Business Description:
Telstra Corporation Limited (TLS) is a provider of telecommunications and information products and services. The principal activities are provision of telephone lines; national local and long distance, and international telephone calls, mobile telecommunications, data, internet and on-line, wholesale, telephone directories and pay TV.

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 down 16.8% to $3.23bn for the year ended 30 June 2011. Revenues from ordinary activities were $25.09bn, up 0.7% from last year. Diluted EPS was 26.1 cents compared to 31.3 cents last year. Net operating cash flow was $8.02bn compared to $9.69bn last year. The final dividend declared was 14 cents, taking the full year dividend to 28 cents, in line with 28 cents last year. For fiscal 2012, the company expects to return to full year earnings growth with low single digit revenue growth and low single digit EBITDA growth on the back of a strong second-half performance in fiscal 2011. Capex to sales will continue to be around 14% of sales with free cash flow of between $4.5 and $5.0bn. The NBN is not expected to have a material impact on the company's financial results in 2012.