Analysis: Seven items of note in Telstra's annual report


IT administrative costs down, software development rises.

Telstra yesterday released its 2011 annual report [pdf], a 233-page tome of financial data and analysis sprinkled with interesting footnotes and casual project mentions.

The report included interesting detail on administrative IT costs, software development and IT staffing arrangements.

There were also details of National Broadband Network and carbon tax exposure assessments that found the light of day.

iTnews has summarised the best seven of these casual mentions below:

  1. Telstra reported a year-on-year 18.2 percent reduction in IT costs listed under general and administration expenses. It attributed the reduction “to renegotiated licence fees with IT vendor managers and PC lease agreements".
  2. Savings were also achieved by “the renegotiation of contracts with external suppliers and the conversion of expenses for IT professionals to labour costs as they moved to permanent staff".
  3. Telstra noted a rise in capital expenditure on software assets, which it put down to continued IT investment under the telco’s “business simplification strategy”. It is not until detailed intangible asset breakdowns that the investment becomes clear. The telco reports that as at June 2011, it “had software assets under development amounting to $593 million (2010: $392 million)".
  4. Software “additions” in the past financial year helped increase the telco’s amortisation expenses by 10.9 percent or $99 million.
  5. The telco’s board has set itself a series of diversity goals for fiscal year 2012. They include  bringing another woman onto the board for a total of three and having “50 percent female representation” in its 2013 graduate intake.
  6. Telstra said it would assess its exposure to the carbon tax once the system is ironed out by the Government. “Based on the information currently available, it appears unlikely that Telstra will be directly liable under the system to purchase emission permits,” the telco noted. “However, Telstra may experience an indirect cost impact from the system as a result of the impacts on electricity prices and other parts of Telstra's supply chain.”
  7. The annual report surfaces Telstra’s estimates for the service life of particular parts and equipment in its network. This year’s service life re-assessment saw depreciation expenses rise $79 million, after they went down $124 million the year prior. The report also reveals details of an assessment “on the impact on service lives that the NBN may have”, in reference to the potential future requirement by NBN Co or the Government to “accelerate... depreciation or... retirement” of Telstra’s assets. The outcome of the assessment was that “minimal” impact was expected.

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Analysis: Seven items of note in Telstra's annual report
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