Telstra : 2022 Annual Report (Spreads)

Telstra Annual Report 2022

We believe it's people who give purpose to our technology

So we're committed to staying

Telstra Corporation Limited

ABN 33 051 775 556

Our 2022 reporting suite

Our FY22 reporting suite includes:

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 2022 Telstra Annual Report (this report)

which describes our strategy, financial performance and remuneration practices for FY22.

Our 2022 Corporate Governance Statement

which provides you with information about governance at Telstra.

Our 2022 Bigger Picture Sustainability Report

which provides an in-depth look at our approach and performance in relation to our most material social and environmental topics during FY22.

Our 2022 Climate Change Report

which summarises our climate-related governance, strategy, risks, targets and activities aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Our 2022 Human Rights and Modern Slavery Act Statement

which provides an overview of how we identify, manage and mitigate the specific risks of modern slavery in our operations and supply chains.

These reports are all available on our governance website at telstra.com/governance.

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	We're one team and embrace the		We show care in all that we	What we do is complex, but we
goals and deliver them - for our	value each of us bring. Our (super)		do. We do the right thing	always make things simple for our
customers, shareholders and	power lies in working together to		for our customers, our	customers and each other. Simple
communities. By speaking up,	deliver for our customers. We're		communities, the planet,	doesn't necessarily mean quick.
being curious to learn and valuing	each accountable for our actions		ourselves and each other -	We keep the simple, simple.
different perspectives we	and do what we say we're going		even when no one's watching.
challenge the status quo and	to do.
make change.

These are the values we stand for - the values by which we measure all of our actions.

Putting these values into action will help us to build a connected future so everyone can thrive.

Front cover image: Jane, Telstra team member, Bathurst Call Centre, NSW

The sections of our Annual Report titled Chairman and CEO message, Strategy and performance, Our material risks, Outlook, and Full year results and operations review comprise our operating and financial review (OFR) and form part of the Directors' report. Our OFR, Directors' report and Financial report were released to the ASX on 11 August 2022 in the document titled 'Financial results for the year ended

30 June 2022' which is available at telstra.com/investor.

Contents

Chairman and CEO message	2
• CEO transition	4
• FY22/T22 achievements	5
Strategy and performance	6
• FY22 financial performance	7
Our material risks	14
Outlook	18
Full year results and operations review	20
Board of Directors	30
Senior management team	33
Sustainability	34
Governance at Telstra	35
Directors' Report	37
• Message from the People and Remuneration Committee Chair	42
• Remuneration Report	43
Financial Report	75
• Financial statements	77
• Notes to the financial statements	83
• Directors' declaration	160
Shareholder information	165
Reference tables	169
Glossary	173
Indicative financial calendar	176
Contact details	176

Chairman and CEO message | Telstra Annual Report 2022

Chairman and CEO message

From T22 to T25 - our new strategy for growth

In FY23 we move from T22 to T25. The move to T25 marks an exciting new era in Telstra's history, one that will see us accelerate growth from our core as well as continuing to scale our successful Health and International businesses while we invest in new businesses like Telstra Energy, where we see opportunities in the future.

We will build on the simpler world we have created for customers and give them an exceptional experience with even greater personalisation, more consistency across our channels, and the products and services they need to connect as individuals and grow as businesses.

COVID-19 has turbo-charged the digitisation of businesses, under-scored the critical importance of connectivity and transformed education and healthcare. Norms around how - and where - we work socialise and educate ourselves have also been turned on their head. At the same time geopolitics is about as volatile and uncertain as most of us have seen in our lifetimes, and that has changed the threat landscape and the demands on our cyber defences and strategic supply chains. Inflation and cost of living pressures also continue to challenge. And all the while the climate continues to change, with a corresponding increase in the frequency and severity of natural disasters.

All of these things will shape our country and our planet over the next decade, and they will shape Telstra. But with the transformative changes we have

Dear Shareholders,

Thank you for your continued support and investment in Telstra during the 2022 financial year.

Four years ago, your company embarked on a bold transformation strategy to fundamentally change Telstra for the better and this year, we are delighted to report, those four years of discipline, focus and hard work under our T22 strategy have paid off and your company is now positioned for continued growth.

Our investments in innovation and technology, in digitisation and networks, in improving our customer experiences and ways of working, and our disciplined approach to capital management mean Telstra today is a fundamentally different company with an incredibly bright future.

A summary of our many achievements under T22 is included and more information is available on these

Importantly, and even while the business was being transformed, we maintained a disciplined approach to our capital management, and this year our financial performance enabled the Board to resolve to pay a final dividend for FY22 of

8.5 cents per share, returning $1.9 billion to shareholders. An additional $1.35 billion was also returned to shareholders via an on-market share buy-back following the sale of a non-controlling interest in our Amplitel towers business for $2.8 billion.

