Morning. I'm Ross Moffat, Head of Investor Relations, and it is my pleasure to welcome you to Telstra's Virtual Investor Day for 2020. Before we commence, I would like to acknowledge, on behalf of Telstra, the traditional custodians of country throughout Australia and recognize our continuing connection to land, waters, and culture. We pay our respects to their elders past, present, and emerging. We have a great line-up for you today. First, we'll be hearing from Andy Penn, our CEO, followed by Kim Krogh Andersen and Nikos Katinakis on 5G, Michael Ackland on consumer and small business, and to close off the first session, David Burns on enterprise. We'll then move to Q&A with those speakers and a short break. After the break, we'll have Vicki Brady, our CFO, followed by Brendon Riley on Telstra InfraCo, with a return to Vicki for a wrap-up.
We'll then move to our final Q&A session with Andy, Vicki, and Brendon. With that, I will now hand over to Andy.
Well, thanks very much, Ross, and good morning, everybody, and welcome. I hope everyone is continuing to stay safe and well. Thank you for spending the time with us today. Let me start by setting the scene for our discussion. There are really three things that we would like to achieve today. Firstly, we want to update you on our operational performance, the key market dynamics that we're seeing, and our progress with our T22 strategy. Secondly, to provide a deep dive on some of the key aspects of our strategy, including the next steps in the creation of Telstra InfraCo and our intention to create a new corporate structure. And thirdly, we want to give you the opportunity to hear directly from the broader management team. Now, as you join us today, we are almost 18 months out from the completion of our T22 program.
This means that we're closer to the end than we are to the beginning. So, to set the scene, I wanted to start by reminding you why T22 is so important to Telstra, why it is so important that we finish the job. When we launched T22 in June 2018, we'd reached a tipping point, a tipping point where we knew we had to act more boldly. We could see our industry was changing rapidly, driven by technology innovation, competition, and the changing expectations of customers hungry for digital experiences. And of course, we had to deal with the profound impacts of the NBN on us.
Our T22 strategy was created to respond to these trends by radically simplifying and digitizing our business, by eliminating customer pain points, removing legacy systems and processes, introducing new agile ways of working, and further extending our network leadership, including in 5G, reducing our cost base, and of course, establishing a standalone infrastructure business to drive performance and create optionality post the NBN rollout. In other words, we were preparing the company for an accelerating digital economy. Of course, little did we know that COVID would supercharge the digital economy and online working, learning, and living would suddenly become the new normal. COVID has proven that when it comes to doing things digitally, with the right incentives in place, change can be embraced quickly. In fact, in the last nine months, the digital economy has exploded around us through activities such as telehealth, online learning, remote working, and e-commerce.
Through the work that we've already done with the T22 strategy, we are exceptionally well placed to respond and lead in this new environment. I cannot emphasize enough the significance and the scale of the foundational changes we have made to our digital systems and functions over the last 2-3 years. They're generational, and we have only just scratched the surface of the benefits that they will ultimately deliver. Telstra, as Australia's largest telecommunications company, plays a central role in the digital economy, and the work that we have done through T22 gives us a winning competitive advantage. As we move into the final 18 months of T22, we're extremely well progressed. We have delivered, or we are on track to deliver, more than three-quarters of our strategic objectives, and the progress is visible right the way across the business.
We have simplified consumer and small business in-market plans, were cut from 1,800 to 20, and today we have almost 6 million services on those plans. We have digitized. Many of the old cumbersome legacy systems are gone, and by the end of FY2020, more than 70% of Telstra consumer and small business service transactions were via digital channels, up from 53% just 12 months before. We are working differently. More than 10,000 employees are now working in agile teams where roadblocks have been removed and products and services are able to be rolled out in weeks rather than months. Our 5G network is the best in the country, and in fact, it's among the very best 5G networks in the world. I expect us to cover more than 50% of the Australian population with our 5G network by the end of December and 75% by June 2021.
As you will hear from Kim and Nikos shortly, we will leverage this investment with new products and services such as our 5G fixed wireless broadband solution. We are also working our assets more effectively. Telstra InfraCo is now fully operational as a standalone infrastructure business unit controlling assets with a book value of around AUD 11 billion. I will return to InfraCo in a moment to comment on the deep dive that we will take you through today. We've also become more efficient through our productivity work. We have delivered AUD 1.8 billion of savings so far, and we remain on track to reach our target of reducing annual underlying fixed costs by AUD 2.5 billion by FY2022, and that includes a further AUD 400 million in productivity this year.
In fact, our progress so far on productivity, along with the digital investments that we have made, sets us up for what's beyond T22. Importantly, we believe we can deliver strong productivity in FY2023 and beyond. Notwithstanding the significant progress, I know, though, that it is not sufficient if we don't also deliver a strong financial performance for our shareholders too. While the impacts of competition and COVID mean we will not achieve our original ROIC goal in our original timeframe, our level of aspiration should not be interpreted as being capped at ROIC of 7% over time. Now, Vicki is going to speak about this later, but without stealing her thunder too much, I do want you to hear from me that we are absolutely focused on getting our underlying EBITDA into the $7.5-$8.5 billion range post the NBN that we have spoken about before.
We are also upgrading our ROIC target in FY2023 to around 8%, given that that is the ROIC which is consistent with EBITDA towards the lower end of that range. Importantly, we can now see the point in FY2023 when the NBN migration will be fully complete and its impact finally wash through our financial results. This will be a historic moment because the net cost to Telstra of this has been huge, around AUD 3.5 billion in recurring annual EBITDA when it is complete. But with this largely behind us, as you will hear from Vicki, we expect profit to return to growth from FY2022. Ultimately, transforming Telstra and preparing and positioning it for the future post the rollout of the NBN has been what T22 is all about. We've made massive progress, but of course, there's still more work to do, and that brings me to today's agenda.
Today, we want to take you through a deep dive on some of our key priorities for the remainder of the program. 18 months out from the end of T22, we are very clear about what we need to deliver. So let me start with Telstra InfraCo. In the last 2 years, we have done a lot of work to set up InfraCo as a standalone business managing the vast majority of our infrastructure assets. It was created for 3 reasons. Firstly, to provide greater transparency of Telstra's infrastructure assets. Secondly, to improve the efficiency of how we manage those assets. Of course, thirdly, to provide optionality in an evolving industry. Today, we are announcing the next step, not just in Telstra InfraCo's establishment, but in the future operations of Telstra overall.
Vicki and Brendon will take you through this detail shortly, but today we are announcing an important milestone in our T22 strategy. In fact, an important moment in Telstra's long history, a proposed restructure of our business into three separate entities under a parent company, Telstra Group. The three entities will be InfraCo Fixed, InfraCo Towers, and a third entity, ServeCo. ServeCo is not a new brand name, I should say. We're just using that as a reference today for the purpose of differentiating this entity, which is focused on products and services and customer support from the infrastructure business. But InfraCo Fixed will own and operate our passive physical infrastructure assets, the ducts, the pipes, fiber, data centers, subsea cables, and exchanges, all of which underpin our fixed telecommunications network.
InfraCo Towers will own and operate our passive physical mobile tower assets, which we will look to monetize over time given the demand and compelling valuations for this type of high-quality infrastructure. ServeCo will focus on how we create products and services, support customers, and deliver the best possible customer experience, including maintaining our significant network leadership. ServeCo will own the active parts of our network, things like software-defined networking that allows us to operate our network in a very dynamic way. It's important to understand that we are being very careful to retain key elements of our network in ServeCo. These include things like the radio access network equipment on our mobile towers, our spectrum holdings, and the electronics that light up the fiber in our fixed network because all of these underpin our strategic advantage and differentiation.
Now, we spoke about the key drivers for the establishment of InfraCo when we launched our T22 strategy in June 2018. The challenges and disruptions that we have seen over the last 6-12 months have only reinforced these. Firstly, the increasing value of infrastructure assets. Secondly, because of the digital economy, not only to business, but to the whole of Australia and its economic recovery. And thirdly, the dependence of the digital economy on telecommunications as the underlying platform that supports it. Because as our collective fortunes become increasingly digitized, our proposed new corporate structure reflects this new world and will help us build a foundation for it, one that is in the interest of our shareholders, our employees, our customers, and ultimately one that benefits the country overall. Any restructure is a complex process, and this is undoubtedly our biggest and most complex since privatization.
It will take time to work through the many commercial, regulatory, and operational issues. We are very conscious of the many stakeholders who will have an interest in these changes, and that is why we have announced our intentions today because we wanted to do so ahead of implementation so we can undertake a comprehensive consultation program to detail the many benefits that this structure delivers to our stakeholders, but also hear their input as well. Now, elsewhere in the business beyond InfraCo, it is also important that we finish the T22 job. For our consumer customers, we need to finish radically simplifying our product offerings, eliminating customer pain points, and creating all digital experiences. We've already made great progress. As I mentioned a moment ago, more than 70% of our total service transactions are now through digital channels. That equates to almost 5 million transactions per month.
Customers are using digital channels to make payments, download builds, update their credit card details, and 95% of these transactions are now completed in digital. Digital sales have also dramatically increased over the last two years, up from 6%-33% in October. Simple sales experiences such as plan changes are now more than 55% via digital, driven through new one-click processes. Finishing this radical simplification and digitization is a large and complex piece of work, and Michael Ackland's going to take you through that shortly. With so much change happening simultaneously for our customers, it is inevitable that we will see some issues, but we will address them as quickly as possible. Ultimately, I know we will end up providing a better, more seamless customer experience.
Now, I mentioned earlier that T22 will not stand for anything if it does not lead to an improved outcome for our shareholders, and we are confident that it will. But similarly, it must lead to a transformed experience for our customers, and we are now starting to see these benefits accelerating. Turning then to our fixed business, the NBN headwinds that we have faced are tracking as we had expected, and the T22 changes that we are making will, I believe, enable us to improve our fixed EBITDA. In fact, as you'll hear from Vicki, we are targeting a mid-teens NBN resale margin in FY2023. For our business customers, we need to complete the transformation of our enterprise business, including with initiatives such as adaptive networks to enable Australian companies to manage their connectivity needs and respond more quickly to changing dynamics.
David will talk more about this shortly, but we expect to bring enterprise business back to growth in FY2022 at the aggregate level for both revenue and EBITDA. In networks, as with our rollout of 3G and 4G before, Telstra is the clear market leader in 5G already, and this reinforces that Telstra has and will retain by far the best mobile network in Australia. Vicki will talk more about the detail of our outlook shortly, but we are confident that our leadership in 5G will enable us to achieve second half FY2021 ARPU and EBITDA growth in mobiles. In productivity, cost reductions are expected to come from further product rationalization, platform simplification, increased customer self-service, and incremental direct and indirect labor reductions. Finally, as well as restoring growth in our core businesses, we intend to build on the strong performance we have achieved in Telstra Health.
This business has built a really impressive ecosystem of digital services that can help with anything from a simple consultation with a GP via a telehealth platform to delivering paperless prescriptions to helping create new integrated capabilities in healthcare and aged care at a national level. It hit break even in the month of May this year, and we expect a positive EBITDA contribution from the business in FY2021 with revenue growth in excess of 25%. Now, we know that not all of the investments Telstra has made in the past have gone well, but we have learned from our experience. Our measured approach now means that Telstra Health is incredibly well positioned and performing well, and I believe it will be a very strong contributor to the value of Telstra in the coming years.
I also wanted to take this moment to share with you that we are exploring the opportunity to resell energy to our consumer customers. These plans are at an early stage, but we're about to apply for the necessary licenses, and you will therefore become aware of them in the coming weeks. Now, we are one of the largest consumers of electricity in the country. We have been heavily involved in the sector by underwriting renewable generation by PPAs, providing firming power capacity during times of extreme demand or grid instability, and neutralizing the emissions from our total operations. We already underwrite projects that generate enough renewable energy to power about 100,000 homes, and we provide standby power that enables more renewable energy to be absorbed into the energy grid. We also deploy machine learning and IoT to change the way that we use energy.
We have a very experienced energy team. All of these things help us affordably access more renewable energy, and we also help some of our larger customers do exactly the same. Now, we are exploring bringing all of this experience to the table with a consumer offer, leveraging our strong in-home position with our customers, the investments that we have made in the digitization of our customer systems, and our Telstra Loyalty Plus program. We plan to do so with a simple, affordable solution at a low cost for us, and we will do it with the same measured and conservative approach that we have applied to health over the last few years. I want to finish my remarks this morning by coming back to the digital economy and the importance of getting the policy and regulatory settings right for Australia's future.
To its credit, the federal government has shown its commitment to the huge task of digitizing our economy with recent announcement in the budget. Only last month, the Prime Minister reiterated his commitment to this goal when he spoke of upgrading the circuit boards of our economy and using the gains we have made this year as a springboard to become a leader. What is important now is that we continue to build momentum behind the digital economy by removing barriers, incentivizing growth, and encouraging reform. Because if we get this right, the potential economic benefits for Australia and Australians are enormous. Recent modeling from PwC showed that more businesses embracing digital tools could add up to a further AUD 90 billion of incremental value to the Australian economy and, importantly, create up to 250,000 new jobs by 2025.
Telecommunications networks will make or break the country's digital economy. With so much at stake, it is therefore crucial we have a clear shared vision for the telecommunications industry for the next decade. With the completion of the NBN rollout, there is now an opportunity for Australia to develop such a vision, one that is technology agnostic, one that provides an environment that is pro-investment and pro-innovation, a vision that not only considers the NBN, but the success of the whole sector. Our initiatives with Telstra InfraCo and the structural changes that we have announced today support such a vision, as do all of the changes that we have made and are making as part of our T22 strategy. Because T22 is fundamentally about transforming Telstra for the future and being in the best possible position to grow strongly in the digital economy.
I hope that helps set the scene for today's discussion and gives you a sense of our immediate priorities and urgency with which we are facing them. As we move further into FY2022, at a point where we are closer to the finish of T22 than we are to the start, we know we have more work to do to truly transform Telstra, but we also know that we have already made very significant progress. We therefore look to the future with great confidence in our ability to deliver our strategic ambitions and, importantly, return Telstra to growth. Thank you, and with that, I will now hand over to Kim.
Thanks, Andy, and hello everyone. My name is Kim Krogh Andersen, and I am the Group Executive for Product and Technology Function here at Telstra. Joining me today to present the 5G update is my colleague Nikos Katinakis, the Group Executive, Networks & IT at Telstra. Today, we will give you an update on our 5G network rollout, our technology roadmap, and how we are currently monetizing our 5G leadership. We will also touch on how we believe the 5G ecosystem and the technology evolution will create long-term value and growth for Telstra. Overall, we believe early adoption of 5G is the single biggest opportunity for telcos in this decade. That's why we have doubled down on our 5G investment and leadership. With this short introduction, I will hand over to Nikos, who will give us an update on current 5G network and our technology plans.
So, Nikos, over to you.
Thank you for the introduction, Kim. I'm super excited to be able to share some of the things we have been doing, and let me start with our 5G deployments. After accelerating our investment, our 5G network already covers 44% of the Australian population, and we are on target to reach 75% population coverage by the end of June 2021. We now have 2,250 sites, actually a bit more than that across the country. We are significantly ahead of our competitors, and our intention is to continue our drive for technological leadership. Besides the opportunities that open up with 5G that Kim will describe later, there are three broad factors that have played a key role in our decision to go faster. The first one is that 5G is a lot more efficient than 4G.
Our data consumption continues to grow by 30%-40% per year, and we are always keen to use the next generation of technology that allows us to deliver more data at a lower cost per bit. The second interesting change with 5G is that the device ecosystem is materializing a lot faster than previous generations of technology. We believe that customers that want to get the latest Samsung, Apple, iPhone, or any other device that already supports 5G will also want a network to use it, and we want to be there for them. Finally, one of the many things that COVID has proven is that change can be made and embraced quickly. It has also proven that the digital economy is central to the functioning of our country, and it will be very important to the economic recovery.
