<PAGE>

                                                         [Letterhead of Telstra]

       Office of the Chairman

       Level 41
       242 Exhibition Street         T 03 9634 7122
       Melbourne VIC 3000            F 03 9632 3341
       Australia
       Locked Bag 4990
       Melbourne VIC 8100

27 August 2003


Dr Ziggy Switkowski
Level 40, 242 Exhibition Street
Melbourne Vic 3000

Dear Ziggy,

On behalf of the Board of the Telstra Corporation, (the Board), I am very
pleased to confirm the offer to you of the following revised terms of employment
in the role of Chief Executive Officer of Telstra Corporation Limited
('Telstra').

1    ENGAGEMENT

     1.1    This agreement will commence on l September 2003, and continue until
            31 December 2007, an extension of 3 years and 10 months on your
            current contract, unless terminated earlier in accordance with this
            agreement. This agreement replaces your current contract.

     1.2    You shall exercise the powers consistent with the office of Chief
            Executive Officer as may be assigned to or vested to you by the
            Board from time to time.

     1.3    You will report directly to the Board and must provide prompt and
            full information of your conduct of the business and affairs of
            Telstra to the Board and conform and comply at all times with the
            reasonable directions given to you by the Board.

     1.4    A close and constructive relationship with the Chairman of the Board
            will continue to be critical to your success in this role. The
            Chairman will be your principal point of contact and referral
            between Board meetings.

     1.5    You will comply with Company policy.

2    PERFORMANCE

     2.1    You are required to perform your role in a proper and efficient
            manner. You will be expected to devote your time, attention and
            energy to the performance of your duties and achieving your
            accountabilities and to use your best endeavours to promote and
            enhance the interests of the Telstra Group, in a manner that is
            consistent with the Telstra Values.

     2.2    Except with the written consent of the Chairman of the Board, you
            must not undertake, be employed in connection with or have any
            interest in any other business or profession during your employment
            under this Agreement, other than by way of holding any shares or
            other securities which are publicly listed or in a private family
            company or otherwise available to the general public by way of
            investment

                                                     Telstra Corporation Limited
                                                     ABN 33 051 775 556

<PAGE>

3    REMUNERATION

     The Remuneration Summary (Attachment l) annexed to this Agreement details
     your remuneration package. No other remuneration arrangements exist outside
     this framework unless explicitly approved by the Board. The attached
     summary provides your remuneration from 1 September 2003. This will be
     reviewed from October each subsequent year. The performance of the company,
     and your own performance, will influence these reviews.

4    LEAVE

     4.1    You will accrue annual leave and long service leave in accordance
            with Telstra policy, which can be taken at a time agreed between you
            and the Board. The relevant date for the purposes of long service
            leave will be your original commencement date of l September 1997.

     4.2    Sick leave will be by agreement with the Board.

5    TERMINATION OF YOUR EMPLOYMENT

     5.1    Your employment may be terminated by either party giving not less
            than six (6) months written notice to the other party.

     5.2    If the Board terminates your employment on notice, you may be
            required to remain in Telstra's service for all or part of the
            notice period; be paid at your Fixed Remuneration rate in lieu of
            notice; or be paid at your Fixed Remuneration rate for the notice
            period but not required to attend for work during the notice period.
            This will be determined through negotiation between you and the
            Board.

     5.3    The Board may terminate your employment if you commit any act of
            serious misconduct, which includes breach of Telstra Policy. In the
            event of such termination you will be entitled only to Fixed
            Remuneration to the date of termination, which shall be immediate.

     5.4    If the Board terminates your employment for any reason other than
            serious misconduct, you will receive, in addition to any payment in
            lieu of notice, a termination payment which is the lesser of:

            (a)   Your Fixed Remuneration for the period through to completion
                  of this contract; and

            (b)   Twelve (12) months Fixed Remuneration.

            You acknowledge and agree that in part this payment is to
            compensate you for the restraint agreed to in Clause 6.

     5.5    The Board notes that these termination arrangements are consistent
            with and no more favourable than those currently in place for your
            senior leadership team.

6    FUTURE EMPLOYMENT

     If your employment with Telstra ceases for any reason you must not (without
     the prior written consent of Telstra) be employed by, or provide services
     as an agent, independent contractor or in any other capacity to, any
     telecommunications business or any business of a like or similar nature to
     that conducted by Telstra, whether in Australia or overseas, for the
     minimum period of notice specified in clause 5.1 of the Agreement (whether
     or not a payment is made in lieu of this period). This period will commence
     from the date that the notice period commences or the payment in lieu of
     notice is made. Each element of this restraint operates to the extent to

<PAGE>

     which it is deemed reasonable by any court. Part of the remuneration and
     benefits, including, but not limited to, the notice and termination
     payments set out in clause 5, provided to you by Telstra is specifically
     referable to this obligation and your agreement to this term is an
     acknowledgment that this term is reasonable and goes no further than is
     necessary to protect the interests and Confidential Information of Telstra
     and its Related Bodies Corporate.