Work is also well progressed on our proposed restructure. The Corporate Restructure is a legal re-organisation of the Telstra Group. Under the Corporate Restructure, a new structure will be established with New Telstra Corp as the head entity of the Telstra Group. Four key subsidiaries will sit under New Telstra Corp:

• ServeCo - which will own and operate the ServeCo Business;
• InfraCo Fixed - which will own and operate the InfraCo Fixed Business;
• Amplitel - which owns and operates the Amplitel Business. The Telstra Group's 51% interest in Amplitel is held by Amplitel HoldCo; and
• Telstra International - which will own and operate the International Business.

The Corporate Restructure is a key component of the T25 strategy Telstra announced last year. It is an important next step in Telstra's drive to increase focus on its customer and infrastructure businesses, increase transparency of the assets in these businesses, and create greater flexibility and optionality to realise value from the Telstra Group's fixed infrastructure assets over time.

The Corporate Restructure is an internal legal re-organisation and will not, in itself, result in any immediate change to the underlying assets and business activity of the Telstra Group as a whole.

At the same time we have also continued to build on our work as a leading responsible business. Telstra is a key contributor to the economy, a major employer and a significant user of resources, so we have a responsibility to make contributions to the betterment of society.

That means the obligations we have to our customers are not just defined by the small print of our contracts but by our purpose and values as an organisation.

It also means continuing to take a leading position and acting on key issues including climate change, diversity, digital inclusion and human rights. It also means working to rebuild

We will take advantage of the many great strides made in our 5G rollout and boost capacity, speed and population coverage of our mobile network. We will also expand our regional network by an extra 100,000 square kilometres so we can continue to deliver leading mobile coverage and build on our network leadership.

We will continue to improve our reputation as a responsible business, further reducing our carbon emissions, supporting our most vulnerable customers and continuing to build fairness, inclusion and accessibility into all that we do. We know we are changing the business for the better, but we also know we need to continue to work hard to convince customers of the benefits of the changes so they want to do business with us.

We will continue to evolve how we work so that we build on what we have created by using Agile which has completely changed the way we do business, making us faster to market, more efficient and more customer focussed. Hybrid ways of working are also enhancing the flexibility in our workplaces and we continue to ensure our teams have all the learning opportunities and tools they need to grow so that we truly become the best place to work.

And, we will finally leave behind the nbn headwinds that have impacted our financials and make the most of the productivity gains we have made across the business to deliver sustained growth and more value for our shareholders.

We were successful with T22 because we were bold. We set ourselves some big, ambitious goals and executed with discipline and transparency. We will take this same disciplined approach with T25.

made through T22, and the changes we will continue to make through T25, we are in the best possible shape to deal with them, and to help our customers do the same.

Our new era of growth will also be led by a new-look leadership team with Vicki Brady and Michael Ackland taking on the CEO and CFO roles respectively from

1 September. A new Group Executive of our Consumer

• Small Business unit will also be appointed to drive our customer focus.

Thank you

The Telstra Board and senior management team would like to sincerely thank our millions of customers for their ongoing support during the year, because ultimately without them, there would be no Telstra. Thank you also to every Telstra employee for the great job you have done, often in trying circumstances, and for your constant willingness to step up and do what is needed.

The Board would also like to acknowledge and thank retiring directors Margie Seale and Peter Hearl for their outstanding contribution over many years.

And most importantly thank you, our shareholders, for your continued support of Telstra.

John P Mullen

Chairman

and many other key initiatives in the Strategy and Performance section of this report.

All of these businesses will continue to focus on creating innovative products and services, supporting customers and delivering an exceptional customer experience. Intercompany Agreements (ICAs) have been or will be established between the entities to help ensure they each have the infrastructure access, services and support required to enable them to achieve this.

trust with First Nations communities and we were pleased to have launched our new Reconciliation Action Plan recently which sets outs our commitments and actions we will take. We encourage you to learn more about our response to these key issues, and our broader approach to responsible business in our Bigger Picture 2022 Sustainability Report, which will be available from

26 August 2022.

Thriving in a challenging environment

Of course, Telstra doesn't exist in a vacuum and just as we have transformed over the past four years,

so too has the world around us. Technology innovation continues to accelerate, with the metaverse rapidly taking shape, 5G and 4G near-pervasive, and IoT and AI reaching real scale.

Andrew R Penn

Chief Executive Officer and Managing Director

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Earlier this year I announced Vicki Brady would be the new Chief Executive Officer of Telstra from 1 September, 2022, replacing Andrew Penn who is retiring after more than seven years in the role.

Andy has led Telstra during a period of significant change and will be known for his courage in setting a bold ambition through the T22 strategy to deliver a transformed experience for customers, shareholders and employees.

During his time as CEO, Andy also developed a strong team to ensure the ongoing successful leadership of the company. The greatest testament to this was the ability to announce an internal successor to the role of CEO and I'm thrilled to welcome Vicki Brady into the role.