Good connectivity is more important than ever before, and resiliency, bandwidth, and performance are critical. Telstra's 5G network is already in more than 60 cities and regional towns across Australia, including most of the suburbs of those cities. More than 12 million Australians now live, work, and pass through our 5G network footprint every day. Evidence that Australia is doing well in the wireless domain is the recent global GSMA Mobile Connectivity Index in 2020. This is the sixth year running, and it's showing the success of our competitive market. Australia came first in the index, and that index measures infrastructure affordability, consumer readiness, content, and services. Last year, we walked you through how the spectrum situation plays out in 5G. I would like to give you an update on this.
We have three layers of spectrum that we are making available to 5G: low band, great for coverage over long distances and in-building penetration from the outside. We are selectively using our 850 spectrum that is also used for 3G and 700 that is used for 4G. We have announced that we are shutting down our 3G network in 2024, and in the meantime, we are deploying some cool technology called dynamic spectrum sharing that allows us to use the same radio for both 3G and 5G simultaneously. Mid band is perfect for coverage improvements and additional capacity, and then high band or millimeter wave, excellent for massive capacity uplifts. We are using the mid band, the 3.5 gig spectrum, as the foundation of 5G everywhere we deploy, and this is the spectrum that was auctioned off in late 2018.
Finally, we're really looking forward to the option early next year of millimeter wave. While it's not suitable for broad geographic coverage, it will allow us to meet organic capacity growth, scale new services, and really optimize offerings like fixed wireless to a select group of customers. Two points of differentiation in the way we're deploying our network is that we have focused on deploying 5G in a contiguous fashion and also by using low bands for in-building penetration. One important point that I want to make on this: it's around speeds. As you can easily understand, peak speeds start to become irrelevant. Most telcos around the globe, including ourselves, have been publishing peak speeds that indicate the progress of the technology. We recently announced 4.2 Gbps on a 5G test. With the introduction of millimeter wave, the numbers get so large that they really become irrelevant.
Instead, we have started focusing on the actual experience that our customers are getting, wherever they are and wherever they use their devices and their services. All major independent studies show that the Telstra mobile networks, including 5G, outperform all our competitors across all the cities tested, and in some cases, by as much as 50%. In the lower part of the chart, you can also see the evolution of the device ecosystem and the availability of 5G devices from all the major manufacturers for our markets. It's a really good story. Another thing we have been doing is we have founded the 5G Future Forum, and we are developing partnerships with cloud services providers and technology vendors. We have said many times that 5G is particularly important for enterprises, and we are clear that the only way to successfully deploy new capabilities and monetize them is through partnerships.
The 5G Future Forum was established in January 2020 by six telcos from around the globe: America Movil, KT, Rogers, Telstra, Verizon, and Vodafone came together with the intention to develop 5G interoperability specifications to accelerate the delivery of 5G and MEC solutions around the globe. MEC stands for Multi-Access Edge Computing. These specifications that have started to be released by 5GFF form the foundation for collaboration between telcos, public cloud providers such as Microsoft, Azure, AWS, Google, and others, and key technology providers such as Cisco, Ericsson, Nokia, and others. It is the collaboration between the complete ecosystem that really enables the introduction of a set of new capabilities that will be taken advantage of by the enterprise customers everywhere. 5G and edge compute have the potential to truly change how organizations operate and be a game changer for a range of applications.
Let me quickly cover these new capabilities. Telstra can bring elevated value to edge compute enhanced solutions. This is probably the most important chart in my presentation today because it describes the actual capabilities that we're looking to enable. I'm not going to describe all the points on this slide, but I do want to highlight some of the key ones. By moving the network and the cloud closer to the enterprises, we are able to reduce latency to applications and increase the resiliency of both the network and those applications. We will be taking advantage of our physical presence that we have across the country and the peering points with cloud and application providers to enable those edge sites. We have also been building the people capabilities in security, cloud, and software development so we can support our customers and partners across all these edge locations.
When is all this going to be available? We have started enabling capabilities and working with partners already. As an example, we have collaboration initiatives for AgriFood Connect in Toowoomba, and we have activities in both Melbourne and Sydney. Broad commercial availability is expected from Telstra in about 12 months or so from now. However, as I said, we are seeing key initial capabilities coming online at our innovation centers now. I will pass it back to Kim that will describe in more detail how we plan to use these capabilities across the various enterprise verticals and, more importantly, to give you a flavor on how we're monetizing 5G now and in the future. Kim, back to you.
Thank you, Nikos. All over the world, enhanced mobile broadband, or in simpler terms, 5G devices is the initial use case for telcos to monetize the 5G investment. This is also the case for us at Telstra, where we are monetizing increased capacity, lower latency, and higher speed. The network rollout leadership really lays the foundation for strong 5G monetization in consumer, small business, and enterprise segments. Since May 2019, we have launched more than 20 5G-enabled devices ranging from smartphones, tablets, mobile broadband devices. This year, all key smartphone vendors have launched their flagship 5G device like Samsung S20, the Google Pixel 5, and of course, the latest iPhone 12. This has truly accelerated the 5G ecosystem, and as of today, we now have more than 400,000 5G devices in our network.
To put this into perspective, at the moment, we are adding around 40,000 new 5G devices every single week to our 5G network, of course, accelerated by the latest iPhone 12 launch. But to really maximize the utilization of our 5G leadership, we also need devices in a lower price range. And in fact, earlier this week, we launched the Motorola 5G Plus. It is priced at AUD 499, which is our cheapest 5G smartphone ever. Our data also shows us that our 5G customers are using about two times more data than 5G customers, which is the reason why we have refreshed our mobile plans, providing up to 30 GB of extra data and including 5G access on our top three plans. This has resulted in a significant shift from customers signing up to the top three plans.
In fact, 72% of the iPhone 12 devices are on these top three plans. So the global 5G use case is the fixed wireless access. As Andy mentioned, fixed wireless access will be a core technology to improve our customer experience, but the fixed technology is underperforming or not sufficient to work, learn, or be entertained from our homes. Currently, about 65% of our customers with covered connectivity are unable to achieve thresholds for 100 Mbps services. So that's why we, in September, launched our Telstra 5G Home Internet product to address some of these experience challenges faced by our customers. The product is currently invite-only as we want to ensure we only provide each household with the best possible service, technology, and customer experience. We are already getting positive feedback from customers with download speeds around 280 Mbps on average.
There is a significant interest in our 5G home internet product from many Australians. We will, over the next 12 months, scale our solution to capture the value of 5G fixed wireless access to continue addressing the underserved households in Australia. Millimeter wave will be an important enabler, as Nikos mentioned, to ensure the right capacity and experience when more customers get access to fixed wireless access. The 5G network and the fixed wireless access will not only be for our consumers. It will also be a super important enabler for all sizes of businesses. For our enterprise customers, the 5G network will enable the opportunity to provide them with access-agnostic solutions to create the required resiliency and flexibility.
For our enterprise customers, we have announced adaptive mobility, which is a simple mobile broadband and enterprise wireless solution with modular plans, features, and services that enable customers to create a solution that fits their specific needs. As part of adaptive mobility, we earlier this year launched Cradlepoint 5G Wireless Network Edge Solution to deliver the speed, security, and reliability required by our enterprise customers. Just like our consumer offering, we will scale up our offering next year when millimeter wave is available. Technology, over the next 12-18 months, will accelerate even further with 5G in the center of that evolution. For example, the content entertainment industry is always thinking about how they can create, produce, and deliver more engaging, realistic content to tell their stories.
Part of that is leveraging nascent technologies like AR, VR, as well as 8K high-resolution displays to deliver a more immersive experience. This is true across sports, movies, TV, short-form content, advertisement, and many other sectors. This also means that our long-standing partnership with Fox Sports, with Foxtel, will be even more critical to bring these enhanced experiences to our customers in the future. We will also see an explosion of cloud gaming platforms emerging in Australia. I anticipate most of the big hyperscalers launching some form of cloud gaming in the next 1-2 years: Microsoft xCloud, Google Stadia, Amazon Luna, and many others. As part of our strategic partnership with Microsoft, we are the exclusive partner in Australia for Xbox All Access, and will enable xCloud for our customers when that's available.
5G's faster speeds, ultra-low latency means customers can play the latest games inside their home and then continue with a seamless and similar experience on the go. 5G network slicing can also deliver service-defined experience configured for AI and VR gaming and entertainment. Even before 5G and network slicing is available, we have developed network-optimized experience for our gaming customers and have early indications that they are willing to pay for this service-defined experience. 5G slicing will be the key enabler of high-quality AR, VR, XR experiences, which will accelerate the device ecosystem with earphones, smart glasses, smart watches, and even smart clothing. Existing devices will also be 5G-enabled in the future. More smartphones will have 5G connectivity, and we will also see more tablets, laptops, and even televisions with 5G to allow the viewers of the viewing of high-resolution 8K videos and mixed reality content.
Service-defined slices, combined with the growing device ecosystem, will give us new opportunities to capture the value of our 5G investment and ensure long-term growth. To capture these longer-term opportunities of 5G, the telco industry, including Telstra, needs to reinvent the current business model and move away from gigabytes and speed to an experience-centric business model. We believe we are well positioned to capture the value of the different industries and sectors when they digitize and automate their businesses. AI will extract the value of massive IoT and will require an ultra-reliable, low-latency network and real-time compute. Our 5G network slicing private network will be a core enabler of the ultra-reliable use cases enabling Industry 4.0. But we will also need cloud and edge to create the resiliency and the compute power required for these use cases.
While connectivity remains super critical, it is software and applications that will solve the customers' pain points and deliver the real value of Industry 4.0. We are in a strong position as more than half of our current revenue in our IoT business is driven by software and services, which is unique when we compare ourselves to other telcos around the world. For our customers to transform and digitize their business, they will need a world-class professional service and managed service partner, which is the core part of our Telstra purpose. Every industry vertical will have huge potential. We believe we are well positioned to play a leading part of that transformation. But we also know that we would not be able to do that stand alone. We need to work with strategic partners and an ecosystem to capture the full potential of this fourth industrial revolution.
We are already working with partners and customers to combine these technologies to develop important new industry solutions in areas such as tracking, supply chain, telematics, digital twin, and smart space solutions. As Nikos mentioned, some of these strategic partners include, for instance, Microsoft, Ericsson, where we already are working with them to develop digital twin, edge compute solutions, and capabilities. This ecosystem will require Telstra to reinvent traditional transforming as a company into an open ecosystem with programmable interfaces to engage with our partners and customers in a new and agile and digital way. There is an ocean of opportunities, and we are both excited and confident that we will capture 5G growth in the short, medium, and long term.
To summarize, first of all, we will double down on our 5G leadership and capture the value of enhanced mobile broadband with increased TMMC as well as growing content and device ecosystem. Secondly, we will accelerate and provide fixed wireless access where the current fixed connectivity is not sufficient. Thirdly, we also double down on the ultra-reliable use cases, which will create opportunities for our core connectivity business, our NAS business, our professional and managed service business, and new opportunities within industrial solutions enabled by 5G, cloud, edge, AI, and IoT. Thank you very much. Now I will pass it over to Michael Ackland to give us an update on our consumer and small business. Michael, over to you.
Kim, thank you very much, and thank you, Nikos. Super exciting to hear about all of that technology and where we're heading.
It has been an incredibly challenging year for our consumer and small business teams. I want to thank all of the teams who service our customers for their incredible hard work and also their adaptability. I also want to thank our customers for their patience and their adaptability as we've gone through these difficult times. As well as being challenging, it's also been a year of achievement. Importantly, we're set up well to meet our T22 targets. Today, I want to run through what our current results and our T22 targets mean for our commercial success. First, I want to talk a little bit about the current market situation. We've seen some significant changes in the market in recent times.
The market is evolving with a number of changes in our competitive dynamics across our competitors, and particularly in relation to the evolution in the market around multi-brand, whether that's with Optus's acquisition of Amaysim, the launch of Gomo, the launch of felix. 5G is becoming more prominent now. You heard from Kim and Nikos, but both Samsung, Apple, but also Google, Motorola have launched 5G devices and are creating exciting new opportunities for growth. For example, game streaming is one of the first tangible mobile 5G use cases, and it is poised to scale. Our partners at Microsoft have xCloud in beta, and it's close to launch as well. Customer behavior has shifted quickly towards more data consumption and spending more time online during the pandemic.
With the NBN migration effectively complete by the end of FY2021, the next stage of the rollout is incredibly important with the AUD 4.5 million network investment plans from the NBN coming over the next few years. There is a real optimism around restoring value in mobiles. Driving growth. Today, I want to focus on the following five key value levers that we're using to drive growth. Firstly, delivering values from our mobile business through a return to ARPU growth in the second half of FY2021, improving our fixed economics through NBN trading levers, and cost management across both our NBN and our legacy businesses. Strong growth in new products and categories, including media, gaming, and small business services. Realizing the commercial potential of the Telstra Plus program through redemption activity and partnerships.
Most importantly, driving and delivering a step-changing customer experience with the migration onto the new technology stack. Starting with mobiles. The last few years have delivered us a strong foundation for growth in mobiles. The shift to the new simplified upfront plans, the removal of usage-based data charges and no lock-in contracts, as well as ongoing network investment, has put us in an excellent position. Our premium has been sustained with a $2 increase in transacting minimum monthly commitment uplift over the FY2020 period, and we're on track to achieve a further $2 TMMC increase to the end of the first half of FY2021 on a PCP basis. We're also in the middle of the iPhone launches at the moment. I would say launch, but it's launches. And our performance so far is giving us real confidence.
As Kim mentioned, we're seeing strong iPhone pre-orders with 72% of the mix so far on the top three plans. We're also on track for ARPU growth in the second half of FY 2021 and further growth into FY 2022. In order to achieve this growth, we're focused on a number of things: maintaining our 5G network leadership. As Nikos said, our 5G network already covers 44% of the Australian population, and we're on target to reach 75% population coverage by the end of June 2021. We now have 5G sites in selected areas of more than 60 cities and regional towns around Australia. There are 1,650 suburbs already with more than 50% coverage of Telstra 5G, and we have over 2,250 sites across the country. Our 5G network covers an area that more than 12 million Australians work or pass through on a daily basis.
We are targeting to have over 750,000 5G devices on our network by the end of this calendar year. We also expect that 80% of all of our device sales will be 5G devices by the end of FY2022, which will double the 5G device mix that we've seen in FY2021. All of this is supported by our ongoing migration to our new simplified plans. By the end of FY2021, we will have 4.36 million services on mobile in-market plans, which is on track to reach our FY2022 target. We continue to have confidence in our multi-brand approach. An exciting milestone we have just completed is to move our Belong mobile business onto a new technology stack. We are also building a range of network-optimized products that Kim talked about that will hit the market soon. Moving to fixed.
In fixed, we're prioritizing improved margin by FY2023. So what does this look like? We're targeting mid-teens NBN reseller EBITDA margins by FY2023, and we're doing this by tripling the mix of high-speed tier plans as part of ongoing improvements in fixed broadband ARPUs. We are seeing strong sales momentum in the highest speed tiers already. We're simplifying our cost structure with all of our NBN activations through the new digital stack by early FY2022, and we're accelerating our on-net solutions. Telstra has the largest base of 4G hybrid modems worldwide. Our Smart Modems have full 4G capacity for both voice and data, and in addition to the 5G wireless access that Kim talked about, offer opportunities for customers to be provided an even better experience. We currently have over 2.1 million Smart Modems in use.
We want to increase this to 2.6 million in FY2021 and reach our target of 3.1 million in FY2022, of which almost 400,000 customers we expect will be using our smart modem generation three that we're launching in FY2022. Moving on to our legacy fixed broadband products. We have a pathway to contain the diseconomies of scale in our legacy fixed business. We're working with the government and stakeholders to support regional and remote communities onto even better technologies. So more broadly in fixed, how are we doing this? As I've mentioned, we're prioritizing customer experience in fixed with our smart modem. We recently launched our Game Optimiser product after months of strong beta testing delivered via the smart modem. We've launched improvements to our Wi-Fi experience with our Wi-Fi Guarantee, and our customer base leveraging Smart Boosters is expected to more than triple through FY2022.
