Telstra Group Limited (TLS) Earnings Call Transcript & Summary

Well, good morning, shareholders. I'm Nick McKechnie. I am the Communications Executive at Telstra, and it's my pleasure to be your MC today. Before we start official proceedings, I'd like to welcome to the stage Aunty Norma Ingram.

[Foreign Language] Morning, everyone. How are we? We have fun getting here this morning? It is my great pleasure and responsibility to welcome you to country this morning for your AGM. I want to acknowledge all of you for being here. I think you've got some buses or something here as well, I think. But it is a big responsibility for me. I'm Aunty Norma Ingram. Our usual protocol is that aboriginal elders are called Aunty or Uncle. So I'm Aunty Norma. Just don't call me late for dinner. But I always love to do an aboriginal welcome to country because it is so important. I'm from mid-western New South Wales, a town called [indiscernible] just past Bathurst. It's my mother's traditional country, and I could trace my ancestry back through her way back before Captain Arthur Phillip came. My father is Riverina. But I have lived on Gadigal country where we are today for many, many years, and I am acknowledged and recognized and respected aboriginal elder in this community. So I want to acknowledge that we're on the traditional lands of the Gadigal people of the Eora Nation. The Gadigal is one of 29 small clan groups that is Sydney area out to Redfern Waterloo. The Gadigal, like all of our over 200 aboriginal nations or language groups that we have right across this country have cared for this country for over 60,000 years. I've got to tell you my friends, 60,000 is really a Western concept. We always say we've been here since the dream time, and we will continue to be here. And I'm so proud that I can say I belong to the longest continuous practiced culture on the entire planet. So you could see, go anywhere in Australia, you can see aboriginal culture practiced as it was practiced 60,000 years ago. One of our major, I guess, aspects of an aboriginal culture is our kinship system. So our kinship system is not just our human relatives. They are our fauna and flora, our animals and our plants. And so what we say is we have respect, responsibility and reciprocity. So it is our responsibility as aboriginal people and aboriginal elders to look after country, to look after our family, our animals, our plants. Because what it means is that if we look after them, they can look after us. And it's what aboriginal welcome to country is all about. It's about acknowledging Mother Earth. It's about saying yes to Mother Earth. But it's far more than that. It's about acknowledging that 60,000 years of culture. It's about acknowledging the people who have taken care and continue to take care. And as Australians, you also have a part to play in that as well, and it shouldn't be just up to aboriginal people to care for country. This is our country. But we praise Mother Earth, and we pay a responsibility to her through our songs, our dances, our stories. And if you look at the Gadigal, the Gadigal are Sunrise people, they are salt water. Their totem is the whale. And so all of those things are very important to us as aboriginal people with our 200 aboriginal nations right across this country. And we will continue to look after country. We will continue to pay respect. I want to acknowledge elders, most certainly, aboriginal elders right across the country, the elders who have gone before us, our elders who are here with us now and I want to acknowledge elders from other nations and other countries. So important because they are the ones who have set the footprints. They are the ones who hold the history who hold the law and who guide us if we just want to have a look and just pay attention to what they're doing. So I just want to congratulate Telstra. I was looking at the videos and I thought, just we've come a long way since smoking, since we sent up the smoke signals [indiscernible] We're able to -- Telstra look at that until I thought Telstra is still able to work with our traditional owners, our aboriginal people, our custodians, still able to work with them, looking at ancient knowledge, ancient cultures with modern-day technology. So I do look at that note, I thank Telstra for making those connections. Because as I said and I continue to say, our people continue to look after country. And it's really great that Telstra can do that and work with our people so that we're not losing our land, so that we're not digging up our land without doing it the right way and the respectful way. So I just wanted to congratulate you on your AGM, your Annual General Meeting. I just do want to say it's been a great pleasure. We have not, as aboriginal people in this country, have not ceded our lands. We have never signed any treaty. So it's great that we can work with people with companies in this country. And so what I say -- when you get the chance, take off those shoes and those socks, stand on Mother Earth, feel her power, whether it's sand or dirt or grass or whatever, stand there and you will feel the power. Talk to Mother Earth. Tell her that you respect her. Tell her that you will look after her, and then she will look after you. So as we always say, always was, always is, always will be aboriginal country. Let's think about that. And I want to thank you all, and I want to welcome you to aboriginal country. Welcome to the Gadigal Country and just continue to think about that and how we can pay respect to Mother Earth and really look after her. So thank you, everybody. Welcome to country, and enjoy your AGM and make some good decisions. Thank you.

Well, thank you so much, Aunty Norma. I for one will look forward to taking my shoes off afterwards and connecting with the earth. But it is so important that we do all listen and learn. So that was a wonderful welcome to country, and thank you very much. Well, welcome to everyone in the room today. It's great to see so many shareholders here today after not being able to meet in person for the last few years. Welcome also to everyone joining us online here today from wherever you may be. Today is a special day for us as we have not 1 but 2 shareholder meetings. This is the first one, our Annual General Meeting. Once we finished our AGM after a short break, we'll hold the second meeting, which is the scheme meeting for our proposed corporate restructure. We'll be serving a light lunch at around midday today. However, if the AGM has not finished by that time, we will not be adjourning for lunch. And this is our first-ever hybrid AGM with shareholders joining us in person, online and by phone. So it's going to run a little differently to previous meetings. For those of you here in the room, you're here today, you'll have been given a card when you registered this morning. Yellow cards are for shareholders who may speak and vote. Blue cards are for shareholders who may speak but not vote. You will need your card to ask a question or to reenter the meeting. And you can see those details from the slide up behind me. If you have any queries about how to vote, please speak with one of our staff in the room, who will be very happy to help you, or in the shareholder registration area outside, and they'll also be happy to assist you. The procedure on how to ask a question in the room is being shown on the screen. For shareholders joining us online, on your screen, you'll see our virtual meetings guide. This contains all of the information you'll need about how to vote and ask questions. You can also call the help number that's shown on your screen if you're having any difficulties. And in terms of how we'll manage shareholder questions today, for each question session, we'll deal with questions from the floor here first, then we'll move to online questions followed by phone questions. I'll be reading the online questions to the Chairman as they have been written by the shareholders. If we can't answer your questions fully or we can't get through all of the questions today, we'll certainly respond to any unanswered questions after the meeting, either directly or through the answers to common questions, which we will put on our AGM website. If you have an individual customer or shareholder issue, please speak with one of our customer service staff here today, who again will be very happy to assist you. For shareholders submitting questions online, one of our customer service or share registry staff will be in touch with you after the meeting. The shareholders joining us online the online platform is now open, and I would encourage you to submit any questions that you have now. So with all of those procedural matters out of the way, I'd like to hand over to your Chairman, John Mullen.

