asx annpuncement re capital management

CAPITAL MANAGEMENT
The Telstra Board of Directors has undertaken with management its review of the
Company's strategy as part of the annual budget and planning process. The operating
strategy of Telstra has been reaffirmed and new capital settings have been established.
The Telstra strategy recognizes the shifts underway in communication technologies and
the changing needs and increasing service expectations of users. Improving the quality
of customer service is the key priority for Telstra over the planning period. Higher levels
of customer satisfaction will lead to lower costs, higher market shares and improved
financial returns.
Fixed network largely regulated voice products are being overtaken by wireless, high
bandwidth internet, and emerging applications and content services in the claim on
consumer spending and enterprise investment. Telstra will invest in new platforms and
technologies while maintaining and optimizing the performance and returns from its
existing networks and products. Investment will align with the growth drivers of
wireless, broadband, IP telephony, web and managed services, and to support the
commitment to continuous improvement in service delivery.
The Board and management agree that the Company’s focus should continue to be on
Telstra's existing Australian, New Zealand and Asian operations and upon global services
to our multinational customers.
Telstra aims to drive cost and productivity improvements within its Six Sigma framework
such that earnings per share and free cash flows continue to improve over the period of
the next Strategic Plan.
The Company expects future cash flows from operations to remain robust. Accordingly,
the Board has adopted the following capital management policies from the 04/05 year:
The Board’s policy will be to declare ordinary dividends of around 80% of normal
profits after tax.
The Board expects to return $1.5 billion to shareholders each year for the next
three years through special dividends and/or share buybacks, subject to
maintaining the Board’s target balance sheet ratios.
The Board notes that after appropriate capital expenditures and the proposed capital
returns to shareholders, the Company will have sufficient remaining balance sheet
capacity to support well targeted acquisitions of moderate scale and which satisfy strict
financial criteria.
21 June 2004