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Business Description: Telstra Corporation Limited (TLS) is a provider of telecommunications and information products and services through its Australian and offshore operations. TLS has a wide range of businesses namely fixed broadband, mobile, data and IP, network application & services (NAS), digital media and international.
Strategy Analysis: The engineered focused 2005 Transformation involved a massive network upgrade with the creation of the Next G(TM) and Next IP(TM) networks. The transformation strategy included significant cultural change, building next generation networks to support growing demand for IP-based services and simplifying IT systems. The launch of Next G(TM) and Next IP(TM) networks was very successful providing a distinct competitive advantage. Revenue from traditional PSTN services is falling although mobiles, internet, and content are offsetting this deterioration. Project New started in October 2010 and is customer focused aimed at improving customer service; retention and growth in customers; and simplifying the business. It was service oriented rather than cost focused aimed at transitioning Telstra to a successful sales and marketing centric company based on significant media and communications assets. The introduction of a government owned and sponsored NBN has changed the Australian telecommunications landscape. The signing of the agreement between TLS, NBN Co and the government has removed most of the uncertainty surrounding TLS. FY11 was a transition year as management positions TLS to compete in a rapidly changing and more challenging market. Focus is on retaining and growing the customer base.
Telstra Corporation reported NPAT up 8.8% to $1.6bn for the half-year ended 31 December 2012. Revenues from ordinary activities were $12.6bn, up 1.5% from the same period last year. Diluted EPS was 12.8 cents compared to 11.8 cents last year. Net operating cash flow was $3.28bn compared to $3.82bn last year. The interim dividend declared was 14.0 cents, in line with 14.0 cents last year. Looking ahead, the group confirmed fiscal 2013 guidance of low single digit total income and EBITDA growth, with free cash flow of between $4.75bn and $5.25bn. The group expects capital expenditure to be around 15% of sales.
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