(531)
3,191
448
2,743
3,191
550
546
1,196
1,394
3,686
(399)
3,287
490
2,797
3,287
3.2.1 Telstra as a lessee (continued)
(d) Right-of-use assets (continued)
Table B provides information about the weighted average useful
lives of our right-of-use assets.
Table C
Telstra Group
Table B
Telstra Group
Right-of-use assets
Land and buildings
Other
(e) Lease liabilities
Weighted average
useful life (years)
As at 30 June
2023
2022
11
9
9
3
Lease liabilities do not include liabilities for leases of low value
assets 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 2023, the weighted average incremental
borrowing rate was 3.0 per cent (2022: 2.4 per cent).
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 $1,776 million (2022: $1,961
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 85 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:
• for leases yet to commence - the legally non-cancellable lease
(interest portion)
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.
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:
network buildings
• leases and subleases of property assets, including office and
3.2.1 Telstra as a lessee (continued)
(f) Amounts recognised in the income statement and cash
outflows for leases
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
Table D presents amounts recognised in the income statement and
the cash outflows related to our lease arrangements.
lease term of the head lease.
Table D
Telstra Group
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 disposal due to finance
(sub)lease (in other income)
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
Year ended 30 June
2023
2022
These subleases are either classified as operating lease or finance
lease. For finance subleases, 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
$m
$m
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.
8
40
(iii) Leases of passive infrastructure assets
Generally, we hold our infrastructure assets for our own use and not
with the intention to earn rental income. However, we also generate
(574)
(587)
some revenue from rental of dark fibre and exchange building
floorspace mainly to our wholesale customers.
These leases are classified as operating leases and we recognise
revenue from other sources for the rental payments.
(iv) Finance lease receivable maturity analysis
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.
(99)
14
(78)
1
(14)
(21)
(14)
(675)
(21)
(697)
(99)
(78)
Undiscounted lease payments
receivable under finance leases
Table E
Telstra Group
Less than 1 year
1 to 2 years
2 to 3 years
3 to 4 years
4 to 5 years
More than 5 years
As at 30 June
2023
2022
$m
$m
74
22
39
31
24
86
276
(55)
221
(1)
220
63
157
220
70
46
26
20
13
17
192
(16)
176
(1)
175
63
112
175
• finance leases where Telstra is a dealer-lessor of communication
assets dedicated to solution management
• leases of modem devices to our consumer and small business
customers
• leases of dark fibre and exchange buildings.
Our key finance and operating leases are described below.
Total undiscounted lease payments
receivables
Less: unearned finance income
Net investment in the lease
Allowance for doubtful debts
(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 eight years (2022: four years).
Comprising
Current
Non-current
124 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F41
F42 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 41 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 42 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
Table C presents maturity analysis of our lease liabilities.
3.2 Lease arrangements (continued)
(ii) Subleases
3.2.1 Telstra as a lessee (continued)
(d) Right-of-use assets (continued)
Table B provides information about the weighted average useful
lives of our right-of-use assets.
Table C
Telstra Group
Table B
Telstra Group
Right-of-use assets
Land and buildings
Other
(e) Lease liabilities
Undiscounted future cash flows
Weighted average
useful life (years)
As at 30 June
2023
2022
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
11
9
9
3
Comprising:
Current
Non-current
Lease liabilities do not include liabilities for leases of low value
assets 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.
As at 30 June
2023
2022
$m
$m
539
591
1,021
1,571
3,722
(531)
3,191
448
2,743
3,191
550
546
1,196
1,394
3,686
(399)
3,287
490
2,797
3,287
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 $1,776 million (2022: $1,961
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 85 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:
• for leases yet to commence - the legally non-cancellable lease
• 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.
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
term
reflect:
term)
• the lease term (based on the weighted average repayment
• any guarantees which may be in place
• the impact of any security if significant to pricing.
As at 30 June 2023, the weighted average incremental
borrowing rate was 3.0 per cent (2022: 2.4 per cent).
3.2.1 Telstra as a lessee (continued)
(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
2023
2022
$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 disposal due to finance
(sub)lease (in other income)
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)
8
40
(574)
(587)
(99)
14
(78)
1
(14)
(21)
(14)
(675)
(21)
(697)
(99)
(78)
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:
• 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
• leases of modem devices to our consumer and small business
customers
• leases of dark fibre and exchange buildings.
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 eight years (2022: four years).
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 either classified as operating lease or finance
lease. For finance subleases, 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.
(iii) Leases of passive infrastructure assets
Generally, we hold our infrastructure assets for our own use and not
with the intention to earn rental income. However, we also generate
some revenue from rental of dark fibre and exchange building
floorspace mainly to our wholesale customers.
These leases are classified as operating leases and we recognise
revenue from other sources for the rental payments.
(iv) Finance lease receivable maturity analysis
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.
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
2023
2022
$m
$m
74
22
39
31
24
86
276
(55)
221
(1)
220
63
157
220
70
46
26
20
13
17
192
(16)
176
(1)
175
63
112
175
Telstra Group Limited and controlled entities | F41
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Telstra Financial Report 2023 2023.Financial Report.book Page 43 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 44 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
(b) Telstra as a lessee
3.2 Lease arrangements (continued)
3.3 Trade and other receivables and contract assets
3.2.2 Telstra as a lessor (including a dealer-lessor and an
intermediate lessor) (continued)
(a) Finance leases (continued)
(iv) Finance lease receivable maturity analysis (continued)
A lessee recognises a right-of-use asset and a lease liability at 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
During the financial year 2023, we added $126 million (2022: $31
million) new finance lease receivables and recognised interest
income of $10 million (2022: $8 million).
• 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
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 $211 million (2022: $67 million), with 65
per cent (2022: 70 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)
3.2.3 Recognition and measurement
(a) Lease identification and lease term
As at 30 June
2023
2022
$m
18
66
$m
22
73
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.
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.
3.2.3 Recognition and measurement (continued)
3.3.1 Current and non-current trade and other receivables and
(b) Telstra as a lessee (continued)
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
contract assets
Table A
Telstra Group
Current
Trade receivables from
contracts with customers
• the future lease payments change due to changes in an index or a
Finance lease receivables
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)
Accrued revenue
Other receivables
Contract assets
Non-current
We distinguish between finance leases, which effectively transfer
substantially all the risks and benefits incidental to ownership of
Trade receivables from
contracts with customers
As at 30 June
2023
2022
Note
$m
$m
2,693
2,755
3.2
3.5
3.2
6.4
3.5
63
247
387
3,390
826
4,216
577
157
143
16
893
124
1,017
63
260
166
3,244
830
4,074
412
112
132
47
703
158
861
Finance lease receivables
Amounts owed by joint
ventures and associated
entities
Other receivables
Contract assets
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.
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 a lease is modified.
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.
(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.
126 | Telstra Group Limited and controlled entities
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Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
(b) Telstra as a lessee
3.2 Lease arrangements (continued)
3.3 Trade and other receivables and contract assets
3.2.2 Telstra as a lessor (including a dealer-lessor and an
A lessee recognises a right-of-use asset and a lease liability at lease
3.2.3 Recognition and measurement (continued)
intermediate lessor) (continued)
(a) Finance leases (continued)
(iv) Finance lease receivable maturity analysis (continued)
During the financial year 2023, we added $126 million (2022: $31
million) new finance lease receivables and recognised interest
income of $10 million (2022: $8 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 $211 million (2022: $67 million), with 65
liability.
per cent (2022: 70 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.
measured.
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)
3.2.3 Recognition and measurement
(a) Lease identification and lease term
As at 30 June
2023
2022
$m
18
66
$m
22
73
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.
the 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
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
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
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.
(b) Telstra as a lessee (continued)
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 a lease is modified.
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.
(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.
3.3.1 Current and non-current trade and other receivables and
contract assets
Table A
Telstra Group
As at 30 June
2023
2022
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
2,693
2,755
63
247
387
3,390
826
4,216
577
157
143
16
893
124
1,017
63
260
166
3,244
830
4,074
412
112
132
47
703
158
861
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.
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2023.Financial Report.book Page 46 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
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, or when an invoice will
be overdue for our no-lock-in consumer plans) 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 (2022: 0.1 per cent) for
balances not past due to 91.0 per cent (2022: 92.0 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 TE, Telstra InfraCo and TC&SB 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 in
Telstra InfraCo and TC&SB segments and in ‘All Other’ category)
are separately assessed based on the Australian government credit
risk rating.
We estimate our allowance for impairment as detailed below.
3.3 Trade and other receivables and contract assets
(a) Impairment of financial assets
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
TC&SB and TE 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
2023, those macroeconomic factors were within the relevant
thresholds.
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
2023
2022
Gross
Allow-
ance
Gross
Allow-
ance
$m
$m
$m
$m
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
3,978
-
3,978
273
119
49
207
4,626
(50)
-
(50)
(8)
(9)
(13)
(106)
(186)
3,688
65
3,753
330
118
50
281
4,532
(43)
-
(43)
(10)
(9)
(10)
(130)
(202)
Aging analysis for the financial year 2022 has been amended to
provide a like-for-like view with the financial year 2023 and reflect a
change in the way we allocate credit balances to aging categories.
(continued)
3.3.1 Current and non-current trade and other receivables and
(including contract assets) measured at amortised cost depending
contract assets (continued)
on their nature on either of the following basis:
We estimate the expected credit losses for our financial assets
(a) Impairment of trade and other receivables and contract
• for accrued revenue, amounts owed by joint ventures and
assets (continued)
Accrued revenue, amounts owed by joint ventures and associated
entities, and other receivables (before allowance for doubtful
debts) totalling $800 million (2022: $613 million) are subject to
impairment assessment using the general approach and include 35
per cent (2022: 49 per cent) of balances with counterparties with an
external credit rating of A- or above, and 30 per cent (2022: 28 per
cent) of balances with counterparties with an external credit rating
between BBB- and A-. The remaining balance is related to
individually insignificant debtors, and there is no concentration of
credit risk in those amounts.
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
We hold security for a number of trade receivables, including past
due or impaired receivables, in the form of guarantees, letters of
interest rate.
credit and deposits. During the financial year 2023, the securities
Any customer account with debt more than 90 days past due (or
we called upon were insignificant. These trade receivables, along
when an invoice is overdue for our no-lock-in consumer plans) is
with our trade receivables that are neither past due nor impaired,
considered to be in default.
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 (or 30 days for our no-lock-in consumer
plans).
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
Movements in the allowance for doubtful debts in respect of all our
last invoice was issued.
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
Opening balance 1 July
Additional allowance
Amount used
Amount reversed
Disposal of controlled entities
Closing balance 30 June
Year ended 30 June
2023
2022
$m
(210)
(130)
62
85
-
$m
(208)
(122)
25
90
5
(193)
(210)
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 $7 million (2022:
$8 million).
3.3.2 Recognition and measurement
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.
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.
128 | Telstra Group Limited and controlled entities
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2023.Financial Report.book Page 45 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 46 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
(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 (or
when an invoice is overdue for our no-lock-in consumer plans) 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.
3.3 Trade and other receivables and contract assets
We estimate our allowance for impairment as detailed below.
(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
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
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
TC&SB and TE 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
2023, those macroeconomic factors were within the relevant
thresholds.
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’
as:
level.
• 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
category.
will become past due by more than 90 days, or when an invoice will
Table B
As at 30 June
be overdue for our no-lock-in consumer plans) and the expected
loss rate when they default, both represented as a percentage of
the exposure at default and determined at the customer account
Our provision rates range from 0.1 per cent (2022: 0.1 per cent) for
balances not past due to 91.0 per cent (2022: 92.0 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 TE, Telstra InfraCo and TC&SB 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 in
Telstra InfraCo and TC&SB segments and in ‘All Other’ category)
Telstra Group
2023
2022
Gross
Gross
Allow-
ance
Allow-
ance
$m
$m
$m
$m
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
3,978
-
3,978
273
119
49
207
4,626
(50)
3,688
-
(50)
(8)
(9)
(13)
(106)
(186)
65
3,753
330
118
50
281
4,532
(43)
-
(43)
(10)
(9)
(10)
(130)
(202)
are separately assessed based on the Australian government credit
Aging analysis for the financial year 2022 has been amended to
risk rating.
provide a like-for-like view with the financial year 2023 and reflect a
change in the way we allocate credit balances to aging categories.
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)
Accrued revenue, amounts owed by joint ventures and associated
entities, and other receivables (before allowance for doubtful
debts) totalling $800 million (2022: $613 million) are subject to
impairment assessment using the general approach and include 35
per cent (2022: 49 per cent) of balances with counterparties with an
external credit rating of A- or above, and 30 per cent (2022: 28 per
cent) of balances with counterparties with an external credit rating
between BBB- and A-. The remaining balance is related to
individually insignificant debtors, and there is no concentration of
credit risk in those amounts.
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 2023, 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 (or 30 days for our no-lock-in consumer
plans).
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
2023
2022
Opening balance 1 July
Additional allowance
Amount used
Amount reversed
Disposal of controlled entities
Closing balance 30 June
$m
(210)
(130)
62
85
-
(193)
$m
(208)
(122)
25
90
5
(210)
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 $7 million (2022:
$8 million).
3.3.2 Recognition and measurement
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.
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.
Telstra Group Limited and controlled entities | F45
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2023.Financial Report.book Page 48 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
3.4 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 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 presents customer payments received in advance under
different types of our commercial arrangements.
Table A
Telstra Group
As at 30 June
2023
2022
Restated
Note
$m
$m
Current
Contract liabilities
3.5
Other revenue received in
advance
Non-current
Contract liabilities
Other revenue received in
advance
3.5
1,366
129
1,342
61
1,495
1,403
1,000
534
1,534
987
401
1,388
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
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.
3.6 Deferred contract costs
Table A
Telstra Group
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
As at 30 June
2023
2022
Restated
$m
826
124
950
(1,366)
(1,000)
(2,366)
(1,416)
$m
830
158
988
(1,342)
(987)
(2,329)
(1,341)
(75)
(19)
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
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.
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 $75 million (2022: $19 million) in the net contract
liabilities:
• $1,422 million (2022: $1,628 million) revenue recognised in the
reporting period that was included in the contract liabilities
balance at the beginning of the reporting period
• $19 million (2022: $47 million) cumulative catch-up adjustments
to revenue recognised in the prior reporting periods
• $55 million (2022: $5 million) changes due to business
acquisitions.
Refer to note 3.3.1 for details regarding impairment assessment of
contract assets.
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.
Telstra Group
Table A
Costs to
Costs to fulfil a contract
obtain a
contract
sions
Commis-
Set-up costs
Total
Costs of
service
provider
Total
deferred
contract
costs
Net book value at 1 July 2021, comprising:
Current
Non-current
Additions
Amortisation expense
Impairment losses
Current
Non-current
Net book value at 30 June 2022, comprising:
Net book value at 1 July 2022
Additions
Amortisation expense
Impairment losses
Current
Non-current
Net book value at 30 June 2023, comprising:
$m
1,146
n/a
1,146
365
(382)
(107)
1,022
n/a
1,022
1,022
268
(320)
(95)
875
n/a
875
$m
41
-
41
11
(9)
43
-
-
43
43
8
(8)
43
-
-
43
$m
268
113
155
809
(788)
-
289
116
173
289
653
(658)
-
284
114
170
$m
309
113
196
820
(797)
-
332
116
216
332
661
(666)
-
327
114
213
$m
1,455
113
1,342
1,185
(1,179)
(107)
1,354
116
1,238
1,354
929
(986)
(95)
1,202
114
1,088
Amortisation period of deferred contract
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.
130 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F47
F48 | Telstra Group Limited and controlled entities
3.4 Contract liabilities and other revenue received in
advance
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.
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.
Table A
Revenue received in advance comprises upfront consideration
under contracts giving rise to revenue from other sources or other
Telstra Group
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 presents customer payments received in advance under
different types of our commercial arrangements.
As at 30 June
2023
2022
Restated
$m
826
124
950
(1,366)
(1,000)
(2,366)
(1,416)
$m
830
158
988
(1,342)
(987)
(2,329)
(1,341)
Current contract assets
Non-current contract assets
Total contract assets
Current contract liabilities
Non-current contract liabilities
Total contract liabilities
Total net contract liabilities
Table A
Telstra Group
Current
Contract liabilities
Other revenue received in
advance
Non-current
Contract liabilities
Other revenue received in
advance
Note
3.5
3.5
As at 30 June
2023
2022
Restated
1,366
129
1,495
1,000
534
1,534
1,342
61
987
401
1,388
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
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.
$m
$m
for the year
Increase in net contract liabilities
(75)
(19)
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
Generally, contract assets increase when we recognise revenue for
goods and services transferred to the customer before billing and
1,403
decrease when we invoice customers for already provided goods
and services.
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 $75 million (2022: $19 million) in the net contract
liabilities:
• $1,422 million (2022: $1,628 million) revenue recognised in the
reporting period that was included in the contract liabilities
balance at the beginning of the reporting period
• $19 million (2022: $47 million) cumulative catch-up adjustments
to revenue recognised in the prior reporting periods
• $55 million (2022: $5 million) changes due to business
Refer to note 3.3.1 for details regarding impairment assessment of
acquisitions.
contract assets.
