Our financial year 2015 results demonstrate that our strategy is working. Customer advocacy has improved, we continued to invest and drive value from our core business and we have laid the foundations for sustainable growth in our new businesses.
The numbers and commentary in the product, expense and segment performance sections have been prepared on a continuing operations basis and align with the statutory financial statements. This means that the results from CSL New World Mobility Limited (“CSL”), sold in the prior year, are included in the financial year 2014 comparatives. Results from the 70 per cent stake in our Sensis directories business, also sold in the prior year,are classified as a discontinued operation and as such are not included in the comparatives. The financial position section has been prepared on a continuing and discontinued operations basis (that is, they include the results.
We report segment information on the same basis as our internal management reporting structure as at 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:
Telstra Retail brings together our key retail businesses including Telstra Consumer, Telstra Business, Telstra Media Group and Telstra Health™. Telstra Retail provides a full range of telecommunications products, services and solutions to consumer customers and to Australia’s small to medium sized enterprises, as well as the provision of Foxtel and digital content services. Income in this segment grew by 5.3 per cent to $17,252 million and EBITDA increased by 0.9 per cent to $9,449 million.
We saw strong growth in our Consumer business unit with income growing by 6.5 per cent. As a result of the continued focus on customer advocacy and innovative new products and plans introduced during the year, we saw good growth in mobiles and fixed data with post-paid handheld average revenue per user (ARPU) increasing by 6.3 per cent to $61.72 and an increase of 158,000 fixed data subscribers. In Telstra Business, income grew by 2.9 per cent driven by a 3.3 per cent growth in mobile services revenue, revenue from unified communications, cloud hosted solutions and contributions from TSM (formerly SNP Security) and AFN Solutions which were acquired during the first half of the year. Telstra Health also contributed income of $78 million.
Global Enterprise and Services:
Global Enterprise and Services (GES) is responsible for sales and contract management support for business and government customers in Australia and globally. It provides product management for advanced technology solutions including data and IP networks, and NAS products such as managed networks, unified communications, cloud, industry solutions and integrated services. GES provides technical delivery support for all NAS customers globally and the recently formed Telstra Software Group and its acquisitions also form part of GES
Income for GES increased by 7.9 per cent to $5,674 million due to strong growth in NAS and enterprise mobility in Australia, our international GES customers (GES Global) and Telstra Software. GES EBITDA declined by 1.7 per cent to $2,439 million largely due to the ongoing change in product mix from higher profit carriage to lower profit NAS products and GES Global businesses, along with the negative EBITDA impact from the Telstra Software Group acquisitions which are businesses in their early stages. The NAS profitability margin continued its trend of improvement in FY15 driven by scalable standardised offerings, a lower cost delivery model and operational leverage.
Telstra Wholesale is responsible for the provision of a wide range of telecommunication products and services delivered over Telstra networks and associated support systems to non-Telstra branded carriers, carriage service providers and internet service providers. Wholesale income grew by 11.1 per cent to $2,586 million. This was largely driven by an increase in NBN infrastructure receipts which have increased in line with the NBN rollout. EBITDA contribution increased by 12.7 per cent to $2,398 million.
Through our Access for Everyone program, we help people on a low income or facing financial hardship to stay connected. Since its inception in 2002, we’ve provided benefits to the value of more than $2 billion, by working with more than 2,000 community organisations across Australia to deliver these programs. In FY15, the benefit provided was $128.8 million, a reduction of 11 per cent compared to FY14, largely reflecting a lower take up of our pensioner discount on fixed-line home phone services as more customers are moving to bundles. Around 885,000 pensioners received the discount this year, compared to 980,000 in FY14. We also provided home phone line rental relief for around 74,500 households and distributed around 72,500 pre-paid calling cards. Every month we also provided rebates on Telstra bills for around 2,000 customers seeking emergency relief.
We are committed to providing our customers with more value and the confidence that they will not encounter unexpected usage charges
This year we became the first telco in Australia to make calls from mobiles to 1800 numbers free of charge. We were also the first to introduce real time mobile data usage alerts for our post-paid mobile customers when they reach 50 per cent, 85 per cent and 100 per cent of their included monthly data allowance.
We want people to participate safely in the online world by providing the networks, products and services that make it easy to do so. This year we introduced a number of new consumer products including Telstra Broadband Protect and Telstra Mobile Protect to help our customers stay safely connected. We are committed to providing consumers with the information they need to have a positive online experience. To access our free cyber safety materials, visit telstra.com/cybersafety.
As a large telecommunications company with a presence across Australia and a global footprint, we recognise that our long term ability to prosper is dependent on how we respond to the changing social and environmental expectations of our employees, customers, investors, regulators and the wider public. These expectations increasingly extend beyond our own operations and into our supply chain and relationships with our business partners.
We have been a signatory to the United Nations Global Compact since 2011 and are committed to supporting its principles – on human rights, labour rights, environment and anti-corruption – wherever we operate. We implement our commitment through a range of policies, management systems, strategies and initiatives that reflect the diverse range of conditions our business operates in. This year we updated our Human Rights Policy to more closely align with external developments such as the publication of the United Nations Guiding Principles on Business and Human Rights – the global standard for preventing and addressing adverse human rights impacts linked to business activity – and internal policy changes including updates to our Code of Conduct.
Telstra Risk Management
The framework is designed, implemented and reviewed via our ‘three lines of defence’ accountability model, which comprises the following:
• First Line – business stakeholders and operational management who are responsible for identifying, assessing and managing their risks
• Second Line – the Chief Risk Office, and risk management teams in the business units, who are responsible for risk and compliance frameworks, oversight and monitoring
• Third Line – our Group Internal Audit function, who are responsible for providing independent assurance on governance, risk management and internal control processes.
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