We have also uplifted our customer experience by improving the performance on our Smart Modems, with now up to 25 Mbps on the 4G failover, increasing from 6 Mbps. We're committing to clearer and easier-to-understand typical evening speeds of 25 Mbps, 50 Mbps, and 100 Mbps, which are currently leading the market. It's not just about fixed and mobile. We're also enabling our customers to thrive in new categories. As the market becomes more competitive, we continue to find ways to add value to customers by bringing our whole-of-customer strategy to life. In gaming, we've partnered with Microsoft to promote the Xbox. The first year of gaming has been successful, and we plan to double the subscribers by early next year due to the new Xbox coming in Christmas and through the Christmas retail period.
We've expanded our media suite with the launch of Binge. Within the first five months, we've had 166,000 trials take up the offer. As Kim said, we've launched our 5G home internet fixed wireless product in late September, and we'll be scaling that up over the next 12 months, particularly with millimeter wave. We're focusing on how we can add value to our small business customers, and we've launched a cybersecurity product, an IT support product, and a digital marketing product for our small business customers. We've had fantastic feedback from customers using these services, and we're now poised to scale these products in FY2022. A little bit more on security. We have now launched parental control in our My Telstra app, and we plan to launch a new suite of cybersecurity products in calendar year 2021. Moving on to Telstra Plus.
Telstra Plus is something we are incredibly excited about, and we've seen great success with Telstra Plus. Engagement is a driving factor of this. In fact, we have hit 2.5 million enrolled customers, which we plan to double by FY2022. As we reach scale on our customer base, redemption volumes and the click-through rates point to a highly engaged base. This is also reflected in a +20 strategic NPS differential. Now that Telstra Plus is maturing, the next step is to really put our foot down on driving commercial value. We're building exciting new partnerships that will benefit both consumers and small businesses, so stay tuned. We are seeing redemptions grow at 32% quarter-on-quarter, and the multiple ways to pay, including Points + repayment options for hardware and accessories, have been a big success.
We've also launched redemption offers in our core services, such as postpaid and prepaid mobile, which we expect to grow significantly. In addition, we're now expanding our redemption offers to further drive the uptake of add-ons in our core services. Our FY2022 ambition for Telstra Plus is for 5 million members, more partnerships, 1.5 million redemption transactions annually, and more than 80% active engagement across our membership base. Moving on to digitization. Throughout the T22 program, we've had a strong focus on improving customer pain points through the simplification of our plans, the removal of contracts, as well as removing usage-based excess data charges. We've reduced our call volume significantly by 15 million from FY2018- FY2020, and we've increased our level of digital engagement, digital service at 73% as of October. As we've been doing all this, we've been building our new technology stack.
Replatforming a company the size of Telstra is a huge undertaking, and you can see from the slide we've achieved some big milestones over the past 12 months, including the launch of the new My Telstra app, which now has 4.4 million customers already active. Launching our console, which is our new customer relationship tool, to over 20,000 frontline agents. The foundations of this build are now largely complete, and we're now focused on the migration of our customers onto that new stack. And I'll talk now about how that is taking place. We commenced the migration of postpaid handheld services last month in October, and we are starting the migration of prepaid in November.
We expect our migration run rate will be around 750,000 services per month from Q4 FY 2021, and we're aiming to hit 50% of sales on the new stack from the end of FY 2021 across all products. We are targeting to stop selling our legacy plans on mobile and NBN on the old stack before the end of the financial year. So what does this mean for customers? Our customer reset is already well underway, from simplifying and digitizing our customer service, including the number of types of plans we offer, to the way customers shop and talk to us, and the way they pay for their services. Customers, as Andy talked about, are completing tasks such as payments and downloading bills and requesting payment extensions, updating credit card details in digital.
Digital transactions performed by the My Telstra app have grown 50% over the last 12 months, and digital sales have dramatically increased in the two years, up from 6% to 35% now. We now have 73% of total service interactions via the digital channel. On the service front, we scaled the digital messaging channel in our contact centers very rapidly over a six-week period during the early stages of COVID, which took our assisted interactions via messaging from around 5% to 55%, which was an enormous effort. But as with any type of significant change of this nature, we face customer experience challenges as we did this, and we have been refining the effectiveness of the channel, and we feel confident that we are in a very good position. We know this has caused some ongoing issues, but we have a major piece of work underway to improve the experience.
We are listening to customers, and we're making very significant changes. While we've already seen significant achievements in improving customer experience, we are yet to realize the full benefits of the digitization program. We are only just scratching the surface from a productivity point of view and a customer experience perspective. This will be a step change once we have a critical mass of customers onto the new stack, with higher rates of digital conversion, reduced provisioning times from 40 minutes to less than 10 minutes, halving our fault calls with proactive troubleshooting, and MPS upside that we've already seen in pilot customers of between 10 and 20 points on the new technology. Going forward, we intend to lead the market with our transformed sales and service experiences.
We are committed to having all inbound calls from our consumer and small business customers answered in Australia by the end of T22. We also have a program of work underway to create rich digital experiences by further enhancing the message experience. So to wrap up, we've made good progress on our T22 strategy so far across our consumer and small business customer base. As a result, we're well positioned as 5G reaches scale and NBN migration is completed. We have a clear path to delivering growth in mobile and improved economics in fixed and NBN resellers. Our ongoing customer focus is delivering compelling new offers. It is removing customer pain points, and it is improving our economics.
In fact, we're at a 10-year record high for consumer brand consideration, and we're seeing very strong strategic MPS results, which shows there is plenty of goodwill in the market towards our brand that we have built upon during this period. This has been driven by network superiority and ongoing improving perceptions of value for money and competitive pricing. We are particularly encouraged with the growth in consideration for Telstra by Gen Y and Gen Z customers, which shows the value under 40s place in high-quality connectivity and our edge as well for the future. I hope that gives you a strong perspective on the confidence we feel in our ability to fundamentally change the customer experience and deliver real growth in the consumer and small business team. With that, I will stop, and I will hand back to David Burns. Thank you.
Thanks, Michael. Good morning, everyone. My name is David Burns. I'm the new Group Executive for Telstra Enterprise. I've worked in the enterprise market segment for more than 30 years, so I'm truly excited by the opportunity to lead our enterprise business. I joined Telstra in 2012 and have led both the NAS and the international teams within the enterprise portfolio before being appointed the Group Executive of global business services. So I truly believe I have a deep understanding of the enterprise business, its drivers, its customers, and the opportunities, and I'm looking forward to successfully growing this business over the coming years. Michael has just highlighted some of the significant outcomes that our consumer business has realized as a result of our T22 transformation. Likewise, in Enterprise today, I will outline how we will continue to transform our business and the outcomes we expect as a result.
While many of the market factors are similar across enterprise and consumer, the criticality of technology to our customers, the prominence of the hyperscalers, and the exciting upcoming opportunities with 5G will drive our business even further. So today, I'll update you on many parts of this well-thought-out strategy that I've inherited, and I believe my job is now to execute on this strategy, drive value and good economics, and grow the enterprise business. So let me take you through that plan. Telstra Enterprise generated AUD 8 billion of Telstra's underlying income in FY 2020. This came from fixed and mobile connectivity, our services business in Australia, and our international operations. The Telstra Enterprise business as a portfolio is expected to return to revenue and EBITDA growth in FY 2022.
And as I'll run through in today's presentation, it is important to note that from FY2022, some areas within the portfolio will remain challenged, such as data and IP, and in other areas, we are expecting growth across the remainder of the portfolio. But to achieve our overall Telstra Enterprise growth by FY2022, we are focused on four key enablers. Firstly, leveraging our 5G and network leadership to maintain our SIO share, stabilize our ARPU, and drive growth by scaling our mobility services and our IoT business. Second, executing our next generation of services offerings by rapidly scaling our business in key growth markets such as cloud and security. And in parallel, we will maintain our share and margin in existing profit pools across our traditional NAS business. Thirdly, setting up our data and IP portfolio for long-term sustainable growth by migrating our customers to new plans and propositions.
Finally, by continuing to execute on our international profitable growth strategy by focusing on OTT and enterprise segments and efficiently leveraging our assets. So let me take you through each of those four pillars. Firstly, let's look at our mobility portfolio. As you heard from Nikos and Kim, our 5G network now reaches more than 44% of the Australian population, and by June of 2021, that will be 75%. Innovation and use cases for the enterprise segment will be a key element of the monetization of these investments. 5G is being productized and developed for enterprise customer use cases as it will bring high speeds to our customers, enabling them to overcome business challenges with incredibly innovative applications. 5G is central to our new modular, standardized, adaptive mobility plans. Launched in August, these simple plans focus on speed rather than data inclusions.
The plans cover handheld, mobile broadband, and enterprise wireless and have three 5G-compatible speed and price tiers: Essential, Enhanced, and Epic. Adaptive mobility brings to life our next generation of mobile leadership and is one of the key ways we will improve mobile EBITDA. We are focusing on, firstly, stabilizing our overall ARPU trajectory, upselling 5G, or sorry, using 5G as an upsell stabilization, including targeting AUD 3-AUD 5 uplift on the adaptive mobility, enhanced, and Epic plans offering 250 Mbps and unlimited speed caps, respectively. We'll then grow our mobility managed services attach rate by 8 percentage points from FY2020 to 2023 to over close to a third of our mobile base.
We'll then radically simplify our mobility portfolio in line with the T22 strategy by reducing the number of plans from more than 2,000 to 12 or less, and then we'll improve the customer experience by more efficiently managing sales and service requests, lowering cost to serve, and improving margins through digitally enabling and integrating these new plans onto our new digital customer systems. As we move beyond handsets, 5G is exciting for customers as it gives them access to the quality and speed of a fixed connection on a simpler and easier-to-manage way. For example, enterprise 5G wireless can power businesses, cloud-based applications, and remote working needs without being connected to a fixed network. The adaptive solutions portfolio also enables the integration of wireless and fiber access into a secure SD-WAN solution.
In June of this year, Telstra Enterprise customers were the first in the world to be able to buy and use the new Cradlepoint 5G Wireless Network Edge solutions. Telstra also has the largest IoT network in Australia. Leveraging our mobile network advantage, we can bring industry-specific solutions to our customers. A cornerstone of growth, our IoT business is a great example of how the network connectivity and technology services arms of our business work to create specialized solutions to meet the customer's needs in various industries. We are targeting a doubling of our IoT services attach rate by FY2023. As the 5G ecosystem matures over the next 12-18 months, we will see well-advanced network capabilities for enterprise and industry use cases, which will unlock new monetization opportunities.
These capabilities include slicing, edge, AR, VR, and other key technologies powering what we call the fourth industrial revolution or 4.0, which Kim outlined a little earlier. Leveraging Telstra's 5G network leadership, we are well-positioned to provide these exciting new opportunities and technologies to our customers. So for example, 5G can enable use cases in the healthcare industry, such as virtual reality training in surgical procedures or supporting critical patient monitoring applications through AI-enabled decisions at the network edge. To perform these critical activities, these technologies need 5G's low latency. So as we move towards full 5G capability at scale, we'll also be able to monetize the network through access to APIs, quality of service tiering, and prioritization in a B2B2X model, i.e., we can help our customers service their customers. So let me go to the second pillar now, the services business.
Our ability to provide our customers with technology solutions that leverage our networks and drive business outcomes has been key to our advantages, one of our key advantages. As competition in the connectivity market continues to intensify, we will maintain our focus on growing our unique technology services capabilities. Today, our NAS business is the largest contributor of revenue to Telstra Enterprise and will be a key driver of our future growth. The key elements of our NAS business are our significant managed network services and unified comms portfolios and Telstra Purple, our professional and managed services organization. It's just over a year ago that we launched Telstra Purple, a team of native technology experts focusing on app development, secure network design, and cloud migration, helping our customers digitally transform and make the most of the latest technologies.
Telstra Purple has some of Australia's best talent, more than 1,500 of them, in fact, with core strengths in security, network, cloud, and app development. Over the past year, this team has worked on more than 8,000 customer projects, including development of apps and platforms for industries such as mining, healthcare, and transport. Additionally, due to COVID, they've helped on examples such as new building management solutions that COVID has caused and many other industry-leading digital products or projects. The NAS market continues to evolve and grow, with the hyperscalers, AWS and Azure, driving much of that market. COVID has only accelerated our customers' need for flexibility, the cost benefits of cloud applications, and moving their workloads to public clouds. The urgency of digital transformation for many businesses continues to increase, and with every cloud migration, they need a flexible, modern network to support their application performance.
The rise of IoT connectivity further enables businesses to use technology to improve operations and save money. I believe that Telstra is uniquely positioned to grow in this environment. I've already mentioned Telstra Purple's software-based capabilities, our network flexibility and resilience, which we now combine by partnering with the hyperscalers. Take our recent announcement with Microsoft. Telstra Purple's Microsoft partner services include cloud platform, app development, security, and DevOps, as well as the exclusive Azure Expert MSP program. Telstra Purple is also an AWS Advanced Partner, certified in migration, DevOps, containerization, and a member of its MSP program. An example of the application of these AWS capabilities was a project recently with VicRoads, helping it adopt cutting-edge technology such as Docker and Amazon's Elastic Container Services and scale its cloud presence more effectively and efficiently. Telstra Purple is the key to this success.
NAS is also a great foundation for our managed service offerings, which are particularly important as it drives the benefits of cloud applications. We are investing in tools and systems to standardize and scale our managed services to not only improve our margin but also help scale our managed services business into the next tier of enterprise and mid-market businesses. Our financial performance in NAS has demonstrated our focus and execution on cost management, and we expect to maintain our mid-teens EBITDA margins. Acquiring capabilities combined with our Telstra core skills in security and UC as examples has been critical to our strategy to build our NAS portfolio to what it is today. Acquisitions provide us with vital capabilities that bolster our relevance in today's software-driven, digital transformation-focused world, and we will continue this approach as we see good opportunities to progress our strategy and drive overall shareholder returns.
So let me now turn to our networks business. At last year's Investor Day, we spoke about the need to transform our enterprise data and IP portfolio given the changes the market was experiencing. These trends included the shift away from premium IPVPN to SD-WAN and hybrid connectivity, as well as NBN's continued focus on the enterprise segment. As I've just outlined, it is not just the competitive forces that we've had to respond to, as our customers are also increasingly shifting workloads to the cloud, which means our connectivity solutions must also be adapted accordingly. So in September, we launched an exciting brand new proposition to meet our customers' rapidly evolving fixed connectivity needs.
Telstra's Adaptive Networks is our new enterprise network suite of products that provides customers with the commercial and technical flexibility to pay for what they need and easily scale their service requirements up or down. This enables them to run their network efficiently, effectively, and securely. Telstra's Adaptive Networks unbundles the connectivity layer with the access layer, allowing for a hybrid network and for customers to embrace the latest in SD-WAN technology options. It positions us for further opportunities on top of the network in security, cloud, and applications. Telstra's Adaptive Networks is a game changer for our enterprise data and IP portfolio and a key part of our T22 strategy to build simplicity and flexibility into our products.
By combining a simple, flexible offer with our built-in network smarts and resiliency, together with direct connectivity into Australia's largest internet backbone, we are confident that we can secure our current customer base on our 250,000 km of existing Telstra enterprise fiber and mitigate NBN overbuild risk for our existing 60,000-lit buildings. We also continue to invest in SD-WAN capabilities to help customers take advantage of the benefits of software-defined networking. Through deep partnerships with the leading SD-WAN providers, Cisco's SD-WAN in Meraki and VMware's VeloCloud, Telstra has created industry-leading adaptive SD-WAN solutions to suit a broad range of customers. Our adaptive network offerings will include NBN-based solutions as well. This is particularly relevant for regional Australian businesses that are currently being served with copper-based technology that won't be fit for future purpose.
By partnering with NBN, we expect to drive new customer growth opportunities and capital efficiencies as we seek to migrate 30,000 copper enterprise connectivity services to fiber. Overall, we are targeting a return to EBITDA growth for our data and IP portfolio by FY2024. As legacy calling revenue continues to reduce in line with the 2022 exit of ISDN, we are focused on transitioning those associated services to NAS products. The rate of decline in data access and connectivity revenue will continue over the next two years as we proactively migrate existing services to adaptive offerings, and we are focused on setting ourselves up for long-term sustainable growth. So let me now turn to the fourth of our pillars, which is our international business. Telstra Enterprise International is a competitive challenger in international markets, connecting international businesses to Asia and Asia to the world.