2023.Financial Report.book Page 47 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 48 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
3.6 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 2021, comprising:
Current
Non-current
Additions
Amortisation expense
Impairment losses
Net book value at 30 June 2022, comprising:
Current
Non-current
Net book value at 1 July 2022
Additions
Amortisation expense
Impairment losses
Net book value at 30 June 2023, comprising:
Current
Non-current
Costs to
obtain a
contract
Commis-
sions
Set-up costs
Costs of
service
provider
Total
$m
1,146
n/a
1,146
365
(382)
(107)
1,022
n/a
1,022
1,022
268
(320)
(95)
875
n/a
875
$m
41
-
41
11
(9)
-
43
-
43
43
8
(8)
-
43
-
43
$m
268
113
155
809
(788)
-
289
116
173
289
653
(658)
-
284
114
170
$m
309
113
196
820
(797)
-
332
116
216
332
661
(666)
-
327
114
213
Total
deferred
contract
costs
$m
1,455
113
1,342
1,185
(1,179)
(107)
1,354
116
1,238
1,354
929
(986)
(95)
1,202
114
1,088
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 Limited and controlled entities | F47
F48 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 131
Telstra Financial Report 2023 2023.Financial Report.book Page 49 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 50 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.6 Deferred contract costs (continued)
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
2023
2022
Restated
$m
$m
1,591
1,691
314
143
107
519
1,317
1,877
316
142
19
538
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 (debits)/credits
• safeguarding our ability to continue as a going concern
available for use in subsequent reporting periods.
• maintaining an optimal capital structure and cost of capital that
4,365
4,209
provides flexibility for strategic investments.
144
64
208
53
180
233
In order to maintain or adjust our capital structure, we may issue or
repay debt, adjust the amount of dividends to be paid to
shareholders or return capital to shareholders.
Notes 4.3 and 4.4 provide further details on each component of
Franking account balance
capital, being equity and net debt.
Table B
Telstra Group
Year ended 30 June
2023
2022
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
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.
Contingent consideration relates to payment obligations arising
from our acquisitions of controlled entities and is measured at fair
value. Refer to note 4.5.6 for further details.
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.
Franking (debits)/credits that will
arise from the (receipt)/payment of
income tax (receivable)/payable as at
30 June (at a tax rate of 30% on a tax
(received)/paid basis)
$m
5
(136)
(131)
$m
24
24
48
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 2024, will be
sufficient to fully frank our 2023 final dividend.
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 Inventories
Telstra Group
Current
Goods for resale
Network and other inventory
Non-current
Network and other inventory
As at 30 June
2023
2022
$m
$m
479
67
546
36
36
400
76
476
28
28
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.
132 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F49
F50 | Telstra Group Limited and controlled entities
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.
4.2 Dividend
This note includes the previous year final dividend and the
current year interim dividend paid.
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
2023
2022
2023
2022
Previous year final
dividend paid
Interim dividend
paid
$m
$m
cents
cents
982
982
951
937
1,964
1,888
8.5
8.5
17.0
8.0
8.0
16.0
On 17 August 2023, the Directors of Telstra Group Limited resolved
to pay a fully franked final dividend for the financial year 2023 of 8.5
cents per ordinary share. The final dividend will be fully franked at a
tax rate of 30 per cent. The record date for the final dividend will be
31 August 2023, with payment to be made on 28 September 2023.
From 30 August 2023, shares will trade excluding entitlement to the
dividend.
In connection with the Restructure, Telstra Corporation Limited’s
Dividend Reinvestment Plan (DRP) was discontinued and a new
DRP established by Telstra Group Limited. On 17 August 2023, the
Board determined that the Telstra Group Limited DRP will continue
to operate for the final dividend for the financial year 2023. The
election date for participation in the DRP is 1 September 2023.
As at 30 June 2023, the final dividend for the financial year 2023 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.
2023.Financial Report.book Page 49 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 50 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 3. Our core assets, lease arrangements and working capital (continued)
3.6 Deferred contract costs (continued)
3.8 Trade and other payables
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.
Telstra Group
Current
Trade payables
Accrued expenses
Accrued capital expenditure
Accrued interest
Costs to fulfil a contract include set-up costs and prepaid costs of
Contingent consideration
a service provider related to goods and services which will be
Other payables
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
Contingent consideration
Non-current
Other payables
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
3.8.1 Recognition and measurement
amounts may not be recoverable. We recognise impairment losses
As at 30 June
2023
2022
Restated
$m
$m
1,591
1,691
314
143
107
519
144
64
208
1,317
1,877
316
142
19
538
53
180
233
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities as detailed in note 1.7.
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.
Contingent consideration relates to payment obligations arising
from our acquisitions of controlled entities and is measured at fair
value. Refer to note 4.5.6 for further details.
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.
in ‘other expenses’.
3.7 Inventories
Telstra Group
Current
Goods for resale
Network and other inventory
Non-current
Network and other inventory
As at 30 June
2023
2022
$m
$m
479
67
546
36
36
400
76
476
28
28
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.
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
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
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 (debits)/credits
available for use in subsequent reporting periods.
Table B
Telstra Group
Year ended 30 June
2023
2022
Franking account balance
Franking (debits)/credits that will
arise from the (receipt)/payment of
income tax (receivable)/payable as at
30 June (at a tax rate of 30% on a tax
(received)/paid basis)
$m
5
(136)
(131)
$m
24
24
48
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 2024, will be
sufficient to fully frank our 2023 final dividend.
4,365
4,209
provides flexibility for strategic investments.
In order to maintain or adjust our capital structure, we may issue or
repay debt, adjust the amount of dividends to be 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.
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
2023
2022
2023
2022
Previous year final
dividend paid
Interim dividend
paid
$m
$m
cents
cents
982
982
951
937
1,964
1,888
8.5
8.5
17.0
8.0
8.0
16.0
On 17 August 2023, the Directors of Telstra Group Limited resolved
to pay a fully franked final dividend for the financial year 2023 of 8.5
cents per ordinary share. The final dividend will be fully franked at a
tax rate of 30 per cent. The record date for the final dividend will be
31 August 2023, with payment to be made on 28 September 2023.
From 30 August 2023, shares will trade excluding entitlement to the
dividend.
In connection with the Restructure, Telstra Corporation Limited’s
Dividend Reinvestment Plan (DRP) was discontinued and a new
DRP established by Telstra Group Limited. On 17 August 2023, the
Board determined that the Telstra Group Limited DRP will continue
to operate for the final dividend for the financial year 2023. The
election date for participation in the DRP is 1 September 2023.
As at 30 June 2023, the final dividend for the financial year 2023 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.
Telstra Group Limited and controlled entities | F49
F50 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 133
Telstra Financial Report 2023 2023.Financial Report.book Page 11 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 12 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 1. Basis of preparation (continued)
1.7 Restatement of prior periods
During the financial year 2023, we have finalised migration of our
prepaid customers to a new billing and provisioning system. On
completion, a $219 million current contract liability balance relating
to our prepaid legacy plans could not be substantiated, because the
services had been provided in the prior periods and this contract
liability should have been recognised as revenue at that time. This
balance was related to the reporting periods prior to the financial
year 2022. Therefore, in the statement of financial position we have
restated the related balances, including their tax impacts where
relevant, as at 1 July 2021 and as at 30 June 2022. The income
statement for the financial year 2022 did not require a restatement
because the comparative financial results were not impacted.
Table A summarises the restatement of all impacted line items in
the statement of financial position as at 30 June 2022 and 1 July
2021. Adjustments to retained earnings have been reflected in the
statement of changes in equity.
Table A
Telstra Group
30 June 2022 Adjustments 30 June 2022
1 July 2021
Adjustments
1 July 2021
Reported
Restated
Reported
Restated
$m
$m
$m
$m
$m
$m
Restated line items in the
statement of financial position
Current liabilities
Trade and other payables
Contract liabilities and other
revenue received in advance
Current tax payables
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Retained profits
Equity available to Telstra
Entity shareholders
Total Equity
4,189
1,622
42
9,860
1,655
14,931
24,791
16,837
9,918
15,349
16,837
20
(219)
37
(162)
23
23
(139)
139
139
139
139
4,209
1,403
79
9,698
1,678
14,954
24,652
16,976
10,057
15,488
16,976
3,766
1,605
124
10,424
1,580
16,826
27,250
15,275
10,014
14,588
15,275
20
(219)
(18)
(217)
78
78
(139)
139
139
139
139
3,786
1,386
106
10,207
1,658
16,904
27,111
15,414
10,153
14,727
15,414
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, only
some of our operating segments meet the disclosure criteria
for 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 2023 our IT function moved from Networks
and IT to Product and Technology, and Networks and IT was
renamed to Global Networks and Technology. Following this
realignment, the ‘Networks and IT’ reportable segment has been
replaced by a new reportable segment, ‘Networks, IT and Product’.
It consists of two operating segments, being Global Networks and
Technology and Product and Technology (previously included in
the ‘All Other’ category), which have been combined for reporting
purposes as they have similar economic characteristics and provide
support functions underpinning operations of the other segments.
There were no other changes to our operating segments. The
Restructure described in note 1.2 did not change our operating
segments as it focused on internal legal reorganisation.
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 contact centres, retail stores, a dealership network, digital channels, distribution systems and
the 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 telecommunication, media and technology products and services to consumer, business and
government customers in the South Pacific through our Digicel Pacific business
• provides wholesale services outside of Australia, including voice and data
• manages Telstra’s networks outside Australia, including international subsea cables, in conjunction with
Networks, IT and Product and Telstra InfraCo segments
Networks, IT and
Product (NIT&P)
• Global Networks and Technology supports the other segments and their respective revenue generating
activities by maintaining high level of reliability and security of our global network platforms and cloud
infrastructure. It maintains our networks and is accountable for our network intelligence and automation.
• Product and Technology works with other functions to create and deliver products and solutions for
customers across all segments. It has accountability for product strategy, life cycle, as well as technology
and innovation where products are incubated and brought to scale. It is also accountable for Telstra’s IT
and Data & AI functions and our digital platforms underpinning our customer digital experience.
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 Group Limited and controlled entities | F11
F12 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 95
Telstra Financial Report 2023 On 30 November 2022, Telstra Corporation Limited transferred its
shares in Telstra Growthshare Pty Ltd to Telstra Group Limited. As
at 31 October 2022 (when eligible shareholders of Telstra
Corporation Limited exchanged their shares in that company for
shares in Telstra Group Limited), the number of shares held by
employee share plans totalled 12,585,314 shares of Telstra
Corporation Limited. Refer to note 5.2.1 for further details about the
Restructure impact on our employee share plans.
As at 30 June 2023, the number of shares held by employee share
plans totalled 12,571,257 shares of Telstra Group Limited (2022:
10,132,961 shares of Telstra Corporation Limited).
During the financial year 2023, Telstra Growthshare Pty Ltd (the
trustee of the Telstra Growthshare Trust that administers our
employee share schemes) purchased on-market 5,454,684 shares
of Telstra Corporation Limited (subsequently exchanged for shares
in Telstra Group Limited as part of the Restructure) for the
purposes of the employee incentive schemes for a total
consideration of $21 million and at the average price per share of
$3.90.
(c) Net services received under employee share plans
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 share-based payment expense recognised after the
establishment of Telstra Group Limited as the new parent entity
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
As at 30 June
2023
2022
$m
3,130
(46)
11
$m
3,180
(36)
(46)
3,095
3,098
Contributed equity
Shares held by employee share plans
Net services received under employee
share plans
(a) Contributed equity
Limited exchanged their shares in that company for shares in
Telstra Group Limited. As a result, Telstra Group Limited became
the parent entity of the Telstra Group. As at 31 October 2022, there
were 11,554,427,353 fully paid ordinary shares of Telstra
Corporation Limited on issue. Refer to note 7.3 for further details
about the parent entity.
As at 30 June 2023, there were 11,554,427,353 authorised fully paid
ordinary shares of Telstra Group Limited on issue (2022:
11,554,427,353 fully paid ordinary shares were on issue in Telstra
Corporation Limited, the then parent entity of the Telstra Group).
Each of our fully paid ordinary shares carries the right to one vote on
a poll at a meeting of the Company.
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.
As detailed in note 1.2, on implementation of the top hat component
(2022: the cumulative value of all instruments issued by Telstra
of the Restructure, eligible shareholders of Telstra Corporation
Corporation Limited).
2023.Financial Report.book Page 51 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 52 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
(b) Shares held by employee share plans
4.3 Equity (continued)
4.3.2 Reserves
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 2021
Other comprehensive income
Transactions with non-controlling interests
Balance at 30 June 2022
Other comprehensive income
Transfer of fair value of equity instruments reserve to
retained earnings
Balance at 30 June 2023
$m
35
49
-
84
50
-
134
$m
(126)
156
-
30
(79)
-
(49)
$m
(63)
55
-
(8)
(9)
-
(17)
$m
299
(149)
-
150
(23)
(76)
51
$m
(7)
-
2,084
2,077
-
-
$m
138
111
2,084
2,333
(61)
(76)
2,077
2,196
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.
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.
Telstra Group Limited and controlled entities | F51
F52 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 135
Telstra Financial Report 2023 2023.Financial Report.book Page 53 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 4. Our capital and risk management (continued)
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
2023
$m
(3,191)
(12,675)
516
(15,350)
932
(14,418)
2022
$m
(3,287)
(10,982)
509
(13,760)
1,040
(12,720)
No components of net debt are subject to any externally imposed
capital requirements except for a $200 million non-recourse facility
entered into by Telstra PM Pty Ltd with Export Finance Australia.
The facility contains a covenant for Telstra PM Pty Ltd to maintain
a minimum debt service cover ratio (subject to cure rights).
All amounts owing under or in relation to the borrowing facilities
with Export Finance Australia in respect of the Digicel Pacific
acquisition (referred to as ‘non-recourse borrowing facilities’ in
Table B) are secured by:
• substantially all of the assets (including any shares) and
undertakings of substantially all of the acquired entities,
comprising Digicel Pacific Limited and each of its wholly-owned
subsidiaries
• the assets (including any shares) and undertakings of Telstra PM
Pty Ltd and BidCo (S) Pte. Ltd
• the shares in Telstra PM Pty Ltd held by Telstra PM Holdings Pty
Ltd.
Refer to note 6.1.2 for further details on the acquisition of Digicel
Pacific.
We did not have any defaults or breaches under any of our
agreements with our lenders during the financial year 2023.
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.
Table B
Telstra Group
Opening net debt at 1 July
Non-recourse borrowing facilities
Debt issuance
Drawings (bilateral bank loans)
Commercial paper (net)
Revolving bank facilities (net)
Debt repayments
Other borrowings
Lease liability payments
Net cash (inflow)/outflow
Fair value (loss)/gain impacting:
Equity
Other expenses
Finance costs
Other non-cash movements
Lease liability (Telstra as a lessee)
Other loans and derivatives
Total non-cash movements
Total (increase)/decrease in gross
debt
Net decrease in cash and cash
equivalents (including effects of
foreign exchange rate changes)
Total (increase)/decrease in net
debt
Closing net debt at 30 June
Total equity
Total capital
Gearing ratio
Year ended 30 June
2023
2022
Restated
$m
(12,720)
(1,127)
(1,487)
(2)
15
(904)
1,959
(14)
675
(885)
(127)
(25)
24
(579)
2
(705)
$m
(15,263)
-
-
(901)
415
(14)
2,795
(15)
697
2,977
284
1
23
(679)
22
(349)
(1,590)
2,628
(108)
(85)
(1,698)
2,543
(14,418)
(17,816)
(12,720)
(16,976)
(32,234)
(29,696)
%
%
44.7
42.8
The comparative amounts have been restated as detailed in note
1.7.
During the financial year 2023 we issued debt of $2,614 million
(Australian dollar equivalent), comprised of:
• non-recourse borrowing facilities of $1,127 million comprised of
borrowing facilities from the Australian Government, through
Export Finance Australia, which were used to fund part of the
consideration for the acquisition of Digicel Pacific. Refer to note
6.1.2 for further details on the acquisition of Digicel Pacific. These
debt facilities are held by our wholly-owned subsidiary Telstra
PM Pty Ltd.
• 8 year €500 million Euro bond ($837 million Australian dollar
equivalent)
• 5 year $650 million Australian dollar bond.
136 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F53
Opening net debt at 1 July
(12,720)
(15,263)
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.
debt.
This note provides information about components of our net
debt and related finance costs.
Table B
Telstra Group
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
Non-recourse borrowing facilities
2023
2022
Debt issuance
$m
(3,191)
(12,675)
516
932
$m
(3,287)
(10,982)
509
1,040
(15,350)
(13,760)
(14,418)
(12,720)
Drawings (bilateral bank loans)
Commercial paper (net)
Revolving bank facilities (net)
Debt repayments
Other borrowings
Lease liability payments
Net cash (inflow)/outflow
Fair value (loss)/gain impacting:
No components of net debt are subject to any externally imposed
Equity
capital requirements except for a $200 million non-recourse facility
entered into by Telstra PM Pty Ltd with Export Finance Australia.
The facility contains a covenant for Telstra PM Pty Ltd to maintain
a minimum debt service cover ratio (subject to cure rights).
Other expenses
Finance costs
All amounts owing under or in relation to the borrowing facilities
with Export Finance Australia in respect of the Digicel Pacific
acquisition (referred to as ‘non-recourse borrowing facilities’ in
Total non-cash movements
Other non-cash movements
Lease liability (Telstra as a lessee)
Other loans and derivatives
Table B) are secured by:
• substantially all of the assets (including any shares) and
undertakings of substantially all of the acquired entities,
subsidiaries
• the assets (including any shares) and undertakings of Telstra PM
Pty Ltd and BidCo (S) Pte. Ltd
• the shares in Telstra PM Pty Ltd held by Telstra PM Holdings Pty
debt
debt
Net decrease in cash and cash
foreign exchange rate changes)
Total (increase)/decrease in net
Closing net debt at 30 June
Ltd.
Pacific.
Refer to note 6.1.2 for further details on the acquisition of Digicel
We did not have any defaults or breaches under any of our
agreements with our lenders during the financial year 2023.
Total equity
Total capital
Gearing ratio
1.7.
