REG - Telstra Corp. Ld - TLS announces two major infrastructure projects

TelstraAnnouncement

02/02/2022 07:00

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RNS Number : 3928A  Telstra Corporation Ld  02 February 2022

 

 

 

 
 
 

 2 February 2022   Office of the Company Secretary

                   Level 41

242 Exhibition Street

MELBOURNE VIC 3000

AUSTRALIA

 The Manager

                 General Enquiries    03 8647 4838

                 Facsimile 03 9650 0989
 RNS

                   companysecretary@team.telstra.com (mailto:companysecretary@team.telstra.com)

                   Investor Relations

                   Tel:  1800 880 679

                   investor.relations@team.telstra.com

 

 
ELECTRONIC LODGEMENT

 

Dear Sir or Madam

Telstra announces two major infrastructure projects

In accordance with the Listing Rules, I attach a market release, endorsed by
the CEO and CFO, for release to the market.

 

Authorised for lodgement by:

 

 

Sue Laver

Company Secretary

 

 

 

 

 

MARKET RELEASE

 

Telstra future proofs Australia's digital economy with

two nation-building projects

 

Wednesday, 2 February 2022: Telstra today announced it will invest in two
major telecommunications infrastructure projects to support the nation's
digital economy and enable unprecedented levels of connectivity
across Australia.

The two distinct projects are:

·      Building and managing the ground infrastructure and fibre network
in Australia for Viasat, a global communications company
(https://www.viasat.com/) . This program will support the new ViaSat-3
terabit-class global satellite system as part of the 16.5 year contract.

·      A major new fibre project to build state-of-the-art inter-city
dual fibre paths. The investment will add up to 20,000 new route kilometres to
increase the capacity of Telstra's already extensive optical fibre network.

To deliver both projects, Telstra expects to invest $1.4-1.6 billion outside
of its BAU capex 1  envelope over the next five years. It expects to invest up
to 70 percent of this total commitment across its T25 planning period, or an
additional ~$350 million of capex per year over FY23 to FY25.

Telstra CEO Andrew Penn said the two projects recognised the strength of
Telstra's network assets and were part of Telstra's T25 InfraCo ambition to
deliver profitable growth and value by improving access, utilisation and scale
of its infrastructure.

"Investing in these two truly significant nation-building projects will see us
continue to have the largest inter-city fibre network in the country, helping
to future proof Australia's digital economy and further improving connectivity
in regional Australia," said Mr Penn.

About the Viasat program:

Each of the three global ViaSat-3 satellites are designed to offer over 1Tbps
of total network capacity to deliver data and video streaming speeds of more
than 150Mbps. Viasat provides broadband internet services to fixed, mobile and
government customers globally.

Mr Penn said the Viasat build would be the largest-scale satellite solution
deployment in the nation's history.

"It's a clear demonstration of the potential opportunities we have when we
combine Telstra Enterprise's customer management and service capabilities with
Telstra InfraCo's industry leading existing infrastructure assets and new
build capabilities," Mr Penn said.

Dave Ryan, President of Viasat's Space and Commercial Networks said: "Telstra
is a trusted, well-respected organisation with impressive infrastructure
assets in Asia and an extensive fibre network.

"By leveraging their existing infrastructure for our ground network, we can
cost-effectively optimise our satellite assets and significantly lower our
risk of deployment and operations for the ViaSat-3 terabit-class satellite
system. We remain focussed on delivering advanced connectivity - from mobility
and government services to connecting hard-to-reach communities - across the
region," said Mr Ryan.

Telstra will co-locate Viasat's satellite access node (SAN) equipment at
hundreds of sites across Australia and will build and manage high-speed fibre
links to each site. The network will connect the SAN sites to multiple
redundant data centres that will house the core networking equipment needed to
manage the expected increase in data traffic.

About Telstra's major new fibre project:

Mr Penn said the new inter-city fibre project would accelerate Telstra's
investment in the growth of InfraCo, while enabling ultrafast connectivity
between capital cities and improved regional connectivity, including
opportunities for higher capacity mobile backhaul.