Great. Good morning, ladies and gentlemen. My name is John Mullen, and it's my great pleasure to welcome you this morning to our 2022 Annual General Meeting. Thanks very much to everyone for joining us and for your continued support and investment in Telstra. Can I also start by saying I'm delighted again to be back speaking to a room full of real people and shareholders once again. But as Nic said, this, of course, is a hybrid meeting. So a very warm welcome to the many shareholders who have chosen to join us online. A quorum is present. And therefore, it's my pleasure to formally declare today's meeting open. A notice of meeting was distributed earlier, setting out the business and resolutions to be considered today. And I propose to take that notice as read. There are a number of items of business on today's agenda, and all of them are now being shown on the screen. Voting on items 3 to 5 will be conducted by poll, and that poll is now open. Instructions on how to participate in the poll were distributed earlier, but assistance is available at any time should you need it. It's important to also point out that following the AGM, after a short break, we will reconvene for a separate scheme meeting. The scheme meeting is to seek shareholder approval on the scheme of arrangement, the next step in our proposed corporate restructure. The restructure was a key component of our T22 strategy and is now a key part of our new T25 strategy that was announced last year. As we'll discuss at the scheme meeting itself, the restructure is an important next step in our drive to increase the transparency of our infrastructure assets and to improve management focus on our infrastructure and customer businesses and, consequently, provide us with more flexibility to create additional value for you, our shareholders. Now I'm very pleased to be joined on stage today by all of my fellow Board members, Company Secretary, Sue Laver; and our CFO, Michael Ackland. Current directors: Craig Dunn and Eelco Blok are also both standing for reelection today, and you'll hear from each of them shortly. Sarah Lowe from our auditors Ernst & Young is also here today. And I'm sure she should be very happy to answer any questions that you may have on the conduct of the audit or on the auditor's report itself. Our senior management team is also present. And in many ways, today marks the end of one era for the company and the beginning of another. Shortly, you'll hear from your new CEO, Vicki. Vicki Brady, whose appointment followed the decision earlier this year by Andy Penn to retire after more than 7 years in the role. Vicki is a highly capable and professional executive, and she could scarcely be better qualified to lead Telstra into this new era. Vicki was previously Telstra's Chief Financial Officer; as well as before that, managing our largest business segment being Consumer and Small Business. As a result, she knows our company inside out, and she's made an enormous contribution to the company already, including through her work in helping develop our new go-to-market plans as part of the T22 strategy. Vicki also played a key leadership role in the development of the T25 strategy, which is going to be absolutely critical to the success of the company going forward. And I and the Board believe that she is, therefore, the ideal person to lead Telstra into its next phase of growth. Then let me now also take the opportunity to offer a special vote of thanks to Andy Penn for his incredible contribution to Telstra. Andy led the company during a period of significant change, and he will be remembered for his courage in setting a bold ambition through T22 to deliver a transformed experience for customers, shareholders and employees. There's no doubt that T22 has delivered beyond expectations. It's also laid the foundations for the T25 strategy and our renewed focus on growth and innovation. In recent years, Andy not only ensured the successful delivery of our T22 commitments, but also provided outstanding leadership during what has truly been an extraordinary time as we have navigated both as a company and the nation through the challenges of the pandemic. Andy also built a very strong leadership team, and perhaps the greatest testament to this was our ability to announce internal successors to the roles of both CEO and CFO. And we were thrilled, therefore, to announce Vicki and Michael in these roles earlier this year. Now without Andy's exemplary leadership, I think it's safe to say Telstra simply would not be in the strong position that it is today. So on behalf of the Board and shareholders, I would formally like to thank Andy for the extraordinary contribution he made to Telstra and to congratulate Vicki on her new appointment. Right. And let me now turn to the company's recent performance and in particular the successful completion this year of our T22 strategy. I think it's fair to say that 4 years ago, when we launched T22, Telstra was in a very difficult position. We've seen the rate of digital adoption accelerate rapidly along with customer expectations through a seamless digital experience. We knew that we had to respond boldly to the enormous impact of the creation of the NBN would have on Telstra. And we knew that we had to radically simplify and digitize Telstra, and once and for all, try to remove the customer pain points that has frustrated our customers and our teams for too long. Now we knew all of this when we launched T22 in 2018 and embarked on what has been one of the largest and most ambitious transformations of a telco globally. The strategy leveraged many of the significant capabilities that we had already built through the strategic investment of $3 billion to create the networks for the future and to digitize the business. And this year, I'm delighted to report the past 4 years of discipline, focus and hard work have really paid off, and the underlying business of your company grew again in fiscal year '22, and we are now positioned for continued growth. Our investments in innovation and technology and digitization and networks in improving our customer experiences and ways of working and our disciplined approach to capital management mean that Telstra today is a fundamentally different company with an incredibly bright future. Vicki will take you through the financial highlights shortly. But I wanted to touch on just some of the key achievements made under T22. Now we have famously reduced the number of in-market products and services for our consumer customers from 1,800 to just 20 and stripped away the lock-in contracts, the excess data and the other charges that used to frustrate our customers. Our 5G network now is the largest and fastest in the country, covering 80% of the population, and it's among the very best globally. Our total network now covers some 99.5% of all Australians and stands at over 2.6 million square kilometers. We have completely modernized and digitized our systems. Our direct headcount has been reduced by approximately 8,000, but simultaneously, we've recruited 1,500 new hires in software engineering, data analytics, artificial intelligence and cybersecurity. Our cybersecurity capabilities are now considerable, and our teams are working around the clock to protect our networks and our customers from unprecedented levels of malicious activity. In the last 12 months alone, we have blocked more than 1 billion malicious e-mails, 200 million scam calls, and we're currently blocking 1,500 scam texts every minute of every day. You know how many still get through, so that shows the magnitude of the problem we're facing. Another significant change has been to bring our consumer and small business contact centers back onshore. I've been a member of the Telstra Board for 14 years now and Chairman for the past 6. And I don't think there's been a single AGM where we have not faced questions from shareholders about offshore contact centers. And I'm delighted to say that those days are over. Over the past months, we have hired around 2,000 new team members across the country so we can answer consumer and small business calls in Australia and create a better customer experience. Our commitment to hybrid working also means that those new team members are located in cities and towns across Australia, including regional hubs like Maryborough, Bunbury and Bathurst. And thanks to hybrid working, that means that the person helping you could be in your state, your suburb, your town or, who knows, even your street. And on any given day, 9 out of 10 of our consumer and small business service team choose to work from home. Another significant change this year concerned our licensee stores, which have all been brought back in-house and are now Telstra-owned and operated. Almost half of all sales interactions and more than 3/4 of all service interactions with consumer and small business customers are now digital. The benefit of a better system are tangible, and the number of calls now coming into Telstra's consumer and small business contact centers has fallen by more than 70%. These improvements are also reflected in our Episode Net Promoter Score results, which are stronger than ever, improving 5 points in the last 12 months and 18 points since the T22 program began. Fiscal year '22 was also a pivotal year for Telstra financially as we saw the near-final negative transitional effects of the NBN rollout in our reported results and the growing momentum in our underlying performance. Vicki will talk to you more about FY '22 results in a minute, but it was especially pleasing to be able to increase the total dividend for the first time in quite a few years. The increase recognized the confidence of the Board following the success of our T22 strategy and the ambition in our T25 strategy of high teens earnings per share growth from fiscal year '21 to fiscal year '25. Inside the business, the adoption of agile at scale work practices has transformed our approach to prioritization and resource allocation so that we are faster at the market, more efficient and more customer-focused. We also continue to look for opportunities to grow our business and to unlock value from our infrastructure assets. Last year, we finalized a significant transaction with the consortium made up of the Future Fund, Commonwealth Superannuation Corporation, and SunSuper to sell a noncontrolling 49% interest in our InfraCo Towers business for $2.8 billion. Importantly, we retained 51% ownership of the Towers business, now called Amplitel, and retain full ownership of the active parts of our network, ensuring that we can continue to maintain our network leadership. And approximately 50% or $1.35 billion of the net proceeds of this deal was indirectly returned to shareholders during fiscal year '22 via an on-market share buyback. We also invested $75 million of the proceeds to further enhance connectivity in regional areas. The remainder of the proceeds were used for debt reduction to ensure that we maintain balance sheet strength and flexibility. In October last year, we announced the acquisition and partnership with the Australian Government of Digicel Pacific, adding a leading mobile business in PNG, Fiji, Vanuatu, Tonga, Nauru and Samoa, with 2.8 million customers through our international business. We completed this acquisition in July of this year. Our intercity fibre project announced in February will provide ultrafast connectivity between capital cities and improve regional connectivity. We have finalized contract negotiations for the first stages of the build, and we have held detailed discussions with customers, including signing up Microsoft as a major anchor tenant. In satellites, Telstra will build and manage the ground infrastructure and fiber network in Australia for ViaSat's new Series 3 satellite system and construct a major fiber project to build state-of-the-art intercity dual fiber parts across the country. We also announced an MOU, a memorandum of understanding, with the LEOSat provider, OneWeb, and are working towards building a commercial relationship with testing of their network underway as well. Telstra Health was selected to deliver the 1800RESPECT to service for an initial 5 years with an estimated value of around $200 million, adding to the strategic health software of the company, acquisitions in GP practice management and specialist billing and clinical coding. Through all of this activity, we continue to build on our work to be a leading responsible business. Now we know the businesses can only be successful in delivering sustained value for their shareholders if the customers, employees and communities are also successful. Our commitment takes many forms. That includes significant action on climate change, where we were certified by the Australian Government's Climate Active program as carbon neutral in 2020 and continue progressing towards our other 2 climate targets: to enable renewable energy generation equivalent to 100% of our consumption by 2025; and reducing absolute emissions by at least 50% by 2030. At the same time, too many Australians and particularly vulnerable Australians in difficult circumstances are at risks of being left behind in the digital age and becoming even more marginalized. Telstra has a key role to play here, building access through our network investment, ensuring our products and services are affordable and by supporting a range of programs to build digital skills. We're also providing more network coverage to more people in remote and regional areas. Over the 7 years to the end of fiscal year '22, Telstra will have invested $11 billion in our mobile network nationally. We have $4 billion of this invested in our regional mobile network, providing additional capacity and new and improved coverage. Last year, we also announced significant forward investments, including $150 million in regional investment for fiscal year '22 and an additional $200 million co-investment fund to improve regional connectivity over the next 4 years. And this work continues to shape Telstra as a responsible, sustainable and community-minded organization, one that is purpose-led and values-driven, and we're very proud of this work. Looking ahead, the company has now moved from T22 to T25. T25 marks a really exciting new area again in Telstra's history, one that will see us accelerate growth from our core as well as continuing to scale our successful health in international businesses. We will build on the simpler world that we have created for customers. We will provide an exceptional experience with even greater personalization and consistency across our channels. We will offer the products and services they need to connect as individuals and businesses grow. We will take advantage of the many great strides made in our 5G rollout and boost capacity, speed and population coverage of our mobile network. We will expand our regional network by an extra 100,000 square kilometers so we can continue to deliver leading mobile coverage and build and sustain our network leadership. We will continue to improve our reputation as a responsible business with further action on climate, digital inclusion and building fairness and accessibility into all that we would do. And we were successful with T22 because we were bold. We set ourselves some big, ambitious goals and executed it with discipline and transparency. And the same disciplined approach will be taken with T25. Turning now then to changes this year on Telstra's Board. One long-serving board member, Nora Scheinkestel, reached the end of her fourth 3-year term as director and has notified the Board of her intention to retire at the conclusion of today's scheme meeting. Nora has simply been an outstanding director. And I'm very, very sorry to see her retire. She is one of the best directors that I've ever had the pleasure to work with. She has been part of the Board at a time when Telstra has gone through some of its greatest challenges and transformations. This includes a chairmanship of the Audit and Risk Committee from 2012 to 2019 and the membership of the Due Diligence Committee which helped guide Telstra through the NBN transaction as well as our current proposed corporate restructure. So on behalf of the Board, I would like to express my sincerest thanks to Nora and offer her our very best wishes for the future. More broadly, Telstra has a strong and talented Board, and we continue to bring on outstanding individuals to replace those that retire. In that regard, we expect to announce 2 high-quality new directors in the next few months. Now a number of investors have also asked me recently about my own future as Chair. I've been on the Board for 14 years, so it's only natural for there to be speculation on my tenure, especially as we now have Vicki in place as our new CEO. So well, my current term with the Board ends in October next year, but I have 2 significant obligations still ahead of me. Firstly, I need to do everything I can to support Vicki in her new role. And secondly, I need to ensure that, in addition to the capable directors already on the Board, the Board is strengthened by the addition of new directors so that my colleagues have a strong lineup of candidates from which to choose when deciding on my successor. If both of those tasks are completed by next year's AGM, then I will not be standing for reelection. If we're unable to complete all of this in the time, then provided my colleagues support the decision, I would stand for reelection, but with the intention of transitioning to a new Chairman within the first 6 to 12 months of my next term. Now of course, Telstra doesn't exist in a vacuum. And just as we have transformed over the past 4 years, so too has the world around us. Technology innovation continues to accelerate. COVID has turbocharged the digitization of our society and further underscored the crucial importance of the connectivity that we provide. Geopolitics remains volatile and uncertain, and that has changed the threat landscape and increased the demands on our cyber defenses and strategic supply chains. Now Vicki will touch on cybersecurity in a minute. But may I just say that it's easy for third parties to be critical of companies who have suffered devastating cyber attacks such as happened recently to Optus. Let me be blunt, however, and say that it's very easy to be critical when it isn't you in the firing line. And we should all avoid hubris because no one can afford be complacent, and no organization can ever be 100% sure that it's completely protected and safe. The threat sophistication of the attackers grows every day. And to address the threat, business needs to put aside competitive rivalry and work constructively across industries with government and with the community to protect Australia from this modern scourge. And at the same time, everyone is aware the inflation and cost of living pressures continue to increase. And this is also something we're incredibly mindful of. The changes we've made under T22 position us well in this regard. Most consumer and small business customers now have incredible flexibility with us. Their mobile internet service plans are no longer in a long-term contract. They can move between plans even once a month if their circumstances change. They can also take advantage of our multi-brand strategy and a range of propositions that give them real choice. Equally, we continue to work closely with customers who find themselves in difficult situations and particularly working with people in vulnerable circumstances. In this regard, through various initiatives, we today helped some 750,000 vulnerable customers to be able to maintain connectivity and participate in our modern digital world. There's an easy or short-term fix, but we remain very sensitive to cost of living pressures and the pressure that, that creates for customers and employees. Lastly, another issue of some concern is the current critical shortage of skilled labor in the technology sector, an issue that clearly impacts on Telstra. The new federal government deserves real credit for its genuine efforts to address this and other critical issues in a considerate, consultative and collaborative way at its recent Jobs and skills Summit. The debate on how to address skill shortages has some way to run yet. But most people agree on one important point: skilled migration is an important part of the solution, and the system that enables it must be made some more efficient and transparent. Historically, migrants have supplied about 1/3 of the increased skill requirements of the Australian economy. And given Australia's aging population, we should expect this trend to accelerate in the future. With the world rapidly digitizing with many companies including Telstra requiring ever more technically skilled workers, this is an area we cannot afford to fall behind. For Australia to be competitive, we must invest in skills and training, particularly in growing industries like technology, but we also need ready and steady access to skilled labor from offshore as required. So let me conclude again by saying we have many achievements to be proud of this year. The many tangible benefits of T22 are now clear and they underpin our commitment to return the business to underlying growth and position it for success in the future through T25. It's an exciting strategy to meet an exciting future. And finally, before I invite Vicki to address you, let me sincerely thank you, our shareholders, for your support during the year. Let me also thank our millions of customers. Because without them, there would be no Telstra. And finally, a really sincere thank you to every Telstra staff member. The Board greatly appreciates all that you do, and I believe so, too, do our shareholders. Thank you very much for listening, and let me now introduce our new Chief Executive Officer, Vicki Brady, and invite her to address the meeting. Thank you.