Year ended 30 June
2023
2022
Restated
$m
$m
(1,127)
(1,487)
(2)
15
(904)
1,959
(14)
675
(885)
(127)
(25)
24
(579)
2
(705)
-
-
(901)
415
(14)
2,795
(15)
697
2,977
284
1
23
(679)
22
(349)
(1,698)
2,543
(14,418)
(17,816)
(12,720)
(16,976)
(32,234)
(29,696)
%
%
44.7
42.8
comprising Digicel Pacific Limited and each of its wholly-owned
equivalents (including effects of
(108)
(85)
Total (increase)/decrease in gross
(1,590)
2,628
2023.Financial Report.book Page 53 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 54 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
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
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.
As at 30 June 2023
As at 30 June 2022
Carrying
value
Fair value
Carrying
value
Fair value
$m
$m
$m
$m
1,814
410
431
6
1
2,662
7,198
1,257
1,143
415
10,013
12,675
1,812
411
432
6
1
2,662
7,044
1,336
1,114
297
9,791
12,453
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
Table C
Telstra Group
Current borrowings
Unsecured notes
Bank and other loans - unsecured
Commercial paper - unsecured
Non-recourse borrowing facilities
Other financial liabilities
Non-current borrowings
Unsecured notes
Bank and other loans - unsecured
Non-recourse borrowing facilities
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.
Other financial liabilities represent amounts arising from sale and
leaseback transactions accounted as financial liabilities under the
accounting standards.
(a) Recognition and measurement
Recognition and measurement
The comparative amounts have been restated as detailed in note
During the financial year 2023 we issued debt of $2,614 million
(Australian dollar equivalent), comprised of:
• non-recourse borrowing facilities of $1,127 million comprised of
borrowing facilities from the Australian Government, through
Export Finance Australia, which were used to fund part of the
consideration for the acquisition of Digicel Pacific. Refer to note
6.1.2 for further details on the acquisition of Digicel Pacific. These
debt facilities are held by our wholly-owned subsidiary Telstra
• 8 year €500 million Euro bond ($837 million Australian dollar
PM Pty Ltd.
equivalent)
• 5 year $650 million Australian dollar bond.
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, cancelled 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 Group Limited and controlled entities | F53
F54 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 137
Telstra Financial Report 2023 2023.Financial Report.book Page 55 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 56 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
Other derivatives
Non-current derivative financial instruments
Cross currency swaps
Interest rate swaps
Other derivatives
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 2023
As at 30 June 2022
Assets
Liabilities
Assets
Liabilities
$m
389
23
33
445
286
33
14
333
778
$m
(68)
(5)
-
(73)
(187)
(2)
-
(189)
(262)
$m
$m
267
8
27
302
486
26
-
512
814
-
-
-
-
(292)
(13)
-
(305)
(305)
138 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F55
F56 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 55 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 56 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
Cross currency swaps
Interest rate swaps
Other derivatives
Cross currency swaps
Interest rate swaps
Other derivatives
Current derivative financial instruments
Non-current derivative financial instruments
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 2023
As at 30 June 2022
Assets
Liabilities
Assets
Liabilities
$m
$m
$m
389
23
33
445
286
33
14
333
778
$m
(68)
(5)
-
(73)
(187)
(2)
-
(189)
(262)
267
8
27
302
486
26
-
512
814
-
-
-
-
-
(292)
(13)
(305)
(305)
Telstra Group Limited and controlled entities | F55
F56 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 139
Telstra Financial Report 2023 2023.Financial Report.book Page 57 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 58 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
4.4.3 Finance costs
4.5 Financial instruments and risk management
4.5 Financial instruments and risk management
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.
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.
Table E
Telstra Group
Year ended 30 June
2023
2022
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
45
10
34
12
101
(570)
(99)
(669)
(62)
30
(32)
71
(630)
(529)
$m
15
8
84
3
110
(444)
(78)
(522)
(100)
39
(61)
56
(527)
(417)
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.
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 2022.
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
2023
2022
Pre
hedge
Post
hedge
Pre
hedge
Post
hedge
$m
$m
$m
$m
(3,105)
(3,660)
(1,217)
(3,611)
(9,151)
(8,596)
(9,348)
(6,954)
(419)
(419)
(417)
(417)
Floating rate
borrowings
Fixed rate
borrowings
Other financial
liabilities
Total borrowings
(12,675)
(12,675)
(10,982)
(10,982)
Refer to note 4.4.1 for further details on our borrowings.
140 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F57
F58 | Telstra Group Limited and controlled entities
(continued)
4.5.1 Managing our interest rate risk (continued)
(a) Exposure (continued)
As at 30 June 2023, we held some floating rate derivative
instruments hedging term debt issuances and bank facilities which
have a reference to a benchmark rate.
We continue to monitor the developments of international
regulations to ensure preparedness for any future changes relating
to Interest Rate Benchmark Reform. None of these implemented
amendments impacted the Telstra Group’s financial results for the
financial year 2023.
Table B summarises as at 30 June our floating rate derivative
instruments 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
6MLIBOR
Cross currency
swaps
3MBBSW
3MEURIBOR
(b) Sensitivity
As at 30 June 2023
As at 30 June 2022
Native
currency
Receive/
(pay)
Nominal
interest
flows
Nominal/
Weighted
Principal
amounts
average
maturity
Nominal
Interest
flows
Nominal/
Weighted
Principal
amounts
average
maturity
$m
$m
years
$m
$m
years
AUD
AUD
EUR
USD
USD
AUD
EUR
Receive
Pay
Pay
Receive
Receive
Pay
Receive
1,568
(450)
-
100
450
(104)
90
-
18
60
-
1.1
4.2
-
4.7
2.8
3.5
-
(604)
(2,709)
-
(513)
3
(3,538)
1,000
50
(4)
(3)
-
36
1,268
(50)
(1,000)
-
300
1.2
1.5
0.2
-
3.8
2.5
0.2
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 (2022:
100 basis points) and minus 25 basis points (2022: 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
2023
2022
Gain/(loss)
Net
profit
Equity
Equity
Net
profit
$m
(31)
8
$m
2
-
$m
(20)
5
$m
(2)
1
Interest rates
(+100bp)
Interest rates
(-25bp)
following factors:
The results of the sensitivity analysis are driven primarily from the
• 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.
2023.Financial Report.book Page 57 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 58 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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)
4.5.1 Managing our interest rate risk (continued)
(a) Exposure (continued)
As at 30 June 2023, we held some floating rate derivative
instruments hedging term debt issuances and bank facilities which
have a reference to a benchmark rate.
We continue to monitor the developments of international
regulations to ensure preparedness for any future changes relating
to Interest Rate Benchmark Reform. None of these implemented
amendments impacted the Telstra Group’s financial results for the
financial year 2023.
Table B summarises as at 30 June our floating rate derivative
instruments 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
6MLIBOR
Cross currency
swaps
3MBBSW
3MEURIBOR
(b) Sensitivity
As at 30 June 2023
As at 30 June 2022
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
Receive
Pay
Pay
Receive
Receive
Pay
Receive
90
(104)
-
18
60
1,568
(450)
-
100
450
(604)
-
(2,709)
-
1.1
4.2
-
4.7
2.8
3.5
-
50
(4)
(3)
-
36
1,268
(50)
(1,000)
-
300
(513)
3
(3,538)
1,000
1.2
1.5
0.2
-
3.8
2.5
0.2
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 (2022:
100 basis points) and minus 25 basis points (2022: 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
2023
2022
Gain/(loss)
Net
profit
Equity
Net
profit
Equity
$m
(31)
8
$m
2
-
$m
(20)
5
$m
(2)
1
Interest rates
(+100bp)
Interest rates
(-25bp)
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.
Telstra Group Limited and controlled entities | F57
F58 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 141
4.4 Net debt (continued)
4.4.3 Finance costs
4.5 Financial instruments and risk management
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.
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.
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
2023
2022
$m
45
10
34
12
101
(570)
(99)
(669)
(62)
30
(32)
71
(630)
(529)
$m
15
8
84
3
110
(444)
(78)
(522)
(100)
39
(61)
56
(527)
(417)
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.
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 2022.
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
Telstra Group
2023
2022
As at 30 June
Pre
hedge
Post
hedge
Pre
hedge
Post
hedge
$m
$m
$m
$m
(3,105)
(3,660)
(1,217)
(3,611)
(9,151)
(8,596)
(9,348)
(6,954)
(419)
(419)
(417)
(417)
Floating rate
borrowings
Fixed rate
borrowings
Other financial
liabilities
Total borrowings
(12,675)
(12,675)
(10,982)
(10,982)
Refer to note 4.4.1 for further details on our borrowings.
Telstra Financial Report 2023 2023.Financial Report.book Page 59 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 60 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 cross 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 2023
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Carrying
value
Exposure
As at 30 June 2022
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
Local currency
Australian dollars
Local currency
Australian dollars
m
(3,425)
(1,500)
(5,000)
m
3,425
1,500
5,000
$m
(5,159)
(1,958)
(62)
$m
(5,457)
(2,265)
(53)
m
(3,925)
(1,500)
(5,000)
m
3,925
1,500
5,000
-
-
(7,179)
(7,775)
-
-
-
-
(310)
310
$m
(5,569)
(1,958)
(62)
$m
(5,849)
(2,177)
(54)
(7,589)
(8,080)
(443)
(443)
(448)
(448)
4.5 Financial instruments and risk management
4.5.2 Managing our foreign currency risk (continued)
(continued)
(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.
Table E summarises forward foreign exchange contracts that are
hedging our transactional currency exposures.
Table E
Telstra Group
As at 30 June 2023
As at 30 June 2022
Exposure
Forward foreign exchange
Exposure
Forward foreign exchange
contract receive/(pay)
contract receive/(pay)
Local currency
Austra-
Average
Local currency
Austra-
Average
lian
dollars
exchange
rate
lian
dollars
exchange
rate
m
(43)
-
m
22
-
(391)
(11,966)
(1,136)
231
5,828
454
$m
(41)
16
(333)
(104)
(12)
$
0.54
-
0.69
55.99
38.06
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
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
(19)
19
(29)
0.67
(85)
85
(122)
0.70
At 30 June 2023, we also had a $710 million United States dollar
(d) Sensitivity
(2022: $442 million United States dollar) liability exposure relating
to transactions with wholly-owned controlled entities (WOCE) that
is economically hedged with a $175 million (2022: $175 million) bank
deposit in the same currency.
(c) Natural offset
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.
Our direct foreign exchange exposure arising from the impact of
Table F
As at 30 June
Telstra Group
2023
2022
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.
Equity
Equity
Net
profit
$m
76
Gain/(loss)
Net
profit
$m
42
$m
16
(87)
(20)
(47)
$m
3
(3)
Exchange rates
(+10%)
(-10%)
Exchange rates
142 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F59
F60 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 59 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 60 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 cross 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 2023
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Carrying
Exposure
value
Carrying
value
As at 30 June 2022
Cross currency
swap/forward
foreign exchange
contract receive/
(pay)
Local currency
Australian dollars
Local currency
Australian dollars
m
(3,425)
(1,500)
(5,000)
m
3,425
1,500
5,000
$m
(5,159)
(1,958)
(62)
$m
(5,457)
(2,265)
(53)
m
(3,925)
(1,500)
(5,000)
m
3,925
1,500
5,000
-
-
(310)
310
(7,179)
(7,775)
-
-
-
-
$m
(5,569)
(1,958)
(62)
$m
(5,849)
(2,177)
(54)
(7,589)
(8,080)
(443)
(443)
(448)
(448)
Euro
United States dollars
Japanese yen
in foreign currency
United States dollars
Commercial paper
Unsecured notes denominated
4.5 Financial instruments and risk management
(continued)
4.5.2 Managing our foreign currency risk (continued)
(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.
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 2023
As at 30 June 2022
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
(43)
-
m
22
-
(391)
(11,966)
(1,136)
231
5,828
454
$m
(41)
16
(333)
(104)
(12)
$
0.54
-
0.69
55.99
38.06
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
(19)
19
(29)
0.67
(85)
85
(122)
0.70
At 30 June 2023, we also had a $710 million United States dollar
(2022: $442 million United States dollar) liability exposure relating
to transactions with wholly-owned controlled entities (WOCE) that
is economically hedged with a $175 million (2022: $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
2023
2022
Gain/(loss)
Net
profit
Equity
Net
profit
Equity
$m
76
$m
16
$m
42
(87)
(20)
(47)
$m
3
(3)
Exchange rates
(+10%)
Exchange rates
(-10%)
Telstra Group Limited and controlled entities | F59
F60 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 143
Telstra Financial Report 2023 2023.Financial Report.book Page 61 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 62 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 (continued)
(d) Sensitivity (continued)
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.
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 2023, 100 per cent (2022: 100 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
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
The analysis does not include the impact of any management action
that might take place if these events occurred.
rated counterparties
• investing surplus funds in liquid instruments.
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.
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 2023, we had total available facilities of $3,613 million,
the majority of which were held by Telstra Corporation Limited, a
wholly-owned subsidiary of Telstra Group Limited. Refer to note 1.2
for further details on the Telstra Group restructure.
Our committed facilities mature on a staggered basis over the next
5 years with $3,600 million maturing beyond 12 months. Drawings
under our bank facilities and commercial paper issues are shown on
a gross basis in the statement of cash flows.
As at 30 June
2023
2022
$m
3,613
(918)
2,695
$m
3,800
(14)
3,786
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 notes 7.3.1 and 7.4.2.
Table G
Telstra Group
Facilities available
Facilities used
Facilities unused
(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.
4.5 Financial instruments and risk management
(continued)
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 2023
As at 30 June 2022 (restated)
Less
than 1
year
1 to 2
years
2 to 5
years
Total
More
than 5
years
Less
than 1
year
1 to 2
years
2 to 5
years
Total
More
than 5
years
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
(1,814)
(1,564)
(3,187)
(2,627)
(2,017)
(1,681)
(3,195)
(2,396)
(9,289)
(9,192)
(433)
(1,667)
-
-
(451)
(207)
(86)
(1,052)
(1,149)
-
(433)
(410)
(6)
(18)
-
-
(906)
(351)
(5)
(20)
(415)
(323)
-
-
-
-
-
(451)
(945)
-
(63)
(729)
(830)
(20)
(17)
(59)
(719)
(815)
(362)
(294)
(523)
(530)
(1,709)
(261)
(191)
(294)
(60)
(806)
(539)
(591)
(1,021)
(1,571)
(3,722)
(550)
(546)
(1,196)
(1,394)
(3,686)
(4,365)
(208)
-
-
(4,573)
(4,209)
(233)
-
(4,442)
-
-
-
Table H
Telstra Group
Unsecured notes
Commercial paper
Bank and other loans
Non-recourse borrowing
facilities
Other financial liabilities
Interest on unsecured
notes, non-recourse
facilities, bank and other
loans
Lease liabilities
Trade/other payables and
accrued expenses
Derivative financial
liabilities
Total
Derivative financial assets
2,529
1,753
2,321
2,750
9,353
2,668
1,787
2,860
2,456
9,771
(2,203)
(1,675)
(2,373)
(2,939)
(9,190)
(2,463)
(1,619)
(2,996)
(2,718)
(9,796)
(7,621)
(3,510)
(5,283)
(6,698)
(23,112)
(7,510)
(2,915)
(5,203)
(4,831)
(20,459)
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities and related balances as
detailed in note 1.7.
4.5.5 Hedge accounting
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.
144 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F61
F62 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 61 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 62 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 (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
As at 30 June 2023
As at 30 June 2022 (restated)
Contractual maturity
Less
than 1
year
$m
(1,814)
(433)
(410)
(6)
(18)
$m
(1,564)
-
(906)
(5)
(20)
1 to 2
years
2 to 5
years
More
than 5
years
$m
(2,627)
-
-
Total
$m
(9,192)
(433)
(1,667)
Less
than 1
year
$m
(2,017)
(451)
(207)
$m
(3,187)
-
(351)
1 to 2
years
2 to 5
years
More
than 5
years
$m
(2,396)
-
-
Total
$m
(9,289)
(451)
(945)
$m
(3,195)
-
(323)
(86)
(1,052)
(1,149)
-
(63)
(729)
(830)
(20)
-
-
-
(59)
(719)
(815)
$m
(1,681)
-
(415)
-
(17)
(362)
(294)
(523)
(530)
(1,709)
(261)
(191)
(294)
(60)
(806)
(539)
(591)
(1,021)
(1,571)
(3,722)
(550)
(546)
(1,196)
(1,394)
(3,686)
(4,365)
(208)
-
-
(4,573)
(4,209)
(233)
-
-
(4,442)
2,529
1,753
2,321
2,750
9,353
2,668
1,787
2,860
2,456
9,771
(2,203)
(1,675)
(2,373)
(2,939)
(9,190)
(2,463)
(1,619)
(2,996)
(2,718)
(9,796)
Unsecured notes
Commercial paper
Bank and other loans
Non-recourse borrowing
facilities
Other financial liabilities
Interest on unsecured
notes, non-recourse
facilities, bank and other
loans
Lease liabilities
Trade/other payables and
accrued expenses
Derivative financial assets
Derivative financial
liabilities
Total
(7,621)
(3,510)
(5,283)
(6,698)
(23,112)
(7,510)
(2,915)
(5,203)
(4,831)
(20,459)
The comparative amounts have been restated as a result of the prior
period restatement of contract liabilities and related balances as
detailed in note 1.7.
4.5.5 Hedge accounting
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.
Telstra Group Limited and controlled entities | F61
F62 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 145
4.5 Financial instruments and risk management
(continued)
4.5.2 Managing our foreign currency risk (continued)
(d) Sensitivity (continued)
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.
