Corporate Accounting for Telstra: Financial Performance, Sources of Finance, and Changes in Accounting Policies

RUNNING HEAD: ACCOUNITNG
Corporate accounting

Accounting 2
Contents
Part 1................................................................................................................................................3
Description of the company.........................................................................................................3
Overview of industry and competitors.........................................................................................3
Sources of finance........................................................................................................................5
Financial performance..................................................................................................................7
Changes in accounting policies....................................................................................................9
Part 2................................................................................................................................................9
Assets – PPE................................................................................................................................9
Intangibles..................................................................................................................................10
References......................................................................................................................................13

Accounting 3
Part 1
Description of the company
Telstra is a telecommunication and technology company operating its business in Australia and
offering a wide range of services in telecommunication markets. The core business of the
company is to provide information and communication services to its customers at both national
and international level. It has 17.7 billion retail mobile services, 3.6 million retail fixed
broadband services and 4.9 million retail fixed voice services. The company has its operations
divided into four segments providing their respective services across the country (Reuters. 2018).
The Telstra Retail segment deals with the distribution of telecommunication products and
solutions. The division named as Global Enterprise and Services offers sales and contract
management for the government as well as business customers. The third segment Telstra
Operations is involved in the overall planning, engineering, designing and construction of Telstra
networks and information technology solutions. The last division of the company is Telstra
Wholesale which provides a wide range of products and services related to telecommunications
that are delivered to the large networks and other service providers (Telstra. 2018).
Overview of industry and competitors
Telstra Corporation operates in Telecom industry of Australia which is a leading market for
many of the companies involved in providing telecommunication services. The country has lot to
do with the concept of digitization and having a vibrant telecom market reflects the importance
of digitization for the country. According to the data and statistics, it is observed that the mobile
broadband market of Australia has experienced steady growth while the revenue and fixed-line
telephony traffic declines. The growth of mobile subscribers is stimulated by the increase in the

Accounting 4
country’s population as well as rise in the number of consumers using more than two mobile
subscriptions. In the recent years, the revenue for Mobile Network Operators has been made up
by the constant taking up of LTE technology services and rising proportion of mobile data.
Furthermore, it is also noticed there is a change in customer preferences as they shift to fibre
networks because its infrastructure is built by NBN Co. which is responsible for national
broadband deployment. Overall, the broadband sector of Australia has experienced growth as the
number of broadband subscribers has also increased (Cision. 2017).
According to the PWC report, it has been surveyed that more than 80% of Australian CEOs
believe that the competition in the industry will intensify in next few years due to the entry of
new operators. This will provide customers more choices and will make difficult for the existing
companies to survive. The next trend likely to take place is the NBN model for providing high
speed broadband connection in residential and commercial areas. Along with this, the industry is
focused on introducing IoT technology based solutions for the manufacturing and agribusinesses
operating in Australia. In a nutshell, the telecommunication industry has performed better in
recent years and is focused on achieving more success and growth (PWC. 2018).
The top competitors of Telstra are Vodafone Group Public Company, Spark New Zealand
Limited and Optus Systems Pty Limited. Vodafone provide its services to over 470 million
customers across 30 countries. The company has 70% of its business in Europe where it is
considered as the leader of wireless markets in UK and Germany. As of 2018, the revenue of the
company is $57,369.55 million along with the gross profit of $16,999.84 during the same year
(Hoovers. 2018). Another competitor SingTel Optus also provides telecom services to
Australians through satellite networks, fixed line and wireless. It has approx 9.5 million
consumers with revenue of $6,579.03 million in 2018. Spark is a telecom cooperation operating