7    BENEFITS

     You will continue to be provided with telecommunications and related
     products, services and equipment for business, personal and domestic use.
     In addition, Telstra will pay for the travel and accommodation of your
     spouse in accordance with normal Telstra policy when she travels with you
     on Company business.

8    INDEMNITY

     As you are appointed to positions of statutory responsibility and
     accountability in companies formed or acquired by Telstra, the Telstra
     Directors' and Officer Liability Policy will apply.

9    ENTIRE AGREEMENT

     This agreement is made under the laws of Victoria. Please indicate your
     acceptance of the terms and conditions outlined in this letter by signing
     the duplicate copy where indicated on each page and returning it to me as
     soon as possible

     This document together with any Attachments records the agreement between
     us. No previous negotiations, understandings, contracts, agreements,
     representations, warranties, memoranda or commitments will affect the terms
     and conditions of your employment by Telstra.

     I and the Board look forward to working closely with you over the next four
     years.


     Yours sincerely

     /s/ Robert C Mansfield
     Robert C Mansfield AO
     Chairman


     I confirm acceptance of the terms and conditions set out in this letter.

     /s/ Ziggy Switkowski                                27-8-03
     ---------------------------------    --------------------------------------
     Ziggy Switkowski                                     Date

<PAGE>

                                                                    Attachment 1
                                  REMUNERATION

Remuneration Framework
Your remuneration is comprised of the following elements:

Fixed Remuneration is the annual cash component of your remuneration which
includes salary, superannuation, benefits and any fringe benefit tax incurred by
Telstra in providing your remuneration package. From 1 September 2003 this will
be $1,455,000 and it will be reviewed annually from October each year.

Annual Manager Incentive Payment is an "at risk" element of your Remuneration
and is to be paid through participation in Telstra's Manager Incentive Plan (as
amended or replaced from time to time). This will be calculated at 75% of your
Fixed Remuneration if targets are achieved. The actual payment you will receive
may differ to this depending on your performance and that of the Company. You
can achieve up to 2 times the "on target" payment (ie, 150% of Fixed
Remuneration) if pre-defined stretch objectives are achieved. This will require
significant over performance by the Company and you personally.

Total Remuneration is the aggregate amount of your Fixed Remuneration and the
Annual Manager Incentive Payment.

Deferred Remuneration is paid to you in the form of Deferred Shares which are
held in trust for a period of three years, or until you cease employment (other
than for summarily dismissal), whichever is the earlier. On allocation these
shares will have a value equal to 50% of your Total Remuneration. If you cease
employment on the completion of this contract, these Deferred Shares will vest
to you without any adjustment to the numbers allocated. If you cease employment
with Telstra under clause 5.2 prior to the completion of this contract, your
allocations will be adjusted in accordance with Telstra policy.

Long Term Incentive Plan is delivered through participation in the Company Long
Term Incentive Plan in the form of Performance Share Rights. These will be
allocated at 50% of your Total Remuneration for achieving the target hurdle. To
vest, the relevant hurdle must be achieved between the 3/rd/ and 5/th/
anniversary of allocation. Up to an additional 50% of Performance Rights may
vest for superior performance above the target hurdle. If you cease employment
on completion of this contract, you will have the opportunity to retain the full
allocations of the performance share rights made prior to you ceasing
employment, or alternatively, you may elect to have them lapse. If you cease
employment with Telstra under clause 5.2 prior to the completion of this
contract, your allocations will be adjusted in accordance with Telstra policy.

Total Package is the aggregate of your Total Remuneration, Deferred Remuneration
and the Long Term Incentive Plan.

Annual Review of Remuneration
Telstra reviews the remuneration arrangements each year and will take into
account relevant factors including performance and prevailing market conditions
in establishing your remuneration level. This review will be effective from 1
October each year. Any change to your remuneration level will be reflected in a
new Remuneration Summary.

Other Benefits
You will be provided with telecommunications and related products and service in
accordance with clause 7 of this agreement. Where these are for personal use the
value of these items will be identified, and where applicable fringe benefit tax
paid. These values will be reported as part of your remuneration in the annual
report.