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Telstra and IBM Supply Chain Agreement to Deliver up to AU$200 Million in Additional Savings


SYDNEY, AUSTRALIA - 06 Dec 2007: Telstra today announced an expansion of its seven-year supply chain agreement with IBM Australia (NYSE: IBM) that will deliver up to AU$200 million in additional cost reduction through further improvements in the company's supply chain management.

The next phase of Telstra's expanded supply chain transformation program will focus on improving Telstra's efficiency in ordering, managing and delivering telecommunication parts needed by its communications technicians and engineers to perform network maintenance, fault repairs and activation of customer services.

Telstra Procurement Executive Director Mr. Ian Wheatley said the phase one partnership with IBM has been a great success and is on track to deliver AU$500 million in reduced costs.

"We will now take what we've learned from phase one to drive further efficiencies in Telstra's logistics and inventory management and achieve a total supply chain cost reduction of AU$700 million over a seven-year period," he said.

"In the first phase of our supply chain transformation, we replaced four payment and ordering systems with IBM's out-of-the-box software. The benefits for Telstra have been significant, including greater automation of procurement processes, removal of duplication and paper-based processes, and providing a single, company-wide view of our vendor spend.

"In phase two of the program, IBM will provide a single end-to-end view of our inventory supply chain and enable us to deliver the right part, at the right place, at the right time -- improving customer service and reducing costs. This is great news for our customers and shareholders," said Mr. Wheatley.

From March 2008, under the new and expanded agreement, IBM will manage logistics and inventory management functions and legacy system repairs resulting in:

"The consolidation of Telstra's supply chain and procurement is not just about enhancing back office systems. IBM will enable a focused, flexible, resilient and variable integrated supply chain -- that means competitive advantage, enabling Telstra to respond more quickly to market shifts and the needs of their customers," said IBM managing director - Telstra Account, Mr. David Burns.

The expanded agreement is part of Telstra's smarter approach to procurement through partnering with world-class suppliers and streamlining supply chain processes. This approach has enabled Telstra to reduce its procurement costs by AU$159 million since September 2006. This includes savings from the phase one supply chain transformation agreement awarded in September 2006, which implemented an integrated supply chain platform for contract management, purchasing and accounts payable over this period.

IBM is a global leader in supply chain management and has transformed its own supply chain, saving U.S. $20 billion over three years. By partnering with IBM, Telstra has access to world-leading supply chain solutions and the ability to leverage IBM's global logistics supplier network. For more information about IBM, please contact www.ibm.com/telecom.

Telstra's national media inquiry line is 1300 769 780 and the Telstra Media Centre is located at: www.telstra.com.au/abouttelstra/media

For news, views and discussion on telecommunications in Australia see: www.nowwearetalking.com.au

Contact(s) information

Clay Helm
IBM Media Relations
415-545-2212
clayhelm@us.ibm.com

Sarah McKinnon
Telstra Media Contact
+ 61 437 757 261
Sarah.McKinnon@team.telstra.com

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