SingTel Investor Day: Mobile Business Overview

Michael Smith Managing Director, Consumer 11 July 2011

Forward looking statements - important note

The following presentation may contain forward looking statements by the management of SingTel Group relating to financial trends for future periods, compared to the results for previous periods. Some of the statements contained in this presentation that are not historical facts are statements of future expectations with respect to the financial conditions, results of operations and businesses, and related plans and objectives. Forward looking information is based on management's current views and assumptions including, but not limited to, prevailing economic and market conditions. These statements involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those in the statements as originally made. Such statements are not, and should not be construed as a representation as to future performance of SingTel Group. In particular, such targets should not be regarded as a forecast or projection of future performance of SingTel Group. It should be noted that the actual performance of SingTel Group may vary significantly from such targets.

Today
1 Market overview 2 FY11 performance 3 Future opportunities & strategy

Today
1 Market overview 2 FY11 performance 3 Future opportunities & strategy

Growth in the Australian telco market is driven by mobile

TELECOMMUNICATIONS
MARKET REVENUE

MOBILE
MARKET REVENUE

UP 2.2%

UP 8.5%

CY09
Source: JP Morgan

CY10

CY09

CY10

underpinned by leading subscriber and strong data revenue growth amongst worlds developed economies

YOY Mobile Subscriber Growth - CY10

YOY Data Revenue Growth - CY10

23.4% 21.3% 9.8% 15.0% 15.0%

27.9%

6.0% 4.4% 2.6% 0.5% 4.4%

6.2% 9.8%

5.2%
2.7%

Germany

Italy

Spain

France

USA

Singapore

Australia

Spain

Italy

UK

Germany

France

Australia

USA

Singapore

-4.8%
UK

Source: Merrill Lynch

Key drivers of mobile service revenue growth

Fixed to Mobile Substitution

MBB and handset data growth

CAGR
54.4% 13,515 52.4% 51.4% 49.2% 8,569 (77%) 8,853 (73%) 9,311 (69%) 11,131 2,562 (23%) 12,182 3,329 (27%) 4,204 (31%)

UP 9%
14,733 5,285 (36%)

15,985 6,455 (40%)

CAGR
Data: +26%

48.6%

9,448 (64%)

9,530 (60%)

Voice: +3%

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

CY06

CY07

CY08

CY09 Voice Revenues ($M)

CY10

Mobile share of total Telco Revenue

Data Revenues ($M)

Source: JP Morgan

Sustained fixed to mobile shift for both voice and data

SEQUENTIAL CHANGE IN MOU (MILLIONS), SIX MONTHS TO
1,639 1,050 598 1,145 1,016
Mobile Fixed

-855
Dec-08

-634
June-09

-873
Dec-09

-1,043
June-10

-862
Dec-10
Source: Optus estimates based on market disclosures

SEQUENTIAL CHANGE IN BROADBAND SUBSCRIBERS (000), SIX MONTHS TO

738 560 618 774 641

Mobile Fixed

108
Dec-08

80
June-09

75
Dec-09

83
June-10

142
Source: JP Morgan

Dec-10

Smartphone penetration drives growth in use of data products

FUNCTIONS USED ON MOBILE PHONES, SPLIT BY TYPE OF PHONE OWNED 2010 DEVICES EVER USED TO ACCESS THE INTERNET 2010 vs 2009

91% 88% 89% 85% 78% 57%

95% 95%
87% 70% 50% 49% 27% 11% 68% 54% 74% 58%

73%

77%

50% 36%

23%

28% 9% 16% 4%
GPS Nav. PC/Desktop 2009 Laptop/Netbook Mobile Phone Games Console 2010

12%

18% 10% 9%

**
eReader or Tablet

**

1%

6%

SMS Smartphone

Photos

Internet

Games

MMS

Email

PVR or Internet Other enabled TV Household app.

Internet capable non-smartphone Non-internet capable mobile phone

Source: Nielsen The Australian Online Consumer Report, February 2011 ** Access via devices like tablets, PVRs / internet enabled TV was not captured in 2009

However various headwinds are emerging

Pricing Pressure
A$/Minute (Mob industry minutes / Pre+Post revenue, ex WBB)

10

Increase in plan inclusions

Included value (A$)

Competitive Aggression
Mobile net adds for the quarter (000)
Telstra Optus

OCTOBER 2009
Consumer

7.67

Unlimited calls, texts & social network

CAGR: -3%

8.12

7.81

555
7.44

VHA

364

$450

$250

$350

88

74**

103 -18 **

Dec-08

Jun-09

Dec-09

Jun-10

Dec-10

A$49 Mar-10

A$49 Mar-11

A$49 Mar-10

A$45 Mar-11

Dec-10
* A$350, + unlimited on-net calls Source: Company disclosures, Optus analysis ** VHA branded net adds

Mar-11

Consumer Confidence
Investment in the resources sector is picking up strongly and the outlook remains very positive... In other areas, cautious behaviour by households are having a noticeable dampening effect.
Westpac Consumer Confidence Index - June 2011

Statement by Glenn Stevens, Governor RBA: Monetary Policy Decision (5 July 2011)

11

Today
1 Market overview 2 FY11 performance 3 Future opportunities & strategy

Service revenue growth softens as competitors discount price and plan inclusions increase
OPTUS MOBILE SERVICE REVENUE GROWTH (YoY)
14.3% 12.5% 11.0% 10.3%