A shift of 10 per cent has been selected as a reasonably possible
We also manage our credit exposure using a value at risk (VaR)
change taking into account the current level of exchange rates and
methodology, which is an industry standard measure that estimates
the volatility observed both on a historical basis and on market
the maximum potential exposure of our risk positions as a result of
expectations of future movements. This is not a forecast or
future movements in market rates. This helps to ensure that we do
prediction of future market conditions. We have disclosed the
not underestimate credit exposure with any single counterparty.
sensitivity analysis on a total portfolio basis and not separately by
Using VaR analysis at 30 June 2023, 100 per cent (2022: 100 per
currency.
Any unhedged foreign exchange positions associated with our
transactional exposures will directly affect profit or loss as a result
4.5.4 Managing our liquidity risk
of foreign currency movements.
There is no significant impact on profit or loss from foreign currency
flexibility of funding through the use of liquid financial instruments,
movements associated with our borrowings portfolio that are
long-term and short-term borrowings, and committed available
Our objective is to maintain a balance between continuity and
cent) of our derivative credit exposure was with counterparties that
have a credit rating of A- or better.
swapped to Australian dollars as an offsetting entry will be
bank facilities.
recognised on the associated hedging instrument.
We manage liquidity risk by:
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.
• 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
The analysis does not include the impact of any management action
rated counterparties
that might take place if these events occurred.
• investing surplus funds in liquid instruments.
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.
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 2023, we had total available facilities of $3,613 million,
the majority of which were held by Telstra Corporation Limited, a
wholly-owned subsidiary of Telstra Group Limited. Refer to note 1.2
for further details on the Telstra Group restructure.
Our committed facilities mature on a staggered basis over the next
5 years with $3,600 million maturing beyond 12 months. Drawings
under our bank facilities and commercial paper issues are shown on
a gross basis in the statement of cash flows.
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
Table G
Telstra Group
Facilities available
Facilities used
Facilities unused
As at 30 June
2023
2022
$m
3,613
(918)
2,695
$m
3,800
(14)
3,786
disclosed in notes 7.3.1 and 7.4.2.
(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.
Telstra Financial Report 2023 2023.Financial Report.book Page 63 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 64 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
(b) Fair value hedges
(continued)
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.
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
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
Table J outlines the cumulative amount of fair value hedge
adjustments that are included in the carrying amount of borrowings
2023
2022
in the statement of financial position.
$m
$m
(1,391)
(6,526)
(2,392)
(5,733)
Table J
Telstra Group
(4,758)
(2,857)
Principal value
(12,675)
(10,982)
(3,191)
(3,287)
(15,866)
(14,269)
Unamortised discounts/premiums
Amortised cost
Cumulative fair value hedge
adjustments
Carrying amount
As at 30 June
2023
2022
(1,557)
(2,493)
(1,549)
(2,486)
$m
8
158
$m
7
94
(1,391)
(2,392)
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.
24
713
41
778
(242)
(17)
(3)
293
511
10
814
(240)
(65)
-
(262)
(305)
(15,350)
(13,760)
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
2023
2022
(Gain)/
(Gain)/
loss
loss
$m
1
(6)
(5)
(4)
$m
(325)
302
(23)
(16)
The principal value of our gross debt on an equivalent basis was
$15,260 million (2022: $13,758 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 2023.
(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.
146 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F63
F64 | Telstra Group Limited and controlled entities
Notes to the financial statements (continued) 2023.Financial Report.book Page 63 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 64 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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, or
accounting
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.
(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
2023
2022
$m
(1,557)
8
(1,549)
$m
(2,493)
7
(2,486)
158
94
(1,391)
(2,392)
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
2023
(Gain)/
loss
2022
(Gain)/
loss
$m
1
(6)
(5)
(4)
$m
(325)
302
(23)
(16)
4.5 Financial instruments and risk management
(continued)
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
2023
2022
$m
$m
(1,391)
(6,526)
(2,392)
(5,733)
(4,758)
(2,857)
(12,675)
(3,191)
(10,982)
(3,287)
(15,866)
(14,269)
24
713
41
778
(242)
(17)
(3)
293
511
10
814
(240)
(65)
-
(262)
(15,350)
(305)
(13,760)
The principal value of our gross debt on an equivalent basis was
$15,260 million (2022: $13,758 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 2023.
(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 Group Limited and controlled entities | F63
F64 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 147
Telstra Financial Report 2023 2023.Financial Report.book Page 65 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 4. Our capital and risk management (continued)
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
Within 1 to 5 years
Capital items
Within 1 year
Within 1 to 5 years
Borrowings
Within 1 year
Within 1 to 5 years
After 5 years
As at 30 June
2023
2022
$m
$m
(695)
(13)
(132)
(2)
(1,798)
(3,776)
(1,455)
(7,871)
(466)
-
(99)
-
(132)
(4,421)
(1,674)
(6,792)
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.
4.5 Financial instruments and risk management
(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
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
2023
2022
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
193
(389)
(10)
98
(4)
(112)
33
(79)
$m
152
(43)
(11)
107
(1)
204
(54)
150
148 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F65
4.5 Financial instruments and risk management
(continued)
4.5.5 Hedge accounting (continued)
(c) Cash flow hedges
The portion of the gain or loss on the hedging instrument that is
Table M
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.
Telstra Group
Non-capital items
Within 1 year
Within 1 to 5 years
Capital items
Within 1 year
Within 1 to 5 years
Borrowings
Within 1 year
Within 1 to 5 years
During the current and prior financial years, there was no material
After 5 years
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
2023
2022
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
193
(389)
(10)
98
(4)
(112)
33
(79)
$m
152
(43)
(11)
107
(1)
204
(54)
150
2023.Financial Report.book Page 65 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 66 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
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.
4.5 Financial instruments and risk management
(continued)
4.5.6 Valuation and disclosures within fair value hierarchy
As at 30 June
2023
2022
$m
$m
(695)
(13)
(132)
(2)
(1,798)
(3,776)
(1,455)
(7,871)
(466)
-
-
(99)
(132)
(4,421)
(1,674)
(6,792)
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 2023, 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. As at 30 June 2023, there were no
financial instruments measured using level 1 inputs.
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.
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 contracts
Quoted forward 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)
Unlisted investments in equity
instruments
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 Group Limited and controlled entities | F65
F66 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 149
Telstra Financial Report 2023 2023.Financial Report.book Page 67 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 68 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 2023
As at 30 June 2022
Level 2
Level 3
Total
Level 2
Level 3
Total
Assets
Derivative financial instruments
Investments in unlisted securities
Liabilities
Derivative financial instruments
Contingent consideration
Total
$m
767
-
767
(262)
-
(262)
505
$m
11
22
33
-
(251)
(251)
(218)
$m
778
22
800
(262)
(251)
(513)
287
$m
814
-
814
(305)
-
(305)
509
$m
-
15
15
-
(72)
(72)
(57)
$m
814
15
829
(305)
(72)
(377)
452
Fair value of borrowings presented in Table C in note 4.4.1 was
measured using level 2 inputs.
Table O details movements in contingent consideration measured
using level 3 inputs.
Table O
Telstra Group
Year ended 30 June
2023
2022
Opening balance at 1 July
Amounts recognised on acquisition
Cash settlements made during the
period
Remeasurements recognised in the
income statement
Interest recognised in the income
statement
Translation impacts recognised in
foreign currency translation reserve
$m
(72)
(243)
88
(10)
(10)
(4)
$m
(4)
(60)
-
(8)
-
-
Closing balance at 30 June
(251)
(72)
Additions in contingent consideration measured using level 3 inputs
resulted from $243 million recognised on the acquisition of Digicel
Pacific. Refer to note 6.1.2 for further details.
4.5 Financial instruments and risk management
(continued)
4.5.7 Offsetting and netting arrangements
Table P 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 P
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 2023
Cash and cash equivalents
Borrowings
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
250
(204)
319
(207)
752
(262)
648
309
(210)
814
(305)
608
204
(204)
102
(102)
-
-
-
-
-
-
68
(68)
46
-
217
(105)
752
(262)
648
241
(142)
814
(305)
608
As at 30 June 2022
-
-
50
(50)
171
(171)
-
53
(53)
204
(204)
-
-
-
8
-
-
-
8
9
-
-
-
9
46
-
159
(55)
581
(91)
640
179
(89)
610
(101)
599
During the financial year 2023, a number of the Telstra Group
Our rights of set-off that are not otherwise included in column B of
wholly-owned subsidiaries entered into customary multi-entity
Table P, related to:
bank account set-off facilities, under which bank accounts are
managed on an aggregated basis. As a result, as at 30 June 2023
cash and overdraft balance sheet positions of different legal
entities were presented net in the statement of financial position.
• 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.
150 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F67
F68 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 67 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 68 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 4. Our capital and risk management (continued)
Section 4. Our capital and risk management (continued)
Table N
Telstra Group
As at 30 June 2023
As at 30 June 2022
Level 2
Level 3
Total
Level 2
Level 3
Total
$m
778
22
800
(262)
(251)
(513)
287
$m
814
-
814
(305)
-
(305)
509
$m
-
15
15
-
(72)
(72)
(57)
$m
814
15
829
(305)
(72)
(377)
452
4.5 Financial instruments and risk management
4.5.6 Valuation and disclosures within fair value hierarchy
(continued)
(continued)
Table N categorises our financial instruments which are measured
at fair value, according to the valuation methodology applied.
Assets
Derivative financial instruments
Investments in unlisted securities
Liabilities
Derivative financial instruments
Contingent consideration
Total
using level 3 inputs.
Table O
Telstra Group
Opening balance at 1 July
Amounts recognised on acquisition
Cash settlements made during the
period
Remeasurements recognised in the
income statement
Interest recognised in the income
statement
Translation impacts recognised in
foreign currency translation reserve
$m
767
-
767
(262)
-
(262)
505
$m
(72)
(243)
88
(10)
(10)
(4)
$m
11
22
33
-
(251)
(251)
(218)
$m
(4)
(60)
(8)
-
-
-
Fair value of borrowings presented in Table C in note 4.4.1 was
measured using level 2 inputs.
Table O details movements in contingent consideration measured
Year ended 30 June
2023
2022
Closing balance at 30 June
(251)
(72)
Additions in contingent consideration measured using level 3 inputs
resulted from $243 million recognised on the acquisition of Digicel
Pacific. Refer to note 6.1.2 for further details.
4.5 Financial instruments and risk management
(continued)
4.5.7 Offsetting and netting arrangements
Table P 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 P
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
Cash and cash equivalents
Borrowings
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
250
(204)
319
(207)
752
(262)
648
309
(210)
814
(305)
608
204
(204)
102
(102)
-
-
-
68
(68)
-
-
-
As at 30 June 2023
46
-
217
(105)
752
(262)
648
-
-
50
(50)
171
(171)
-
As at 30 June 2022
241
(142)
814
(305)
608
53
(53)
204
(204)
-
-
-
8
-
-
-
8
9
-
-
-
9
46
-
159
(55)
581
(91)
640
179
(89)
610
(101)
599
During the financial year 2023, a number of the Telstra Group
wholly-owned subsidiaries entered into customary multi-entity
bank account set-off facilities, under which bank accounts are
managed on an aggregated basis. As a result, as at 30 June 2023
cash and overdraft balance sheet positions of different legal
entities were presented net in the statement of financial position.
Our rights of set-off that are not otherwise included in column B of
Table P, 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 Group Limited and controlled entities | F67
F68 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 151
Telstra Financial Report 2023 2023.Financial Report.book Page 69 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 70 Wednesday, August 16, 2023 4:21 PM
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.
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
2023
2022
$m
520
684
125
-
$m
489
667
132
11
1,329
1,299
Long service leave provision
We applied judgement to determine the following key
assumptions used in the calculation of long service leave
entitlements:
• 3.8 per cent (2022: 3.5 per cent) weighted average projected
increases in salaries
• 5.6 per cent (2022: 5.2 per cent) discount rate.
The discount rate used to calculate the present value has been
determined by reference to market yields at 30 June 2023 on
nine year (2022: nine year) high quality corporate bonds which
have due dates similar to those of our liabilities.
Notes to the financial statements (continued)
Section 5. Our people (continued)
5.2 Employee share plans
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.
period.
Performance rights are rights to Telstra shares subject to the
satisfaction of certain performance measures and service
conditions over a defined 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
The table below provides a summary of the instruments granted
under the main equity-settled employee share plans outstanding at
note 5.2.2.
30 June 2023.
Type of
equity
instrument
Executive
Variable
Remuneration
Plan (EVP)
restricted
shares
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
As at 30 June
2023
2022
$m
363
$m
354
5.1.2 Recognition and measurement
Restricted shares are Telstra shares that are subject to a restriction
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.
152 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F69
F70 | Telstra Group Limited and controlled entities
Financial
year granted
Restriction
period
Performance
hurdles
Date of
testing
against
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 2023
The restricted
shares for FY23 are
expected to be
allocated in the
first half of FY24
1,471,276
1,448,708
847,394
Four equal tranches
with the respective
tranches restricted
from one to four
years from the end
of the initial
performance period
FY23
FY22
FY21
FY20
2023.Financial Report.book Page 69 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 70 Wednesday, August 16, 2023 4:21 PM
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.
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.
and
provisions).
Table A
Telstra Group
As at 30 June
2023
2022
$m
520
684
125
-
$m
489
667
132
11
Accrued labour and on-costs
Current employee benefits
Non-current employee benefits
Current redundancy provisions
Long service leave provision
We applied judgement to determine the following key
assumptions used in the calculation of long service leave
entitlements:
• 3.8 per cent (2022: 3.5 per cent) weighted average projected
increases in salaries
• 5.6 per cent (2022: 5.2 per cent) discount rate.
The discount rate used to calculate the present value has been
determined by reference to market yields at 30 June 2023 on
nine year (2022: 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
2023
2022
$m
363
$m
354
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.
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.
1,329
1,299
Certain employees who have been employed by Telstra for at least
Notes to the financial statements (continued)
Section 5. Our people (continued)
5.2 Employee share plans
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.
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 5.2.2.
The table below provides a summary of the instruments granted
under the main equity-settled employee share plans outstanding at
30 June 2023.
Type of
equity
instrument
Executive
Variable
Remuneration
Plan (EVP)
restricted
shares
Financial
year granted
Restriction
period
Four equal tranches
with the respective
tranches restricted
from one to four
years from the end
of the initial
performance period
FY23
FY22
FY21
FY20
Performance
hurdles
Date of
testing
against
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 2023
The restricted
shares for FY23 are
expected to be
allocated in the
first half of FY24
1,471,276
1,448,708
847,394
Telstra Group Limited and controlled entities | F69
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Telstra Financial Report 2023 2023.Financial Report.book Page 71 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 5. Our people (continued)
5.2 Employee share plans (continued)
Type of
equity
instrument
Short-term
incentive (STI)
restricted
shares
Financial
year granted
Restriction
period
FY23
FY22
FY21
FY20
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
Performance
hurdles
Date of
testing
against
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 2023
The STI restricted
shares for FY23 are
expected to be
allocated in the
first half of FY24
1,804,327
1,914,950
2,031,844
EVP
performance
rights
FY23
n/a
30 June 2027
Relative Total
Shareholder
Return (RTSR)
The performance
rights for FY23 are
expected to be
allocated in the
first half of FY24
FY22
FY21
FY20
FY19
n/a
n/a
n/a
n/a
We will also grant cash rights in lieu of restricted shares and
performance rights under the FY23 EVP to Andrew Penn and Alex
Badenoch, who ceased employment as CEO and Group Executive,
Transformation, Communications and People respectively during
the financial year 2023. The cash rights are expected to be allocated
in the first half of the financial year 2024. 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.
30 June 2026
RTSR
30 June 2025
RTSR
1,681,460
2,207,550
30 June 2024
RTSR
1,936,886
30 June 2023
RTSR
1,878,032
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 Telstra Group restructure
Following the establishment of Telstra Group Limited as the new
parent entity of the Telstra Group, on 30 November 2022 Telstra
Corporation Limited transferred all of its shares in Telstra
Growthshare Pty Ltd, to Telstra Group Limited, so that Telstra
Group Limited wholly owns Telstra Growthshare Pty Ltd.
154 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F71
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Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
FY23
FY22
FY21
FY20
FY22
FY21
FY20
FY19
5.2 Employee share plans (continued)
Financial
year granted
Restriction
period
Performance
hurdles
Date of
testing
against
performance
hurdles
n/a
n/a
Type of
equity
instrument
Short-term
incentive (STI)
restricted
shares
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
n/a
n/a
n/a
n/a
n/a
n/a
Number of
instruments
allocated and
outstanding at
30 June 2023
The STI restricted
shares for FY23 are
expected to be
allocated in the
first half of FY24
1,804,327
1,914,950
2,031,844
EVP
rights
performance
FY23
n/a
30 June 2027
Relative Total
Shareholder
Return (RTSR)
The performance
rights for FY23 are
expected to be
allocated in the
first half of FY24
n/a
n/a
n/a
n/a
30 June 2026
RTSR
30 June 2025
RTSR
1,681,460
2,207,550
30 June 2024
RTSR
1,936,886
30 June 2023
RTSR
1,878,032
We will also grant cash rights in lieu of restricted shares and
The definition of Relative Total Shareholder Return (RTSR) is set
performance rights under the FY23 EVP to Andrew Penn and Alex
out in the Remuneration Report Glossary (the Remuneration Report
Badenoch, who ceased employment as CEO and Group Executive,
forms part of the Directors’ Report).
Transformation, Communications and People respectively during
the financial year 2023. The cash rights are expected to be allocated
5.2.1 Telstra Group restructure
in the first half of the financial year 2024. The cash rights provided
Following the establishment of Telstra Group Limited as the new
in lieu of restricted shares are subject to the same time condition as
parent entity of the Telstra Group, on 30 November 2022 Telstra
restricted shares and the cash rights provided in lieu of
Corporation Limited transferred all of its shares in Telstra
performance rights are subject to the same performance hurdle as
Growthshare Pty Ltd, to Telstra Group Limited, so that Telstra
performance rights.