Well, thank you, Chairman, and good morning, everybody. I am delighted to be here for the first time as your Chief Executive Officer, and I look forward to hearing your comments and answering any questions you have of me. This morning, I will cover 2 things. Firstly, I will comment on the financial and operating results from FY '22 and an overview of our priorities and guidance for FY '23. Secondly, I will provide some detail on the growth aspirations of our new T25 strategy. Before I do that, given it is my first time here as CEO, I wanted to briefly touch on what my immediate key focus areas are and some of the drivers behind them. FY '22 was a particularly important year for Telstra. As the Chairman just took you through, we successfully closed out our T22 strategy and the financial headwinds from the transition to the NBN are largely behind us. At the same time, the world is going through a period of upheaval, with changes in the geopolitical landscape, supply chain disruptions and economic pressures such as inflation coming on top of the growing impacts of climate change. These things are driving different opportunities and challenges for all businesses. And to prosper in this environment, we will need to think differently and boldly. One thing I am sure of and as COVID has demonstrated, connectivity and technology, Telstra's core products and expertise will play a key role in helping our country and the world to respond to these challenges. Put simply, what we do and deliver has never been more important, which brings me to my key priorities, which is strongly grounded in our T25 strategy and ambitions. Number one, we must continue to radically change the experience for our customers. We have made huge progress through T22, but delivering exceptional customer experiences, being known as a leader in customer excellence, isn't just the right thing to do, it is critical to us unlocking future opportunities, opportunities to fuel our growth. And that growth is my second priority. Growth will come from customers trusting us to play a lead role in delivering the technology that can make a real difference for them and their organizations. Connectivity is at the heart of so much of our lives, and Telstra is in an extraordinary position. With the team that can bring together our market-leading networks, products, services and solutions for consumers and enterprises. That demand for our products and services, with connectivity playing a foundational role in everything we do, means we are well placed to grow into the future. The increased reliance on connectivity we provide means we need to be vigilant in protecting our networks and platforms. We are seeing increasing cyber threats, and the recent attack on one of our competitors puts into stark focus just how real these threats are. You may have also seen reports of a data breach at one of our third-party suppliers. I want to be clear that this was not a breach of any Telstra system and did not involve any customer data. The hackers accessed the names and e-mail addresses of some of our employees. We have taken important steps to protect our networks and customers, but ongoing vigilance is required, and the job is never done. We are also blocking unprecedented levels of malicious activity from reaching our customers, including calls and SMS, while at the same time, helping our customers to protect themselves and their businesses. With a growing number of these cyber attacks, some of our customers are asking us what ID documents we keep, for how long and for what reason. These are all fair questions, and people are right to be asking them. Like many companies, we are subject to multiple pieces of legislation and rules in relation to retaining our customers' ID data. We collect it and fiercely protect it through our cybersecurity capabilities. But we agree that time is right for a discussion on the laws around keeping data. As we do, we have to get the balance right, and it's a fine balance between identifying our customers, protecting them against fraud, maintaining their privacy and helping law enforcement combat crime. Given advances in technology and the broader work being done on trusted digital identity, I think that balance is achievable, and we really look forward to working with the government on it. I'll now turn to the financial results. FY '22 was a pivotal year for us as well as successfully marking the end of our T22 program, we also saw the last financial effects of the rollout of the NBN and the growing momentum in our underlying performance is showing through. Those final financial NBN impact saw reported total income decline of around $700 million in one-off NBN receipts and $300 million in NBN commercial works. Total income for the year, therefore, decreased 4.7% to $22 billion on a reported basis. While NPAT decreased 4.6% to $1.8 billion and earnings per share were down 7.7% to $0.144 per share on a reported basis. The declines reflect both the impact of the NBN and one-off gains from asset sales last year. In contrast, underlying EBITDA on a guidance basis increased 8.4% to $7.3 billion, driven significantly by an outstanding performance in the year from our mobiles business. Underlying EBITDA included an in-year NBN headwind of $340 million. This is the last year of in-year NBN headwinds and brings the total cumulative impact of NBN on Telstra's EBITDA to $3.6 billion per annum. Encouragingly, underlying EPS was up 48.5% to $0.144 per share. And as the Chairman just highlighted, we are pleased to announce an increase in the total dividend for the first time in a number of years. I will now turn to the operating highlights of the year. As I said, mobile has performed very strongly, adding $700 million in EBITDA growth. We added 155,000 net retail postpaid mobile services, including 121,000 branded, demonstrating the benefits of our clear leadership in 5G. Retail prepaid unique users were up 215,000. In Wholesale, we added 218,000 services, and we added over 1 million Internet of Things services. Our performance in fixed for consumer and small business has been more challenged. Net new retail bundles were negative 87,000, although bundle and stand-alone data ARPU increased by 2.4%. Notwithstanding the disappointing fixed SIO performance, we are confident of restoring financial momentum by leveraging the many value-adding home broadband features Telstra offers. In Enterprise, and in line with our previously communicated aspiration, we returned to growth at both the income and EBITDA level. Fixed Enterprise EBITDA grew by 2.3% with NAS EBITDA growing by $152 million to offset weakness in our data and connectivity business. InfraCo Fixed income was $2.4 billion, with core access revenues, including NBN recurring receipts, up 3.1%. InfraCo fixed growth will be further supported by our intercity fiber project announced in February. This will provide ultrafast connectivity between capital cities and improved regional connectivity. Telstra Health had a strong year, both operationally and strategically, as it continues to scale. Telstra Health revenue for the year was up 13% or 51% to $243 million after including the MedicalDirector and Power Health acquisitions. Finally, on our operating highlights. Underlying fixed costs were down $454 million, and total operating expenses were down $906 million or 5.8%. In summary, FY '22 has been -- has seen our core business perform strongly. Our mobiles result was outstanding. Consumer and small business fixed grew in the second half. Enterprise returned to growth at the top line and bottom line, and we've started to realize the benefits of setting up our infrastructure assets as stand-alone InfraCo businesses. Turning now to FY '23 guidance, which I am confirming today. The ranges and basis on which guidance is provided can be seen on the slide. Guidance across all measures includes our Digicel Pacific acquisition that completed in July. Our underlying EBITDA guidance is consistent with our previous FY '23 ambition, plus a contribution from Digicel Pacific. Our CapEx guidance includes an uplift in mobile investment around $150 million for Digicel Pacific and around $350 million of strategic investment outside of business as usual for the intercity fiber and ViaSat infrastructure projects. Finally, on guidance, we expect to continue to achieve strong cash flow, enabling us to invest for growth and deliver returns to shareholders. FY '23 free cash flow is expected to be around $1.1 billion, lower at the midpoint of guidance than FY '22. Increased EBITDA in FY '23 contributes positively, but this is more than offset by increased CapEx as well as working capital and other benefits in FY '22 not repeating. With that, let me turn back to T25 and the future. T25 is built on 4 strategic pillars and aims to deliver: first, an exceptional customer experience you can count on. As I said at the start, nothing is more important than continuing to improve its customer experience, and this sits at the heart of our T25 strategy, leveraging the capabilities we have built. Second, leading network and technology solutions that deliver your future. Connectivity is central to how the world works, and our customers are demanding more from us than ever before. We are committed to continuing to provide them leading network and technology solutions. Third, sustained growth and value for you, our shareholders. Our financial ambitions are clear. We aim to grow our underlying business through to FY '25, demonstrated by the key metrics of EBITDA, ROIC and earnings per share. With cash flow generation and opportunities ahead to monetize assets, although we have made no decisions yet in this regard, we will focus on maximizing our fully franked dividend and seeking to grow it over time. And finally, the place you want to work. The last one is built on 3 key areas: excelling in new ways of working, accelerating our digital leadership and doing business responsibly. As the Chairman said, we will take the same transparent and disciplined approach to T25 as we did to T22. That means we will continue to publish a scorecard that clearly shows our progress against our commitments and metrics. Today, you heard the Chairman call out some of our early progress in this in his speech, including our intercity fibre build and our support of the ViaSat satellite ground network. In conclusion, FY '22 clearly shows the financial momentum within our business, and we expect that momentum to continue through growth in our underlying business. While the current economic and global environment remain volatile, we are well placed to manage through it with earnings growth, strong cash generation and a strong balance sheet. Demand for our products and services has never been stronger. We have a clear strategy to grow our business, deliver industry-leading networks and technology, continue to improve our customer experience and attract and retain the best talent. I echo the thanks of the Chairman to you, our shareholders, and I am equally humbled and proud to be given a job of leading this iconic company. I would also like to thank the Board for the faith they have put in me, and I want you to know I feel the weight of that responsibility that comes with it. As we have laid out today, Telstra plays a critical role in providing the networks, connectivity and technology that connects our nation. I am energized by that responsibility and confident we have the strategy and the team in place to fulfill it. Lastly, I wanted to -- I want to take the time to thank the entire Telstra team. I am supported by a group of extraordinary values-driven people working together to deliver an exceptional customer experience to fully realize the value of our unequaled assets and, ultimately, to deliver better returns for you. Thank you. And with that, I will now hand back to the Chairman.