Having started her career with KPMG, Vicki subsequently worked in a range of finance, commercial and strategy roles before moving into broader business leadership positions. Vicki

FY22/T22 achievements

Our shareholders

16.5 cents per share total dividend	$2.7b productivity savings,
fully franked and $1.9b returned to	further strengthening
shareholders1	balance sheet

Chairman and CEO message | Telstra Annual Report 2022

Sale of non-controlling 49 per	Proposed restructure to
cent interest of our InfraCo	better realise the value of
Towers business for $2.8b,	our infrastructure assets,
approx 50% of net proceeds	take advantage of potential
returned to shareholders via	monetisation opportunities
an on-market share buyback	and create additional value
	for shareholders

CEO transition

-

Message from the Chairman

There is no doubt T22 has delivered beyond expectations and has laid the foundations for Telstra's T25 strategy and a renewed focus on growth and innovation. During his time as CEO, Andy has driven a focus on digitisation underpinned by a commitment to simplifying our products and services for our customers and employees. He has also maintained our leadership in mobile and fixed networks, including

joined Telstra in 2016 and has held the role of Group Executive, Consumer and Small Business in addition to her current role of CFO and Group Executive responsible for Strategy and Finance, which she was appointed to on 1 July 2019. She is an experienced executive leader, who has built a strong and deep understanding of telecommunications and technology on top of her financial expertise.

Our customers

All Telstra Consumer & Small	Over 4.5m Telstra Plus members,	We have reduced our TIO	Telstra Group eNPS achieved
Business calls now answered in	and 45b points redeemed	complaints by 44% since FY21	+37, a +18 uplift for T22
Australia - calls also down 71%

recently through our investment to lead on 5G.

Delivery of the T22 strategy has seen Telstra return to underlying growth, achieve significant customer experience improvements, reduce costs by $2.7 billion and reach high performing employee engagement levels with more than 17,000 people in the organisation now working in Agile.

She has a Bachelor of Commerce from the Australia National University, a Masters from Stanford University Graduate School of Business, is a member of the Institute of Chartered Accountants Australia and New Zealand and is a graduate of the Australian Institute of Company Directors.

Vicki has made a significant

Our people

Employee engagement at global	One of Australia's largest
high performing norm levels	Agile workforces - more than
	17,000 people

Flexible and hybrid work leadership - incl. location agnostic employment contracts

Exceeded our target to recruit new capabilities in new areas such as software engineering, data analytics, cyber security and artificial intelligence with more than 1,500 new hires

In recent years, not only has Andy ensured the successful delivery of our T22 commitments he has provided leadership at what has truly been an extraordinary time as we have navigated both as a company and a nation through the challenges of the pandemic.

While in his role Andy made important contributions to Australian society including through his role as a Male Champion of Change advocating for diversity in the workplace, as Chair of the Australian Governments Industry Advisory Committee on Cyber Security and in the Arts where he received the 2020 Creative Partnerships Australia's

contribution to Telstra including her work in developing our new go-to-market plans as part of the T22 strategy. She also played a key leadership role in the development of the T25 strategy and is well placed to lead the company through its next phase. She could not be more qualified to take over the reins to deliver on our T25 commitments.

On behalf of the Board, I would like to thank Andy for his extraordinary contribution to Telstra and congratulate Vicki on her appointment.

Our community

Over 17 million free calls made from Telstra payphones

We are targeting a 50% reduction in absolute greenhouse gas emissions by 2030, from a FY19 baseline. During FY22 we extended this target to also include scope 3 emissions

Blocked over 200 million	Helped more than 745,000
scam calls from reaching our	customers in vulnerable
customers since introducing	circumstances to stay
our scam call blocking feature	connected
in mid-2021

Business Leadership Award for his exceptional contribution to Australia's cultural life.

John P Mullen Chairman

Our network

Australia's largest mobile network	Invested $11b in our mobile	Telstra 5G now covers 80% of	Own or operate 400,000km of
covering more than 2.6 million	network over the last 7 years,	the Australian population	subsea cables - enough to lap
square kilometres of land	including $4b regional mobile		the world 10 times
	network

1. The statutory financial results for the full year ended 30 June 2022 filed on 11 August 2022 contained a typographical error which has now been corrected.

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Strategy and performance | Telstra Annual Report 2022

Strategy &	FY22 financial
performance	performance

$22.0 billion

Total Income on a reported basis1

$7.3 billion

Earnings Before Interest, Tax,

Depreciation and Amortisation (EBITDA)

$7.3 billion

Underlying EBITDA on a guidance basis2

$1.8 billion

Net Profit After Tax (NPAT)

Total FY22 dividends 16.5 cents per share fully franked

$1.9 billion returned to shareholders

Maintained A-band credit ratings

$2.7 billion reduction in underlying fixed costs since FY16

1.Total income excluding financial income.

2.This guidance excludes material one-offs, such as mergers and acquisitions, disposals, impairments, spectrum, restructuring costs and such other items as determined by the Board and management.

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