Group Limited wholly owns Telstra Growthshare Pty Ltd.
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.
5.2 Employee share plans (continued)
5.2.1 Telstra Group restructure (continued)
There were no changes to the restriction periods, performance
periods and performance measures applying to our employee share
plans as a result of the Restructure. However, from 31 October 2022
performance rights and restricted shares have been granted by
Telstra Group Limited (the new parent entity) and a fully paid
ordinary share in Telstra Group Limited (or at Telstra Group
Limited's discretion, a cash amount equivalent to the value of a
Telstra Group Limited share) will be provided on vesting of a
performance right. For the purpose of assessing the RTSR
performance condition applying to performance rights, Telstra
Corporation Limited is the relevant entity for the portion of the
performance period up to (but excluding) 31 October 2022 and
Telstra Group Limited will be the relevant entity for the portion of
the performance period from and including 31 October 2022.
We continue to account for the employee share plans using the
original grant date fair value as there is no overall change to these
awards as a result of the Restructure.
The results of the Trustee continue to be consolidated into the
Telstra Group Financial Report.
5.2.2 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.
Refer to the Remuneration Report for further details on the FY23
EVP structure.
The FY23, 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.
Testing of the outstanding FY19 EVP performance rights as at 30
June 2023 resulted in all of those performance rights vesting due to
the RTSR performance hurdle being met. Telstra ranked at the 93rd
percentile against the Comparator Group over the performance
period.
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 2023, we recorded a $7 million liability (2022: $5
million) pertaining to the outstanding cash rights issued to certain
former executives that ceased employment for a Permitted Reason
in prior financial years.
(b) STI restricted shares
The allocation of restricted shares and performance rights under
the FY23 EVP is expected to be made shortly after the 2023 Annual
General Meeting. Shareholder approval will be sought at the 2023
Annual General Meeting for the CEO’s FY23 EVP equity allocation.
Under the STI arrangements, 25 per cent of an eligible executive’s
actual STI payment is provided as restricted shares. The table
summarising the instruments granted under the employee share
plans lists the restriction periods for each STI restricted share plan.
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 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).
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.
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.
5.2.3 Fair value measurement
(a) EVP restricted shares
EVP restricted shares were measured based on the Board approved
dollar amount outcome for the financial year 2023, with a final
number of shares to be allocated shortly after Telstra’s 2023 Annual
General Meeting. The estimated fair value per share granted in the
financial year 2023 was $4.24 (2022: $3.91).
Telstra Group Limited and controlled entities | F71
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Telstra Financial Report 2023 2023.Financial Report.book Page 73 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 74 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.2 Employee share plans (continued)
5.3 Post-employment benefits
5.3 Post-employment benefits (continued)
(b) Present value of the wholly funded defined benefit
5.2.3 Fair value measurement (continued)
(b) EVP performance rights
Table A provides a weighted average of the inputs used in
measuring the fair value of EVP performance rights at grant date.
Table A
Telstra Group
Share price
Risk free rate
Dividend yield
Expected life in years
Expected stock volatility
Fair value ($)
Year ended 30 June
2023
$3.98
3.27%
5.04%
4.7 years
22%
$2.03
2022
$3.84
0.62%
5.21%
4.6 years
22%
$1.78
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.
5.3.2 Telstra Superannuation Scheme (Telstra Super)
obligation
(continued)
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.
Table C
Telstra Super
As part of the Restructure, an internal funding policy has been put
in place between the sponsoring employer (i.e. the Telstra Entity)
and the associated employers (i.e. other legal entities under
common control which participate in Telstra Super). Refer to note
year
Present value of defined benefit
obligation at the beginning of the
7.3.2 for further details.
Table C provides a reconciliation of the present value of defined
benefit obligation from the opening to the closing balance.
5.3.1 Net defined benefit plan asset/(liability)
(a) Fair value of defined benefit plan assets
Table A details our net defined benefit plan asset/(liability)
recognised in the statement of financial position.
Table B provides a reconciliation of fair value of defined benefit plan
assets from the opening to the closing balance.
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.
Table A
Telstra Group
5.2.4 Expense recognised in the income statement
Refer to note 2.3 for details about the related employee benefit
expenses.
5.2.5 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.
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.
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
2023
2022
$m
$m
1,529
1,552
1,255
274
285
(11)
274
1,288
264
274
(10)
264
5.3.2 Telstra Superannuation Scheme (Telstra Super)
As detailed in note 1.2, on 30 November 2022, Telstra Group Limited
became the sponsoring employer in Telstra Super, a regulated fund
in accordance with the Superannuation Industry Supervision Act
governed by the Australian Prudential Regulation Authority. On the
same date, Telstra Corporation Limited became an associated
employer participating in Telstra Super.
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 the Telstra Entity 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.
156 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F73
F74 | Telstra Group Limited and controlled entities
As at 30 June
2023
2022
$m
$m
1,278
1,549
39
63
7
9
(123)
(9)
1
(21)
50
34
7
2
(144)
(221)
(1)
2
Current service cost
Interest cost
Member contributions
Past service cost
Benefits paid
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
Fair value of defined benefit plan
assets at the end of the year
As at 30 June
2023
2022
$m
$m
1,552
1,704
Actuarial gain due to change in
financial assumptions
Actuarial loss/(gain) due to change in
demographic assumptions
Actuarial (gain)/loss due to
experience
Present value of wholly funded
(123)
(144)
of the year
12
18
(4)
75
(1)
12
18
(4)
37
(71)
1,529
1,552
defined benefit obligation at the end
1,244
1,278
The actual return on defined benefit plan assets was 5.2 per cent
gain (2022: 2.8 per cent loss). Net actuarial gain recognised in other
comprehensive income for Telstra Super amounted to $28 million
(2022: $149 million).
2023.Financial Report.book Page 73 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 74 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.3 Post-employment benefits (continued)
5.3.2 Telstra Superannuation Scheme (Telstra Super)
(continued)
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.
As part of the Restructure, an internal funding policy has been put
in place between the sponsoring employer (i.e. the Telstra Entity)
and the associated employers (i.e. other legal entities under
common control which participate in Telstra Super). Refer to note
7.3.2 for further details.
(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.
(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
Benefits paid
Actuarial gain due to change in
financial assumptions
Actuarial loss/(gain) due to change in
demographic assumptions
Actuarial (gain)/loss due to
experience
Present value of wholly funded
defined benefit obligation at the end
of the year
As at 30 June
2023
2022
$m
$m
1,278
1,549
39
63
7
9
(123)
(9)
1
(21)
50
34
7
2
(144)
(221)
(1)
2
1,244
1,278
As at 30 June
2023
2022
$m
$m
1,552
1,704
12
18
12
18
(123)
(144)
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
Fair value of defined benefit plan
assets at the end of the year
(4)
75
(1)
(4)
37
(71)
The actual return on defined benefit plan assets was 5.2 per cent
gain (2022: 2.8 per cent loss). Net actuarial gain recognised in other
comprehensive income for Telstra Super amounted to $28 million
(2022: $149 million).
1,529
1,552
5.2 Employee share plans (continued)
5.3 Post-employment benefits
5.2.3 Fair value measurement (continued)
(b) EVP performance rights
Table A provides a weighted average of the inputs used in
measuring the fair value of EVP performance rights at grant date.
Table A
Telstra Group
Share price
Risk free rate
Dividend yield
Expected life in years
Expected stock volatility
Fair value ($)
Year ended 30 June
2023
2022
$3.98
3.27%
5.04%
22%
$2.03
$3.84
0.62%
5.21%
22%
$1.78
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.
4.7 years
4.6 years
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.
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.
Table A
Telstra Group
5.2.4 Expense recognised in the income statement
Refer to note 2.3 for details about the related employee benefit
assets
expenses.
5.2.5 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
Telstra Super
a corresponding increase in equity (i.e. share capital). The expense
is adjusted to reflect actual and expected levels of vesting.
Other
Fair value of defined benefit plan
Present value of the defined benefit
obligation
Net defined benefit asset
Attributable to:
As at 30 June
2023
2022
$m
$m
1,529
1,552
1,255
274
285
(11)
274
1,288
264
274
(10)
264
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.
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.
5.3.2 Telstra Superannuation Scheme (Telstra Super)
As detailed in note 1.2, on 30 November 2022, Telstra Group Limited
became the sponsoring employer in Telstra Super, a regulated fund
in accordance with the Superannuation Industry Supervision Act
governed by the Australian Prudential Regulation Authority. On the
same date, Telstra Corporation Limited became an associated
employer participating in Telstra Super.
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 the Telstra Entity 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 Group Limited and controlled entities | F73
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Telstra Financial Report 2023 2023.Financial Report.book Page 75 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 76 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.3 Post-employment benefits (continued)
(d) Actuarial assumptions and sensitivity analysis
5.3 Post-employment benefits (continued)
5.4 Key management personnel compensation
5.3.2 Telstra Superannuation Scheme (Telstra Super)
(continued)
(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 equity1
International equity1
Debt instruments
Fixed interest1
Other
Property
Cash and cash equivalents
Other
As at 30 June
2023
2022
%
%
10
12
62
10
4
2
9
11
61
11
5
3
100
100
1 These assets have quoted prices in active markets.
(i) Related party disclosures
The related party disclosures below relate to Telstra Super as a
whole, rather than just the defined benefit plan.
As at 30 June 2023, Telstra Super owned 37,615,162 shares in the
Telstra Entity (2022: 44,202,865 shares in Telstra Corporation
Limited) at a cost of $146 million (2022: $169 million) and a market
value of $162 million (2022: $170 million). All these shares were fully
paid at 30 June 2023. During the financial year 2023, we paid a
dividend to Telstra Super of $7 million (2022: $8 million). We own
100 per cent of the equity of Telstra Super Pty Ltd, the Trustee of
Telstra Super.
Telstra Super also holds fixed interest securities issued by Telstra
Corporation Limited and the Telstra Entity. As at 30 June 2023,
these securities had a cost of $1 million (2022: $5 million) and a
market value of $1 million (2022: $5 million).
All purchases and sales of Telstra shares and fixed interest
securities 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.
Defined benefit plan
The following key assumptions were used in the calculation of
our defined benefit obligations:
• 3.3 per cent (2022: 3.0 per cent) average expected rate of
increase in future salaries
• 5.5 per cent (2022: 5.1 per cent) discount rate.
We have used a seven year (2022: seven 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 2023 would have increased/(decreased) as a result of a
change in the respective assumptions by one percentage point
(1pp).
Table E
Telstra Super
Discount rate
Expected rate of increase in future
salaries
(e) Employer contributions
Defined benefit
obligation
1pp
increase
1pp
decrease
$m
(70)
69
$m
78
(63)
During the financial year 2023, we paid contributions totalling $12
million (2022: $12 million) at the average rate of five per cent (2022:
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
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
2023
2022
Within 1 year
Between 1 and 4 years
Between 5 and 9 years
Between 10 and 19 years
After 20 years
%
8
24
29
36
3
%
8
23
27
38
4
100
100
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 2023 and 2022, the aggregate
compensation of our KMP was:
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Year ended 30 June
2023
2022
$000
18,469
331
1,094
838
10,426
31,158
$000
19,080
348
1,019
-
11,065
31,512
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 2023 and 2022, 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.
Our commitment to defined contribution plans is limited to making
Telstra Group
5.3.2 Telstra Superannuation Scheme (Telstra Super)
(continued)
(e) Employer contributions (continued)
The weighted average duration of the defined benefit plan
obligations at the end of the reporting period was seven years
(2022: seven 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
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.
158 | Telstra Group Limited and controlled entities
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2023.Financial Report.book Page 75 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 76 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 5. Our people (continued)
Section 5. Our people (continued)
5.3 Post-employment benefits (continued)
(d) Actuarial assumptions and sensitivity analysis
5.3 Post-employment benefits (continued)
5.4 Key management personnel compensation
5.3.2 Telstra Superannuation Scheme (Telstra Super)
(continued)
(c) Categories of plan assets
Defined benefit plan
Table D details the weighted average allocation as a percentage of
the fair value of total defined benefit plan assets by class based on
The following key assumptions were used in the calculation of
our defined benefit obligations:
their nature and risks.
Table D
Telstra Super
Asset allocations
Equity instruments
Australian equity1
International equity1
Debt instruments
Fixed interest1
Other
Property
Other
Cash and cash equivalents
• 3.3 per cent (2022: 3.0 per cent) average expected rate of
increase in future salaries
• 5.5 per cent (2022: 5.1 per cent) discount rate.
We have used a seven year (2022: seven 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 2023 would have increased/(decreased) as a result of a
change in the respective assumptions by one percentage point
(1pp).
As at 30 June
2023
2022
%
%
10
12
62
10
4
2
9
11
61
11
5
3
100
100
Table E
Defined benefit
Telstra Super
1 These assets have quoted prices in active markets.
(i) Related party disclosures
The related party disclosures below relate to Telstra Super as a
whole, rather than just the defined benefit plan.
As at 30 June 2023, Telstra Super owned 37,615,162 shares in the
Telstra Entity (2022: 44,202,865 shares in Telstra Corporation
Limited) at a cost of $146 million (2022: $169 million) and a market
value of $162 million (2022: $170 million). All these shares were fully
paid at 30 June 2023. During the financial year 2023, we paid a
Discount rate
salaries
Expected rate of increase in future
(e) Employer contributions
obligation
1pp
1pp
increase
decrease
$m
(70)
69
$m
78
(63)
dividend to Telstra Super of $7 million (2022: $8 million). We own
During the financial year 2023, we paid contributions totalling $12
100 per cent of the equity of Telstra Super Pty Ltd, the Trustee of
million (2022: $12 million) at the average rate of five per cent (2022:
Telstra Super.
five per cent) to our defined benefit divisions, following
recommendations from the actuary of Telstra Super.
Telstra Super also holds fixed interest securities issued by Telstra
Corporation Limited and the Telstra Entity. As at 30 June 2023,
The current five per cent contribution rate is expected to be
these securities had a cost of $1 million (2022: $5 million) and a
reviewed in the next triennial actuarial review as at 30 June 2024, to
market value of $1 million (2022: $5 million).
All purchases and sales of Telstra shares and fixed interest
securities by Telstra Super are on an arm’s length basis and are
determined by the Trustee and/or its investment managers on
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.
behalf of the members of Telstra Super.
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
2023
2022
Within 1 year
Between 1 and 4 years
Between 5 and 9 years
Between 10 and 19 years
After 20 years
%
8
24
29
36
3
100
%
8
23
27
38
4
100
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 2023 and 2022, 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
2023
2022
$000
18,469
331
1,094
838
10,426
31,158
$000
19,080
348
1,019
-
11,065
31,512
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 2023 and 2022, 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.
5.3.2 Telstra Superannuation Scheme (Telstra Super)
(continued)
(e) Employer contributions (continued)
The weighted average duration of the defined benefit plan
obligations at the end of the reporting period was seven years
(2022: seven 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.
Telstra Group Limited and controlled entities | F75
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Telstra Financial Report 2023 2023.Financial Report.book Page 77 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 6. Our investments
This section outlines our group structure and includes
information about our controlled entities, joint ventures and
associated entities. It provides details of changes to these
investments and their effect on our financial position and
performance during the financial year. It also includes the
results of our material joint ventures and associated
entities.
SECTION 6. OUR INVESTMENTS
6.1 Changes in the group structure
6.1.1 Changes due to the Telstra Group restructure
As detailed in note 1.2, during the financial year 2023 the Telstra
Group completed the Restructure, which resulted in the following
changes to our Group structure:
• Telstra Group Limited was established as the new parent entity of
the Telstra Group
• the following controlled entities became wholly-owned
subsidiaries of Telstra Group Limited:
- Telstra Corporation Limited
- Telstra ESOP Trustee Pty Limited
- Telstra Finance Limited
- Telstra Foundation Ltd
- Telstra Growthshare Pty Ltd
- Telstra International Holdings Pty Ltd
- Telstra Limited
- Telstra Towerco No.2 Pty Ltd, being the wholly-owned entity
which holds an interest in the Amplitel towers business and
related investments
• Telstra Corporation Limited and its controlled entities
transferred the retail and active wholesale business assets and
liabilities and related investments to Telstra Limited and its
controlled entities
• Telstra Corporation Limited and its controlled entities
transferred the international business assets and liabilities and
related investments to Telstra International Holdings Pty Ltd and
its controlled entities.
6.1.2 Current year acquisitions
During the financial year 2023, we acquired controlling interests in
Digicel Pacific Limited and Media Innovations Holdings Pty Ltd and
their controlled entities; and other individually immaterial
businesses. Details of the significant acquisitions have been
disclosed below.
(a) 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).
Digicel Pacific is a leading provider of communication services
across Papua New Guinea (PNG), Fiji, Nauru, Samoa, Tonga and
Vanuatu. The acquisition of Digicel Pacific expands our
international footprint and supports our growth strategy.
The final consideration paid and payable consisted of $2,378 million
upfront cash payment, and up to $370 million deferred payments
contingent on Digicel Pacific’s performance over the financial years
2022, 2023 and 2024. The consideration was funded by Telstra’s
contribution of $400 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. The total acquisition costs for the acquisition were $22
million, of which, $7 million was incurred and paid during the
financial year 2022.
Equity-like securities issued to the
Australian Government
On 13 July 2022 and on 2 September 2022, we issued
respectively $903 million and $20 million of equity-like
securities to the Australian Government, through Export
Finance Australia. The securities are perpetual, subordinated,
unsecured and redeemable in certain circumstances. The
securities do not grant the Australian Government any
recourse, voting rights, or earnings in respect of the Telstra
Group.