We operate in more than 20 countries outside of Australia, serving global enterprise, wholesale, and OTT customers. We have a strong global presence with 400,000 kilometers of cables, the largest subsea cable network in Asia-Pacific, and more than 2,000 points of presence. In the last fiscal year, Telstra Enterprise International achieved strong growth, with key highlights being, firstly, AUD 2 billion segment revenue with global connectivity EBITDA growth of 20% at constant currency, and we continued significant investments in new cable routes with industry names such as HKA, PLCN, and Southern Cross Next. More importantly, these cable routes are expected to provide us with 20 terabytes of additional new design capacity by FY2022. Our strategy going forward, we are focused on continuing our strong performance in international through these following key initiatives.
Firstly, we will continue to drive our global carrier value proposition to OTT and carrier customers targeting large deals. These deals generate cash flow and help us maximize the value of our cable investments. We are increasing our focus on our enterprise customer segment as an APAC-focused enterprise connectivity and service provider as our second strategy. And finally, we are focused on driving EBITDA growth on a constant currency basis and maximizing cash return. This will be achieved by strategically investing in cable routes that are most demanded by customers and return the most profit, and by continuing to leverage the enterprise customer hub to drive operational efficiency and improve customer experience. So let me summarize. In line with our T22 commitments, we will continue to execute initiatives to drive simplification and improved customer and employee experiences, digitize our business, and achieve profitable growth.
Firstly, in simplification, we will continue to simplify our business and put the customer first in everything we do. Since 2018, we have reduced enterprise products by 35%, and that will be at 50% by the end of this fiscal year. I've outlined our simplified product offerings, Adaptive Mobility, and Adaptive Networks that make it easier for our people and easier for our customers to do business with us. The improved customer experience has been reflected in an uplift in our strategic NPS across all of our customer segments, along with an improvement in our own employee engagement. Secondly, we have made great progress with our B2B digitization program over the last year, improving how we service our customers. I've talked about our recently launched Adaptive Mobility and Adaptive Networks products with enterprise mobility migration underway to its new digital stack.
Our Telstra Connect platform simplifies and improves the customer experience as it provides customers with a centralized self-service tool to digitally manage incidents, request services, track orders, and monitor their network performance. We exceeded the target of 4,000 active customers on Telstra Connect by the end of FY2020, and we're on track to achieve our T22 commitment of more than 7,000 active customers by the end of this fiscal year. And finally, it is imperative that we continue to drive profitable growth as a business by prioritizing and aligning to market demand. To achieve the overall growth I've highlighted, we've created new product suites such as the adaptive network solutions, which is focused on providing our customers with the best networks and enhancing customer flexibility and simplification.
We're also focused on mobilizing our NAS and Telstra Purple business towards cloud and digital technologies to support our customers' drive towards digital transformation and strengthening Telstra Enterprise International through additional capacity and digital tools, all of which will continue to our growth outlook. Thank you for your time. I appreciate it. I'll now join Andy, Michael, Nikos, and Kim for a Q&A session, but as we set up for that, let's show you a quick video to give you a flavor of our new Telstra Adaptive Network Solutions. Thank you.
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Welcome back. Now we'll move to our Q&A session. I would ask that we focus the questions on the presentations around consumer and small business enterprise and 5G, as we've yet to hear from Brendon and Vicki on InfraCo, and we'll get to those questions in the second session. So with that, Taylor, do we have any questions on the line, please?
Is sent by end of CY21. Just wondering what your views are on that and what proportion of your gross adds are on 5G handsets so far. And then just a question on InfraCo.
I don't know if this is jumping the gun a bit, but I suppose the one thing we haven't addressed is capital structure. So just wondering if there's the ability, just referencing other sort of infrastructure comps, to take on more debt and potentially even to fund buybacks. And if that was the case, how do we sort of balance EPS versus the credit rating, whether we're willing to sort of steer away from that traditional A-band credit rating to sort of support the EPS? Thanks.
Thanks. It's Andy. I think hopefully you can hear me okay. We just lost the first part of your question, but I think you were really talking about the proportion of 5G devices that we were seeing on the network, which you heard from Michael and from Kim. So I might just ask Michael to comment on that. And perhaps, yeah, please.
That'd be helpful. Sorry. The first question was actually on, I guess, the ARPU uplift from 5G and the 5G iPhone because Michael said there was 72% being added on the top free plan. So the math sort of suggests an average ARPU of 55-60, excluding Belong and Enterprise.
Yeah, got it. No, look, and I'll get Michael to maybe comment on that. And look, on the one on capital structure and InfraCo, I think I might hold that over if that's okay until we've got Vicki on the stage as well. And once she's had a chance, and Brendon's had a chance to take us through the InfraCo presentations. But Michael, do you want to talk about the 5G flow through into ARPU and what we're seeing on the plans?
Yeah, absolutely. So 73% on the top free plans, which is 65 and above.
There are some offers in there with Telstra points, but I think the math of around a 55-60 average in terms of the gross adds going on is about right. Then the second one is what proportion of handsets are 5G and our gross adds. Through Q1, about 65% of our Android sales were 5G. And with Apple, obviously, the new range is 100% 5G, but obviously, there's sort of a broader Apple range that we're still selling in terms of SEs and others. So I would expect us to be very quickly, probably for Q2, to be well above that 65 range.
And then as we go into next year, it'll move around, particularly given you've got, I think as Kim pointed out, such a broad price range on the 5G devices now, both in Android with Motorola and Google, but even the iPhone mini as an entry price 5G. So yeah, 65-ish would be a good range. And then going up from there as the 4Gs come out of the range for gross adds. Yeah. And to the extent that that's a much higher number than their competitors are saying that they may be experiencing, I think that's just clearly a demonstration of the fact that we've got a much better network and we're much further advanced in relation to 5G.
Because I think there was a question about some of our competitors saying they're seeing a much lower proportion, but that doesn't surprise me because actually we're just a lot further advanced in relation to 5G than our competitors are.
Excellent answers. Just to follow on, Michael, since forecasting mobile ARPU is such a dark art, if we're sort of putting the Telstra brand at AUD 55-60, Belong sort of coming in probably in the 15-20 range, and Enterprise is sort of a discount to that AUD 55-60, presumably. If everything sort of goes according to plan, at the end point, you could still conceivably get to a blended ARPU in the low AUD 50s versus your high AUD 40s today. Am I mapping that all right?
Well, I think we're confident of our ARPU growth targets into the second half and then further growth into FY2022.
I think all of the mechanics you described there is exactly the way that we would think through the math. So lifting the TMMC on an ongoing basis, not just in main brand, but across all of the brands, lifting that TMMC is broadly where we want it to be. And that will flow into EBITDA, as we said, with second half growth and further growth into 2022. So yeah.
Thank you very much. That's great.
Thank you. Taylor, can we go to the next question, please?
Yes. Your next question comes from Mr. Kane Hannan from Goldman Sachs. Please go ahead.
Good morning, guys. Just three from me as well, please. Firstly, just updated ROIC target, Andy.
I suppose just to the avoidance of any doubt this time around, just a sense of what the underlying EBITDA would be if you hit, I suppose, 8.0% ROIC in FY 2023. And just confirming there's no assumptions around TowerCo sales or any other asset sales in that number. Secondly, just on your fixed margin outlook, you're sort of going from arguably zero margins in 2021 to a mid-teens level in FY 2023. Just wondering if you made any assumptions around fixed wireless in that number and just a bit more detail around how you're actually going to do that, given it looks like a bit of a hockey stick recovery. And then finally, just a quick one around the mobile app outlook, just confirming what your assumptions are around mobile roaming, particularly in that FY 2022 comment of continued growth. Cheers.
Thanks very much, Kane. I will answer the first one, and I'll get Michael to answer the second one on roaming. And then we'll go to Kim to answer the middle one on fixed, if that's okay, Kim. And I only do it that way because Kim's in Sydney and I'm in Melbourne. So do you want to just do the one on roaming? Sorry, yeah, on roaming first, Michael, and then I'll go to the one on ROIC. Yeah. So our forecast for second half, EBITDA growth and then further growth of EBITDA into FY2022 is independent of whether it's not excluding roaming. We have a roaming assumption where we expect in the outer years to see a return to roaming. And so there's no qualifications on our EBITDA growth in the second half of 2021 or further growth in 2022.
Then on the ROIC one, Kane, there aren't any assumptions in asset restructures or monetization in the update on that ROIC. And to your point, I think, and Vicki will talk a bit more about this later, when we updated our ROIC in conjunction with results, we probably were a bit conservative in terms of how we expressed that. And so we've sought to address that by being a bit more definitive that we see ROIC at approximately 8% in FY2023. And of course, there's a number of factors that do come into ROIC. Obviously, there's EBITDA, there's D&A, there's interest costs, there's the capital position. So it is a broader range, but we would sort of estimate EBITDA would be sort of at the lower end of that range to be equivalent to ROIC at around about 8%.
But I'll get Vicki to come back on that, I'm sure, when we get to hear from her in the second half of the presentations. And then Kim, do you mind just talking a little bit about some of the important contributory factors that help get us from here to a mid-teens margin on reselling NBN and the extent to which fixed wireless may or may not play a role in that?
Yep. Thank you, Andy. And first of all, that target is on the NBN reseller only. So it is really about that. And then fixed wireless access and some of these on-net opportunities we see that will come on top of that. But to do that, now when we are getting closer to the finalization of the migration to NBN, it's really about operational efficiency and operational excellence.
So, to really ensure that we capitalize on the new digitization stack, ensure that we utilize that automation in the backend to take out costs to ensure that reseller margin. On top of that, also, of course, ensure that we increase the top line. We have reintroduced the 100 Mbps products into market, which is a very important part of increasing the ARPU and TMMC for our NBN reseller customers. So it is a logic of operational efficiency, excellence, to take away the cost and automate that backend process. And then it's about ensuring that we sell up same logic as the mobile to sell to a higher ARPU and therefore increase the TMMC. So it is a combination of these two things that create a very clear plan to that target. So we believe it's about operational efficiency and excellence.
Thank you. Your next question comes from Mr. Entcho Raykovski from Credit Suisse. Please go ahead.
Morning, all. So my questions, running through them one by one. Firstly, sorry, I don't want to labor the point around the ARPU growth, but the comments on ARPU growth in mobile in the second half, if you can just give us further color whether you think that growth is likely to be marginal. Sounds like you've got reasonable confidence, but any more color whether you think it can be only just get there, do you think you've got a reasonable level of growth you can achieve? And secondly, the productivity targets, obviously, AUD 2.5 billion by FY 2022, but can you talk about the quantum of these beyond FY 2022, especially given a lot of the digitization initiatives you've spoken about?
I suspect you're not going to give us a number, but just the level of significance of those additional targets. And then just finally, interested in how you reconcile the expectations for data and IP growth in FY 2024 with NBN's plans to expand the reach of their enterprise Ethernet products and whether that creates a risk to some of those growth projections. Thank you.
Thanks, Entcho. I might go first again to Michael to talk about the mobile ARPU. I think Entcho's question really is how material will the increase be in the second half? And to the previous question, I mean, it is a bit of a not so much a dark art, it's just more that there are a lot of moving parts in the ARPU equation.
I don't know, Michael, if you can provide any color, and then we'll go to Vicki. I'll talk about productivity, and then we'll go to David on the data and IP question.
Yeah. Okay. I'll try and provide a bit of color to that question. We have a large base, and mobile moves relatively slowly, and there are a lot of moving pieces. What I would point to is that our confidence in moving mobile back to growth in the second half is driven by 18 months' worth of actions that we've taken in market from a pricing perspective.
Now, whether that's removing the $10 Belong plan from market, whether that's the ongoing and continual lift in TMMC and plan mix that we've made, whether it's the significant pricing changes we've made within our JB Hi-Fi channel to really target a value, all of those are what build into the base. And so obviously, our transacting MMC has an impact, but we only transact on a certain proportion of our customer base in any period. So we're confident around the turning to growth, but I would reiterate, this has been a long journey of ongoing changes in the way that we've competed in market, and it is a big base, and the ARPU moves relatively slowly.
Thanks, Michael. On productivity, you're right, Entcho to point out, and I've been deliberately trying to make the point that there's an enormous amount of work that's gone into the digitization of our business. As I said, I can't underestimate just how significant the scale of that work is. I mean, Telstra is an enormously large company with a massive amount of historical legacy in products and systems and processes. So upgrading all that and replatforming all of that really is a generational project. It doesn't happen overnight. So a lot of the hard work is really what we've been doing over the last few years, and particularly under the T22 program.
And sort of the slightly frustrating thing about that is, in a way, is that, of course, you have to do really close to 95% of the work before you start to get really the material changes and benefits. Michael tried to provide a little bit of color on what's coming up literally just in this year, and he quoted a few statistics about what proportion of new business we'll be having coming through the new stack and the proportion of customers that we will migrate. FY2021 is a really material year in terms of how we start to leverage that. The important point of all of that is a bit to your point. What it means is actually the productivity benefits of that are actually going to flow beyond the T22 period, so beyond FY2022.
That's why we're confident enough to firstly say productivity will absolutely be a feature of what comes after T22. And as we said, at results, we'll talk about that sometime in the next 12 months or so. It will absolutely be a feature, and it will absolutely be material. I don't want to go further in terms of what the numbers will be. And of course, we will absolutely deliver what we've said for the rest of the T22 program, which is another AUD 400 million this year and by definition another AUD 300 million the year after. And then thereafter, I anticipate it will be in the hundreds of millions. I don't want to say it doesn't act as Vicki or Kim kick me under the proverbial table, but I think enough to say it is we expect it to be a contributor to ongoing value that we're creating.
It's a lot to do with the very significant work that's been put in place of the platforming and then the migrations that happen from there. So why don't I pass back to Sydney and get David to talk about how we're going to get data and IP growth, notwithstanding NBN's aspirations in the data and IP area as well?
Thanks, Andy. Look, I think this is a combination of two or three plays here, and I like the cards I've got, frankly. Firstly, we recognize we need to do something with the product, so hence Adaptive Networks, its flexibility, its ability to go up and down, its ability to meet customers' demand and need. And we're rolling that out as we speak. And the take-up and the interest from our customer set in very early weeks is very, very positive, and I'm very excited by that.
I do recognize that as we transform, if you like, or migrate our customers, and our first objective is to maintain our customer base, by the way, is to migrate them from, let's call it a back book to a front book in this instance, is going to only help in that decline, but it's about retaining our customers. What I am excited about is the quality of our network, our Telstra fiber that we base that upon, the partnerships, as I outlined in my presentation in SD-WAN. We will use the NBN where appropriate, where we haven't got Telstra fiber and where that's right. Regional Australia is a great example for businesses in those places.
But on top of that, what I like is that combination that we'll use our services strength because our customers are using our data and IP networks to do their own digital transformation to move more and more to the cloud. And it's a combination of both of those things that I think gives us a great set of cards and a great play with our customer set. So we will work with NBN, but we have a great set of assets. We have a great play, and I'm pretty confident that we'll retain our customer set, and that's the most important objective here.
That's great. Thank you.
Yeah. Thank you, John.
Yep. Your next question comes from Mr. Sameer Chopra from Bank of America. Please go ahead.
Morning. Just had one question. Just kind of want to understand with COVID and the changes in behavior, some firms kind of letting go of people. What are the trends that you're seeing in things like—and I'm talking about subscriber numbers—what are the trends you're seeing in terms of mobile broadband and sort of switching between prepay and postpay? If you can just give us some color around the subscriber end and how we've kind of tracked in the last six months through COVID, behavioral changes, that would be really appreciated.
Hi, Sameer. No, thanks very much for the question. I might get Michael maybe to go first, and then we could go to Sydney and see if Kim would want to add anything, and then maybe even David from an enterprise perspective. But Michael.