Great. Thanks a lot, Vicki. So we will now move to the formal part of the meeting. The items of business are being shown on the screen. Nic outlined at the start of the meeting how you can ask a question and vote. Just a reminder, if you have any difficulty with the online platform or the phone side, please check our virtual meetings guide on our website or call the help number shown at the top of your screen. As I mentioned earlier, voting on items 3 to 5 is being conducted by poll. Ms. Emma Jones of Link Market Services Limited, Telstra's share registrar, is acting as returning officer in relation to the poll. We have received proxies from over 15,000 shareholders and direct votes from almost 40,000 shareholders. And we will display the proxy and direct votes recorded for and against an item on the screen when we get to that item. The 4 numbers include proxies received and available to be voted by the Chairman of the meeting. So I now turn to item 2 on today's agenda, which is to discuss the company's financial statements and reports for the year ended 30th of June 2022. So this item provides shareholders with the opportunity to ask questions about our 2022 financial statements and reports as well as the business operations and management of Telstra. You can also ask questions of our auditor. However, if you have any specific questions about the scheme, could you please hold on to those and ask them at the scheme meeting, which will be held later today after the AGM. So I'll now take questions from the floor. Shareholders, I invite you to move to a microphone and ask any questions about our 2022 results or any general questions you have about our company. For those of you not here in person, please submit your questions through the online portal or raise your hand on online if you haven't already done so. I have 4 microphones here. So please, any questions for us. We have a question from #4.

Chairman, I would like to introduce Mr. Bernard Power.

A general question, Mr. Chairman. You mentioned earlier that you were having difficulty recruiting the best technical talent. But I do notice on the CVs of both the Board and the senior management, those are people mainly from a financial or commercial background. Do you not feel perhaps that Telstra should have a bigger technical representation in this forum?

Well, thank you for the question. I think the days of having a technical director on the Board are over, that every director on the Board needs to have an understanding of technology. They don't have to be a deep specialist, but you need to have a good understanding of technology and how it impacts our world. And I believe we really do have that. And in particular, we have 3 directors, we've had the levels of experience as CEO or Boardroom level of major telcos larger than Telstra. So I think we've actually got an excellent level of technological capability on the board. But thank you for the question. Number three?

Chairman, I'd like to introduce Penelope Fisher.

My name is Penelope Fisher. I'm a shareholder in Telstra from the original frote -- and I'm also a Telstra customer. And I cannot tell you how extraordinarily disappointed I am in the performance of Telstra to me as a customer. I have actually had nothing but problems since I converted to the NBN in January '22. I have taken this up both with Telstra as case managers have been disappointed to me and regularly rotated and changed to the degree that I just feel like pass the parcel. I've taken it to my local member for Wentworth, Dave Sharma, who's now no longer my local member. And I've also taken it to the TIO over and over and over again. Due to a car accident, I'm a priority assist customer, and yet I have had an ongoing fault issue with both my home line and my Internet, which is not covered by priority assist, but home line is. Since March of this year, I had somebody who was appointed to me, Mr. Charlie Wilson is my case manager, who has now left Telstra. And somebody called Jade Smith has taken over. She has not contacted me, my phone in the past 2 months. She said she has, but she hasn't gotten through to me. She's never written a letter to me to tell me how to contact her. She's constantly sent me only 2 e-mails. And when I've actually said to her, "Why have the agreement or the offer, as a contractual offer that was made by Charlie Wilson, not been honored by Telstra once I've agreed to them?" She has not been able to get back to me and tell me why. I cannot tell you how aggrieved I am not just for myself, but for those other people who are in vulnerable positions, for whatever reason, mine is due to a car accident, bilateral hip replacement, damage to my spine, lucky to walk away. But there are other people older than me who don't have the linguistic skills or education I do, who are actually in a position that Telstra has placed them in by not honoring their word and not fixing the problem. If the NBN is not delivering, I can't sue them. I have a third-party relationship with them, but Telstra can. But the NBN network is not working all over Australia. There's problems with the NBN network that many, many people recognize. Apparently, the ACCC have complained to the government about the current legislation, especially for priority assist. And also, the current Ombudsman for the TIO have also complained that the legislation needs changing. But it's not just the legislation that needs changing, it's Telstra's working relationship with the NBN that needs changing because the NBN network has regular outages, both planned and unplanned, which leave people without any way of connecting. I have not had mobile signals in or in the area around my home since 2012. So if I lose my home line and my Internet, but it's not covered by Priority Assist, only the home line, I have no way of getting the assistance I might need. I think this is extremely poor performance as a company. And I would like to know what kind of measures you're going to be taking to address it? And I agree with the person who asked the question before; I'm surprised that there's not more technical expertise on the board, but more financially-heavy expertise on the board. Of course, the company must survive as a company, but it has to have something to sell that is a technical and sophisticated product to its customers. So I'd like to know what you intend to do about fixing the NBN network problem as well as how you intend to assist customers who are Priority Assist customers. I can't work from home, I can't start a business from home, and I can't study from home because of these issues. Thank you.

