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1 12 September 2011 Office of the Company Secretary The Manager Company Announcements Office Australian Securities Exchange 4 th Floor, 20 Bridge Street SYDNEY NSW 2000 Level Exhibition Street MELBOURNE VIC 3000 AUSTRALIA General Enquiries Facsimile ELECTRONIC LODGEMENT Dear Sir or Madam TELSTRA RETAIL SHAREHOLDER INFORMATION MEETING In accordance with the Listing Rules, I attach the presentation to be made by the CEO and CFO at the Telstra Retail Shareholder Information meetings being held between 12 and 19 September, for release to the market. Details of the meetings were provided to shareholders in the Telstra Annual Review, lodged with the ASX on 11 August, I also attach a document which is to be provided to attendees at those meetings. Yours faithfully, Carmel Mulhern Company Secretary Telstra Corporation Limited ACN ABN

2 TELSTRA RETAIL SHAREHOLDER INFORMATION MEETING Chief Executive Officer, David Thodey Chief Financial Officer, John Stanhope September 2011 DISCLAIMER This presentation summarises certain information included in Telstra s Explanatory Memorandum for the resolution under Item 2 at the Telstra Annual General Meeting on 18 October 2011: Telstra s participation in the rollout of the National Broadband Network. This should be read with that Explanatory Memorandum and the Notice of Meeting and should not be relied on for the purposes of shareholders considering that resolution. This presentation includes certain forward-looking statements that are based on information and assumptions known to date and are subject to various risks and uncertainties, assumptions and other factors that could cause the actual results or performance to be materially different from those expressed in, or implied by, these forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Telstra, which may cause actual results to differ materially from those expressed in the statements contained in these presentations. All amounts are in Australian Dollars unless otherwise stated. 2 1

3 COMPANY PERFORMANCE FINANCIAL RESULTS IN 2011 $ Billions FY10 FY11 FY11 Growth 2H11 Growth Sales Revenue % 1.8% EBITDA % 0.7% Profit After Tax % 0.3% Free Cash Flow % n/a Ordinary Dividends 28c 28c - - Results vs Guidance 4 2

4 OUR STRATEGIC PRIORITIES ARE WORKING 1.IMPROVE CUSTOMER SATISFACTION 2.RETAIN AND GROW CUSTOMERS 3.SIMPLIFY THE BUSINESS 4.BUILD NEW GROWTH BUSINESSES 5 CUSTOMER SATISFACTION IS IMPROVING BUT MORE TO DO SERVICE, PRICE, PRODUCT AND BRAND MORE THAN 280 NEW AND REFURBISHED TELSTRA STORES >$1 MILLION IN DONATIONS FOR DISASTER RELIEF CALLS TO KEY SERVICE & SUPPORT NUMBERS FROM A TELSTRA SERVICE IN AUSTRALIA NOW FREE CALL CENTRES OPEN 24 HOURS A DAY, SEVEN DAYS A WEEK TELSTRA CONNECTED SENIORS WORKSHOPS TECHNICIAN APPOINTMENTS AVAILABLE ON WEEKENDS DEDICATED HOME MOVE TEAM 6 3

5 A STRONG YEAR FOR CUSTOMER GROWTH Customer net adds ( 000) FY10 FY11 TOTAL CUSTOMERS Bundles ,043 Mobile broadband ,576 Total mobile customers 371 1,661 12,223 Retail fixed broadband ,413 Fixed Telephony lines ,370 7 NATIONAL BROADBAND NETWORK 4

6 NBN DECISION FRAMEWORK GOVERNMENT NBN POLICY CO-OPERATE The Directors unanimously recommend shareholders vote in favour of Telstra s participation in the roll out of the NBN. DO NOT CO-OPERATEOPERATE 9 A BETTER FINANCIAL OUTCOME FOR SHAREHOLDERS APPROXIMATE VALUE OF THE TRANSACTION $2.0bn $11.0bn $5.0bn $4.0bn Disconnection Payments and sale of lead-in conduits Infrastructure Access Payments Commonwealth Agreements & policy commitments Post-tax NPV of the Proposed Transaction at June

7 INDEPENDENT EXPERT S OPINION In Grant Samuel s opinion, the Proposal is in the best interests of Telstra and its shareholders The Independent Expert has concluded that: the value of Telstra if the Proposed Transaction proceeds is approximately $4.7 billion greater than under the best available alternative; and the value differential remains substantial ti even under a wide range of alternative assumptions Note: This assessment is post tax net present value at June KEY SHAREHOLDER PROTECTIONS LONG TERM CONTRACTUAL COMMITMENTS FOR CERTAIN INFRASTRUCTURE A ROLLOUT TERMINATION PAYMENT OF UP TO $500M GOVERNMENT PACKAGE OUR NATURAL HEDGE FROM EARNINGS FROM EXISTING NETWORKS 12 6

8 SUSTAINABLE FREE CASHFLOW GENERATION IN THE MEDIUM TERM Illustrative Free Cashflow trend of Telstra fixed line business and Proposed Transaction * For personal use only Free Cashflow Other payments under Commonwealth Agreements Incremental cashflow for TUSMA Services Infrastructure Access Payments Disconnection Payments Fixed Line business FY11 FY15 * Assumes NBN rollout proceeds as set out in NBN corporate plan 13 STRONG MOMENTUM IN THE BUSINESS DIRECTORS UNANIMOUSLY RECOMMEND NBN PARTICIPATION 7