"This will support remote working and education needs, health services,
high-definition entertainment consumption and online gaming, and IoT use cases
such as mining and agriculture," said Mr Penn.

"We're already seeing connection speeds on the current network surge from
100GB to 400GB and beyond through our investments to date. There is growing
demand for greater fibre capacity, enabling massive bandwidth and ultrafast
data rates with lower latency. The time for delivering the infrastructure to
support this is now."

The investment will deliver up to 20,000 route kilometres of new ultra-high
capacity, low-latency fibre that will enable transmission rates of up to
650Gbps (six times today's common rate of 100Gbps). It will enable express
connectivity between capital cities up to 55Tbps per fibre pair capacity
(over six times today's typical capacity of 8.8Tbps per fibre pair) on routes
such as Sydney - Melbourne; Sydney - Brisbane; and Perth - Sydney.

The national fibre network project is a multi-year build which will commence
at scale in late FY22 with early trial and test deployments already underway.
Discussions with key anchor customers for the national fibre network are
progressing, including with global hyperscalers, local telecommunications
providers and construction partners.

Mr Penn said the infrastructure investment opportunities demonstrated the
benefits of Telstra's T22 strategy, including to establish InfraCo as a
standalone business.

"They are also consistent with our strategy to create value from InfraCo,
including considering monetisation opportunities over time," said Mr Penn.

"Our strong cash flows and T25 growth ambitions provide us the flexibility to
make these strategic infrastructure investments, whilst maintaining
flexibility to return excess cash to shareholders. Together, these investments
are expected to deliver incremental long-term accretive growth."

Telstra continues to expect cashflow to remain ahead of accounting earnings.
Capex, including this investment, is forecast to be ~$250 million per annum
lower than adjusted depreciation and amortisation.

Both infrastructure projects meet Telstra's organic investment criteria and
are consistent with its capital management framework, including a commitment
to balance sheet settings consistent with an A band credit rating. Telstra
expects these investments combined to deliver mid-teens IRR, to reach per
annum EBITDA contribution of ~$200 million by FY26, and to have a payback
period of approximately nine years.

There is no change to FY22 guidance, and Telstra plans to complete its
on-market buyback in FY22 as previously advised. It also remains committed to
deliver all of its T25 financial ambitions.

--------------------------------------------------------------------------------------------------------------------------------------

About Telstra InfraCo

Telstra InfraCo was created in 2018 as a standalone infrastructure business
unit within Telstra to provide greater visibility to the market of the value
of this business and create more optionality for the future.

 

As Telstra's dedicated infrastructure business, Telstra InfraCo is
reinventing the way Australia's telecommunications infrastructure is built and
managed and will open up new and easier ways for customers to access our
infrastructure portfolio.

 

Telstra InfraCo is now accountable for 250,000 kilometres of fibre optic
cable, 370,000 kilometres of ducts, masts, poles, and large
structure, 10,000 exchanges, two data centres, and access to 400,000
kilometres of subsea cables and 8,000 mobile towers (owned by
(https://www.telstra.com.au/aboutus/media/media-releases/telstra-finalises-infraco-towers-sale)
Amplitel
(https://www.telstra.com.au/aboutus/media/media-releases/telstra-finalises-infraco-towers-sale)
).

 

Telstra media contact: Steve Carey, General Manager Media

M: +61 413 988 640

E: media@team.telstra.com (mailto:media@team.telstra.com)

Reference number: 005/2022

 

Telstra investor contact: Nathan Burley, Investor Relations

T: +61 457 529 334

E: investor.relations@team.telstra.com
(mailto:investor.relations@team.telstra.com)

 

Viasat media contact: Chris Phillips, Corporate Communications & Public
Relations

M: +1 917-974-1667

E: Christina.Phillips@Viasat.com

 

 1  Capex is measured on an accrued basis and excludes spectrum and guidance
adjustments, externally funded capex, and capitalised leases.

 

 

 

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