TLS - Telstra Corporation

[Nicks]

Could TLS ever be a takeover target for a bigger international? Just like Singtel's interest in Optus. You'd think if this was an option right now would be an opportunity to strike.

 

[skc]

Could TLS ever be a takeover target for a bigger international? Just like Singtel's interest in Optus. You'd think if this was an option right now would be an opportunity to strike.

There's no way that the FIRB will approve that imo.

 

[Boggo]

Could TLS ever be a takeover target for a bigger international? Just like Singtel's interest in Optus. You'd think if this was an option right now would be an opportunity to strike.

If $4.15 doesn't hold it could be a bargain buy at $3.45

Weekly...

 

[Triathlete]

Not sure were Telstra will finish up but the downtrend is still in place although I have pulled the pin on my short today @ $4.16 ,may look to get back in if $3.92 is broken.
Have attached the Monthly and Weekly charts analysis below.....

Monthly Chart:

Weekly Chart:

 

[MrChow]

Here's my downside scenario based on current information.

Earnings in next 4 years:
-20% from NBN partially offset by cost cuts (Telstra's own forecast)
-10% from TPG mobile competition (Share Price attribution this week)

EPS 23c (33c x -30%)
Div 17c (if changed to 75% payout ratio)
PE 11 (just above 2009 low)
Div Yield 9.4% (gross)
Share Price $2.50

I think this is why they are looking at bringing the potential $88b future NBN revenue forward into a new vehicle, it could hit -5% of earnings, but give them a one-off treasure chest to reinvest to offset the above scenario.

 

[galumay]

I have no idea of the hard numbers, but at a local level I know TLS are absolutely bleeding customers with the NBN, the fact that they charge about a 30% premium for the same plan with worse support than just about any other company has seen a massive erosion of market share in our town. I know because I run an IT company and also have the contract for NBN installs in our town. If the numbers were consistent across the country the loss of revenue from broadband due to the move to NBN will be massive for NBN. I suspect the rest of Australia is not quite as well informed so the hemorrhaging of customers is probably less elsewhere, regardless its not a business I would allocate capital to.

 

[Boggo]

I have no idea of the hard numbers, but at a local level I know TLS are absolutely bleeding customers with the NBN, the fact that they charge about a 30% premium for the same plan with worse support than just about any other company has seen a massive erosion of market share in our town. I know because I run an IT company and also have the contract for NBN installs in our town. If the numbers were consistent across the country the loss of revenue from broadband due to the move to NBN will be massive for NBN. I suspect the rest of Australia is not quite as well informed so the hemorrhaging of customers is probably less elsewhere, regardless its not a business I would allocate capital to.

Yes, my previous posts 1993 and 1995 on page 100 are two examples of what could be considered a display of their attitude.
There was a time when they could get away with that but those days are long gone for the majority who look at the numbers rather than the advertising.

 

[MrChow]

TLS seem to be doing well with the official NBN numbers, but based on those TLS still forecasts 20-30% loss in annual earnings from NBN by 2021, so they wouldn't want to be tracking below target.

Keep in mind TLS was in the $3-4 range before the NBN was announced, and without the NBN earnings would have been flat / declining in recent years.

Also the biggest divisional growth has come from TLS taking mobile share from Vodafone, which looks to be the opposite in the future with TPG being on the hunt and others looking to defend.

If that all sounds overly negative, I believe TLS management feel the same way which is the reason for their announcing to the market the up to $3b loss of EBITDA from NBN 5 years before it's due to happen and to warn that capital strategy such as dividends / capex / asset sales are all up for review. They know business as is will leave a significant earnings gap (even more so with TPG news) and need to realise the financial assets they have so they can use them for a combination of capital investment = earnings clawback = maintaining (as much as possible) capital returns.

 

[nulla nulla]

IMO the Telstra share price will be driven by negativity in the near term. However the market will ultimately wake up to two factors (other than the outcome of the ACCC review of roaming access to their competitors in regional areas):

1. It will be some time before TPG has it's Mobile Network up and running in all major cities. Telstra will be locking in as many customers as possible in the interim and the new contracts will include a break fee. Any disruption to Telstra's income will be down the road; and
2. Telstra has been trying to decide what to do with the NBN aspects of the business and is expected to announce its' decision in the near future. One of the speculated options is a split off, others are share buybacks and special dividends. Shareholders/investors probably see some good in this.

I suspect that when the market gets over the TPG purchase of spectrum, the Telstra share price will rebound somewhat.

Disclosure: I purchased some Telstra shares in Thursdays close at $4.16 for my superannuation.

 

[sptrawler]

If $4.15 doesn't hold it could be a bargain buy at $3.45

Weekly...
View attachment 70707

I'm with you on that, they could be a bargain buy at $3.45, but I still wouldn't put my life savings in.
The one thing in their favour, is they have a ton of cash, they just have to come up with a viable business plan.
That may entail looking at other opportunities, ala Westfarmers, they don't get fixated on one income stream. However, thinking outside the box, hasn't been Telstra's strong point.
My gut feeling is, they need to work out what is working overseas, then look for the opportunity here.
The line between, free to air t.v, cable t.v, live view mobile t.v and internet newsprint, is becoming very grey.
All media is feeling the pain, and the Government is going to have to relax cross media ownership, before several go under.
This will no doubt will give Telstra an opportunity, if they are still in a financial position to compete with other predators. Just my two cents worth.