Yeah. I'll answer relatively quickly. So we have seen a bit of a shift back to subscriber growth between pre and post. So people converting from pre to post has turned a little bit, and we've seen subscriber volume, sort of new activations in prepaid soften quite a bit through this period because people aren't out and about in the same way. But our unique users have been very, very strong in prepaid, so people who had them kept them. Mobile broadband, a little bit up and down, but David probably has. There's probably an interesting story there on that in enterprise.
Yeah. Okay. Thanks, Michael. Let's go to Sydney and David and Kim. Not sure who wants to go first.
I can go first. And thanks for the question. I think COVID has definitely shown us different behaviors from our customers, and that goes for both consumers, small business, and also our enterprise customers.
I think the first thing is really when people are working, studying, and being entertained in their homes because of the lockdown, we have seen an increased demand to the connectivity. And therefore, that's also the reason why fixed-price access is so important to bring to market now to ensure we bring the right technology to the right homes in Australia. So to ensure the right capacity, the right speed, the right experience in the homes, that's one thing. Then the other thing is really that we have seen people going out of the office space and into a more flexible environment. And that's why we have seen an upgrade, and David can come back to that, especially in enterprise where we have provided a lot of additional mobile broadband to serve that need.
And then, of course, one of the biggest things we have seen under COVID is the UC portfolio. The whole UC portfolio and the collaboration tools and video conference and all these things, that is a significant change in behavior that has increased, again, the need for quality. We work again to ensure the service-defined experience so people have a good experience. We do that together with our own solution, our partners, Cisco solutions, but also together with Microsoft Teams and all these things. To ensure a wide range of offering, again, to support the flexibility our enterprise customers demand, as David, he mentioned before. The last point I think is important is the affordability. This situation, this COVID potential recession, really gives customers a different affordability.
And therefore, it's so important to keep the 5G penetration that we, as Michael mentioned as well and I was mentioning earlier, we provide the customers with that range of offering and affordable 5G handset to still digitize themselves and benefit from 5G, but in a way they can afford. So we really see a lot of different impact on the way we are serving our customers. We're trying to be on the forefront of that. Then it is definitely opportunities for us that can fuel our growth and solution to our customers. But David, you're seeing an enterprise as well.
Look, I think the only thing I'd add to that, Kim, because I think we've covered the points very well, is that the obvious point of being able to work from anywhere. And that's an enterprise requirement. Telstra has had more than 20,000 people working from home since early March, and so have most enterprises. And we know we'll continue to do that going forward. So not only is it in the mobile broadband pickup that we've seen recently in industries, you talked about the UC portfolio, but also in Telstra Purple, we see lots of projects about this enabling of enterprises to be able to work from anywhere. So there's no doubt that COVID also does create in the enterprise space some opportunities as well as some challenges. And so that continued migration to the cloud of companies, etc., as I outlined in my presentation, it does represent an opportunity for us.
Thank you. Your next question comes from Mr. Ian Martin from New Street Research. Please go ahead.
Thank you. Two questions, if I could. Just with the multi-access edge computing, they seem to be suggesting that's effectively a whole new area of business, potentially with incremental value. We've seen how this has played out previously with technology change. At the telcos, the network operators invest heavily in the infrastructure, but a lot of the value goes to content providers. In this sector, you've got your cloud service providers and vendors and so on. I guess the risk is that a lot of that value in the network you're building ends up being paid away in software licensing and content, particularly to those cloud vendors. I wonder if you can comment on that and how you're managing that risk.
And secondly, just in relation to 5G, the early indications seem to be that the level of usage is 2 or 3 or more times higher than 4G, and that that is becoming quite a difficult thing to manage both from a network point of view and in terms of consumer satisfaction with lots of reports of consumers switching 5G off rather than running to the edge of their data allowances.
Hey, Ian and Andy. No, great to hear from you. Thank you. On that second point, I'm not sure that's an experience that we're having, but I might actually. I've got Nikos with me. I might get Nikos to tackle both of those, both from the edge compute perspective where we see that opportunity and then also what we're seeing in terms of the experience on the 5G network. Thank you, Andy.
I'll start with the 5G edge compute or mobile edge compute capability that we're deploying and how does that play out? As I said before, the ecosystem collaboration is key to the success, and I think you highlighted that. So in the absence of collaboration between operators, cloud providers, and the content, and the content can come in the form of applications or any other content, that ecosystem will not work. But we have seen already quite a few announcements on this collaboration, so we are quite, quite confident that this is going to work out. We have the infrastructure assets and the locations across the country, so we can deploy as needed, and that creates a brand new opportunity. Kim mentioned a few use cases, but I'll give you some examples of where the money is really going to come from that ecosystem.
AR/VR, you can imagine three or four years from now, the estimates are about 200+ million-dollar devices of AR/VR headsets. Unless you have the compute power in your pocket in the network, you'll end up with a massive helmet on your head. Clearly, that's not going to work out very well. So edge compute is what's going to enable a lot of that capability, especially on AR, the augmented reality applications that we're going to see. Same thing for face recognition in airports. Same thing for measurement of foot traffic in stores. That ability is key, and it's all brand new capability that's going to emerge. On traffic usage, 5G compared to 4G is about 10 times more efficient. As you can imagine, a lot of it comes from spectrum.
It's the first time that we have seen the expansion of spectrum usage in so many other bands at the same time. So growth in data continues to be about 30%-40% per year. And in the absence of this technology evolution, we will not be able to handle it, like you said. So 5G, yes, we do see incremental traffic. It's the early adopters, and they always use a lot more. We expect that to stabilize and reach a new water level in the next few years. Just to give you an idea, the average monthly consumption now of a user is 15-20 gigabytes per month. So that's still not big enough to kill anybody's data bucket, at least in Australia where we have quite generous, I would say, data plans. So, Andy, that's it. At least at Telstra, we have generous data plans.
So it may be that our competitors are not offering that sort of same level of competitiveness. And then, of course, we also have data available beyond that as well in all of our plans. It's one of the things that's been central to our T22 program, which is getting rid of excess data charges. So thanks, Ian. And Ross, happy to go to the next question.
Thank you. Your next question comes from Mr. Fraser McLeish from MST Marquee. Please go ahead.
Hi, guys. Just two for me. First one for Michael. Just wondering if you could comment on what you're seeing in the kind of mobile sort of competitive pricing environment, anything that encourages you or concerns you. In particular, if you could talk about how you're thinking about the sustainability of that AUD 65 entry point for 5G. That's the first one.
And then just, Andy, I wonder if you could comment on MBM pricing. Obviously, with that upgrade to your MBM margins guidance, it doesn't kind of suggest that MBM pricing's wholesale pricing is killing you quite as much as previously. Do you still see a need for that MBM wholesale price to come down? Thanks.
Thanks very much, Fraser. Look, I think on MBM pricing, I mean, firstly, just to be clear, our aspiration to get MBM reseller margins to mid-teens does not assume any major sort of structural change from MBM in terms of its approach to pricing, etc. Our position on pricing hasn't changed, and we think those prices are too high. And structurally, the CVC continues to be, I think, a potential headwind to the development of the digital economy. And so our position on that hasn't changed.
But in terms of our modeling and our outlooks and our forecast, we're not planning for any sort of structural change. We hope we get one, but that's not assumed in our numbers. But Michael, I might get you to talk about the competitive dynamics in mobile as well.
Yeah. Great. So I think there's a, obviously, we're in the middle of iPhone launch, and there'll be a series of other sort of flagship device launches through the first half of next year. And the innovation on the handset side as more and more 5G devices come and we see that is, I think, gives us some confidence around people being in market and being willing to spend.
I think what we've seen in this latest iPhone launch, particularly, is that the competition around the service plans has probably anchored a little bit higher than it has in the last few launches where there was less excitement about the new phone. So that's definitely a positive. I think the other thing that gives us some confidence is the range of device prices that we've seen and a real slowing in that increase of device prices where we've seen quite an escalation of device prices over the last few years, which always puts pressure back on the underlying service plan.
Thank you. Our next question comes from Mr. Brian Han from Morningstar. Please go ahead.
Andy, on the likely productivity benefits beyond T22, do you think most of that will be in the ServeCo vehicle, or will there be more efficiency gains in the other sort of passive infrastructure vehicles? And secondly, can I please circle back to the mid-teen margin targets for NBN reselling? Given the current NBN access cost structure, how big is the margin leverage from tripling customers on high-speed tiers?
Thanks, Brian. I'll send the question on NBN reseller and the dependency. I think what I'm interpreting from what Brian's saying, Kim, is how much is the mid-teen aspiration dependent on getting customers to trade up? So if you can give a bit of color on that.
But firstly, in terms of the productivity question, I think it is fair to say that there would be, just in nominal terms, more of the productivity would be in ServeCo than the InfraCo businesses, mainly because there's more cost in there, there's more activity, there's more transactions. That's where all the operational aspects of the business are. But that's not to say that we won't be setting our InfraCo teams' productivity and efficiency targets as well. So we certainly will. But I think it is fair to say that just normally, just where the cost actually sits, it would be greater in ServeCo than the InfraCo parts of the business. But why don't I, with that said, I'll pass the NBN reseller margin question to Sydney and to Kim.
Thank you, Andy. And again, as I mentioned before, the efficiency is one thing.
Then on the top, there is the change to the higher tiers. That's one element. And after we now are back in market on the high tiers, we see an increased uptake on the 100 Mbps, but we also see uptake on the even higher plan tiers. On top of that, we also sell some of the add-ons that will increase this. We have the Wi-Fi Guarantee where we ensure and guarantee that you not only have connectivity at your access point into the home, but actually have guaranteed Wi-Fi where you use the device in the home. That's one thing. We also come with optimized products, as I mentioned before, into the homes. We also have to keep—we have all these things coming in on top of the pure connectivity. That will increase the upper and the top line. But we see an increase already.
We have already seen an increase from where we were before with the investments and increase in the investments to actually improve this. So all in all, we see a significant need. So all the places where we can provide the higher tiers, we do that now because we are in market with that product mix. And our customers, they demand better experience because of the need they have realized under COVID. So we see a quite clear roadmap to get us to that top line point we need. And then, of course, combined with our operational efficiency and excellence with all the back-end processes. So the combination is still the same, but the need from the customer and demand from the customer have increased as a part of COVID. And that's what we're utilizing now with these new product mix we have in market.
Thank you. There are no further questions at this time. I'll now hand the call back over to Ross.
Thank you, Taylor. That concludes our first Q&A session. We'll take a short break and be back at about 11:05 A.M. with Vicki Brady. Thank you very much. Thank you.
Tell me what the lights have changed. Tell me that you're feeling the same. Tell me what the lights have changed. Tell me that you'll stay the same. So at Telstra, we produce millions of kilos of both branded and co-branded packaging in our system. A lot of it can actually be recycled, but a lot of it actually ends up in areas such as landfills. So we're actually unable to recycle them due to a number of reasons. Now, what we identified on top of that was there wasn't a consistent way of how we approached our packaging within the organization.
So everything was coming through quite disparate, not unified, and showing up in the customer realm in a really disjointed way. So we went about and addressed that with the current packaging guidelines that you can see. And where we ended up was awesome. So basically, the net result is we were able to reduce the materials in that packaging compared to the current design by 75%. On top of that, we ensured that we ended up with something that was 100% recyclable. So you'll see the new designs are built around craft board, so very kind of natural-looking paper base. And the really exciting part is that we were actually able to reduce the cost in this particular item by 50%.
So for me personally and the team, it's really exciting to have a project that actually has so much impact in so many ways, both from a commercial standpoint, from an operational standpoint, but also one that will actually have positive benefits on an environmental standpoint. It's one that we are all individually really proud of and just really excited to see going to market.
We are in the fourth industrial revolution, where ubiquitous digital connectivity, accelerating technological change, infinite storage and computing capacity, as well as artificial intelligence advancement, are colliding faster than ever with sociodemographic shifts. The underpinning connectivity is central to this structural change. The accelerated rollout of 5G network capability will enable a new level of high-speed connectivity. Not only will we see an increase in reach, the deployment of, for example, multiple frequency bands will increase connectivity quality and foster additional use cases in and out of the business, such as connecting wirelessly to the edge or cloud with high bandwidth and low latency. On top of the connectivity, it is software, cloud platforms, cybersecurity, AI algorithms, and the data that feeds them, which are having a disruptive visible impact on product and service evolution under IR 4.0.
We're experiencing a shift from the millions of connected humans towards the potentially billions of connected things. Using ever-increasing data provides the opportunity to feed cloud platform-based and AI-driven applications, including digital twins that facilitate monitoring, tracking, automation, and control solutions. These applications can then be leveraged from small businesses through to large enterprises. Farmers, retailers, or any businesses depending on a supply chain can use a combination of these technologies to help improve efficiencies and productivity. In order to unlock the true transformational potential of the intersection of 5G, cloud, edge, AI, and IoT, we require enterprising thinking and collaboration across government, industry, and academia. Tell me what the lights have changed. Tell me what the lights have changed. Tell me what the lights have changed. Tell me what the lights have changed. Tell me what the lights have changed. Tell me that you'll stay the same.
Tell me what the lights have changed. Tell me what the lights have changed. Tell me what the lights have changed. Australian businesses have always been enterprising, always embracing challenges and finding opportunities. It's how our nation has evolved to do ever greater things, no matter what we're facing. That's why at Telstra, we're collaborating with some of the country's most enterprising leaders to create progress for their business, their employees, and the community. Like harnessing Australia's best network of networks to solve problems before their problems, using our adaptive capabilities to digitize workplaces so they can keep helping the isolated even during isolation, and leveraging emerging technology to save a city billions of liters of water. If you're ready to be what's next, let's be enterprising.
Hello everyone and welcome back. I'm Vicki Brady, CFO of Telstra. I'm really pleased so many people could join us for our Investor Day today, even if the circumstances are a bit different this year. Let me start by saying that I hope you and your loved ones are safe and well during this difficult time. I'd like to thank my colleagues who have presented so far. I think they've demonstrated the momentum we've built within our business. Shortly, Brendon Riley will provide an update on InfraCo, including an overview and financial snapshot of the passive asset businesses. Before he does, I wanted to discuss the structural implications for our whole business and our focus on delivering optimal group outcomes and returns. Today is an exciting milestone as we take advantage of the progress InfraCo has made and set out our plans for the future.
As Andy has mentioned, we intend to establish a corporate structure for Telstra that maximizes long-term value for our shareholders and gives us the option to undertake further monetizations. This structure would include InfraCo Fixed, InfraCo Towers, and ServeCo as subsidiaries of the Telstra Group. We are targeting completing this restructure by the end of calendar year 2021. InfraCo Fixed would own and operate our passive infrastructure assets: ducts, fiber, data centers, subsea cables, and exchanges. Under our preferred structure, we would also establish separate asset co-subsidiaries of InfraCo Fixed. InfraCo Towers would own and operate our passive tower assets. With strong demand from investors and compelling valuations for high-quality infrastructure assets, the time is right to review our options for unlocking value. We've already demonstrated our ability to successfully monetize infrastructure assets, particularly our exchanges and data centers.
Today, we take a further step forward through announcing an intention to monetize InfraCo Towers. We anticipate this will begin in 2021 and will follow a similar timeline to the rest of the restructuring process. We are confident we can do this while also preserving the strategic differentiation our world-leading mobile network provides. This is because of the choices we have made on setting asset perimeters, as well as the intercompany agreements we have created, which I will explain shortly. We also intend to maintain control over our strategic towers. Any transaction that we proceed with would, of course, be subject to being significantly value-accretive for Telstra. As we have done with previous transactions, the proceeds from any future monetization will be assessed in line with our capital management framework.
And to deliver long-term value for our shareholders, we would consider earmarking proceeds to firstly maintain our balance sheet strength, followed by a focus on returning proceeds directly to shareholders or potentially reinvesting in the business for growth. In the proposed simplified structure, Telstra ServeCo would own and operate the rest of Telstra, including our consumer and small business and enterprise functions, along with all the elements of our network other than the passive assets. By defining the asset perimeter this way and keeping active elements of our network, such as the mobile radio access network equipment, spectrum, and fiber electronics within ServeCo, we are able to preserve the strategic differentiation we have built through decades of investment and innovation, making us Australia's leading telco. The restructure will be a multifaceted process and need to consider a broad range of commercial, regulatory, and operational requirements.