We applied judgement to classify the issued securities as
equity and present them as non-controlling interests in our
consolidated statement of changes in equity.
As at 30 June 2023, the non-controlling interests related to the
equity-like securities issued to the Australian Government
were $923 million.
The vendor has entered into legal arrangements with the PNG tax
authorities in relation to the additional PKG350 million company
tax, which had been adopted by PNG before completion of the sale.
We have recognised a liability of $149 million included in other
provisions. Telstra is not part of this process, and the outcomes of
this process are a matter for the vendor. 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, and
an indemnification asset of $149 million was recognised in trade
and receivables on completion. This amount is held in escrow.
We have also recognised a $42 million liability (included in other
provisions) for other tax matters. The vendor has provided an
indemnity to Telstra against the outcome of those tax matters and
an indemnification asset of $42 million was recognised in trade and
receivables on completion. This amount is held in escrow.
The accounting for this acquisition gave rise to $1,580 million
goodwill reflecting revenue growth opportunities, cost synergies
and profitability of the acquired business. The goodwill is not
deductible for income tax purposes.
160 | Telstra Group Limited and controlled entities
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Notes to the financial statements (continued)
Section 6. Our investments (continued)
6.1 Changes in the group structure (continued)
(b) Fetch TV
6.1.2 Current year acquisitions (continued)
(a) Digicel Pacific (continued)
Table A summarises the effects of the accounting for this
acquisition.
Table A
SECTION 6. OUR INVESTMENTS
6.1 Changes in the group structure
6.1.1 Changes due to the Telstra Group restructure
As detailed in note 1.2, during the financial year 2023 the Telstra
Group completed the Restructure, which resulted in the following
changes to our Group structure:
Equity-like securities issued to the
Australian Government
On 13 July 2022 and on 2 September 2022, we issued
• Telstra Group Limited was established as the new parent entity of
respectively $903 million and $20 million of equity-like
the Telstra Group
securities to the Australian Government, through Export
• the following controlled entities became wholly-owned
Finance Australia. The securities are perpetual, subordinated,
Notes to the financial statements (continued)
Section 6. Our investments
This section outlines our group structure and includes
information about our controlled entities, joint ventures and
associated entities. It provides details of changes to these
investments and their effect on our financial position and
performance during the financial year. It also includes the
results of our material joint ventures and associated
entities.
subsidiaries of Telstra Group Limited:
- Telstra Corporation Limited
- Telstra ESOP Trustee Pty Limited
- Telstra Finance Limited
- Telstra Foundation Ltd
- Telstra Growthshare Pty Ltd
- Telstra International Holdings Pty Ltd
- Telstra Limited
- Telstra Towerco No.2 Pty Ltd, being the wholly-owned entity
which holds an interest in the Amplitel towers business and
related investments
• Telstra Corporation Limited and its controlled entities
transferred the retail and active wholesale business assets and
liabilities and related investments to Telstra Limited and its
controlled entities
• Telstra Corporation Limited and its controlled entities
transferred the international business assets and liabilities and
related investments to Telstra International Holdings Pty Ltd and
its controlled entities.
6.1.2 Current year acquisitions
During the financial year 2023, we acquired controlling interests in
Digicel Pacific Limited and Media Innovations Holdings Pty Ltd and
their controlled entities; and other individually immaterial
businesses. Details of the significant acquisitions have been
disclosed below.
(a) Digicel Pacific
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
Digicel Pacific is a leading provider of communication services
across Papua New Guinea (PNG), Fiji, Nauru, Samoa, Tonga and
Vanuatu. The acquisition of Digicel Pacific expands our
international footprint and supports our growth strategy.
The final consideration paid and payable consisted of $2,378 million
upfront cash payment, and up to $370 million deferred payments
contingent on Digicel Pacific’s performance over the financial years
2022, 2023 and 2024. The consideration was funded by Telstra’s
contribution of $400 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. The total acquisition costs for the acquisition were $22
million, of which, $7 million was incurred and paid during the
financial year 2022.
unsecured and redeemable in certain circumstances. The
securities do not grant the Australian Government any
recourse, voting rights, or earnings in respect of the Telstra
Group.
We applied judgement to classify the issued securities as
equity and present them as non-controlling interests in our
consolidated statement of changes in equity.
As at 30 June 2023, the non-controlling interests related to the
equity-like securities issued to the Australian Government
were $923 million.
The vendor has entered into legal arrangements with the PNG tax
authorities in relation to the additional PKG350 million company
tax, which had been adopted by PNG before completion of the sale.
We have recognised a liability of $149 million included in other
provisions. Telstra is not part of this process, and the outcomes of
this process are a matter for the vendor. 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, and
an indemnification asset of $149 million was recognised in trade
and receivables on completion. This amount is held in escrow.
We have also recognised a $42 million liability (included in other
provisions) for other tax matters. The vendor has provided an
indemnity to Telstra against the outcome of those tax matters and
an indemnification asset of $42 million was recognised in trade and
receivables on completion. This amount is held in escrow.
The accounting for this acquisition gave rise to $1,580 million
goodwill reflecting revenue growth opportunities, cost synergies
and profitability of the acquired business. The goodwill is not
deductible for income tax purposes.
Digicel Pacific
Consideration for acquisition
Cash consideration
Contingent consideration
Total purchase consideration
Cash balances acquired
Contingent consideration payable
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
Inventories
Prepayments
Investments - accounted for using the equity
method
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Employee benefits
Other provisions
Lease liabilities
Contract liabilities and other revenue received in
advance
Deferred tax liabilities
Net assets
Adjustments to reflect non-controlling interests
Goodwill on acquisition
Total purchase consideration
Contributions to the Group's performance from
acquisition date to 30 June 2023
Income
Profit before income tax expense
Year
ended
30 June
2023
$m
2,378
243
2,621
(30)
(169)
2,422
15
Fair value
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. The customer transition
is yet to commence and is planned to be completed by the end of
the financial year 2025.
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.
The accounting for this acquisition gave rise to $32 million goodwill
reflecting cost and revenue synergies and revenue growth
opportunities. The goodwill is not deductible for income tax
purposes.
Table B summarises the effects of the accounting for this
acquisition.
Table B
Year
ended
30 June
30
246
11
15
8
522
52
1,125
(108)
(12)
(248)
(52)
(55)
(476)
1,058
(17)
1,580
2,621
719
167
Consideration for acquisition
Total purchase consideration - cash
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
Inventories
Property, plant and equipment
Right-of-use assets
Intangible assets
Trade and other payables
Deferred tax liabilities
Employee benefits
Lease liabilities
Net assets
Adjustments to reflect non-controlling interests
Goodwill on acquisition
Total purchase consideration
Contributions to the Group's performance from
acquisition date to 30 June 2023
Income
Loss before income tax expense
2023
$m
47
(14)
33
1
Fair value
14
10
3
1
5
32
(21)
(7)
(3)
(5)
29
(14)
32
47
63
(7)
Telstra Group Limited and controlled entities | F77
F78 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 161
Telstra Financial Report 2023 2023.Financial Report.book Page 79 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 6. Our investments (continued)
6.1 Changes in the group structure (continued)
6.2 Investments in controlled entities
6.1.2 Current year acquisitions (continued)
6.2.1 Investments in controlled entities
(c) Telstra Group result if all acquisitions occurred on 1 July
2022
If all the acquisitions made during the financial year 2023 had
occurred on 1 July 2022, our adjusted consolidated income and
consolidated profit before income tax expense for the financial year
2023 would have been $23,282 million and $2,867 million,
respectively.
6.1.3 Current year disposals
During the financial year 2023, we have not disposed of any
controlled entities or businesses but we have sold some other
investments. These transactions had no significant financial impact
on our results.
6.1.4 Prior 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.
Telstra Group has a direct or indirect interest in over 210
subsidiaries with our international presence spanning over 30
countries. We have controlled entities in Australia, Asia, the South
Pacific, New Zealand, Europe, Middle East and the United States of
America. We conduct most of our business through our controlled
entities Telstra Limited and Telstra Corporation Limited, which in
total constituted 98 per cent of the Group’s EBITDA.
A complete list of our controlled entities is available online at
www.telstra.com/financialresults.
(a) 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). On acquisition, we recognised a
financial liability for our commitment to purchase 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.
The acquisition of Power Health is accounted as a 100 per cent
wholly-owned group as detailed below.
Determining non-controlling interests in
Power Health
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.
This liability is remeasured to its fair value at each reporting date,
with any remeasurements recognised in the income statement. No
earnings are attributed to the non-controlling interests. As at 30
June 2023, the fair value of the financial liability was $35 million
(2022: $46 million).
162 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F79
2023.Financial Report.book Page 79 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 80 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.1 Changes in the group structure (continued)
6.2 Investments in controlled entities
6.2 Investments in controlled entities (continued)
6.1.2 Current year acquisitions (continued)
6.2.1 Investments in controlled entities
6.2.2 Deed of cross guarantee
The following entities are party to the Deed and part of the Closed
Group:
(c) Telstra Group result if all acquisitions occurred on 1 July
Telstra Group has a direct or indirect interest in over 210
2022
If all the acquisitions made during the financial year 2023 had
occurred on 1 July 2022, our adjusted consolidated income and
consolidated profit before income tax expense for the financial year
2023 would have been $23,282 million and $2,867 million,
respectively.
6.1.3 Current year disposals
subsidiaries with our international presence spanning over 30
countries. We have controlled entities in Australia, Asia, the South
Pacific, New Zealand, Europe, Middle East and the United States of
America. We conduct most of our business through our controlled
entities Telstra Limited and Telstra Corporation Limited, which in
total constituted 98 per cent of the Group’s EBITDA.
A complete list of our controlled entities is available online at
www.telstra.com/financialresults.
During the financial year 2023, we have not disposed of any
controlled entities or businesses but we have sold some other
(a) Power Health
investments. These transactions had no significant financial impact
On 9 November 2021, we completed the acquisition of 70 per cent
on our results.
6.1.4 Prior year disposals
of the shares in Power Solutions Holdings Pty Ltd and its
subsidiaries (Power Health). On acquisition, we recognised a
financial liability for our commitment to purchase the remaining 30
On 30 June 2021, we announced that a consortium comprising the
per cent of the shares in Power Health between the end of years two
Future Fund, Commonwealth Superannuation Corporation and
and five from completion or otherwise obligatory acquisition by year
Sunsuper agreed to acquire a 49 per cent interest and become a
five.
strategic partner in Telstra’s towers business.
On 31 August 2021, the towers business became operational
wholly-owned group as detailed below.
The acquisition of Power Health is accounted as a 100 per cent
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.
Determining non-controlling interests in
Power Health
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.
This liability is remeasured to its fair value at each reporting date,
with any remeasurements recognised in the income statement. No
earnings are attributed to the non-controlling interests. As at 30
June 2023, the fair value of the financial liability was $35 million
(2022: $46 million).
Telstra Group 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 that are eligible for the
benefit of the ASIC Instrument 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.
As disclosed in the 2022 Annual Report, Telstra Corporation Limited
(as the then holding entity of the Telstra Group), certain of its
wholly-owned subsidiaries and Telstra Finance Limited (as trustee)
were party to a deed of cross guarantee (Previous Deed), as defined
in Australian Securities and Investments Commission (ASIC)
legislative instrument: ‘ASIC Corporations (Wholly-owned
Companies) Instrument 2016/785’.
As detailed in note 1.2, during the financial year 2023 the Telstra
Group had completed the Restructure, with the following changes
occurring in relation to the deed of cross guarantee:
• on 23 November 2022, a revocation deed was lodged with ASIC to
revoke the Previous Deed. The revocation was effective on 24
May 2023 (being the day following the expiration of six months
from the date of lodgement with ASIC).
• on 23 November 2022, the Deed was lodged with ASIC.
• Telstra Group Limited (holding entity)
• Alliance Automation Pty Ltd
• Aqura Technologies Pty Ltd
• Clinical Technology Holdings Pty Limited
• Clinical Technology Systems Pty Limited
• DLM Automation Pty Ltd
• 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
• muru-D Pty Ltd
• Pacnet Internet (A) Pty Ltd
• Pacnet Services (A) Pty. Ltd.
• Service Potential Pty Ltd
• Telstra 3G Spectrum Holdings Pty Ltd
• Telstra Australia Networks Pty Limited
• Telstra Broadcast Services Pty Limited
• Telstra Communications Limited
• Telstra Corporation Limited
• Telstra Energy (Generation) Pty Ltd
• Telstra Energy (Holdings) Pty Ltd
• Telstra Energy (Retail) Pty Ltd
• Telstra Health Pty Ltd
• Telstra Health Services Pty Ltd
• Telstra Holdings Pty Ltd
• Telstra International (Aus) Limited
• Telstra International Holdings Pty Ltd
• Telstra International Networks Pty Limited
• Telstra International Operations Pty Limited
• Telstra Limited
• Telstra Multimedia Pty Limited
• Telstra OnAir Holdings Pty Ltd
• Telstra Pay TV Pty Ltd
• Telstra Plus Pty Ltd
• Telstra Purple Pty Ltd
• Telstra Reach Holdings Pty Ltd
• Telstra Services Solutions Holdings Limited
• Telstra Software Group Pty Ltd
• Telstra Towerco No.2 Pty Ltd
• Telstra Ventures Pty Limited.
There were no financial impacts on the Telstra Group resulting from
the revocation of the Previous Deed and the establishment of the
Deed.
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 Group Limited and controlled entities | F79
F80 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 163
Telstra Financial Report 2023 2023.Financial Report.book Page 81 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 82 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
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
As at
Closed 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 – 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
Contract liabilities and other revenue received in
advance
Total current liabilities
30 June
2023
$m
530
3,963
110
513
421
136
255
5,928
1,057
1,088
36
6,137
680
22
19,507
2,313
7,196
300
285
38,621
44,549
3,893
657
106
363
4,138
73
1,336
10,566
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
As at
30 June
2023
$m
102
122
115
2,259
11,529
189
1,602
791
16,709
27,275
17,274
3,095
79
14,100
17,274
Table B
Closed Group
Year
ended
30 June
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
2023
$m
1,680
(92)
1,588
Table C provides a reconciliation of retained profits of the Closed
Group from the opening to the closing balance.
Table C
Closed Group
Year
ended
30 June
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
Total comprehensive income recognised in retained
profits
Dividend
Retained profits at the end of the financial year
available to the Closed Group
2023
$m
-
14,365
1,699
(1,964)
14,100
6.3 Non-controlling interests
6.3.2 Telstra PM Pty Ltd and its controlled entities (Telstra PM
Summarised financial information of the Telstra Group entities
Group)
which have material non-controlling interests is detailed below.
As detailed in note 6.1.2, during the financial year 2023 we acquired
6.3.1 Amplitel business
Digicel Pacific and our controlled entity within the Telstra PM
Group issued $923 million of equity-like securities to the Australian
Table A summarises financial information of the entities which have
Government, through Export Finance Australia. The issued
material non-controlling interests, i.e. the Trust and Amplitel
securities are classified as equity and recognised as non-controlling
(Amplitel business), amalgamated for the year ended and as at 30
interest.
June 2023. 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 B summarises financial information for the year ended and as
at 30 June 2023 of Telstra PM Group which have material non-
controlling interests. The financial information represents the
amounts before inter-company eliminations of transactions with
other entities within the Telstra Group, with the exception of the
Table A
Year ended/as at
transactions within the Telstra PM Group which have been
Amplitel business
30 June
eliminated.
2023
2022
$m
$m
Telstra PM Group
Table B
Year
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
764
794
Total liabilities
Net assets
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Accumulated non-controlling
Statement of comprehensive
interests
income
Revenue
Profit/(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
activities
activities
Net cash inflow from investing
Net cash outflow from financing
Net cash (outflow)/inflow
262
2,015
2,277
170
814
984
1,293
198
155
90
120
54
138
(270)
(78)
339
2,071
2,410
217
809
1,026
1,384
141
(157)
83
87
82
129
(81)
130
Accumulated non-controlling interests
Statement of comprehensive income
Revenue
Loss/total comprehensive income for the period
attributable to Telstra PM Group
Profit allocated to non-controlling interests
Statement of cash flows
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Net cash inflow
6.3.3 The Exchange Trust
As at 30 June 2023, our controlled entity The Exchange Trust, which
holds a portfolio of 36 Telstra exchanges in Australia, had a 49 per
cent (2022: 49 per cent) non-controlling interest balance of $701
million (2022: $700 million). The trustee of the Exchange Trust is
Merricks NewCo Pty Ltd, our wholly-owned controlled entity.
During the financial year 2023, we paid the minority unit holder of
the trust a $33 million (2022: $32 million) dividend.
ended/as
at 30 June
2023
$m
460
3,353
3,813
537
1,861
2,398
1,415
938
738
(7)
1
216
(2,525)
2,402
93
164 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F81
F82 | Telstra Group Limited and controlled entities
2023.Financial Report.book Page 81 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 82 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.3 Non-controlling interests
Summarised financial information of the Telstra Group entities
which have material non-controlling interests is detailed below.
6.3.1 Amplitel business
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 2023. 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/as at
6.3.2 Telstra PM Pty Ltd and its controlled entities (Telstra PM
Group)
As detailed in note 6.1.2, during the financial year 2023 we acquired
Digicel Pacific and our controlled entity within the Telstra PM
Group issued $923 million of equity-like securities to the Australian
Government, through Export Finance Australia. The issued
securities are classified as equity and recognised as non-controlling
interest.
Table B summarises financial information for the year ended and as
at 30 June 2023 of Telstra PM Group which have material non-
controlling interests. The financial information represents the
amounts before inter-company eliminations of transactions with
other entities within the Telstra Group, with the exception of the
transactions within the Telstra PM Group which have been
eliminated.