Well, firstly, nobody likes hearing the difficulties you've experienced, and I unreservedly apologize on behalf of the company for the troubles you've experienced. Now there's a lot in your question. Let me try and go some of the bits. Firstly, you'll forgive me, in your particular circumstances, obviously, I don't have the knowledge at my fingertips, but we have people here who will be able to help you. And let's make sure before you leave today you'll sit down with appropriate person from Vicki's team, and we will get your issues resolved. So that's point one. Point two, I think, yes, you're right. There have been quite a few difficulties experienced by the whole industry with the transition to the NBN. That's no secret. However, we have a very good working relationship with the NBN [indiscernible] pretty well complete now. And I can assure you, NBN is trying really hard to fix those issues in conjunction with us. Sometimes it's a Telstra problem, sometimes it's an NBN problem, but we would do work constructively together to try to address those. I know it's of small comfort to you with the experiences you've had, but the -- actually, the transformation of Telstra's customer experience has been absolutely radical. A long, long way to go. And when you've got millions and millions of customers, there will always be someone who has a bad experience from time to time. I think you heard some of the statistics that we mentioned earlier. The number of calls coming in have reduced by 70%. We brought 166 of the stores in-house where they can be directly managed by Telstra management. We brought 100% of the consumer small business service calls that were handled overseas, brought them back on. Our Net Promoter Score has climbed dramatically up to, I think, plus 37 at the end of T22. We've done other things as well like with the free calls from phone boxes. I believe we've done some 17 million customers who have done some 17 million free calls. We're extending that to fixed line opportunities as well that where we've helped some 0.75 million vulnerable customers. So while, yes, I don't in any way downplay the difficulties you've had, believe me, that the transformation of Telstra service performance has been dramatic. And T25, probably the single biggest component, and Vicki and I have discussed this at length, single biggest focus is to take that service performance up another level. There will always be somebody who has an experience from time to time, that's life, but we really want to get it to the point where Telstra is recognized as a seamless digital and first-class customer service organization. We've still got a way to go, but we've made a lot of progress. And I would just circle back, please don't leave today until you sat with one of us. I'm happy to talk to you with Vicki and some of our team, and we will address your issue and get it resolved. Thank you.

Chairman, I'd just like to introduce Margaret Mcintoy.

I'm not used to doing this, but I would like to speak to somebody on the Board. I have had problems with my legs from here down. I have to walk every day, but I've had problems with my legs in the last few weeks through the stress of not resolving the Telstra NBN problems. Everyone has been extremely nice to me, except for somebody about 2 or 3 weeks ago, who when I went into the Telstra place at Chatswood, the Westfield, where they happen to know me because I've been in there so many times. With all these scams, I know people who have been scammed. And I didn't know sometimes -- still don't know always if it's Telstra ringing me. So I make a journey into Westfield. And I was on the phone for an hour and not understanding the technology that the girl was using, and I never will understand it. And especially when my head is all [ fogs ]. Now I think it since -- and I lost the use of -- I didn't -- I don't know if I was going to faint or whatever. But since then, I've had distress. My brother died on the 21st of July, have lost 3 other friends since then, going back for years. But I think it's about 2 weeks into July that I first had a problem with the screeching so badly on the phone and a friend in hospital leaving the longest message he's ever left, and I could not understand any word in that message on the answering machine because of the phone I have been told has dropped out as many as 50 times, even when I'm not even talking on the phone, it's still dropping out 50 times, 20 times, 30, 17. I do believe that it was fixed last week by one fellow Con, C-O-N, Con, Greek background, lovely fellow, who started supervising the other technicians that came out. And a new line should have been put in when we had problems with Telstra before where I live in that area. We had problems with Telstra for years. The technicians had come out. There'd be water in the little black boxes in the pit, what they call condensation. My mind is not even working properly. I have made a very bad investment. I went into the bank to invest in a term deposit so much. And it was suggested double the amount because I had too much [ then ]. I had intended that money to go somewhere else. Now I can't think clearly. That's how stressed I have been. I have missed out on meals. My weight went down to under 7 stone. I should be 8 stone, [ 2 or 4 ]. No, it's not funny to have your -- and about 2 or 3 weeks ago, my head -- I can't explain it, felt it so if I didn't just pull back and just -- and I have been nice to everybody. I ended up in the last 2 or 3 weeks telling the people that I'm frustrated, that's the strongest word I've used. Yesterday, the Priority Assist fellow, I've had Priority Assist for a long time. I walk very quickly. My movements are very quick. And everybody thinks I'm very fit. I'm not, but I do what I'm told to do by the physio every day, and I do want to go for a walk every day and that keeps me going. I'm sorry to take up so much time, but I'm not as articulate as that lady. And Vicki, you are very articulate. Thank you for explaining things so clearly this morning. I would like to speak to somebody -- but Con, who took responsibility, the line has gone from that box up to that box to there, up to there and up to my garage. Now it's going down to -- it goes down through the -- between the 2 brick walls. And the line by NBN has been completed, but the phone is still not right. And the fellow yesterday said, "Just stay calm." Well, it's very hard, and I didn't raise my voice, but I didn't even think that was the right word. I think that Telstra could -- and as I said, everyone has been extremely polite in what they say. They think that it's fixed. But if it's not, the line needs to be replaced. Well, now that was done last Saturday. And it was done very quickly and efficiently, I believe. And this Con had a wonderful way of keeping me calm, keeping me confident. That's lacking when nobody takes responsibility for anything. And when the technician is leaving, he says, "I think the line has been fixed. But if it's not, you need to replace the complete line." Well, this is costing Telstra, for that lady, for me -- we're not the only ones. I have so many friends who have a connection in their house, but they don't use it. They're obviously paying the bill, which may be something, but they don't use their phone. And the other thing, yes, they gave up trying to get in once they switched over to NBN. They just gave up. But the mobile in my area, that also doesn't work very efficiently in my house. And I took it out onto the street. I don't normally use the mobile, I'm not good with the technology. Went out there. It cut out 5 times. I thought it was me. But no, apparently, selling of these towers is not a good idea because you're not allowed -- Telstra are not allowed onto the properties. The one tower has been out of operation for 9 months and one has been -- this was mentioned to me about 3, 4 weeks ago -- 9 months. And another one has been out of operations since -- at some stage for 2 months, the mobile in my area. So why -- and it's something to do with, what do you call it, -- see, I can't think at all. But please, I realized the whole of the country, there are problems in every area because we've all -- it's all grown too quickly. Everything has grown too quickly, and we keep bringing new people into the country. Let's try and resolve what we can in the country with -- the health is disgraceful. But you're a communications company, so you need to be able to communicate with people and not let us get as uptight as we are. It's part of my personality, too, so I can't blame -- and overall, I've been very happy with Telstra, but not since I've changed to NBN. Thank you.

Thank you very much. And again, I can only apologize for all the troubles you've had with the NBN connection. Again, you'll forgive me, I'm obviously not aware and nobody here will be aware of your specific circumstances, but I can give you a full commitment that, again, before you leave today, speak with one of our customer service representatives. Or if you can't get satisfaction, speak to Vicki or myself, and we will address your issue for you.

Thank you. Yes. But unfortunately, everybody has passed on to the next person to the next person, I don't know how many people have come into my home. And because I'm a Priority Assist person, I've had to stay at home. So I need to get out. I live alone. I need to have a company. I've had to put off some -- I can't even go to the hairdresser. I can't make a hair appointment. That I can't make medical appointments. I haven't been able to make since, but it was due in about July. I haven't been able to make my breast -- I've had breast cancer, years ago, but I have to go every 12 months. I haven't been able to do that. I haven't -- I have canceled other important appointment. My friends are not ringing me. They're sick and tired of hearing the stories. Because it's on my mind, it's either that or grief. I don't know. And there's not much of the grief coming through because it's all Telstra or NBN. I can't even stay in bed till 8:00 at morning, which I never ever do. I'm an early morning person. I like to walk early. But I can't even -- because I feel my body needs so much to have a morning in bed, I can't do that for fear of what the technicians come before or after the time you may have an appointment there, they'll come there. And they say, "Because you're priority, we come early if we can." So look, I appreciate a lot of that, but what it's doing to me it's -- I can't go on -- I so badly need a holiday. No, there's so many other people.