We will work collaboratively with shareholders, staff, customers, and other stakeholders through this process. We will provide an update on our progress at our half-year results in February 2021. Turning now to the principles underpinning our intercompany agreements, we have created a set of intercompany agreements between Telstra InfraCo and Telstra ServeCo that underpin their ongoing relationship and support strong and sustainable earnings for both. These agreements ensure that both organizations benefit from the strength and capabilities of the other. They're also designed to maximize overall value for Telstra shareholders. The first principle is business continuity. InfraCo will provide all passive infrastructure services to Telstra ServeCo at today's high level of quality, and Telstra ServeCo will support InfraCo on managing and optimizing its operations. The second principle is differentiation for Telstra ServeCo. As I just mentioned, the agreements and asset boundaries will maintain Telstra's sources of infrastructure-led differentiation.
The third principle is maintaining a strategic relationship. Telstra ServeCo will receive pricing and terms consistent with its status as a strategic partner and anchor customer of InfraCo, and will commit to long-term contracts providing certainty to InfraCo. The fourth principle is market competitiveness, ensuring both entities are competitive in the market with respect to supply and demand for passive infrastructure. The final principle is that Telstra InfraCo operates as a fully operational standalone business with its own dedicated leadership team focused on delivering long-term value for customers and Telstra Group shareholders. We are confident we can have strong infrastructure businesses and maintain Telstra's strategic differentiation. Let me now turn to Telstra InfraCo's financials. The left-hand side of this slide displays FY2020 InfraCo Proforma segment view, which includes the asset perimeter changes which were effective from 1 July 2020.
This segment view of InfraCo includes both passive assets and active wholesale. This is consistent with how we manage the business today, with Brendon leading a function that includes passive InfraCo and the active wholesale business. This is reflected in our current segment reporting. The proposed simplified new legal structure is consistent with InfraCo Fixed and Towers being passive-only infrastructure businesses. As a result, in the financials, the active wholesale business is assessed as part of Telstra ServeCo. The FY2020 Proforma InfraCo Fixed and Towers earnings reflect fully allocated costs, consistent with them being a standalone business. The active wholesale earnings, however, do not include all costs of a standalone business. This includes costs for infrastructure, including passive infrastructure. These costs sit in Telstra ServeCo. For these reasons, assessing Telstra ServeCo earnings should be done by excluding only InfraCo passive earnings, not the segment view.
This is shown on the next slide. There is one view of the Telstra Group's financial performance, and there will continue to be one view. Our focus will remain on delivering optimal financial outcomes and returns for the entire Telstra Group. We remain committed to our capital management framework, including balance sheet strength. You can see on this slide the FY2020 Proforma breakdown between InfraCo Fixed and Towers and Telstra ServeCo. At our first half FY2021 results in February, our management reporting will provide disclosure of InfraCo passive-only earnings for InfraCo Fixed and Towers separately. This will continue to be a secondary disclosure rather than included in our primary product-based management reporting. It is important to note InfraCo Fixed and Towers is an economic rather than accounting view, which would include AASB 16. As such, all lease costs are included as operating expenses.
Looking now at the financial attributes of InfraCo and ServeCo, Telstra InfraCo's passive infrastructure delivers high EBITDA margins with recurring, predictable, and indexed earnings growth, largely from long-term contracts from NBN Co and Telstra ServeCo. This can be seen in the FY2020 pro forma EBITDA, which includes AUD 820 million from NBN recurring DAs and around AUD 700 million from Telstra ServeCo for passive infrastructure. Only 2% is from legacy, including copper-related sources. Telstra ServeCo has an ambitious growth profile with a lower capital intensity than the Telstra Group. After Brendon's presentation, I will talk in more detail about Telstra ServeCo's ambitious earnings profile from FY2022. In respect of our medium-term CapEx to sales target for the group of 12%, excluding spectrum, we are committed to managing the allocation of CapEx between ServeCo, InfraCo Fixed, and Towers to achieve this outcome.
I'm going to hand over to Brendon Riley before I come back and close with a financial update. After that, Andy, Brendon, and I will take questions. So with that, I'll pass to Brendon.
Thanks very much, Vicki, and good morning. Well, Telstra InfraCo was created just over two years ago with three key objectives in mind: provide greater transparency on the value of Telstra's infrastructure assets, implement strategies to improve asset efficiency, service delivery, and financial returns, and to provide optionality in an evolving industry. Our intent was to show InfraCo to be a business with a set of performance attributes readily identifiable and aligned to a dedicated infrastructure company. We're now at that point in our execution where the benefits of InfraCo are more apparent.
For shareholders, InfraCo can respond to continued growth in fiber and mobile network rollouts and take advantage of structural and capital options to drive value. For customers, standing up InfraCo as a commercial operating business affords easier access to our world-class infrastructure, including a focus on improved service and new products and solutions. For our people, InfraCo provides an exciting opportunity to be part of a new business focused on growth, our customers, and further developing our specialist infrastructure expertise, all as part of the broader Telstra Group. While we have much to deliver in the months and years ahead, today's presentation and announcements will see an acceleration in our efforts to make InfraCo an unqualified success. At Investor Day, a year ago, I presented this framework.
We've executed strongly over the past year in the transitioning from building the business to operating as a dedicated infrastructure business and preparing for asset monetization. In looking back over the past 12 months, we've completed the work required to establish an operational InfraCo, and it underpins the basis for today's announcements.
The work has included refinement of the asset perimeter settings, which I'll cover shortly, establishing individual asset-based businesses accountable for go-to-market offerings, financial performance, long-term agreements, and service delivery, creating a new organization, including leadership appointments and the transfer of operational capabilities from networks and IT, building a new financial and operational reporting system for InfraCo and each asset business, putting in place long-term intercompany agreements for asset-based services from InfraCo to ServeCo, our anchor tenant, creating a core operations capability and operating efficiency program across all asset businesses, building business plans to drive growth and productivity for each asset co and InfraCo overall beyond our T22 commitments, and updating our framework for risk, safety, and asset lifecycle management, which builds on our established practices and evolves InfraCo further. The presentation today will provide updates from the stage one work, including InfraCo asset financials based on restated FY2020 results.
Given the state of NBN completion and Andy and Vicki's earlier comments on our corporate structure, we will include the optionality work as part of our stage two program going forward. Given changes to the asset perimeter between InfraCo and ServeCo, we wanted to restate the overall financial profile for InfraCo for FY2020. The new asset perimeter was effective from 1 July 2020. The asset perimeter changes announced at the 2019 Investor Day were mobile towers and poles and backhaul fiber within InfraCo, resulting in a new total fiber view. Legacy copper and associated assets to remain with ServeCo. Minor changes to network supporting infrastructure, mostly around power-related assets. We've also updated the financials to reflect the new asset charges between InfraCo and ServeCo as part of the intercompany agreements.
The charges are based on market rates and reflect ServeCo's status as an anchor tenant and the long-term volume commitments it is making. The original charges were put in place during FY2018 when InfraCo was established as a reporting segment before the new operating business was created. When the FY2020 results are restated for these changes, revenue and EBITDA declines slightly and net book value increases. In the presentation, we'll also break out InfraCo's active and passive businesses. The active business is Telstra's wholesale business, which provides a range of fixed connectivity solutions as well as mobile services for MVNOs. The restated FY2020 numbers you see here include the active and passive businesses, with active representing 38% of the total EBITDA. We think it's important to split the two, which we will do going forward, so it's easier to compare InfraCo with other dedicated infrastructure providers.
It also shows that InfraCo's passive business has limited exposure to legacy copper-based business services, which are progressively being substituted with NBN and other services across the industry. I'd now like to move on and discuss InfraCo's asset businesses in more detail. This table shows the restated FY2020 financials for revenue and then ranges for EBITDA. The reason we've included EBITDA ranges is that we are continuing to refine our cost base as we stand up our passive Asset Cos as operational businesses. The InfraCo FY2020 actual results did not reflect the increased OPEX from the operational transfers from N&IT into InfraCo or the new skills and capabilities we are introducing to drive market-facing business momentum. By providing an EBITDA range, we can normalize for these changes and provide a better view of InfraCo EBITDA going forward and its relativity to global peers.
We will report the FY2021 first half actual results for both revenue and EBITDA by asset class at our results presentation early next year. If we start at the bottom of the table, you can see total revenue of around AUD 4.3 billion. Total EBITDA of approximately AUD 2.8 billion is the midpoint of the EBITDA margin range of 63%-66%. If we now subtract the active business, you can see the InfraCo passive business with a revenue of close to AUD 2.6 billion and an EBITDA of AUD 1.7 billion, which again is the midpoint between the margin range of 64%-67%. While there are some differences between InfraCo and other global infrastructure businesses, the EBITDA margin range compares well. Looking to the asset businesses, TowerCo has a revenue of AUD 306 million and an EBITDA range of 63%-67%.
FiberCo has a revenue of AUD 808 million and an EBITDA range of 64%-68%. Exchanges and infrastructure, which includes ExchangeCo, Data CenterCo, and DuctCo, has revenue of close to AUD 1.5 billion and an EBITDA range of 57%-60%. Subsea cables revenue is AUD 156 million with an EBITDA range between 64% and 68%. Intercompany eliminations are AUD 160 million, and these relate to asset charges between the asset businesses, which net out at the total InfraCo level. Most of the AUD 160 million are asset charges paid by FiberCo to DuctCo for duct access, as FiberCo sells duct space bundled with fiber to ServeCo and other customers. I also wanted to highlight that in FY2020, AUD 874 million of NBN ISA revenue landed in the fiber and exchanges and infrastructure portfolios, and this is consistent with what we've previously disclosed.
InfraCo is Australia's leading passive telco asset business across towers, fiber, exchanges, and ducts. Each business is unique with long-term customer arrangements and strong financial returns. TowerCo has around 8,200 towers, which is more in aggregate than any other provider across both metro and regional areas. 5,570 of our towers are mobile towers, and 2,630 towers are USO, universal service obligation, and non-mobile towers. TowerCo is the largest builder of mobile towers in Australia, having built approximately 1,000 towers over the past five years, and will have a long-term arrangement to build and manage ServeCo's future passive tower infrastructure. With 250,000 kilometers of optical fiber cable, FiberCo has the largest dedicated business fiber footprint in Australia and will also have long-term anchor agreements in place. Incremental opportunities exist to supply additional fiber to ServeCo, NBN in the industry to support mobile expansion and business connections.
InfraCo's largest cash-generating business is the exchanges and infrastructure portfolio. The portfolio will have long-term agreements in place with NBN and ServeCo for duct and exchange access and can continue to rationalize and grow. The portfolio has 1,500 exchanges with external tenants, of which 650 are suitable for growth to support distributed emerging technology solutions. It's important to note that 36 exchanges and one data center in Australia have already been monetized. Moving now to talk more about TowerCo, which is led by Jon Lipton. TowerCo's business model is the provision and management of passive equipment, including towers, large poles, rooftop towers, and power to huts to support active assets managed by tenants.
TowerCo's focus is to drive operational efficiency, safety, and reliability of the tower portfolio, to increase tenancy ratios by augmenting existing towers or selling available space, build new towers and rooftops to support both ServeCo and industry expansion, including collaboration with FiberCo on backhaul expansion, and provide transparency on performance metrics and investor returns. As mentioned earlier by Andy and Vicki, we intend to launch a process to monetize towers during calendar year 2021. Moving to the TowerCo financials in more detail, we have looked at many other tower businesses in different geographies. The key financial metrics which are reported and helpful to position TowerCo are the underlying EBITDA, CapEx, and operating free cash flow. Going forward, we expect EBITDA margin in the range of 63%-67%, which is slightly ahead of industry averages.
CapEx to revenue is close to the industry median in the 15%-20% range, and the resulting operating free cash flow to net book value in the 28%-37% range. The overall tower numbers show TowerCo's strong market position in all areas, with significantly more towers than any other tower business in Australia. We have a total base of 8,200 towers, of which 5,570 are mobile towers and 2,630 are USO and non-mobile towers. Some of the towers are government co-funded in regional and remote areas, and therefore the tenancy ratios we are reporting are for the 5,050 mobile towers that Telstra has owned and built outright. The average tenancy ratio on existing towers today is 1.34. This is below industry average, and this is due to two main factors.
Firstly, some of the existing towers have been built for ServeCo's sole usage, meaning they cannot be physically hardened for additional tenants. Secondly, the intercompany agreements facilitate ServeCo's future requirements for 5G. With 3G, 4G, and 5G all in operation, there is no additional space for additional tenants on some of our towers. That said, the plan is to increase tenancy ratios on the existing portfolio and look to build new towers with multi-tenancy wherever possible. Our current plans are to build new towers with an average tenancy ratio of 1.5-1.6. This will bring our tenancy ratios closer to global industry averages over time, noting that tenancy ratios are specific to each geography. We're also simplifying our processes and pricing to make it easier for the industry to access our available portfolio and participate in joint tower builds. This is already unearthing some exciting new opportunities.
From an operating efficiency perspective, around 60% of the cost base is rental, land access, and government charges. TowerCo is well into the process of reviewing the entire portfolio, beefing up its in-house capabilities in this area, and identifying medium to long-term efficiencies. These include reducing the cost to build new towers, renegotiating leases, and the use of new technologies to reduce maintenance costs. Moving on to our FiberCo business, which is led by Kathryn Jones. FiberCo has an extensive national fiber presence. This includes regional and inner-city fiber, inter-exchange and data center fiber, business access fiber, and mobile backhaul fiber. FiberCo is the primary fiber provider to ServeCo and a significant fiber provider to NBN and the wider industry.
Its priorities include providing simple market-facing solutions to maximize network utilization across all segments, effectively managing capital to drive growth and lifecycle maintenance, and developing new use cases for dark fiber, data center, and edge compute workloads, and providing transparency on performance metrics and investor returns. In looking to the FiberCo financials, we expect EBITDA margin in the range of 64%-68%, CapEx to revenue of 15%-20% at the lower end of industry averages, and a resulting operating free cash flow to net book value of 9%-11%. FiberCo has a strong market position in the business fiber market, and there remains opportunity to drive further utilization with existing capacity and modular builds, especially in the customer access market. FiberCo will have long-term contractual arrangements with both NBN and ServeCo, which underpin its market position.
FibreCo is responsible for the design, build, operate, and maintenance of all of ServeCo's passive fiber needs across the fixed and mobile portfolios. FibreCo is further developing its approach to lifecycle maintenance of the fiber assets to optimize work-induced faults and field costs, including the use of predictive analytics to drive increased proactive performance. The exchanges and infrastructure portfolio led by Rachel Johnson-Kelly includes ducts, data centers, exchanges, and other fixed network structures such as portable exchange sites, repeaters, and supporting infrastructure. The ducts and exchanges play a crucial role in supporting the industry by providing ducts space for national connectivity and powered racks and exchanges to facilitate active equipment and services. The exchanges can be broadly broken down into two categories.
Those to be rationalized as the NBN rollout completes and the last 8% of the population, mostly on copper services, migrate to newer technologies over the long term, while the second category of exchanges will continue to support commercial arrangements as well as be a target for new use cases such as edge compute and data center services. There will be significant safety, lifecycle maintenance, security, and community matters to be managed across the exchange portfolio. Given this and the large number of exchanges set for rationalization, the returns on the exchanges portfolio is expected to be lower compared with ducts and data centers. A significant attribute of the exchanges and infrastructure business is the high book value, with tangible net assets of AUD 7.2 billion.
While we expect EBITDA margins in the range of 57%-60%, CapEx to revenue will be in the 10%-15% range, and operating free cash flow to net book value in the 7%-8% range. Ducts is a lower growth business, but it has a strong investor proposition due to the long-term contracts that will be in place, its stable market position, and strong operating free cash flows. We've recently launched a new automated duct reservation system, which has significantly increased speed to market for duct access for all of our customers. We've monetized one of our data centers in Australia, being Clayton, and we have further opportunities to increase utilization both in both our data centers and also in the data center facilities in some of our exchanges. We have already active interest from customers in taking up additional rack space in our data centers.