 

[preemo]

Telstra's big hope for a new business & revenue stream was Health and the formation of Telstra Health. Any thoughts about when or if that will impact the share price?

 

[sptrawler]

Telstra's big hope for a new business & revenue stream was Health and the formation of Telstra Health. Any thoughts about when or if that will impact the share price?

Why would that be a big new revenue stream, when any of the providers can supply the internet connection?
Was Telstra going to supply a knowledge base of doctors at a call centre?

 

[preemo]

Why would that be a big new revenue stream, when any of the providers can supply the internet connection?
Was Telstra going to supply a knowledge base of doctors at a call centre?

Yes they were....as well as a few other things such as the National Cancer Screening Register, the IT systems linking providers such as pharmacists etc. Have a look at https://www.telstrahealth.com/

 

[sptrawler]

Well it will be interesting to see, if the medical and hospital sector, take it onboard.
I still think in the scheme of things, it won't be a lifeline, for Telstra.
We are talking a $50billion company, they need a strong and growing income stream, to maintain that.
As has been said on numerous occasions since 2009, Telstra with the advent of the NBN, will become just another reseller.
If the ACCC decides it is in the public's interest, to allow third party access to Telstra's regional network, it is curtains.
They really do need to come up with a plan to diversify, while they have time, as it will run out.IMO
They keep trying to stay ahead of the technology game, where the margins are small and the cost is high.

 

[preemo]

Well it will be interesting to see, if the medical and hospital sector, take it onboard.
I still think in the scheme of things, it won't be a lifeline, for Telstra.
We are talking a $50billion company, they need a strong and growing income stream, to maintain that.
As has been said on numerous occasions since 2009, Telstra with the advent of the NBN, will become just another reseller.
If the ACCC decides it is in the public's interest, to allow third party access to Telstra's regional network, it is curtains.
They really do need to come up with a plan to diversify, while they have time, as it will run out.IMO
They keep trying to stay ahead of the technology game, where the margins are small and the cost is high.

Totally agree.

 

[sptrawler]

Telstra should have pushed the Government to allow it to buy a t.v station, then develop world leading t.v to mobile applications, but that would have been clever.
Australia wants to be that, but the politics don't allow it. Weird

We can't give ourselves a break, because it isn't fair to the Multi Nationals.

 

[galumay]

Seriously, Imagine Telstra Health, 2 hours on a support call to India with people at the other end who not only know nothing about Comms, but also nothing about Health!! What could possibly go wrong?!

Same with them owning a TV station, a badly run TV station combined with a badly run Telco, that will fix the share price!!

 

[sptrawler]

Seriously, Imagine Telstra Health, 2 hours on a support call to India with people at the other end who not only know nothing about Comms, but also nothing about Health!! What could possibly go wrong?!

Same with them owning a TV station, a badly run TV station combined with a badly run Telco, that will fix the share price!!

There is no easy fix, to their problem.

 

[skc]

Seriously, Imagine Telstra Health, 2 hours on a support call to India with people at the other end who not only know nothing about Comms, but also nothing about Health!! What could possibly go wrong?!

Same with them owning a TV station, a badly run TV station combined with a badly run Telco, that will fix the share price!!

Foxtel was supposed to be the unique content offering that makes TLS communication products more competitive. It worked for a while but, ACCC was never that obliging and now it's probably the next shoe to drop given how terrible value Foxtel offers compared to the other streaming giants. Live sport is the only real attraction, but the rights just get more and more expensive each round.

A TV station would be pointless... in 5 years there'd still be TV stations, but there will be no money in it.

 

[McLovin]

There's no way that the FIRB will approve that imo.

It's actually in enshrined in legislation...

TELSTRA CORPORATION ACT 1991 - SECT 8BG
Meaning of unacceptable foreign-ownership situationthis Act, an unacceptable foreign-ownership situation exists in relation to Telstra if:

(a) there is a group of foreign persons who hold, in total, a particular type of stake in Telstra of more than 35%; or

(b) there is or are one or more foreign persons each of whom holds a particular type of stake in Telstra of more than 5%.

Note 1: A person's stake is calculated on the assumption that the only shares in Telstra are shares held by persons other than the Commonwealth--see clause 12 of the Schedule.

Note 2: A person's stake includes the interests of the person's associates--see the Schedule.

Live sport is the only real attraction, but the rights just get more and more expensive each round.

There's also no reason why live sport is immune from streaming. Optus flopped with the EPL, but give it a few years and Foxtel could be totally redundant for anything more than re-runs of the Real Housewives of Dubbo: Live sport pretty much subsidises all the other stuff no one wants to watch on Foxtel. It's kind of funny how much times have changed. 12-13 years ago Kerry Stokes spent hundreds of millions of dollars trying to get access to the Foxtel set top boxes for his one sports channel.