Table B
30 June
2023
2022
$m
$m
262
2,015
2,277
170
814
984
1,293
339
2,071
2,410
217
809
1,026
1,384
764
794
Telstra PM Group
Statement of financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
198
155
90
120
54
138
(270)
(78)
141
(157)
Accumulated non-controlling interests
Statement of comprehensive income
Revenue
Loss/total comprehensive income for the period
attributable to Telstra PM Group
Profit allocated to non-controlling interests
Statement of cash flows
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow from financing activities
Net cash inflow
6.3.3 The Exchange Trust
83
87
82
129
(81)
130
As at 30 June 2023, our controlled entity The Exchange Trust, which
holds a portfolio of 36 Telstra exchanges in Australia, had a 49 per
cent (2022: 49 per cent) non-controlling interest balance of $701
million (2022: $700 million). The trustee of the Exchange Trust is
Merricks NewCo Pty Ltd, our wholly-owned controlled entity.
During the financial year 2023, we paid the minority unit holder of
the trust a $33 million (2022: $32 million) dividend.
Year
ended/as
at 30 June
2023
$m
460
3,353
3,813
537
1,861
2,398
1,415
938
738
(7)
1
216
(2,525)
2,402
93
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
Profit/(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 (outflow)/inflow
Trade and other receivables and contract assets
Contract liabilities and other revenue received in
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
As at
Closed Group
Table A (continued)
Closed Group
As at
30 June
2023
Trade and other receivables and contract assets
Investments – controlled entities
Investments – accounted for using the equity
method
Investments – other
Property, plant and equipment
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
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
Contract liabilities and other revenue received in
advance
Total current liabilities
30 June
2023
$m
530
3,963
110
513
421
136
255
5,928
1,057
1,088
36
6,137
680
22
19,507
2,313
7,196
300
285
38,621
44,549
3,893
657
106
363
4,138
73
1,336
Non-current liabilities
Other payables
Employee benefits
Other provisions
Lease liabilities
Borrowings
Derivative financial liabilities
Deferred tax liabilities
advance
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained profits
Closed Group
Equity available to the closed group
Table B
Year
Profit for the year for the Closed Group
Total other comprehensive income for the Closed
Group
Closed Group
Total comprehensive income for the year for the
Table C provides a reconciliation of retained profits of the Closed
Group from the opening to the closing balance.
Table C
Year
Closed Group
$m
102
122
115
2,259
11,529
189
1,602
791
16,709
27,275
17,274
3,095
79
14,100
17,274
ended
30 June
2023
$m
1,680
(92)
1,588
ended
30 June
2023
$m
-
14,365
1,699
(1,964)
14,100
10,566
Retained profits at the beginning of the financial
year available to the Closed Group
Effect on retained profits from addition of entities to
Total comprehensive income recognised in retained
the Closed Group
profits
Dividend
Retained profits at the end of the financial year
available to the Closed Group
Telstra Group Limited and controlled entities | F81
F82 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 165
Telstra Financial Report 2023 2023.Financial Report.book Page 83 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 84 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 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
Additions obtained via acquisition of controlled entity
Gain on dilution of shareholding recognised in other comprehensive income
Share of net loss
Share of distributions
Share of reserves
Carrying amount of investments at end of year
Additions of associated entities include $27 million (2022: $71
million) of new investments in Telstra Ventures Fund III, L.P.
Share of joint ventures’ reserves includes $83 million loss (2022:
$199 million) in our share of other comprehensive income.
As at 30 June
Joint ventures
Associated entities
2023
2022
2023
2022
$m
284
6
-
-
290
(3)
(45)
(83)
159
$m
578
13
-
-
591
(4)
(104)
(199)
284
$m
530
27
8
7
572
(24)
-
(21)
527
$m
440
101
-
-
541
(27)
-
16
530
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.
Name of entity
Principal activities
(continued)
entities
Table B
Telstra Group
Joint ventures
3GIS Pty Ltd
Reach Limited
Management of former 3GIS
Partnership (non-operating)
Australia
International connectivity services
Bermuda
Telstra Ventures Fund II, L.P.
Venture capital
Associated entities
ACN 147 190 118 Pty Ltd1
Software service provider
Asia Netcom Philippines Corporation
Ownership of physical property
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
Samoa Submarine Cable Company Limited Network cable provider
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
Tonga Cable Limited
Network cable provider
Tonga
Guernsey
Australia
Philippines
Bermuda
Korea
Australia
Australia
Samoa
Bermuda
Australia
Guernsey
1 During the year, Telstra Limited’s ownership interest in ACN 147 190 118 Pty Ltd
(immediate parent of Neto (US) Inc. prior to its deregistration on 7 July 2022) was
reduced from 74% to 20% due to a capital return completed on 8 June 2023. Accordingly,
ACN 147 190 118 Pty Ltd is no longer considered a controlled entity and is included in our
list of investments in associated entities in Table B.
Ownership interest
As at 30 June
2023
2022
%
%
Principal place of
business/country of
incorporation
50.0
50.0
62.5
20.0
40.0
46.9
49.0
35.0
25.0
20.0
16.7
25.0
48.0
100.0
50.0
10.0
16.6
50.0
50.0
62.5
74.0
40.0
46.9
49.0
35.0
25.0
20.0
-
25.0
48.0
100.0
50.5
10.0
-
166 | Telstra Group Limited and controlled entities
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2023.Financial Report.book Page 83 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 84 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Telstra Financial Report 2023
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
Additions obtained via acquisition of controlled entity
Gain on dilution of shareholding recognised in other comprehensive income
Share of net loss
Share of distributions
Share of reserves
Carrying amount of investments at end of year
Additions of associated entities include $27 million (2022: $71
million) of new investments in Telstra Ventures Fund III, L.P.
Share of joint ventures’ reserves includes $83 million loss (2022:
$199 million) in our share of other comprehensive income.
As at 30 June
Joint ventures
Associated entities
2023
2022
2023
2022
$m
284
6
-
-
290
(3)
(45)
(83)
159
$m
578
13
-
-
591
(4)
(104)
(199)
284
$m
530
27
8
7
-
572
(24)
(21)
527
$m
440
101
-
-
541
(27)
-
16
530
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
Ownership interest
As at 30 June
2023
2022
%
%
Principal place of
business/country of
incorporation
Joint ventures
3GIS Pty Ltd
Reach Limited
Telstra Ventures Fund II, L.P.
Management of former 3GIS
Partnership (non-operating)
International connectivity services
Venture capital
Australia
Bermuda
Guernsey
Associated entities
ACN 147 190 118 Pty Ltd1
Software service provider
Asia Netcom Philippines Corporation
Ownership of physical property
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
Software development
Pivotal Labs Sydney Pty Ltd
Samoa Submarine Cable Company Limited Network cable provider
Network cable provider
Southern Cross Cables Holdings Limited
Telecommunication services
Telstra Converge Inc. (formerly Digitel
Crossing Inc.)
Telstra Super Pty Ltd
Telstra Ventures Fund III, L.P.
Tianjin TenLink Electronic Technology Co.,
Ltd.
Tonga Cable Limited
Superannuation trustee
Venture capital
Control system of industrial internet
supplier
Network cable provider
Australia
Philippines
Bermuda
Korea
Australia
United States
Australia
Samoa
Bermuda
Philippines
Australia
Guernsey
China
Tonga
1 During the year, Telstra Limited’s ownership interest in ACN 147 190 118 Pty Ltd
(immediate parent of Neto (US) Inc. prior to its deregistration on 7 July 2022) was
reduced from 74% to 20% due to a capital return completed on 8 June 2023. Accordingly,
ACN 147 190 118 Pty Ltd is no longer considered a controlled entity and is included in our
list of investments in associated entities in Table B.
50.0
50.0
62.5
20.0
40.0
46.9
49.0
35.0
25.0
20.0
16.7
25.0
48.0
100.0
50.0
10.0
16.6
50.0
50.0
62.5
74.0
40.0
46.9
49.0
35.0
25.0
20.0
-
25.0
48.0
100.0
50.5
10.0
-
Telstra Group Limited and controlled entities | F83
F84 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 167
2023.Financial Report.book Page 85 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
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 (continued)
We apply judgement to determine if we have significant influence or
joint control over our investments as detailed below.
Joint control of Telstra Ventures Fund II,
L.P.
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.
Significant influence over Telstra Super
Pty Ltd
We applied judgement to determine that we do not control
Telstra Super Pty Ltd even though we own 100.0 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 44.0 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 significant
influence of our investment in Telstra Ventures Fund III, L.P..
While we hold 50.0 per cent (2022: 50.5 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 2023 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
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
Telstra's share in equity 35% (2022:
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%)
Year ended 30 June
2023
2022
$m
682
3,542
(1,360)
(1,992)
872
305
83
388
$m
705
3,793
(1,224)
(2,319)
955
334
68
402
2,866
(2,979)
2,775
(2,887)
(113)
36
(77)
(7)
(84)
44
(40)
(14)
(112)
40
(72)
16
(56)
19
(37)
(13)
168 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F85
2023.Financial Report.book Page 85 Wednesday, August 16, 2023 4:21 PM
2023.Financial Report.book Page 86 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 6. Our investments (continued)
Section 6. Our investments (continued)
6.4 Investments in joint ventures and associated entities
(continued)
6.4.4 Transactions with our joint ventures and associated
entities
6.4.1 List of our investments in joint ventures and associated
its controlled entities (NXE Group), an associated entity which
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.
Table D
Year ended/As at 30 June
Telstra Group
Joint ventures
Associated
entities
2023
2022
2023
2022
$m
159
$m
284
$m
527
$m
530
(3)
(4)
(24)
(27)
(83)
(199)
(14)
16
(86)
(203)
(38)
(11)
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.
2,866
(2,979)
2,775
(2,887)
Table E
Year ended 30 June
Telstra Group
Period Cumula
Period Cumula
6.4 Investments in joint ventures and associated entities
(a) NXE Group
(continued)
entities (continued)
We apply judgement to determine if we have significant influence or
joint control over our investments as detailed below.
Telstra has a 35 per cent interest in NXE Australia Pty Limited and
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 2023 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
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Equity
35%)
Telstra's share in equity 35% (2022:
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%)
Year ended 30 June
2023
2022
$m
682
3,542
(1,360)
(1,992)
872
305
83
388
(113)
36
(77)
(7)
(84)
44
(40)
(14)
$m
705
3,793
(1,224)
(2,319)
955
334
68
402
(112)
40
(72)
16
(56)
19
(37)
(13)
Joint control of Telstra Ventures Fund II,
L.P.
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.
Significant influence over Telstra Super
Pty Ltd
equity.
We applied judgement to determine that we do not control
Telstra Super Pty Ltd even though we own 100.0 per cent of its
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 44.0 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 significant
influence of our investment in Telstra Ventures Fund III, L.P..
While we hold 50.0 per cent (2022: 50.5 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.
-tive
2023
2022
-tive
2022
2023
$m
$m
$m
$m
(5)
(558)
-
(553)
Joint ventures
Reach Limited
Associated entities
Australia-Japan
Cable Holdings
Limited
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
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 $540 million (2022: $536 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 $69
million (2022: $95 million) and wholesale services totalling $68
million (2022: $66 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 2023 the outstanding balance drawn under this
facility was $143 million (2022: $132 million).
(c) Trade and other payables
As at 30 June 2023, we had $39 million (2022: $50 million) trade
payables to NXE Group for purchases of pay television services.
As at 30 June 2023, we had nil (2022: $74 million) 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
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.
(b) Investments in associated entities
(1)
(70)
(6)
(628)
(1)
(1)
(69)
(622)
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.
Telstra Group Limited and controlled entities | F85
F86 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 169
7.2 Other provisions
The table below provides a summary of our current and non-current
other provisions.
Telstra Group
Current other provisions
Non-current other provisions
As at 30 June
2023
2022
$m
327
186
513
$m
160
119
279
Other provisions include $191 million provisions for tax matters
related to the acquisition of Digicel Pacific. Refer to note 6.1.2 for
further details.
2023.Financial Report.book Page 87 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
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
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.
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 3
Category 4
Total fees to other overseas member
firms of Ernst & Young (Australia)
Total auditor’s remuneration
Year ended 30 June
2023
2022
$m
$m
9.692
0.043
2.505
0.359
8.814
0.040
3.254
0.448
12.599
12.556
4.703
0.052
0.030
0.099
4.884
2.475
0.049
-
0.082
2.606
17.483
15.162
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.
170 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F87
Notes to the financial statements (continued) 2023.Financial Report.book Page 88 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 7. Other information (continued)
7.3 Parent entity disclosures
7.3.1 Contingent liabilities and guarantees
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.
As detailed in note 1.2, on 31 October 2022 Telstra Group Limited
became the parent entity of the Telstra Group.
Tables A and B provide a summary of the financial information for
the Telstra Entity.
As detailed in note 1.2, Telstra Group Limited became the Telstra
Entity in the Telstra Group and the operating businesses are carried
out by separate legal entities controlled by it. As a result, the
performance obligations under a number of our existing contractual
arrangements now apply to these separate legal entities. Where
contractually required or otherwise agreed with counterparties, the
Telstra Entity has provided parent company guarantees, however
those guarantees did not change the overall economic exposure the
Telstra Group had under these arrangements prior to the
Restructure.
(a) Intra-group debt guarantees
Table A
As at
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
Reorganisation reserve
Cash flow hedging reserve
Retained profits
Total equity
30 June
2023
$m
2,355
44,334
46,689
24,112
1,660
25,772
3,095
(53)
9
17,866
20,917
Reorganisation reserve represents the amounts recognised as a
result of the establishment of the new parent entity and other
Restructure steps described in note 1.2.
Table B
Telstra Entity
Statement of comprehensive income
Profit for the year
Total comprehensive income
Year
ended
30 June
2023
$m
5,924
5,919
Total current assets include $34 million of provision for impairment
losses recognised during the financial year 2023 relating to
impairment of intercompany receivables due from certain
subsidiaries within our Australian tax consolidated group under the
tax funding agreement. This impairment has been eliminated on
consolidation of the Telstra Group.
As at 30 June 2023, the Telstra entity did not have any capital
commitments. Refer to note 7.4.1 for details about the Group
capital commitments.
As part of the Restructure, the Telstra Entity has entered into the
following intra-group debt guarantees:
• a debt guarantee in favour of holders of specified debt issued by
Telstra Corporation Limited (including unsecured notes, bank
loans, commercial paper and derivatives covering cross currency
swaps, interest rate swaps and forward foreign exchange
contracts) under which each of Telstra Group Limited and Telstra
Limited guarantee all amounts due and payable but unpaid by
Telstra Corporation Limited in respect of the guaranteed debt.
The guarantee will apply for the term of the guaranteed debt,
subject to early release in certain circumstances, including if the
guaranteed debt is repaid, redeemed, purchased, exchanged,
transferred or substituted (or similar) earlier, and, subject to
certain applicable limitations and conditions, may also be
released early in respect of the guarantee given by Telstra Group
Limited. When the guarantee was issued, Telstra Group Limited
recognised a financial guarantee liability (measured at fair value),
and a contribution increasing its investment in Telstra
Corporation Limited.
• a debt guarantee in favour of holders of specified debt issued by
Telstra Group Limited under which each of Telstra Limited and
Telstra Corporation Limited guarantee all amounts due and
payable but unpaid by Telstra Group Limited in respect of the
guaranteed debt. Guaranteed debt entered into by Telstra Group
Limited comprises of unsecured notes, a bank loan, commercial
paper, derivatives covering cross currency swaps and forward
foreign exchange contracts. The guarantee will apply for the term
of the guaranteed debt, subject to early release in certain
circumstances, including if the guaranteed debt is repaid,
redeemed, purchased, exchanged, transferred or substituted (or
similar) earlier, and, subject to certain applicable limitations and
conditions, may also be released early in respect of the guarantee
given by Telstra Corporation Limited. When the guarantee was
issued, it was measured at fair value and accounted for as an
adjustment to the guaranteed debt of Telstra Group Limited, with
a corresponding reduction in its investments in Telstra
Corporation Limited and Telstra Limited.
The financial impact of all intra-group debt guarantees has been
eliminated at the Telstra Group level.
F88 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 171
Telstra Financial Report 2023 2023.Financial Report.book Page 89 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Telstra Financial Report 2023
Section 7. Other information (continued)
7.3 Parent entity disclosures (continued)
7.4 Commitments and contingencies
7.3.1 Contingent liabilities and guarantees (continued)
(b) Contingent liabilities and other guarantees
We have also provided the following indemnities, performance
guarantees and financial support through the Telstra Entity:
• guarantees to nbn co in respect of payment obligations of Telstra
Limited or Telstra Corporation Limited to nbn co up to a maximum
of $2.5 billion in respect of the Subscriber Agreement, and $2.5
billion in respect of the Infrastructure Services Agreement. At the
reporting date, the likelihood of any claims under these
guarantees is considered remote.
• Telstra Group Limited, Telstra Limited, and Telstra Corporation
Limited have entered into (i) a multi entity bank account set off
facility; and (ii) banking services agreement, for their
transactional banking requirements. A cross guarantee and
indemnity has been provided by each of Telstra Group Limited,
Telstra Limited and Telstra Corporation Limited in respect of
amounts due and payable to the applicable bank counterparty
under each of these arrangements.
• parent guarantee under which the Telstra Entity has provided a
guarantee in favour of Amplitel Pty Ltd as trustee for the Towers
Business Operating Trust in respect of obligations from Telstra
Limited under the Master Services Agreement.
• guarantees in favour of counterparties in respect of specified
obligations of two of our controlled entities under contracts
executed under the International Swaps and Derivatives
Association agreement (ISDA) between the controlled entity and
the swap counterparty. As at 30 June 2023, there was no exposure
under those contracts.