Nine of our exchanges have data center floors that also create opportunities to provide more high-power density services. On the exchange portfolio, we currently have around 1,500 exchanges with external tenants, of which 650 exchanges will support new use cases such as edge compute and growth in regional data center services. We are working with ServeCo on its edge compute requirements, and we also believe these sites will be attractive to other customers. In terms of operating efficiency, we will focus on land costs, more efficient building management and monitoring, site optimization and rationalization, and, of course, power consumption and efficiency. With our data centers, we see an opportunity to bring our power utilization efficiency, or PUE metric, closer to industry standards. We will also continue to explore property investments where we believe there is an attractive return from sale of the land.
We will provide information on the exchanges and infrastructure portfolio as part of our first half results announcement. As announced earlier, we will look to launch a process to monetize TowerCo during calendar year 2021. TowerCo will be an independent operating business. It will be the first of the Cos to be established in this way. We are well advanced on our operational program of work, and the key initiatives underway include verification of all tower structures and land tenure for all our sites, building out the TowerCo team with some selective specialist capabilities, and implementation of an off-the-shelf tower asset management system, which is the same system used by many other global tower companies. We're also redesigning our internal processes to improve how we work with ServeCo and other customers to meet their tower requirements.
We have site acquisitions and designs underway for new tower sites and are working closely with ServeCo as our anchor customer to support their 5G rollout. We expect the majority of our program of work to establish TowerCo as an independent operating company to be complete by the end of financial year 2021. In light of today's announcements, we will commence discussions with employees, customers, and major stakeholders in the coming days. In closing, I wanted to leave all investors with three key takeouts. We tabled a plan at last year's Investor Day. We've executed strongly, and we've built good momentum in Telstra InfraCo. We're now an established operating business and are commencing the next stage of structural changes. InfraCo has a fantastic set of diverse at-scale assets. Each asset Co has strong financials, established long-term customer agreements, and the businesses compare well to global peers.
We have a fantastic new team with a rapidly emerging infrastructure mindset and culture. We're committed to driving the growth of InfraCo, building the metrics, operating efficiency, transparency, all the things you wish to see, and, of course, respond to the market shifts and opportunities that emerge. I look forward to presenting our inaugural first half results as an operating business in February and provide more color on the asset COs and more of InfraCo's plans for the future. Thanks very much, and with that, I'll pass back to Vicki.
Thanks very much, Brendon. As I mentioned, I wanted to close today's presentations with a brief discussion on the momentum we are building in growing underlying EBITDA and discuss our FY2021 guidance.
As Andy has spoken to many times before, as did our chairman at the AGM last month, our view is that in order to support an AUD 0.16 dividend under our current capital management framework, we need to achieve underlying EBITDA in the range of AUD 7.5 billion-AUD 8.5 billion by FY2023. While we do not provide financial guidance beyond the current financial year, our management team understands the importance of this range, and it is our ambition to deliver results within it. If we are successful in delivering a result towards the bottom end of this range, it would equate to a ROIC of around 8%. We took a conservative approach in August, setting our FY2023 ROIC target at greater than 7%.
With the increased confidence outlined today, we are updating our FY2023 ROIC target from greater than 7% to approximately 8%, and we will continue to pursue opportunities to achieve a higher ROIC closer to our original target under T22. You've already heard today from my colleagues, so let me briefly reiterate how their work is contributing to our confidence. We reported underlying EBITDA of AUD 7.4 billion in FY2020 and have guided to AUD 6.5 billion-AUD 7 billion in FY2021. We believe we will turn underlying EBITDA back to growth in FY2022 with the building blocks in place to achieve medium-term EBITDA consistent with our ambition. In our mobile business, we have an enormous opportunity to capitalize on a new multi-year cycle of growth driven by 5G, thanks to our clear market leadership. Transacting minimum monthly commitment, our leading indicator of ARPU, has continued to grow in FY2021.
This and other factors support confidence that we can achieve second half 2021 mobile ARPU and EBITDA growth. In our fixed business, the NBN headwinds we have faced are tracking as expected, and we will be largely complete by FY2022. We have a plan to improve our fixed EBITDA by firstly targeting mid-teens NBN resale margins in FY2023. Secondly, managing the economic impact of the legacy copper network by limiting losses to less than AUD 100 million per annum. Finally, accelerating on-net solutions, including by leveraging our mobile network. Our focus is on bringing our total enterprise business back to growth in FY2022 across mobile, data, and IP, NAS, and international as a whole, as you've heard from David today. We remain on track to deliver our productivity target of AUD 2.5 billion in reductions by FY2022 and see further opportunity beyond this point.
On the financial impacts of the COVID pandemic, measures including levels of bad debt remain within our expectations. In the medium term, we expect adjacencies such as health to continue to contribute to our turnaround. Given these trends, we have increasing confidence that our underlying EBITDA ambition is achievable and is the right level of ambition to be setting ourselves. Turning now to a more detailed view of productivity, we continue to target $2.5 billion in net productivity by FY2022. We delivered $1.8 billion of this from FY2016 to FY2020. This year, we will deliver another $400 million. The $2.5 billion target is a net figure which includes absorbing all inflation, reinvestment, reduction in legacy network costs, and COVID-19 impacts.
Our cost reductions in FY2021 are expected to be achieved predominantly through indirect and direct labor, enabled by the shift of customers onto digital sales and service channels, along with a strong focus on vendor costs and workforce efficiency. An example of the productivity improvements we are making is the optimization of some of our field service teams and vendors. Historically, tasks were tendered and scheduled in a reactive and discreet manner. Now, through proactive forecasting, vendor management, and enhanced scheduling techniques, we are optimizing the sequencing and prioritization of this work to enable similar types of work in similar areas to be scheduled together. This is helping us bring our costs down. Direct labor cost reductions, which we deferred until February 2021, will deliver a full year of benefits in FY2022.
Other FY2022 cost reductions are expected to come from product rationalization, platform simplification, increased customer self-service through digitization, and incremental indirect labor reductions. It is important to recognize that the transformation of our business, which T22 delivers, also enables ongoing productivity benefits beyond FY2022. For example, as we migrate our customers and products to our new digital stack, we will continue switching off our legacy IT systems. As we do this, the associated support and maintenance activities can also be switched off. The new products and customer experiences we are launching are also focused on straight-through ordering and self-service, enabling further rationalization of some of our support activities. Let me finish by turning to our FY2021 guidance. We reaffirm our FY2021 guidance provided to the market at our FY2020 full-year results in August.
However, as outlined in our FY2020 results, I want to reiterate that we expect FY2021 underlying EBITDA to be weighted to the second half, with cost reductions, COVID impacts, and product trajectory, especially mobile, all more supportive of improved second half performance. Given the evolution of our business and our desire to deliver better clarity for the market, we are considering changes to our product hierarchy for our first half FY2021 results. If we proceed, we will, with any changes, we will provide more details before our half-year results. Thank you, and I will see you in just a moment for Q&A.
Stability is very important for me. I found it's probably one of the most important things about having a mental illness. I suffer from schizophrenia, and it's very hard to manage a regular job.
In the other jobs, you used to drive in my car, and I'd get a knot in my stomach and think, "I don't want to go in today," and I had to take a fair bit of time off. I need to work to provide for my family and for my home. People with a disability have challenges that most of us can't even begin to imagine just to get to work. My own son has autism, and he also has a lot to offer. I was reviewing the cleaning and grounds contracts for Telstra. I could see a way that we could help the community without compromising on quality. I heard about a program that Telstra was running, which employed people like me. It definitely changed my life. I went from not wanting to get out of bed to looking forward to coming to work.
People don't think they can make a difference in a big company, but they really can. Telstra Supported Workforce 10 years down the track. We now have 6,000 sites and over 500 people involved. That gives me a real sense of pride. I've been able to start a family, and it's changed my life. Without people like Michael standing up for people with mental health issues, I might be out of a job somewhere. I just look to the future, and the future looks very good.
Welcome back. We'll now move to our final Q&A session. And Taylor, do we have any questions on the line, please?
Yes, thank you. Please go ahead, Kane.
Perfect, thanks. Morning, guys. Just another three from me, please. Firstly, just again on the 8% ROIC target for FY2023.
Just interested if there's any comments you can make around the phasing of the growth profile from here. I take the point around returning to growth in FY2022, but it looks like it needs a decent step up in FY2023 to hit that target. And I suppose whether you would need to be at the top end of your FY2021 guidance to make that a plausible target. Secondly, just remembering the issues you guys ran into monetizing the NBN payment stream. Interested if you talk about any of the regulatory or other requirements you would need to progress the initiatives announced today. And then finally, just the TowerCo financials and that Co tenancy targets you were talking to. So if you were to increase the tenancy from 1.34 to 1.6, is it right to think about an additional $50 million in revenue for that business?
Any reason why that wouldn't be 90%-100% sort of margin revenues?
Hey, Kane, it's Andy. Thanks very much for the questions. I might talk about the approvals one and then hand it over to Vicki and to Brendon to maybe comment on ROIC and the utilization question. One of the things that I said in my address was that we're very conscious that there's a lot of stakeholders that will have an interest in the restructuring that we're doing. NBN's obviously a very important stakeholder, as is the government, but then there's also a range of other customers and partners as well. We announced it today so that we can actually be very consultative in terms of the way in which we do this, including working through what approvals we need.
And that will be a little bit of a function of the feedback that we get and also ultimately how it is structured. You can assume that we've reached out to those relevant stakeholders to start those conversations, but that's something obviously that we've got to work through over the next period of time. But we do see a way through us being able to put in place the structures that we've outlined today, but it's really important that we do so in a way which is considerate and respective of our stakeholders and ensuring that we don't put them in any worse position than they would have otherwise have been. And I think we're confident if we can do that, we've got good relationships that we can navigate our way through all those approvals, including ultimately considerations around what shareholder approvals may be required as well. But with those points, I might pass this to Sydney and to Vicki and to Brendon to talk about ROIC and TowerCo utilization.
Great. Thanks, Andy. And thanks, Kane, for those questions. Why don't I take the ROIC one and then I'll hand across to Brendon for the TowerCo-related question. Kane on ROIC. Yeah, just to add some color to that. So as we've talked about, we see a return to growth in underlying EBITDA in FY2022, and our ambition on our ROIC target is approximately 8%. And as we said, towards the lower end of that AUD 7.5 billion-AUD 8.5 billion range, you're at around that 8% ROIC number. Just a few things I would add to think through in the phasing. So firstly, obviously we've got a strong track record on productivity, so that continues.
And we've been clear on those targets to the end of FY2022 with seeing potential beyond that. And as Andy said earlier today, beyond 2022, that's likely to be AUD hundreds of millions per annum. So that's an important metric. Mobile turning, so the second half turn on mobile ARPU and EBITDA is obviously critical, and that will continue to build. We expect, given current trends at the moment. Now, obviously, it's always subject to the competitive environment longer run and needing to compete in the market, but we're seeing good signs as Michael has spoken about today. And then the third piece I would add, we've set an ambitious goal for FY2023 around our fixed business, particularly NBN resale margins, limiting the losses on legacy and on-net acceleration, plus the NBN headwinds. At the end of FY2020, we were around 75% of the way through them.
We know by the end of this year, NBN headwinds tracking as expected will be over 90% of the way through them. So as you're thinking about the phasing, I think there's some important aspects to keep in mind and maybe give you a little bit of a sense of how we're thinking about it. And Brendon, I might go across to you on TowerCo. Yeah, thanks, Vicki, and thanks, Kane, for the question.
Yeah, increased tenancy will drive accretive revenue and EBITDA for the business, and we've built that into the TowerCo business plan going forward. I'm keen to get a first half of actual results behind us before we start to break the numbers down a little bit more in terms of what that would yield.
I'm not sure it'll be at the level that you mentioned, but it will definitely be a meaningful increase in revenue and EBITDA if we're able to hit those tenancy ratio increases.
Thank you. Your next question comes from Mr. Eric Choi from UBS. Please go ahead.
Thanks again. All my questions are in three codes. So just the first one. In terms of the capital structure of the three entities, their capacity to take on additional debt, say to fund buybacks, and how sacrosanct is that A-band rating across the three? Second one, just can we talk about monetization options around TowerCo? Are we sort of thinking about an in specie distribution or a 100% sale of those assets? Because I just worry if we do a sell and lease back of, say, only a partial percentage stake, the market may not attribute as much of a valuation uplift.
And then just lastly, theoretically, I know this is not what's being considered today, but if we were to fully separate ServeCo and InfraCo, what would this entail in terms of additional back-end costs that would need to be put into InfraCo? Thanks.
Thanks, Eric. Let me make a couple of comments before handing over to Vicki and Brendon in Sydney. I think, firstly, in relation to tower, I'll let Vicki and Brendon talk about structuring, but what's really important, and we both have sort of elaborated on this point in our presentations, both Vicki and I, is that we protect our strategic differentiation in mobile network leadership. And we're doing that in a number of different ways. We've talked about the passive, or rather the active aspects of our network being in ServeCo.
So that's the spectrum licenses, it's the radio access network, it's the software-defined functionality and capabilities, as well as not necessarily treating all towers the same. And Brendon's talked about this in some of his presentations as well. Some of them are subject to mobile black spot programs. Some of them we've got to do more due diligence in relation to the leaseholds and the land in which those towers sit. But clearly, there's a great opportunity to increase utilization as well. So the structuring's obviously got to take those factors into account. And then on your sort of last question, which is, were you to completely de-merge effectively InfraCo from ServeCo, what incremental costs would that drive?
I mean, yes, I guess there would be some incremental costs in the sense that at that point, that would effectively be two listed companies, presupposing they're both listed, but I assume that would be the case. Two listed companies, so you'd have to carry all those sort of governance and overhead costs of doing that. I mean, I think beyond that, or rather excluding that, we're doing a lot of the setting up of the structures to ensure that those companies can operate relatively independently of each other anyway internally. Yes, that will obviously require some duplicated costs, but we believe that the overall productivity we're getting as an organization holistically will more than offset that.
So when we're talking about productivity hitting what we need to hit for T22, the productivity beyond T22 that Vicki has spoken about, that is after taking into account any duplicative costs associated with setting these things up within the context of the Telstra Group. As you say, if you went a step further, which we're not saying that we would do that, are doing that, or even would do it in the future, as I've always said, and we've always said, this is actually about creating optionality for the future. But if one were to do that, then I think, as I say, it would be the duplicative governance costs associated with running a large publicly listed company, essentially two times, if I can put it that way.
But Vicki and Brendon, maybe hand to you in Sydney to comment a bit more about the capital structuring thoughts.
Yeah, absolutely. Thanks, Andy, and thanks, Eric, for the questions. Let me comment on the first couple, and then I'm sure Brendon will have more to add. So just on your first question, you've jumped straight to the likely capital structure of the three entities. The first thing I would say is we've obviously announced our intentions today early. And so those legal restructuring, we don't expect to come into effect until towards the end of next year, December 2021. So it's probably a bit early to jump to that. That's part of the work we'll work through over the next 12 months. But what I would say, certainly as Telstra, we have an exceptionally strong balance sheet, which is very important and key to our capital management framework. And we're confident there's a path to both strong proceeds and maintaining our rating.
So I just provide those comments on that one. On your second part around TowerCo monetization, you mentioned in-specie distributions. Look again, that's going to be part of the work over the process that we will commence in 2021 in terms of how we monetize TowerCo. And the comment I would make is obviously we'll look at considering those proceeds in terms of firstly maintaining our balance sheet strength, secondly looking at the most efficient way to return funds to shareholders, and finally, as I said, potentially some reinvestment in the business for growth. So I might just maybe those comments help a little bit and pass across to Brendon. Yeah, thanks, Vicki.
Eric, just to pick up on what Andy's already said, if we were to get to a point to do a separation of InfraCo, the single biggest cost that we need to go to work on would be in and around IT and around the IT platforms. The approach we're taking at the moment, the approach I'm working very closely with Nikos on, is we're just doing it asset by asset, and obviously Towers is the first. We're taking a very light touch approach to that, a very agile approach, simplified approach. So I said in my comments we'll stand up a new asset-based management system for that Towers business, which we didn't really have in the form that we needed it for in terms of looking to do a monetization. But that will be the single biggest item.