Absolutely. So look, we hear you loud and clear. I obviously don't know whether it's a Telstra issue, it's an NBN issue. But whatever the issue is, we will get somebody on to it straightaway and seek to resolve it for you as quickly as possible. Thank you.

Chairman, I'd like to introduce Judy Stephens.

Chairman, I have something positive to say. I'm a senior, I live in the CBD and got a prepaid plan that's fantastic. And I really appreciated you giving free phones from public phones with free calls. I hope this will continue because our vulnerable people or medical emergencies, when a mobile might not be about -- would really work. And you have a George Street store. I've been going in there to see John for more than a decade. They're very, very good in there. And I just want to thank Telstra for looking after us.

Well, thank you. It's understandable when people have difficulties that they would raise it with us, but not everybody takes the trouble to thank us when things go well. So I really appreciate those comments. Thank you.

Chairman, I'd like to introduce Antoinette Grant.

Thank you very much. I sympathize with speakers 1 and 2, even so I think if people get too long, they have to be cut off. But what I -- I had similar problems and I don't want to talk about those because I'm in the middle of resolving it. But I have had similar problems. The thing is I've been a Telstra customer for about 40-odd-plus years. And I intend staying with Telstra because the money is staying in Australia. That is my very, very strong belief. I just thought I might offer some opinions on how to resolve 1 or 2 problems. One is when you talk to the sales line or any other line, you constantly get somebody different. And so you're starting again after waiting, obviously, for some considerable time, you get somebody who needs the explanation from beginning to end, and you get absolutely sick and tired of it. And everybody has been very nice, exactly as this lady said. Everybody is trying to be helpful, but not usually able to be helpful and not being able to follow up. The other thing is somebody told me the other day, if you have problems with your phone cutting out, that you -- because I have a phone and an answering machine that has worked perfectly for more than 30 years. If you let the phone ring too long, it cuts out the phone. So if you cut down the time that your phone rings before you answer it, that might solve -- that apparently seems to solve the issue for some people, and it might be worthwhile just checking up on it. Thank you.

Thank you very much for the kind words at the beginning. We absolutely understand how critical connectivity is to everybody, but also to older or more vulnerable customers. And one of the main reasons that the company moved to the free calls from phone box was exactly that, in case of emergency, health or whatever, you know there's some way you can go, you can make a call, even if you've got -- you've lost your mobile or you haven't got access or whatever. I think that's hopefully a really positive step forward. On the other issue you raised, one of the reasons that we put such a lot of effort into getting digital interaction with customers is to reduce the risk of being passed from one person to another, we have one line of communication. But of course, we understand that digital interaction is not for everybody. And that's one of the reasons again why we brought the customer service people back onshore so that you're now speaking to somebody here in Australia because we think that, again, materially improves the experience that you will get. So thank you for the suggestion. You're absolutely on the money. Those are things we're working hard on, and we will continue to redouble our efforts accordingly.

Chairman, I'd like to introduce Pierce Barberry.

Good morning. Just Parberry is actually the name. But the -- in order to address the skill shortages that you mentioned in your speech, I just wondered what the practice and attitude to in-house training is. Corporations just have a very different attitude. There was a lot of in-house training. And I know that has changed in -- or not just in recent decades. One of the reasons I've heard is that people will take the skills and move to another company, and so the company that's trained them doesn't benefit. That's not necessarily the case if those people are looked after and promoted and valued. I'm reminded of meeting somebody a number of years ago in London, who -- there was a graduate trainee with IBM. Remember them? That was before even Microsoft existed at this particular meeting. And I was astonished to hear that the number of courses she was going to be on in the first 2 years, I think it was approximately 40% of her time, which is just phenomenal. They had the attitude that they train people their way and the people stay with them, and they promote them and many people stayed for many, many years. So perhaps -- anyway, the question really is, what sort of in-house training does Telstra have? Thank you.

Thanks very much for the question. I think I can actually give you some good news there. I think Telstra's in-house training capabilities and human resource capabilities are absolutely first class. The time that I've been here, have been nothing -- I stand by it. So we have actually, in the last 2, 3 years, completely transformed the way employees work in Telstra. I think we have some 17,000 people today working in Agile teams, which is a complete change from the old siloed sort of mentality that existed in older corporations. We have extensive training programs because we -- remember, with the migration of our fixed business to the NBN, we had a lot of jobs that were now surplus. And many of those people have been retrained into new roles elsewhere in Telstra. We've hired some 2,000 new very technically capable people as part of that transition. And we also -- for retention of attraction and retention, I think we have some of the more generous terms and conditions of employment in Australia. We pay at the top end of pay scales. We have quite a lot of benefits of 16 weeks of parental leave, I think, 15 days of additional personal leave a whole lot of other benefits than not every company offers, which hopefully makes Telstra an attractive place to work. So my comments were -- I think it's a problem for the whole country, attraction of technical skills, but I think we're probably doing better than many in being able to attract and retain really, really capable talent. Thank you.

Chairman, I'd like to introduce Patricia Faye.

I'm not going to make a complaint. I'm going to tell you how wonderful it is that you brought your call center back to Australia. Being in my age -- being over 80 and going downhill, it's wonderful to speak to someone who speaks my language. And I do think that you should put a time limit on how long people are allowed to speak because it's almost, almost makes you [ shut your eyes ] when it goes on for too long. Thank you.

Thank you. And if I may be so bold to say you definitely don't look like you're going downhill. You're a pretty good -- pretty good for your age. I hope I'm half as good. As to terminating questions, look, I think it's important that we listen to what people have to say. That's what we're here for. It's the one opportunity that individual shareholders get to really engage with the Board and with senior management, and we take that responsibility very seriously. Obviously, the people who do maybe speak for longer, they're not doing it to annoy anyone. They're doing it because they're really emotionally connected to the issue, and it's important to them. So I hear and understand what you say, but I think I'd rather let people have their say, and we do our very best to try to resolve it, rather than cutting people off in mid flow. But thank you for your comments.

Chairman, I would like to introduce Peter Star.

Good morning and good morning, fellow shareholders. John, I'd like to thank you very much for extending the courtesy on the 17th of August to myself to attend Andy's farewell in Sydney. It's a tradition that was held by your predecessor, Catherine Livingstone and David Thodey. I've been around since Sol Trujillo was CEO. And welcome, Vicki, a bit of a baptism of fire this morning, but anyway. Sincerely John, it's good to see you have the tie on today, you didn't have it on -- I had the suit on -- John, on a serious note, I think it's important that you're thinking about maybe going in 12 months on behalf of the shareholders I represent, I think it's important leadership to stay, John, if you need to stay, we'd support that. Welcome to you, Vicki, on behalf of the shareholders. Big shoes to fill your 2 predecessors. And John, if I may, Nora, I was with David Thodey on Sunday when he flew out to Europe, but he asked me to mention that he's really appreciated all the time and things you've given to the Board, and he wish you the best of luck, Vicki. Question I have for you, John, is that we've seen what's happened with Optus. And of course, a lot of people are worried. I've had some clients that have been caught up in that, unfortunately, not many. But for the reassurance that you may be able to give and even Vicki about people's data being protected, I know that I raised with the current minister that they're going to look at why telcos have to hold specific information for such a long period, and this is what happened in Optus. And that information was hacked and passports, driver's license and Medicare card, it's an absolute nightmare. So maybe you'd like to just touch on that. Thank you.

Sure. Thank you very much, as always. An AGM wouldn't be the same without you here. So good to see you. Thank you. So there are a few questions in there. Firstly, a couple of us had to search in the bottom of closets to find ties, particularly one or two of our overseas directors. But we all found one. So I'm glad you appreciate that. You commented briefly on my tenure. Look, I'd love to stay as Chairman of Telstra for another decade. I love the company passionately. I found it fairly enjoying and interesting. But I also believe strongly that there's a cycle, there's a time in all organizations, both for senior management and for Board members, where it's time to give someone else the keys and take the company on to the next level. So I'm not about to rush off tomorrow, I want to make sure there's a smooth transition. But I think that sadly that time has come where I need to do what I think is the best thing for the company. Then more seriously, and more importantly, I have talked about the Optus situation on our side. But I think as Vicki said, and I said we can never give 100% guarantees. It's just not possible. But firstly, as Vicki said, the biggest is the breach that happened -- as Vicki said, it was not actually Telstra, it was a third-party provider with some data that we could pretty well get from anywhere. I mean I was on the list so was Vicki -- it was just name and e-mail address that was all it was. It definitely wasn't a breach of Telstra systems at all. And we are extremely vigilant, trying to ensure that we don't have any such breach. But we were talking about it yesterday. And I'm -- a little anecdote. I mean, last weekend, I was trying to do some work in the garden, I managed to hit a pipe to my wife [ Shagren ], so it was water everywhere. I had to get an emergency plumber in. So firstly, on the telephone, they took my credit card details. Then when the plumber finally came out, I had to pay for the fix. He asked for us to see some ID. I gave him my driving license. So I thought after it all fixed and fine, I thought afterwards, that company, I don't even know who they are because they were the emergent one. They have my name, my address, they have my mobile phone number, they have my credit card number, and they have my driving license number. So that data has gone into the ether. I don't know where it went. Have they deleted it? Have they sold it to someone? Have they kept them on file? Unfortunately, every one of us are exposed to that every day. And so the ability for us to say, unequivocally, you will never have an issue, we just can't do that. But what I am extremely confident of is that Telstra has got the highest levels of security and protection that I've seen in the industry in Australia. I think it's full credit to the team. Nikos and others here who have put us in a really good position, not 100%, but I think better than most. And I would be bitterly disappointed if the same thing happened to us as it happened to some other organizations. I hope we can give you some comfort of the level of capability that the company possesses.