7.3.2 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 agreement, 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. Refer to
note 2.4.2 for details about amounts receivable and payable by
the Telstra Entity under the tax funding agreement.
• investments in controlled entities, included within non-current
assets, are recorded at cost less impairment of the investment
value
• under an internal funding policy between the sponsoring
employer of Telstra Super (i.e. the Telstra Entity) and the
associated employers (i.e. other legal entities under common
control which participate in Telstra Super) each entity recognises
the net defined benefit cost related to its employees who are
members of Telstra Super. Both the Telstra Entity and the
associated employers account for their share of the net deficit
(i.e. net defined benefit liability) where the fair value of the plan
assets allocated to that entity based on the defined benefit
obligations of the employees who are members of Telstra Super
is less than the present value of the defined benefit obligations of
those employees. The Telstra Entity also accounts for any surplus
(i.e. net defined benefit asset) where the fair value of the total
plan assets exceeds the total present value of the defined benefit
obligations of Telstra Super as a whole.
• where the Telstra Entity grants its equity instruments to
employees of a subsidiary, the subsidiary records an expense,
with a corresponding credit to equity, representing a capital
contribution from the Telstra Entity and the Telstra Entity records
an increase in its investment in the subsidiary equivalent to the
expense in the subsidiary, with a corresponding credit to equity.
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.
7.4.1 Capital expenditure commitments
Table A shows capital expenditure commitments contracted for at
balance date but not recorded in the financial statements.
Table A
Telstra Group
Property, plant and equipment
commitments
Intangible assets commitments
As at 30 June
2023
2022
$m
772
716
$m
169
774
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 licences is not expected until shortly before they
commence in mid-2024.
7.4.2 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 7.3.1.
(a) Investigations by regulators
The Telstra Group 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
Group interacts with are the Australian Competition and Consumer
Commission (ACCC), the Australian Communications and Media
Authority (ACMA), the Office of the Australian Information
Commissioner (OAIC), the Australian Securities and Investments
Commission (ASIC), the Australian Securities Exchange (ASX), and
Comcare.
The Telstra Group is subject to investigations and reviews from time
to time by regulators, including certain current investigations into
whether the Telstra Group has complied with relevant laws and
regulations. These are taking place in an environment of heightened
scrutiny and regulator expectation and include where the Telstra
Group 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.
Regulatory investigations and reviews may result in enforcement
action, litigation (including class action proceedings), and penalties
(both civil and in limited circumstances, criminal).
172 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | F89
2023.Financial Report.book Page 90 Wednesday, August 16, 2023 4:21 PM
Notes to the financial statements (continued)
Section 7. Other information (continued)
7.4 Commitments and contingencies (continued)
7.4.2 Contingent liabilities and contingent assets (continued)
(b) Common law claims
Certain common law claims by employees and third parties are yet
to be resolved. As at 30 June 2023, management believes that the
resolution of these contingencies will not have a significant effect
on the Telstra Group’s financial results.
(c) Indemnities, performance guarantees and financial
guarantees
In addition to the items disclosed in note 7.3.1, we have provided the
following indemnities, performance guarantees and financial
support through our controlled entities:
• indemnities to financial institutions to support bank guarantees
to the value of $254 million (2022: $303 million) in respect of the
performance of contracts
• indemnities and corporate guarantees 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 $274 million (2022: $232 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)
• an internal indemnity arrangement in connection to bank
guarantees procured from, and indemnities granted to, financial
institutions to the value of $254 million in respect of the
performance of contracts.
(d) Other contingent liabilities
Other contingent liabilities identified for the Telstra Group relate to
the ASIC deed of cross guarantee. A list of the companies that are
party to the deed and part of the Closed Group are included in note
6.2.2. Each of these companies that are part of the Closed Group
guarantees the payment in full of the debts of the other companies
in the Closed Group in the event of their winding up.
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 2023, management believes that the
resolution of these contingencies are not at a stage which supports
a reasonable evaluation of the likely outcome of the matter and
therefore, no provision has been made.
(e) Contingent assets
We had no significant contingent assets as at 30 June 2023.
7.5 Events after reporting date
We are not aware of any matter or circumstance that has occurred
since 30 June 2023 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:
7.5.1 Final dividend
The details of the final dividend for the financial year 2023 are
disclosed in note 4.2.
F90 | Telstra Group Limited and controlled entities
Telstra Group Limited and controlled entities | 173
Telstra Financial Report 2023 DirectorsDec with signatures for Print Report.fm Page 91 Wednesday, August 16, 2023 5:03 PM
Directors’
Declaration
Directors’ Declaration
This Directors’ Declaration is required by the Corporations Act 2001
of Australia.
The Directors of Telstra Group 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 2023 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 Group Limited and the Telstra Group as at 30
June 2023 and of the performance of Telstra Group
Limited and the Telstra Group, for the year ended 30
June 2023
(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
Group 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
17 August 2023
Vicki Brady
Chief Executive Officer and
Managing Director
174 | Telstra Group Limited and controlled entities
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Notes to the financial statements (continued) SignOffs with signatures for Print Report.fm Page 92 Wednesday, August 16, 2023 5:22 PM
Ernst & Young
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 Group Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of Telstra Group Limited (the Company) and its subsidiaries (collectively the Group), which
comprises the consolidated statement of financial position as at 30 June 2023, 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 2023 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
How our audit addressed the key audit matter
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, 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.
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, we selected a sample of
revenue transactions recorded during the year and 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
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,
contract transaction price and fulfilment costs.
• 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.
Reliance on automated processes and controls
Why significant
How our audit addressed the key audit matter
A significant part of the Group’s financial processes is 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, a number of which were significant to our audit.
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 strategy 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 those controls in new systems.
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Notes to the financial statements (continued) SignOffs with signatures for Print Report.fm Page 94 Wednesday, August 16, 2023 5:22 PM
Capitalisation of assets, including useful lives and amortisation
Why significant
How our audit addressed the key audit matter
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 assessment of useful lives;
• The timeliness of the transfer from assets in the course of
construction; and
• 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 of assets can be found at
Section 3.1 Property, Plant and Equipment and Intangible Assets.
Our audit procedures included the following:
• Assessed the effectiveness of the Group’s controls over the
acquisition and disposal of assets and the transfer from assets
in the course of construction.
• Evaluated the appropriateness of capitalisation policies.
• Selected a sample of costs capitalised during the year to
determine whether capitalisation was appropriate.
• Assessed the appropriateness of the date from which assets
commenced being depreciated.
We assessed the application of the Group’s annual assessment of
useful lives. 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 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 2023
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 2023.
In our opinion, the Remuneration Report of Telstra Group Limited for the year ended 30 June 2023, 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
17 August 2023
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Notes to the financial statements (continued) Shareholder
information
179
Shareholder
information
Listing information
Voting rights
Stock Exchange Listing
Telstra Group Limited is listed, and its issued shares are quoted,
on the Australian Securities Exchange (ASX). On 31 October
2022, Telstra Corporation Limited ordinary shares were
exchanged for Telstra Group Limited ordinary shares on a 1:1
basis for eligible Telstra Corporation Limited shareholders
under the scheme of arrangement between Telstra Corporation
Limited and its shareholders.
Markets on which our debt securities are listed
Telstra Group Limited also has debt securities listed on the
ASX. In addition, Telstra Corporation Limited has 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 31 July 2023:
Title of class
Identity of person or group
Amount owned
Listed shares
Listed shareholders
11,554,427,353
%
100%
Distribution of shares
The following table summarises the distribution of our listed shares as at 31 July 2023:
Size of holding
Number of shareholders
%
Number of shares
%
1–1,000
1,001–5,000
5,001–10,000
10,001–100,000
100,001 and over
Total
566,761
48.36%
307,498,143
2.66%
411,754
35.14%
979,294,647
8.48%
101,311
8.65%
725,123,885
6.28%
89,066
7.60%
2,133,132,398
18.46%
2,978
0.25%
7,409,378,280
64.13%
1,171,870
100.00%
11,554,427,353
100.00%
The number of shareholders holding less than a marketable parcel of shares was 25,562 holding 1,668,412 shares (based on the
closing market price on 31 July 2023).
180
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Shareholder information | Telstra Annual Report 2023
Substantial shareholders
As at 31 July 2023, we are not aware of any substantial shareholders.
Twenty largest shareholders as at 31 July 2023
The following table sets out the Top 20 holders of our shares (when multiple holdings are grouped together):
Shareholder name
1 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
2 J P MORGAN NOMINEES AUSTRALIA LIMITED
3 CITICORP NOMINEES PTY LIMITED
4 BNP PARIBAS NOMINEES PTY LIMITED
5 NATIONAL NOMINEES LIMITED
6 AUSTRALIAN FOUNDATION INVESTMENT COMPANY LIMITED
7 ARGO INVESTMENTS LIMITED
8 BNP PARIBAS NOMS PTY LTD DEUTSCHE BANK TCA
9 NETWEALTH INVESTMENTS LIMITED
10 BNP PARIBAS NOMS(NZ) LTD
11
IOOF INVESTMENT SERVICES
12 NETWEALTH INVESTMENTS LIMITED
13 NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
14 CUSTODIAL SERVICES LIMITED
15 NULIS NOMINEES (AUSTRALIA) LIMITED
16 UBS NOMINEES PTY LTD
17 NAVIGATOR AUSTRALIA LTD
18 TELSTRA GROWTHSHARE PTY LTD
19 MCCUSKER HOLDINGS PTY LTD
20 SARGENTS CHARITY LIMITED
Total for Top 20
Total other Investors
Grand Total
Amount owned
2,559,137,014
1,363,031,713
1,187,108,735
746,645,745
411,126,602
48,680,221
48,514,800
47,495,140
41,623,734
20,683,926
20,374,548
16,825,040
15,607,917
14,983,104
14,536,290
14,115,136
13,018,559
12,571,257
10,000,000
10,000,000
6,616,079,481
4,938,347,872
%
22.15%
11.80%
10.27%
6.46%
3.56%
0.42%
0.42%
0.41%
0.36%
0.18%
0.18%
0.15%
0.14%
0.13%
0.13%
0.12%
0.11%
0.11%
0.09%
0.09%
57.26%
42.74%
11,554,427,353
100.00%
181
181
182182
Reference
tables
Guidance versus reported results
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 nbn DA receipts less nbn net C2C and guidance adjustments. 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
FY22
$m
FY23
$m
Underlying
EBITDA
FY22
$m
FY23
$m
Reported
Total Income
22,045
23,245
Reported
EBITDA
7,256
7,862
Reported
Free Cashflow
Adjustments
Free
Cashflow
FY22
$m
FY23
$m
3,854
851
M&A adjustment1
(87)
0 M&A adjustment1
34 M&A adjustment1
841
2,595
Restructuring costs2
Net one-off
NBN receipts3
Spectrum payments4
Lease5
n/a
n/a
n/a
n/a
157
71
n/a
Restructuring costs2
91
Restructuring costs2
n/a
Net one-off
NBN receipts3
(233)
(37)
Net one-off
NBN receipts3
n/a
n/a
41
n/a
n/a
112
n/a
Spectrum payments4
n/a
Lease5
n/a
0
0
0
Spectrum payments4
Lease5
(775)
(774)
Guidance
Total Income
21,958
23,245
Guidance
Underlying EBITDA
7,251
7,950
Guidance
Free Cashflow
3,961
2,784
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 acquisitions and disposals of controlled entities, joint ventures, associates and other investments and any associated net gains or losses and
contingent consideration. Consistent with the guidance we provided to the market we are not adjusting (removing) FY23 Income, EBITDA or Free Cashflow for the
trading results of these acquisitions.
During FY22 we disposed of a 49 per cent interest in our towers business to non-controlling interests and 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.
During FY23 we paid stamp duty relating to Amplitel Pty Ltd (Amplitel) and acquired:
– Digicel Pacific Limited and its subsidiaries (Digicel Pacific);
– Media Innovations Holdings Pty Ltd and its subsidiaries (Fetch TV).
2. Adjustments for the strategic focus (T22 program) to establish a standalone infrastructure business, simplify structure, improve customer experience and cut costs.
FY23 adjustments include costs for Telstra's legal restructure including legal and IT costs.
3. 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.
4. Adjustment relating to the impact on free cashflow associated with our spectrum purchases and renewals for FY23 including:
– $29M for renewal of our national spectrum licence in the 900 MHz band. We surrendered this licence in December 2022 and received a refund from ACMA of $16m
– $57M for renewal of our national spectrum licence in the 26 GHz band
– $23M for renewal of our national spectrum licence in the 3.6 GHz band
– $3M spectrum licence in the 850 MHz band
– $16M payments for spectrum and apparatus licences in various spectrum bands
5. Adjustment is not relevant to the respective guidance measure.
n/a Adjustment is not relevant to the respective guidance measure.
183
183
Task Force on Climate-related Financial Disclosures Index
For information on Telstra’s climate-related governance, planning, strategy, activities and results for the financial year 2023 please
refer to the Understanding our climate risks section of this report. The Understanding our climate risks section aligns with the
Task Force on Climate-related Financial Disclosures (TCFD) framework. The location of the TCFD recommended disclosures are
summarised in the table below.
TCFD Recommendations
Governance
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
2023 Annual Report
page number
a) Describe the board’s oversight of climate-related risks and
36
opportunities.
b) Describe management’s role in assessing and managing
37
climate-related risks and opportunities.
a) Describe the climate-related risks and opportunities the
organisation has identified over the short, medium, and
long term.
37–39
b) Describe the impact of climate-related risks and
37–41
opportunities on the organisation’s businesses, strategy,
and financial planning.
c) Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario.
37–40
a) Describe the organisation’s processes for identifying and
41
assessing climate-related risks.
b) Describe the organisation’s processes for managing
climate-related risks.
c) Describe how processes for identifying, assessing, and
managing climate-related risks are integrated into the
organisation’s overall risk management.
41
41
Metrics & Targets
Disclose the metrics and
targets used to assess and
manage relevant
climate-related risks and
opportunities where such
information is material
a) Disclose the metrics used by the organisation to assess
climate-related risks and opportunities in line with its
strategy and risk management process.
42–43
b) Disclose Scope 1, Scope 2, and if appropriate, Scope 3
42–43
greenhouse gas emissions, and the related risks.
c) Describe the targets used by the organisation to manage
climate-related risks and opportunities and performance
against targets.
42–43
184
Glossary
Reference tables | Telstra Annual Report 2022
185
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.
To become carbon neutral, 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 are then 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.
Average Revenue Per User (ARPU)
Cloud
The measure of the average revenue
generated per unit or user.
Broadband
Describes a class of internet access
technologies, such as ADSL, fibre, 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.
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 was established with
Telstra Group Limited as the head entity
of the Telstra Group. Four key
subsidiaries sit under Telstra Group
Limited: Telstra Limited, Telstra InfraCo,
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 Agreements (DAs)
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 customer 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’.
186
Glossary | Telstra Annual Report 2023
Free cashflow
Millimetre wave (mmWave)
Service in Operation (SIO)
The cash that a company is able to
generate from its operations after
spending money required to maintain or
expand its asset base.
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.
Geostationary (GEO) satellite
A telecommunications satellite that is in
a fixed position and does not rotate with
the earth.
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.
Mobile data
Wireless internet access delivered over
the mobile network to computers and
other digital devices using portable
modems.
Mobile Virtual Network Operator
(MVNO)
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.
Low earth orbit (LEO) satellites
Reconciliation Action Plan (RAP)
A telecommunications satellite that is in
low-earth orbit can provide broadband
services to areas where fixed cables or
cellular can’t reach. It rotates with the
earth and, compared to traditional GEO
satellites, more are required in a
constellation to provide near total
coverage.
Memorandum of Understanding
(MoU)
A document describing the broad
outlines of an agreement that two or
more parties have reached.
Messaging
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 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.
Return on Invested Capital (ROIC)
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.
Roaming
A service which allows customers to use
their mobile phone while in a service area
of another carrier.
Refers to an active telecommunications
service to an end-user.
Strategic Net Promoter Score
(sNPS)
A measurement of customer advocacy as
a result of their overall experience with
Telstra – this is determined by their
likelihood to recommend or promote
Telstra.
Spectrum
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.
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.
187
2024
indicative
financial
calendar1
Half Year Results announcement
Thursday 15 February 2024
Ex-dividend share trading commences
Wednesday 28 February 2024
Record date for interim dividend
Thursday 29 February 2024
DRP election date
Friday 1 March 2024
Interim dividend paid
Thursday 28 March 2024
Director nominations open
Friday 7 June 2024
Director nominations close (by 5pm)
Friday 9 August 2024
Annual Results announcement
Thursday 15 August 2024
Ex-dividend share trading commences
Wednesday 28 August 2024
Record date for final dividend
Thursday 29 August 2024
DRP election date
Final dividend paid
Friday 30 August 2024
Thursday 26 September 2024
Annual General Meeting
Tuesday 15 October 2024
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
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
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 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.
Investor Relations
Telstra Group Limited
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
188
ABN 56 650 620 303
Incorporated in Victoria. Telstra Group Limited’s shares are
listed on the Australian Securities Exchange.
Websites
Telstra Investor Centre: telstra.com/investor
Telstra Sustainability: telstra.com/sustainability/report
Telstra Corporate Governance: telstra.com/governance
Telstra Customer Enquiries: telstra.com
Contact Telstra: telstra.com.au/aboutus/contactus
Keeping informed
To keep up to date with the latest news about Telstra:
• follow us on Twitter @Telstra_news
• follow us on LinkedIn at linkedin.com/company/telstra
• find our latest media releases at telstra.com.au/aboutus/media/media-releases
• subscribe to our sustainability newsletter by emailing us at sustainability@team.telstra.com
• visit Telstra Exchange at telstra.com/exchange
189
telstra.com/investor