But our approach, as you've seen pretty consistently, is working through this in stages and managing it.
Thank you. Your next question comes from Entcho Raykovski from Credit Suisse. Please go ahead.
Hi, all. So to start with, just wondering if you can give us the NBN recurring payments split across the InfraCo asset classes. I mean, I'm assuming most of it falls into exchanges and infrastructure, but I don't know if you're able to give us the exact split between, say, exchanges and infrastructure and FibreCo. Then secondly, just wondering how you can practically increase the tenancy ratios, particularly on existing towers, and obviously conscious that both Optus and Vodafone have a network in place. So just wondering what you can do, obviously, and maintain your competitive advantage at the same time. And then finally, Optus are also reported to be pursuing a TowerCo spin-out.
I guess, how are you thinking about that and whether it dilutes the value, which can be attached to the Telstra TowerCo? I mean, I assume they'll also be looking for a commercial return, and there will be some competing infrastructure. Those are my three. Thank you.
Thanks, Entcho. Well, the good news is, as we look forward into the future, the demand for telecommunications connectivity is insatiable. So I think there's going to be demand for ongoing build-out of infrastructure and new towers, which Brendon's already referred to. But with that sort of brief comment of introduction, I might just hand those questions up to Vicki and to Brendon.
Thanks, Andy, and thanks, Entcho, for that. Why don't I just comment on the exact splits of the NBN recurring amounts, and then I'm sure Brendon will take the other questions. So firstly, we haven't provided those exact splits.
I think if you take a look at Brendon's material, you'll see on the pie charts some indication that that's part of what we're considering as the first half disclosures. So no exact splits today, but I think there's a fair bit provided in the materials that gives you a good indication of how that will split out. And Brendon, do you want to jump on the other one? Yeah, so on the tenancy ratios, so the good news is we already have a set of towers that have space. So we're obviously talking to the industry about that and making that information more accessible so we can drive more increased tenancy there. Second is we can look to harden some of the towers that we have. Not all of the towers we can do that, but we can harden some of the towers to provide more access.
And then obviously the third is we build new towers, but we build with sharing in mind. And I know ServeCo is very keen to do that, and as is the industry. On the last point in terms of there being another process in market, look, I think we've seen the asset valuations on the tower assets continue to be very, very strong around the world. There 's a huge amount of interest in these assets. We think we've got the biggest portfolio, the most diverse, the greatest geographical reach. We've been the biggest builder of towers. We've got fantastic in-house expertise. So I feel pretty confident on the process once it's launched.
Thank you. Your next question comes from Mr. Sameer Chopra from Bank of America. Please go ahead.
Great. Just had one question, Andy, Vicki, just in terms of when you look at the TowerCo asset monetization, how do you think about how much you want to monetize, whether the percentage is 10%, 15%, or more like a 49%, which was closer to what you did with the exchanges? How do you think about the kind of ranging? Is it driven by price? Is it driven by control? If you can shed some color on that, that would be helpful. Thanks, Sameer.
Look, maybe I'll make a comment and then see if Vicki wants to add anything. I mean, I think maybe just two things I would say. Firstly, preserving and maintaining our strategic competitive advantage is paramount. And then beyond that, then I think we want to maximize the extent of monetization to ensure that we actually leverage as much value as possible.
And so I think if we can ensure we've got that competitive protection and organized in that way, then I think it makes sense to maximize the value release that we can. Vicki, I don't know if you sort of add anything to that.
Yeah, I'd just add to that. Andy, as you said, and Brendon's just spoken about, we've got such a strong TowerCo business, such a compelling portfolio of towers. And given sort of the attractive valuations today, that will be part of the process, Sameer, as we work through, which we launched in 2021 to look at monetization. We want to make sure, as Andy said, we unlock maximum value. And we're confident we can retain our strategic advantage in our mobile business through where we've set those asset perimeters, through the intercompany agreements, and as Andy said, through maintaining control of strategic towers.
So that will be part of the process, and we're going to work through all the options. And I'm sure there'll be many options come to us as we work through that. So we're pretty open, and that's how we're thinking about it.
Thank you. Your next question comes from Mr. Craig Wong-Pan from CLSA. Please go ahead.
Morning. Look, I'll be honest and say I haven't been able to dial into the whole presentation, so sorry if these questions have been asked earlier. But just on slide 48, that last point about monetizing TowerCo, I just wanted to clarify, has a decision actually been made to monetize it, or is that last bullet point about going through the process of establishing these separate legal entities with the potential to monetize? Second question, could you provide any comments around your first quarter mobile subscribers, like how many net adds you had? Because typically in the past, you've given that number. And then third point to clarify, just on the growth, the second half growth you expect in mobile APU and EBITDA, could you clarify if that growth excludes the impact of roaming, and also if that's a year-on-year growth rate or a sequential growth rate? Thank you.
No, look, thank you. Maybe I'll just take the first one and then hand over to Vicki who can comment on the mobile point. But in terms of a decision to monetize the towers, yes, we made the decision that that's what we're going to do.
Now, we've obviously got to work through the process, and don't anticipate us running into any roadblocks, but in principle, that is the decision that we've absolutely made, and we've got to set up the structures now to enable us to do that. So yeah, it's not we're not announcing that we're now going to go through a process to decide whether we are or we're not going to. We've made a decision in principle that's what we're going to do. We just need to work through the logistics and the legal and the structuring to do that in the most effective way. But Vicki, are you happy to take the other questions?
Yeah, absolutely. Andy and Craig, thanks for those questions. So if I just talk to the first one, you asked about have we provided any update today on Q1 net adds. We haven't provided that today.
It's obviously been a little bit of an unusual year with the COVID impacts and the various lockdowns around the country at various stages. So Michael did talk earlier today, however, about the momentum we're seeing, pleasing momentum in transacting minimum monthly commitment continuing to lift in FY2021, up another $2. And also the traction we're seeing with the new iPhone in market, which is 5G, and our leading position in 5G obviously puts us in a great position. So we haven't talked to net ad numbers today, but we did talk to those other items. Then your last question about second half APU, mobile APU growth and mobile EBITDA growth, does it include roaming? It does, even including roaming, and it is on a PCP basis. So not sequential, but looking PCP.
Thank you. Your next question is from Mr. Ian Martin from New Street Research. Please go ahead.
Thank you. Gee, a lot to go through there, a lot to digest. Just in terms of the monetization of towers, is one of the options you're looking at perhaps some kind of securitization of the cash flow without necessarily ending ownership, a bit like what you were looking at with the NBN infrastructure lease some time ago, rather than just a sale? And secondly, as you move towards that monetization, I'm interested in how you manage the trade-off between the tower company's interest in increasing tenancy versus the value in Telstra retaining whatever network advantages it has. Is that done through some kind of anchor tenant arrangement, long-term tenancy, and so on? And thirdly, towers themselves and access to towers isn't access regulated?
But we've seen both in Australia and New Zealand, when we go through this privatization process, there's one access arrangement before the sale, and then the regulator backflips afterwards and says, "Well, we're going to regulate it quite differently." We saw that with T3. We're seeing it with New Zealand, with Chorus at the moment. So I just wonder to what extent we've had discussions with the regulator about these arrangements and how reliable they might end up being for investors.
Yeah, no, look, thanks very much, Ian. Again, I'll pass this and then can talk about how we've sort of approached this dynamic of making sure on the one hand we maximize the value that we can achieve from monetization, on the other hand, the reality is Telstra ServeCo is an incredibly important customer of the TowerCo.
So by definition, the arrangements that are in place there are very important in terms of how Telstra's needs are met in the context of setting up. Vicki talked a little bit to some of the principles that we've been used to put in place the intercompany agreements to give effect to that, but I'll pass them to provide those comments further. I mean, from the regulatory standpoint, you can assume that we've got good relationships with our regulators and we engage with them, and we've obviously pre-briefed them on things that we're going to announce and decisions that we're making appropriately. Those consultations would be things that we would enter into now to understand any concerns or any issues or questions that they may have.
Obviously, we would have a mind to regulatory implications of what we may be doing in terms of the way in which we're structuring. So to some extent, it'd be nice to sort of come out and announce, "Right, this is what we're doing. This is exactly how it's structured. This is what it actually means at a practical level, and this is where it's all going to complete." The flip side of that, though, is that the challenge is it's difficult to really engage and have an open and consultative approach with all of the key stakeholders, customers, the NBN, the government, the regulators without actually communicating at first, because otherwise, as you know, things will leak and people will speculate and will be sort of put in an awkward position.
So we've decided what we would do is take a proactive approach now and say, "This is the end outcome that we're seeking to achieve. We believe it is achievable." We've obviously done an enormous amount of due diligence. We've also already done an enormous amount of work at setting up, just standing up InfraCo as a standalone business unit. And a lot of the intercompany work has already been clearly done, but we now need to go through that consultation to tackle the very specifics of how we monetize, the very specifics of the structure, how that addresses any regulatory concerns, what approvals we may or may not need from any of the key stakeholders. So that's stuff that we're going to work through now. And we'll obviously keep a dialogue with the market in terms of how that's progressing. But Vicki and Brendon, anything that you would add?
Yeah, thanks, Andy, for that. Ian, just to touch on your question of the balance, the balance between TowerCo and maintaining our mobile network advantage, that's been absolutely critical in our thinking. I spoke a little bit about today that firstly, where we set the asset perimeter is very important. TowerCo being a passive-only infrastructure player. The active components, the radio access network, the spectrum, being on the ServeCo side, we think is very important. Secondly, under our intercompany agreements, I did go through the principles and you mentioned anchor tenant status. Yes, under our principles, that strategic relationship between TowerCo and ServeCo is critical, and that includes the status as an anchor tenant. That remains very important. We're confident we've got all the things that underpin to get that balance right for us at a group level.
That's been critical in the work we've done to date. And so where we set the asset parameters, the intercompany agreements we've created absolutely gives us that confidence. You also asked a question about in terms of as we look to monetize TowerCo, what options are we considering? Look, we will kick the process off in 2021, and we will always retain flexibility. As part of that process, we'll look at all of the options available that gets the maximum and optimum outcome for Telstra overall. So that will be part of the process we'll work through. And Brendon, I don't know if you wanted to add some more comments.
Yeah, just maybe a couple of things on the tower side, Ian. What I said in my comments is that ServeCo has got the reservations it needs on the InfraCo towers for its 5G rollout.
Obviously, 5G is one of those big generational upgrades. When we look at tower sharing models around the world, and maybe something that hasn't been focused on quite as much in the comments today is the operating efficiency side. So typically, if one tenant is on a tower and then another tenant comes along and is added to the tower, then there is a benefit back to the original tenant in terms of reduced charges and operating efficiency. So we've really looked to build that in. Then the final item, which Vicki highlighted in the principles, is TowerCo has to be competitive. So it'll be operating in the Australian industry, the global industry, and it has to be competitive in everything it provides ServeCo.
Thanks.
Thank you. Your next question comes from Mr. Brian Han from Morningstar. Please go ahead.
Andy, sorry to labor the point on the intercompany issue, but have the intercompany arrangement details, have they been all determined, or are you just still talking about the principles of maintaining differentiation and all that?
No, they have been determined. And we've done an enormous amount of work on the intercompany agreements. I mean, again, Vicki and Brendon can talk to it in more detail, but the principles that we're talking about are the principles that we have used to inform that work, not that that work's about to start. But Brendon and Vicki, do you want to maybe comment further?
No, Andy, you're spot on. So they're at very high 90th percentile stage of completion, and we expect to have them finalized, towers completely finalized in the very, very immediate term, the others not long after. And then the one that we've probably got a little bit more work to do is the undersea cables.
Thank you. Your next question comes from Ms. Jennifer Hewett from The Australian Financial Review. Please go ahead.
Hi, good morning. I just wanted to ask about the relationship with Telstra. You used to be very critical, Andy, of NBN's pricing structure and how that made it so difficult for you given the need to get a return on assets, and that would actually mean a massive write-down of the value of NBN. I'm just trying to understand what's changed in that equation. Is it NBN, or is it Telstra?
Thanks very much, Jen. I think I got all of your questions there, but let me sort of answer, and then if I've missed something, please do follow up. I mean, so we are targeting mid-teen EBITDA margin by FY2023, and we've got to do a lot of heavy lifting to get there. And that's a lot of process improvement, a lot of cost out, as well as trading customers up. But the NBN pricing structure will continue to put pressure on margins and also on retail prices because basically the CVC is essentially uncapped. And if you just model it through based on data volumes, the CVC charge will ultimately just continue to eat into retail providers' margins unless we ultimately increase prices way ahead of inflation rates.
So the point is that we can see a path to try to get to mid-teens by FY2023, but it's going to continue to be very, very problematic if that NBN pricing structure doesn't change because the CVC charge, which is just purely going to ultimately be a function of data volumes. As you look out into the future, most of us are predicting data volume growth of 20%+ on the fixed network for a long period of time, and that's just going to continue to be a headwind to effectively adoption in the digital economy.
Does that mean to get to your margins, prices are going to have to go up for customers? Well, ultimately, that will be the case because the CVC will just continue to escalate.
Now, today, we sort of get into this cycle where NBN has either provided some discounts on CVCs, which in fairness to it and credit to it, it has this year because of the big kick-up as a consequence of COVID. But it's still basically a stated pricing structure, and its stated pricing model is to continue to have that, which if you just model literally, if you just put it into a model and you flow it through, or rather you flow through a reasonable projection of where data volumes go, what we'll see is NBN ARPUs will increase materially, and they'll increase materially ahead of inflation.
Thank you. There are no further phone questions at this time. I will now hand the call over to Ross to ask another question.
Thank you, Taylor. This is our final question, and it comes from Simon Dux at Communications Day. How do you achieve mid-teens NBN resale margins without increasing prices? Does this mean Telstra is planning to achieve those margins by rapidly increasing 5G home broadband services?
No, well, thanks, Simon. I'll make a couple of comments and see if Vicki wants to add anything. So our NBN reseller margin, by definition, does not include fixed wireless because fixed wireless is not NBN. In fact, it makes sense. So it doesn't include fixed wireless, and we're doing it through a combination of really leveraging the very significant investments we've made through our T22 program in digitization to really continue to streamline the process of activation and service assurance through continuing to get improvements in the efficiency of the cost-to-connect process as well. And then ultimately as well, and we heard from Kim earlier in terms of moving customers up into higher tier speed plans as well.
It'll be a combination of those strategies that we will use to get to the mid-teens position. But Vicki, anything else to add from your end? No, Andy, you've done a great job covering that, and I would just say absolutely reinforce there. It's a lot to do on our side and a lot on the cost side, which we've got plans underway. And so a big part there on the efficiency side for us to drive to get to those mid-teens margins.
So thank you, everyone, for answering the questions today. Before we conclude, Andy, is there any closing comment you'd like to make?
Oh, no, just thank you to everybody for investing the time with us, for listening in.
It's always a good opportunity to take Investor Day, which is a day which is off-cycle from the results when we can talk a little bit more about strategically what our plans are, what we're trying to do, rather than necessarily just the focus on the financial results for the past period. As I said in my introduction, I think we're at an important point in our overall journey and our overall T22 program. We're closer to the end than we are to the beginning. And importantly, FY2021 is the low point in the year of us absorbing the impact of the economic impact of the rollout of the NBN, and we can see our way through to growth from FY2022 and underlying EBITDA and beyond.
We're very focused and committed on doing everything that we can to get our underlying EBITDA into that AUD 7.5 billion-AUD 8.5 billion range and hit an 8% ROIC because that's ultimately part of the overall investment equation for our shareholders to support a AUD 0.16 dividend. You can see we've made very, very considerable progress with InfraCo, and that third objective of increasing optionality is starting to really now materialize itself through the work that we've done and all the plans for next year. A big six or 12 months ahead, and we look forward to continue to keep the market updated. Thank you, everybody, for hooking in, and thank you to my team for all of the great work that they do for our customers and in support of driving these changes for our shareholders as well. We look forward to catching up again soon.