Thank you.

Actually, sorry, you made -- just you said one other thing about the laws requiring organizations to retain information. That is a really good point. And there are a whole multitude of regulations and laws that require us to keep data in certain ways for certain periods of time, et cetera. And that's an issue right across the industry. And I think the government is right on to that, and we are very much involved in discussions with them, trying to minimize that. You'll understand the push pull. On the one side, we're required to keep information for fraud purposes, or law and order or that side of things, we need to be able to help authorities by law. But equally, does that need to be kept forever? No, it doesn't. So I think the government is going to hopefully come up with a streamlined set of rules that everybody can adhere to. So everyone knows how long your data is kept for and why. So I forgot that bit. Another question?

Chairman, I would like to introduce Varma Nallepekpali -- Nadimpalli.

That's okay. Thanks for this opportunity. This is the first time I'm attending this shareholders' meeting, even though I've been the shareholder since the beginning of the Telstra has been there. I have been a silent shareholder until now. So now I am looking at -- actually looking at the share of my shareholdings. What I can see here is like Telstra has been growing. The total income has been gone from $29 billion to $22 billion in 5 years, and the profit has halved from $3.6 billion to $1.8 billion in 5 years. So what kind of things can we expect in 5 years from now to Telstra? Because I can see like Vicki has given the next year, it's going to be something like $23 billion revenue, but I don't know what will the net profit out of that and then what would be the outlook for the next 5 years? Can we expect any growth, not the negative growth we have seen in the last 3 years?

Yes. Thank you very much. It's a really good and important question. So lots of competing issues. But by far, the biggest issue that reduced Telstra's profitability was the effect of nationalization of half of our business by the government to create the NBN. The nbn, I think, recently declared a $4.4 billion EBITDA profit. I mean all of that has come out of the industry. And Telstra obviously, being the largest player, suffered the worst. We lost over $3.5 billion of net profit with the creation of the nbn. That's the single biggest reason. One of the challenges that Telstra had was, unlike in some other countries where it was sort of done overnight and shareholders knew from one day to the next, in New Zealand and some other areas, what the new company would look like after it has been cut in half, in Australia, it was eked out over a number of years. So every year, when management started the year, they had a headwind of hundreds of millions of dollars of profitability that was going to be transferred to the nbn. The good news is, I think both Vicki and I said, that is over. Thus, we have now returned to growth with all of that nbn impact finally behind us. And now our outlook that we published for the year is for earnings and revenue to grow this year. So -- and we're very confident. One of the reasons why the Board is willing to increase the dividend was that we are very confident of that trajectory. We're very confident of the capabilities of management now to take Telstra to a whole new era where we go back to growth again. I hope that helps.

Chairman, I'd like to introduce [ Hans De Welt ].

Good morning, everybody. I am [ going ] to let you to bring the shops under control and also that we don't have to go overseas to make a phone call because you could hardly understand those people, most of them. So that is two big pluses. Also, I think there should be a little bit -- promotion made whereby there are lots of people having shares in your company. But I don't have the telephone in Telstra. So why couldn't we promote more people who directly or indirectly benefits from the share -- the dividends, whereby they're still with the opposition? And also that's why the profit stays in Australia, whereby the profit of the other companies, most likely go overseas, and maybe partly even in a tax haven. So we should have more promotions to keep that all the shareholders or most of them are trying to promote that indirectly or directly, the benefit to be a shareholder customer. And that way, we're getting a lot of people more into the system at Telstra. Thank you very much.

Great. Thank you. Well, obviously, I can't comment on the structure of our competitors, but I mean, Telstra is 100% an Australian company. I think well over 90% of our shareholders are Australian, well over 90% are Australian. And obviously, all of the profits that we make are retained in Australia, and they're distributed to Australian. By and largest, Australian shareholders, we obviously do have a portion of our investors, particularly our institutional investors who are overseas, but retail investors are almost exclusively here in Australia. So thank you. Yes, we agree, and we're doing our best to make sure all of those other companies' customers end up coming to us, both the shareholders and customers. I have one, number four.

Chairman, I'd like to introduce Brian Upton.

Just a very short question, I hope. When I've been reading a lot of the correspondence lately, I've been coming across this word agile. Now to me, I mean, I'm in my kind of mid 80s. And when I get on the tennis court, I find it, I'm not quite as agile as I was as a teenager. So I imagine you have a slightly different version of this, unless you mean you -- your agile teams are scurrying around the office all of the time. So could you perhaps give me a couple of examples of what you mean by agile?

I'll give it a go. I'm sure you don't have to wait until your age to feel that agility was something in the past. I experienced it every morning. Look, basically, I'm looking at Alex who will give me a withering stare if I get this wrong. But basically, legacy companies in the past, and Telstra was no different. You had lots of silos of activity, both regional or functional, and they really didn't talk to each other that much. So if you're starting a new project, you had to get somebody from...

What do you mean -- the word silo has a different connotation to me from the [indiscernible].

Groups of people in -- groups of people in function. So the IT department would be sitting over here in isolation. The pricing department will be sitting here and so on. And if you -- we're launching a project, Vicki is launching a project, she's got to try and find representatives, so we are trying to get them to talk together. And that is often quite inefficient. What agile basically does is break down the structures of verticals and say, this is the issue. We're going to have a combined team with multifunctional capabilities and different areas, and we're all going to work on that at the same time. And we're going to do it in short bursts of activity where we set short-term goals. We collectively, how we achieve them all? Yes, we've done 9 out of 10, and I will fix the 10th. Now we move to the next goal. And basically, it transforms the speed of decision-making. It means that the teams can make decisions and judgments without having to go back to their bosses and other departments and all these things, which slows it all down. That's basically what's happened. And I think it's an extraordinary story. Telstra has moved some 17,000 people from the old way of working to agile. And it's actually held up as a bit of a poster child, I think, of Australian industry, how that's done.

Yes, that sounds great to me. But I'm just wondering, I mean, communication is your thing. How come it's been in silos for so long? Why didn't you have this kind of worked out 30 years ago. It's a matter of simple communication. You talk to people.

Well, it's a very good question, but I think the whole -- it's not like Telstra was the only one. That's the way we all do business. When I grew up in business, no one thought the question that it's only better minds now. I have said actually, there are other ways of doing these things.

I hope you didn't mind, I'm pretty ancient, but anyway, go on. Thank you for that answer.

I hope it was helpful. Is that right, Alex? Yes. Thank God. Number two.

Chairman, I'd like to introduce Chris Maxworthy.

Good morning, Chairman, Board. In the interest of being a more agile company and with a great history behind it, I'd wonder what the strategic direction is for Telstra in regard to the other so generate -- fifth-generation mobiles. We're talking about 80% coverage of the notion. And for the standard mobility, we're talking about 90 something. Okay. So the question I have for you, and I'm an engineer by training, is there are large numbers of entities, share councils, start-up businesses that have basically found a fill-in niche competing against Telstra for those areas that Telstra finds it not profitable or worthy of pursuing in terms of this great big nation of ours. So my question to you is, I'll give you an assessment. My assessment is that Telstra provides a very robust, very efficient solution technically. But the challenge is that for large areas of Australia, it's not worth pursuing. That's not worth pursuing because it's costly, and the hurdles for profitability can't be met. And so therefore, we choose to go all those remote areas, we won't service, or we'll continue using the legacy system that, in some cases, was put in 2 to 3 decades ago. So my challenge to you, the Board, is to look at ways to extend our reach, even if it's not profitable but it does build the concept of Telstra as a nation-serving, emergency service-backing organization. And I'd say in some ways that build it and they will come. Okay. That's it. Thank you.

