AAPT

1

• AAPT
• 14 March 2002
• David Bedford
• Chief Operating Officer - Australia

2
Australian Market

• Lower growth predicted
• Telstra maintains its dominance
• Consolidation of participants continues
• Regulatory environment not supporting competition
  
• Sale of Telstra will occupy much attention

3
Opportunities

• A good time to influence the regulatory
  environment
• The government wants to sell Telstra
• Voice prices tending upwards
• Capital investment requirements are lower
• Targeted opportunities are viable

4
TCNZ in Australia
TCNZA Karyn Devonshire
AAPT David Bedford

• Consumer
• Commercial
• Greg Armstrong
• Smartchat
• Bundling with
• AOL7 and C1

• Business
• Graham Mitchell
• Connect
• Business, Corporate
• Government

• Mobile
• Mohan Jesudason
• Cellular One
• Hutchison 3G

• ITT Outsourcing
• The Top 100 Corporates

Service Delivery - Ian Buchanan
Infrastructure - Richard Dammery
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This represents

• Increased focus on single point of customer
  contact
• Mobile to focus on MVNO benefits and Hutchison 3G
  relationship
• Consolidation of back office (Finance, HR)
  functions to reduce cost
• Improved utilisation of existing infrastructure
  in broad Business segment
• A single Service Delivery structure to improve
  process and reduce cost

6

• Market Strategies
• Graham, Greg and Mohan will brief you on
  their major initiatives
• Cost Reduction Strategies
• Capex spend will continue to be miserly
• Operational costs including personnel will
  benefit from back office / Service Delivery
• consolidation

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1st Half 01/02 in AAPT

• Focus on
• Reducing capital spend
• Improving product and customer margins
• Improving margins through smarter pricing
• Reducing personnel and opex costs
• Increasing utilisation of existing assets
• Continuing to grow data revenues

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Resulting Performance Trends in AAPT

• Gross Margin improved by 30 for YTD
  December 01 on YTD December 00
• EDITDA up 100 YTD December 01 on
• YTD December 00
• Opex / Revenue decreasing Year on Year and
  month on month
• Capex spend down significantly from A204m
  (6 months ended Dec 00) to A70m (6 months
  ended Dec 01)

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• Staff numbers decreased by 336 from 1 July
  01 to 31 January 02 - reduction of 20 plus
• These trends will continue during the balance
  of 01/02
• A continued focus on improving business basics
• On continuing to target customers and segments
  that provide value enhancing margins.

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Disclaimer This presentation contains not only
a review of operations, but also some forward
looking statements about Telecom and the
environment in which the company
operates. Because these statements are forward
looking, Telecoms actual results could differ
materially. The second quarter media release,
management commentary and various documents filed
with the US Securities Exchange Commission,
including the Annual Report on Form 20-F, contain
additional information about matters which
could cause Telecoms performance to differ from
any forward looking statements in this
presentation. Please read this presentation in
the wider context of material previously published
by Telecom and filed with the SEC.