Australian Wireless Broadband Bet Paying off for Telstra and Customers

Business Wire, Feb 11, 2008

BARCELONA -- An AUD$1.1 billion investment in a national high-speed wireless broadband network by Australian media communications company Telstra is growing mobile services revenue, subscribers and average revenue per user (ARPU) at world leading levels.

Telstra's Next G[TM] network, provides coverage over more than 2 million square kilometres (four times the size of Spain) to 99 per cent of the Australian population.1 It uses 3GSM HSPA technology and delivers superior rural and in-building coverage over other HSPA networks by using 850MHz spectrum.

In Barcelona today at the GSMA Mobile World Congress, Telstra's CEO Sol Trujillo said the Next G[TM] network had changed the lifestyles of consumer and business customers through capabilities such as moving data at speeds which are unsurpassed in the world on a national 3GSM wireless network.

Mr Trujillo said the percentage of Telstra's mobile subscribers on 3G was 38 per cent at the end of January 2008. This grew 11 percentage points in the past four months and represented a climb from only a few per cent when the network was launched in October 2006. Telstra expects it to hit between 60 and 70 per cent by 2010. Among post-paid consumer (non-business) subscribers, the proportion on 3G is already 60 per cent.

He said an ARPU differential of 3G subscribers over 2G subscribers has been maintained at more than A$20 since the network launch. In the December 2007 quarter, Telstra's 3G revenues exceeded 2G revenues for the first time.

Data accounted for 30 per cent of Telstra's mobile services revenue in the six months to December 2007, rising to 31.5 per cent in the month of December.

Telstra's non-SMS data revenues now exceed SMS revenues. In the September 2007 quarter, non-SMS data revenues grew 93.5 per cent, more than twice the industry average.

As industry segments testify to improved productivity due to the high speed Next G[TM] network, the percentage of Telstra's 3G post-paid subscribers using wireless broadband data cards in their laptops is 15 per cent. ARPU from these customers in the September quarter was nearly A$100 a month.

Telstra achieved double digit mobile service revenue growth in the six months to June 2007, ahead of European peers, and its December 2007 half-year figures will be released next week.

"In making our Next G[TM] bet, we had to differentiate Telstra in a market that was competing on price with little innovation. Our strategy was to provide customers with high speed wireless broadband backed by 1-click, 1-touch, 1-command simplicity, on any screen, in real time. It was to integrate content seamlessly across different devices, for voice, data and video," Mr Trujillo said.

Telstra built its national Next G[TM] network, with Ericsson as its partner, in an unprecedented 10 months and turned it up on one day. It has 6400 base stations with 300 added in the past six months.

"We joined a wireless ecosystem which included Ericsson, chip set manufacturer Qualcomm and device manufacturers including Samsung, LG and ZTE. We have an evolution roadmap with Ericsson which will deliver customers speeds of 21 Mbps in 2008 across our national NextG[TM] network--a world first--and 42 Mbps in 2009 using HSPA technology. Our partnership with Ericsson continues to break the speed barrier," Mr Trujillo said.

"Just like with the introduction of fixed line ADSL in the mid 1990s, people started using the internet because it was 'always on,' we believed the investment in high-speed wireless broadband would provide a customer experience that was also life changing.

"That has proved to be the case as Australians have embraced real time connections for data services, entertainment such as Mobile TV and music, information, transactions and other mobile services - for example, penetration of video calling on Next G[TM] is four times more than on our 2100 3G network."

Mobile TV is one of the new revenue streams. At December 31, 2007, more than 70,000 3G customers were monthly subscribers to Telstra's Mobile FOXTEL service with each subscriber watching about 54 minutes a month and spending almost A$11 a month.

Telstra will unveil a prototype online music concept in Barcelona this week which has the potential to revolutionise the traditional portable media player. Dubbed netTunity, the application eliminates the traditional link between a mobile music device and a computer, streaming audio directly from Telstra Next G[TM] network, the world's largest and most advanced national 3GSM network.

A survey conducted in January among Next G[TM] subscribers who use the network for more than voice and SMS showed how the mobile internet is changing lifestyles.

* 45 per cent of Next G[TM] subscribers using wireless data cards in their laptops bought goods, services or tickets online while 67 per cent used them for online banking and bill payments

* 67 per cent also used them to work away from the office;

* 21 per cent of mobile users watched entertainment over their mobiles, 30 per cent made a mobile video call and 93 per cent sent photos via their mobile.