Telstra Corporation Limited and Alcatel-Lucent (Euronext Paris and NYSE: ALU) today announced a three year collaborative Research and Development (R&D) agreement that will see the two companies combine forces to develop world-leading tailored innovations for the advancement of Telstra's network.

The agreement will enable Telstra to harness Alcatel-Lucent's extensive local and global R&D capabilities - including 25,000 technologists, scientists and engineers around the world and the innovative power of Bell Labs, helping to sustain Telstra's ongoing drive to be at the forefront of telecommunications innovation in Australia.

This new R&D agreement ensures that Alcatel-Lucent's global products and solutions are developed in close alignment with Telstra's commercial and technological business requirements.

"Such close collaboration with the world-class R&D capabilities of Alcatel-Lucent, including Bell Labs, is a major advantage for Telstra and our customers," said Telstra's Chief Technology Officer, Dr Hugh Bradlow.

"It enables technology transfer of leading edge capabilities to Australia and ensures our customers have access to world-leading solutions that are globally competitive. It will also enable us to influence global solution development and technology innovation here in Australia."

Alcatel-Lucent said this agreement is another move forward for Telstra's network transformation as it will enable the two companies to collectively create shared technology roadmaps and differentiated products and solutions.

"This is a unique opportunity to work with a leading next generation network carrier to develop and align our product and service offerings based on an intimate insight into their business," said Alcatel-Lucent's Asia Pacific Chief Technology Officer, Mr Vince Pizzica.

"Maintaining a strong innovation and R&D edge is vital for any technology organisation. Working together Alcatel-Lucent and Telstra are ideally placed to drive forward broadband innovation in Australia and keep this country at the forefront of global communications."

Key elements of the agreement include:

• The development of a comprehensive three year joint Research and Development plan, to be regularly evaluated and reviewed
• A regular joint review of leading-edge Alcatel-Lucent products and solutions and assessment of their relevance to Telstra's network development - including Telstra Next Dimension Working" 
• The ability for Telstra and Alcatel-Lucent in Australasia to shape Alcatel-Lucent's global technology roadmaps based on Telstra's business and technology requirements
• The development of innovative, differentiated and tailored solutions that are strongly aligned with the capabilities and requirements of Telstra's network
• Secondment of local and overseas staff to work on specific projects
• Joint contribution of intellectual property (IP) and R&D focused resources

"We're delighted to be working with Alcatel-Lucent. This agreement will drive considerable advancements in Telstra's network transformation," said Dr Bradlow.

"Alcatel-Lucent has a strong heritage and proven track record of world-leading innovation, which includes links to the first telephone exchange in Australia and connecting Australasia to the rest of the world with undersea fibre cable," said Mr Pizzica.

Alcatel-Lucent's R&D credentials include:

• One of the industry's largest R&D capabilities focused on communications with more than 25,000 technologists, scientists and engineers around the world and 25,000 patents
• Over 300 software engineers based in Sydney, which means Alcatel-Lucent has one of the largest telecommunications software development engineering facilities in Australasia
• A position among the top 40 R&D spenders in Australia (Source: IBISWorld Research)
• The recipient of Telstra's 2006 'Vendor of the Year' and 'Excellence in Technology Innovation' awards
• A number of locally based centres of Innovation and Excellence, including:
  - IP Service Centre in Hamilton
  - Sydney based global NOC and Innovation Centre
  - Three Centres of Excellence that focus on IN, OSS and Triple Play.
• A central role in defining the key technology standards on standards bodies including TISPAN, 3GPP & 3GPP2 and TMF among others.

The agreement complements Alcatel-Lucent's existing role as a major Strategic Supplier for the development of the Telstra Next IP" network.

Telstra Next IP" network and Telstra Next Dimension Working" are trademarks of Telstra Corporation.

About Telstra
Telstra is Australia's leading telecommunications and information services company, with one of the best known brands in the country. Telstra offers a full range of services and competes in all telecommunications markets throughout Australia, providing 9.86 million Australian fixed line and 8.9 million mobile services. Telstra's network and systems infrastructure underpins the carriage and termination of the majority of Australia's domestic and international voice and data telephony traffic. Telstra owns 50% of FOXTEL®, and its international businesses include CSL New World Mobility Group, Hong Kong's leading mobile operator, TelstraClear Limited, the second largest full service carrier in New Zealand and Reach Ltd, a provider of global connectivity and international voice and satellite services, as well as SouFun Holdings Limited, a leading real estate and furnishings website in China.

About Alcatel-Lucent
Alcatel-Lucent (Euronext Paris and NYSE: ALU) provides solutions that enable service providers, enterprises and governments worldwide, to deliver voice, data and video communication services to end-users. As a leader in fixed, mobile and converged broadband networking, IP technologies, applications, and services, Alcatel-Lucent offers the end-to-end solutions that enable compelling communications services for people at home, at work and on the move. With operations in more than 130 countries, Alcatel-Lucent is a local partner with global reach. The company has the most experienced global services team in the industry, and one of the largest research, technology and innovation organizations in the telecommunications industry. Alcatel-Lucent achieved adjusted proforma revenues of Euro 18.3 billion in 2006 and is incorporated in France, with executive offices located in Paris. [All figures exclude impact of activities transferred to Thales]. For more information, visit Alcatel-Lucent

Alcatel-Lucent Press Contacts
Régine Coqueran
Tel :+ 33 (0)1 40 76 49 24

Mark Burnworth
Tel :+ 33 (0)1 40 76 50 84

Alcatel-Lucent Investor Relations
Pascal Bantegnie
Tel: +33 (0)1 40 76 52 20

Maria Alcon
Tel: +33 (0)1 40 76 15 17

John DeBono
Tel: + 1908-582-7793

Telstra Press Contact
Brent Hooley
Tel :+ 61 (0)439 400 214

Reference Number: al2007