12

6.7%

Mar-09

Sep-09

Mar-10

Sep-10

Mar-11

Note: All numbers are HY

Prepaid being impacted by a number of industry dynamics

Optus Subscriber Growth Prepaid (000)
+1% +1% -1%

13

-1%

Prepaid subscriber growth under pressure:

4,295

4,307

4,359

4,404

4,342

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

30 25

Optus Prepaid ARPU (A$) for quarter

26.4 25.2 25.8 24.8 23.6

Industry prepaid to postpaid migration Highly competitive market: Telstras subscriber push New competitors (e.g. Lebara) Vodafones Infinite offers Higher churn from Optus International Calls for Less customers1

20 Mar-10

Jun-10

Sep-10

Dec-10

Mar-11
1: International Calls for Less plan was launched in November 2009 offering attractive rates for international calls

but Postpaid continues to grow

POSTPAID SUBSCRIBERS (000s)
+139 (+3%) +143 (+3%) +150 (+3%) +151 (+3%)

14

POSTPAID ARPU YoY GROWTH EXCLUDING WIRELESS BROADBAND SUBSCRIBERS

4,191

4,330

4,473

4,622

4,773

Q4 FY11

2%

Q3FY11
Mar-10 Jun-10 Sep-10 Dec-10 Mar-11

2%

Q2 FY11 WIRELESS BROADBAND SUBSCRIBERS (000s)

+88 (+10%) +101 (+10%) +92 (+8%) +94 (+8%)

5%

Q1 FY11
1,282

2%

907

994

1,096

1,188

Mar-10

Jun-10

Sep-10

Dec-10

Mar-11

Smartphone penetration and innovative data services driving data growth

OPTUS DATA SHARE OF SERVICE REVENUE
Non SMS Data % of Service Rev SMS % of Service Rev

15

Unlimited mobile access, within Australia, to these sites

40%

36% 33% 28% 24%

9%

13%

18%

389,000 live streams of the 2010 FIFA World Cup matches

79% increase in Australian Open Tennis live streaming

5%

3%

20%

23%

24%

23%

23%

Google Apps Partnership Helping SMBs manage their communications

2007
Note: All numbers are FY end

2008

2009

2010

2011

16

BROADBAND UPTAKE
OPTUS MBB SUBS (000)
+375 1,282 +421 907 +375 486

111

Mar-08

Mar-09

Mar-10

Mar-11

Increased investment leading to network performance improvement

OPTUS MOBILE CAPEX (A$ MILLION)
575 536 495
Sydney Morning Herald Network Testing

17

30 sites around Sydney CBD and metro areas Data transfer speeds only Tested on iPhone 4

AVERAGE DOWNLOAD TIMES 3MB SONG (SEC)

AVERAGE UPLOAD TIMES 1MB SONG (SEC)

8 2009 2010 2011

13

15

Note: All numbers are FY end

Optus the leading challenger network

Weve delivered competition to
Weve expanded Weve delivered

18

more than 14 towns

in the last year
Fibre backhaul to

covering over 700,000km2

1000 in-building solutions,

improving coverage for our metro customers

over 80% of metro sites

Over

Femtocell
Leveraging fixed network Our network coverage reaches

In the last three years weve invested over

660 mobile sites built

during FY11

97% of Australians

$1.6 billion in the Open Network

The Customer Experience program continues to deliver improvements for our Mobile Customers
Outperforming our major competitor in key CE metrics
+5%
Activation

19

Reduction in number of technical enquiries through a simplified activation process in Mobile Billing and General enquiries Faster delivery of online orders for mobile handsets

30%

+4%
Billing

50%

+7%
Customer Service

Reduction in early tenure churn in Post Paid Mobile

25%

20

Today
1 Market overview
2 FY11 performance

3 Future opportunities & strategy

We will breakout in customer experience

Driving a breakthrough in Customer Experience Fix vital service experience
We are resolving the key Customer pain points.

21

Product is the Network

We will continue to invest in our network and will work to close our customers perception gap of our performance.

Design for Lifetime Value

We will drive loyalty through our acquisition, retention and rewarding of our Customers

Understand the Customer

We will continue to invest in systems and our people to exceed customer expectations.

Closed Loop Feedback

We will empower our people to drive continuous improvement by ensuring Customer feedback is achieved on a timely basis.

Link Customer Experience to Value

We will link Customer Experience to performance.

Driving a Customer-centric attitude

Device leadership across handsets, tablets and other devices

Number of Applications (000)
iOS

22

350 275 50 20 10

Android Symbian Blackberry

Windows

Source: Samsung Securities April 2011

Deliver relevant and personalised digital services to our customers

Lead in online digital experience with products and VAS of
Optus Smart Safe
secured data accessible on any device easily shared with friends and family

23

RELEVANCE

Optus Now

Optus Smart Safe

Optus Call Buddy

Google Apps Partnership helping small medium businesses manage their communications range of integrated business tools accessible via a single web portal on a range of devices dedicated IT helpdesk offering up to 24/7 support

Leverage distribution to compete

Optus Distribution Landscape +241

24

Regional Metro

Mar-10

Mar-11

Branded Retail +41

2009

Mar-11

Increase our investment in the mobile network

25

Mobile 2012 and beyond

CONTINUE
regional expansion

INVEST
in metro network depth

COMPLETE
upgrade to HSDPA+

FINALISE
trial of LTE and deploy

With the continuing significant investment, Optus is the only carrier capable of challenging the incumbent telcos network on both coverage and speed

Video: Network

26

SingTel Investor Day: Mobile Business Overview

Michael Smith Managing Director, Consumer 11 July 2011