9 Telstra s participation in the National Broadband Network IT S HOW WE CONNECT This document summarises certain information included in Telstra s Explanatory Memorandum for the resolution under Item 2 at the Telstra Annual General Meeting on 18 October 2011: Telstra s participation in the rollout of the National Broadband Network. This should be read with that Explanatory Memorandum and the Notice of Meeting and should not be relied on for the purposes of shareholders considering that resolution. The Explanatory Memorandum and Notice of Meeting have been disclosed to the ASX and will be sent to all registered shareholders. Telstra s shareholders are being asked to vote on Telstra s participation in the rollout of the National Broadband Network at the company s AGM on 18 October Telstra s Directors unanimously recommend shareholders vote IN FAVOUR of the resolution The Independent Expert, Grant Samuel, has concluded the Proposed Transaction is in the best interests of Telstra and its Shareholders The Directors have determined that participating in the NBN rollout would be the best course of action for Telstra as it will deliver an overall result that is materially superior to any other option realistically available to Telstra, given current Government policy. There are three key components of the agreements with NBN Co and the Commonwealth: Telstra s commitment to disconnect progressively copper services and HFC broadband services as the NBN is rolled out; Telstra s provision to NBN Co of long-term access to large volumes of infrastructure; and A range of Government measures. We said in June 2010, when we announced the Financial Heads of Agreement, the approximate $11 billion consideration across these elements was critical to ensuring the Board could support a deal and when we signed Definitive Agreements in June this year that remained the case. Compared to other alternatives the Proposed Transaction should provide Telstra with: A better overall financial outcome, contributing to sustainable free cashflow generation in the medium term; A more stable regulatory environment; and Greater strategic flexibility, enabling Telstra to maintain a strong focus on identified key areas of growth. INDEPENDENT EXPERT S OPINION The Independent Expert has concluded that the Proposed Transaction is in the best interests of Telstra and Telstra Shareholders. The Independent Expert s analysis shows that: The value of Telstra if the Proposed Transaction proceeds is approximately $4.7 billion* greater than under the best available alternative; and The value differential remains substantial even under a wide range of alternative assumptions (for example, as to the timing of the rollout of the NBN Fibre Network). *post-tax net present value as at June 2011 Telstra Corporation Ltd (ABN ) 12 September 2011

10 TELSTRA S PARTICIPATION IN THE NBN Background The Directors consideration of Telstra s participation in the rollout of the NBN was triggered by two major Government policy initiatives: The April 2009 decision to build and operate the NBN to provide fibre connections for high speed broadband services to 90% of Australian homes and businesses (subsequently increased to 93% of homes and businesses); and The November 2010 passage of legislation requiring Telstra to choose between voluntary structural separation or mandatory functional separation in relation to our fixed line business. The Government s policy initiatives will result in a net loss of value of Telstra overall, irrespective of whether Telstra participates in the rollout of the NBN. Telstra undertook a rigorous analysis of the options realistically available to it to ensure the best outcome for Telstra and its shareholders in these circumstances. This includes considering options that did not involve Telstra participating in the rollout of the NBN. Details of VOTE Telstra s 2011 Annual General Meeting is scheduled to be held at 10.00am (Sydney time) on Tuesday, 18 October 2011 at the Sydney Convention and Exhibition Centre, Hall No. 1, Darling Drive, Darling Harbour, Sydney, and will be broadcast live to venues in Melbourne and Brisbane. more information The Explanatory Memorandum and Notice of Meeting have been disclosed to the ASX and will be sent to all registered shareholders. It is also available from Telstra s Investor Relations website via to investor.relations@team.telstra.com, or by writing to Telstra Investor Relations Department, 242 Exhibition Street, Melbourne, VIC WHAT IS THE PROPOSED TRANSACTION? The Proposed Transaction involves the implementation of the Definitive Agreements by Telstra (subject to the Conditions Precedent being satisfied or waived). The Proposed Transaction and associated Government policy commitments are expected to deliver approximately $11 billion in post-tax net present value (NPV) as at June 2010, subject to a range of dependencies and assumptions. It will not be in the form of an upfront payment, but is the present value of consideration and benefits to be received over many years. This value does not include broader benefits which Telstra may gain from the Definitive Agreements and which are hard to quantify. approximate post-tax NET present value of the Proposed Transaction 1 $1.0bn $11.0bn $0.7bn $0.3bn $5.0bn $4.0bn Note 1: The values are discounted to the time of signing of the Financial Heads of Agreement in June 2010 to facilitate direct comparison with terms agreed at that time. Note 2: While the sale of Lead-in Conduits is covered in the Infrastructure Services Agreement, it is included in the Disconnection Payments component of the table since it relates to assets or services Telstra will not control once the NBN is built. Disconnection Payments and sale of Lead-in Conduits 2 Infrastructure Access Payments Value from the NBN Co Agreements TUSMA Services Housing estate fibre provision responsibilities Other 3 Value from Commonwealth Agreements and other policy commitments Post-tax NPB of the Proposed Transaction Note 3: Other includes contractural commitments by the Commonwealth towards funding for retraining and redeployment of Telstra staff, and migration of certain customers and services onto the NBN Fibre Network, as well as costs Telstra will avoid due to the public education campaign undertaken by NBN Co.