Great. Thank you. Another good question. Look, I'd like to think that we are actually doing that. So Telstra does have, by far, the most extensive network. I think we have 1 million square kilometers more coverage than the next competitor approximately. We've invested $4.5 billion in regional mobile and about $1.5 billion in fixed in the regions over the last 5, 6, 7 years. The government's Black Spot Program, which is focused very much on areas where they're not economic, we have been overwhelmingly the biggest contributor to that program. I think, over 900 sites or something that Telstra has subscribed for. But much greater than all the other competition added together, and we're continuing to do that. I think in T25, we're committed to another 100,000 square kilometers of coverage. I'm absolutely confident that we will maintain network leadership, network supremacy across the nation. What is going to be interesting is that I think network superiority is going to be defined differently as we go forward as well. Geographic coverage, obviously, but also as we move into a 5G world, density of networks in cities, ensuring there are no dead spots once you start moving into driverless cars and all these sort of autonomous things, you obviously can't afford to have the signal go down at the traffic light. So it's got to be completely ubiquitous across town. So I think it's not just going to be square kilometers, and I'm confident we will retain our leading position there by a long way, but we will also be doubling down on the depth and scale of 5G networks to ensure that it's not just coverage, but it's also accessibility everywhere. I mean I just recently moved house, and I'm delighted to tell Vicki and I actually got one gig download speed on my mobile, which is the first time I've seen that outside the laboratory. I think Nikos organized it especially for the day, but now it's fantastic. That is a quantum leap forward in speed and capability that the whole industry didn't possess only a year or two ago. Well, Nick, it looks like we've concluded all the questions from the floor. In which case, would you be kind as to move to our online and then I think phone after that, yes?

That's right. Thanks, John. We do have several questions online. The first one is from Michael Bordenaro. Hopefully, Michael, I've got your name pronounced correctly. Telstra has had 5 years of declining sales and profits. You have reduced costs and overheads with your T22 strategy. When are shareholders going to see a turnaround with increased sales and higher net profits? The nbn can no longer be used as an excuse for falling profits.

Well, hopefully, I've addressed that in an earlier question. You're absolutely right. The nbn, over the last 5 years, is now behind us. So it's not an excuse. It was never an excuse. It was just a reality of what was taking place. But as that is now, as you've observed behind us, so the company is moving back into growth. And I think I've covered that both in terms of revenues and also profitability.

Great. Thanks, John. Next question is from James Brown. Why is Telstra continuously pursuing nbn co to install underground infrastructure over neighboring properties, enforcing their right of entry when underground copper cable is obsolete? And given 5G network is forthcoming to this area, there is no valid reason to install underground infrastructure unless it was fiber optics to the premise, which is not the case. nbn co has an obligation to follow TIO guidelines, and this is questionable.

I'm not 100% sure what's behind the question. But look, we have no control, obviously, over what nbn does with its fiber. There are rules that govern our interaction with nbn, and the provision of services to the home where that is now exclusively nbn over the industry. In business enterprise areas, it's a slightly grayer area. And yes, the nbn does lay fiber sometimes where we have fiber, and that's something we continue to have to work through as we -- as the thing rolls out, as industry rolls out. But again, we're not always best friends with nbn, but I think we have a good working relationship. It's important to the whole country and to us that nbn is successful. Now we do our very best to work with them to achieve that outcome.

Thanks, John. Next question is from Stephen Mayne. Stephen asked, the Digicel acquisition was very unusual with taxpayers granting us billions in what effectively was a national security move as China attempts to increase its influence in the Pacific? In light of this, apparent role for Telstra in Canberra's national security strategies, what is our position in relation to making political donations? And how do we go about lobbying ministers and regulators? Who specifically negotiated the Digicel deal with both the current and former government?

Okay. There are a few questions in there. The easy one to answer is we do not make political contributions. We do occasionally attend dinners where you pay to attend that dinner or an event, a speaking event or whatever, but we do not make any political donations. Digicel was indeed a unique opportunity. It was negotiated by Andy and the team at the time with the Board's full support. And I can assure you that they were not easy negotiations. They went on for quite some time because, well, obviously, if your government asks you to help, it's beholden on you to do so, but we were not going to do so at the expense of Telstra shareholders. So we had a lot of discussion to make sure that, yes, we gave every possible assistance to the government of the day. But at the same time, we would only do it if it was a good deal for Telstra and Telstra shareholders. And I'm very confident that that's where we landed. And it will be very good for Telstra shareholders going forward.

Thanks, John. Next question is from Gavin Smith. Why did Telstra shareholders and our customers have to bring their Telstra problems to a shareholder meeting to get their issues resolved? Why cannot our employees and company take ownership to solve customer issues much quicker and to be more thorough?

Okay. Well again, hopefully, I've covered that. You don't have to come to the Annual General Meeting to get your issues resolved. We -- all of our doors are open. My door is open because if you, for some reason, can't get a resolution from the representatives of the company with whom you normally interact. But if you do bring it here, obviously, we will listen, and we'll do our very best to resolve it before you leave.

Great. Thanks, John. Next question from Paul Wabush. Inflation is currently 6.2%. Can you please advise, number one, what impact this is expected to have on Telstra's revenue, cost and profit? Number two, whether the income performance measure noted in the remuneration report will be adjusted to focus on real growth rather than nominal growth?

So what impact? Well, it will obviously have a big impact on all of us in this room and behooves us to manage our costs as effectively as we can, which I think the company has done extremely well. On the other side, we have had modest price increases below the level of inflation. So we try to always balance affordability, customer service and returns to shareholders, and we need to try and balance all of those. And what was the last bit? Sorry?

Sorry, John, I have just gone past that question. Technically challenged on coming back to it. So perhaps we'll just come back to that in just one moment. Yes, growth rates. We'll come back to that, John.

All right. Sorry, I should have written it down.

Apologies for that. Next question from Edward Leslie Emmanuel. What plans does Telstra have to compete with those recent communications supply businesses that operate with small overhead costs, given there are 11 on the [indiscernible] working for Telstra customers, shareholders and staff?

Well, look, Telstra is the ubiquitous legacy, telecommunications provider that services most, or if not all, of the needs of Australians. We don't seek to be a small niche provider. There are lots of other companies that I'm sure can do very well by taking a little piece of Telstra's world or the industry's world and just focusing on that and I'm sure being very competitive. But we have a full range of services, full geographic coverage and the whole different promise and offering than those small niche operators. There's no point in comparing them. We're trying to achieve different things.

I'm going to go back to the second part of the question before. So it was whether the income performance measure noted in the rem report will be adjusted to focus on real growth rather than nominal growth?

So every year, the Board spends a lot of time, firstly, through the People and Human Resources Committee on looking at the incentive targets for all of the executives for the following year. And we have to take into account a whole raft of things, not just inflation and nominal versus inflation-linked, et cetera. I'm very comfortable that the committee is sufficiently diligent and looking at all the impacts. And remember in the years gone by, we've actually had falling revenue. We still have to incentivize management. I think you have to incentivize management more in bad times than you do in good times. Good times tied, lifting all boats, et cetera. It's easy to convince yourself that you're doing a great job when there are a lot of external influences helping. In really tough times, like Telstra experienced when the nbn started to impact its profitability and our revenue fell on our profitability fill, that's when the real mettle of our management was challenged. And so the Board's job to absolutely incentivize managers to perform really well in that situation as well as in a good situation. So we don't just look at a nominal inflation in figure and just based on that. There's a lot more factors goes into the decision.

All right. Thanks, John. Next question from Gavin Smith. Did Telstra ever get paid for all the copper piping we owned and not just hand over for free?

Yes, to my knowledge, we sell the spare copper that we don't use, which is -- I can't remember Telstra had made how much of this, but it's quite a material sum. When copper is disconnected, we don't just leave it in the ground. It's taken out and it's resold.

Great. Thanks, John. Next question from Margaret Mary Larkin. In my opinion, staff need to be employed in busy Telstra offices and also proper customer service training provided to staff, not just online. So many customers that I speak with detest entering a Telstra office, especially if older, due to a delay and poor quality of service, except for a few exceptions.

Well, I'm disappointed to hear that you've had those experiences. I think we've heard from several of the shareholders and customers in the room today that they've actually had very good experiences in the stores. And as Vicki and I, I think mentioned, we have brought all 166 of those stores back in-house, and they are managed directly by Telstra now rather than a third-party franchise, as was the case before, which I think is hopefully going to address most of those issues that you raised.

Next question is from Margaret McArthur. I do not agree with company's proposal towards net zero as all of the countries who are manufacturing the wind turbines and solar panels are not complying to this and continue to pollute our planet. Net zero will drive Australia into further bankruptcy.

I'm not sure if that was a statement or a question, but obviously, we take our obligations and -- ethical obligations as well as legal ones very seriously. We have committed to carbon neutrality by 2020, which we achieved. We've committed to 100% renewable energy or to source 100% renewable energy equivalent to our use of energy by 2025; and two, a 50% reduction in total emissions by 2030. And we've, just, last year, I think, really upped the bar by including our Scope 3 emissions as well, which was some 70%, I think, out of total emissions. So it's quite a significant change. I'm very comfortable that we've got an ambitious but realizable target, doing our bit to help a global problem of climate change.

Thanks, John. Next question from [ Chris Wood ]. Chris asks, customer of Telstra for 20-plus years and a shareholder, recently, misled repeatedly replanned change. Repeated lack of response, many calls to call center, significant language barrier and poor servers. No willingness to remedy and told to go to ombudsman. I've observed continued decline in customer service and frustrating interactions with overseas call centers and chat services. What is Telstra doing to increase and maintain customer service levels and services being returned to Australia?