TLS - Telstra Corporation

[So_Cynical]

We have just seen a data centre at Clayton leased to a REIT (#2379).

Expect an Infrastructure entity to emerge; high yield, low growth, geared? .... especially in this 'low interest' era.

Sold to the REIT and leased back - 416 million sale price, was just reading about this last night and found the sale to be a little strange, the property looks like
a great growth asset and the kind of thing that a dynamic modern company would want to keep, note that TLS will continue to use the asset for maybe 30 years.

 

[Boggo]

@sptrawler agree. It's having a bit of an issue getting past the constant sellers around the $3.90 area and this will probably repeat around the $4 area.

Extract above was from a post around the end of January. It did hit $3.94 and then headed South from there.
MTPredictor gave a nice heads up back then and a few weeks ago signalled another short to $2.82.
Second signals are usually not as reliable as the first one in these situations (imo) but lets see how it pans out

(click to expand)

 

[Dona Ferentes]

would a barcode scanner help interpret today's One Minute price action?

 

[Garpal Gumnut]

would a barcode scanner help interpret today's One Minute price action?


View attachment 107730

I did scan it.

I've just bought the NBN.

I may start a GoFund page.

gg

 

[sptrawler]

Extract above was from a post around the end of January. It did hit $3.94 and then headed South from there.
MTPredictor gave a nice heads up back then and a few weeks ago signalled another short to $2.82.
Second signals are usually not as reliable as the first one in these situations (imo) but lets see how it pans out

Again they are paying out more than they are earning, so as was worked out a while back in this thread a $2.80 price is a possibility.
A lot of punters would have expected Telstra to be immune from the virus, as everyone was either on the internet or on the phone, the drop in earnings probably came as a shock to many IMO.
If they hit $2.80 I will be getting in.
By the way great chart Boggo, cheers.

 

[tinhat]

I couldn't help myself...

 

[tinhat]

Again they are paying out more than they are earning, so as was worked out a while back in this thread a $2.80 price is a possibility.
A lot of punters would have expected Telstra to be immune from the virus, as everyone was either on the internet or on the phone, the drop in earnings probably came as a shock to many IMO.
If they hit $2.80 I will be getting in.
By the way great chart Boggo, cheers.

I haven't read the report or the recent coverage. It's been a while since I owned Telstra. You only get the confluence of the bravado of a David Murray, Malcolm Turnbull and Tony Abbott once in your life-time.

With Telstra I think the free cash flow is more important for the maintenance of the dividend than the reported earnings figure. They have maintained strong free cash flow for some time but everything else is compressing, return on assets, return on equity profit margin all falling for years and with profit growth being on average negative for years now.

I don't know if this company transforms itself or just sits out to pasture as a cash cow. I assume the future is more in wholesale infrastructure and services rather than retail. I assume they don't want retail anymore as they keep jacking up their prices. I've moved three devices off Telstra to Woolworths Mobile (still Telstra network) recently and will be taking the NBN account elsewhere once my contract is up.

 

[Boggo]

Again they are paying out more than they are earning, so as was worked out a while back in this thread a $2.80 price is a possibility....

I’ve been in and out of internet coverage in Arnhem Land and Areas of Kakadu so haven’t been keeping up with what’s happening to the share price.

Now in Katherine and getting updated and it seems like it could be on its way there @sptrawler.
Cheers.

 

[sptrawler]

I haven't read the report or the recent coverage. It's been a while since I owned Telstra. You only get the confluence of the bravado of a David Murray, Malcolm Turnbull and Tony Abbott once in your life-time.

With Telstra I think the free cash flow is more important for the maintenance of the dividend than the reported earnings figure. They have maintained strong free cash flow for some time but everything else is compressing, return on assets, return on equity profit margin all falling for years and with profit growth being on average negative for years now.

I don't know if this company transforms itself or just sits out to pasture as a cash cow. I assume the future is more in wholesale infrastructure and services rather than retail. I assume they don't want retail anymore as they keep jacking up their prices. I've moved three devices off Telstra to Woolworths Mobile (still Telstra network) recently and will be taking the NBN account elsewhere once my contract is up.

Yes their payments from the NBN, for transferring subscribers will be drying up, now the project is nearing completion.
The ongoing rental of the exchanges could end up being spun off? Also I think I read they are trying to get out of the rural service obligation, they really are reducing down to just another service provider. So as you say a possible cash cow with minimal growth.
A big issue is having the best coverage, only affects those who live or travel to remote areas and that isn't where you make the bulk of your money, the cities are.
The cost of providing the remote services and upgrading them probably outweighs what you earn from them.

 

[Newt]

I’ve been in and out of internet coverage in Arnhem Land and Areas of Kakadu so haven’t been keeping up with what’s happening to the share price.

Now in Katherine and getting updated and it seems like it could be on its way there @sptrawler.
Cheers.

Wonderful part of Australia. Out of interest Boggo, are you still trading your systems while on the move?

 

[Boggo]

Wonderful part of Australia. Out of interest Boggo, are you still trading your systems while on the move?

No I’m not @Newt.
Just adjusted the stops where necessary on existing holdings and left any updates etc until I get back on around the 5th Sept.
Cheers.

 

[Newt]

Sounds like a good compromise. Safe travels!

 

[fiftyeight]

Tin foil hat time.

Telstra = Telstar

Yes their payments from the NBN, for transferring subscribers will be drying up, now the project is nearing completion.
The ongoing rental of the exchanges could end up being spun off? Also I think I read they are trying to get out of the rural service obligation, they really are reducing down to just another service provider. So as you say a possible cash cow with minimal growth.

Building some kind of cash pile maybe???

ABC running stories on how awesome space is, and that space is the new frontier.

Who else would the gov give a contract too, if oz did go space broadband?

If TLS reduce their divs and/or walk away from any NBN or other commitments, who knows hahaha

 

[danz95]

What does everyone think about averaging down TLS? I stupidly bought 9000 TLS at 3.42 and a couple weeks ago averaged down by adding another 2800 shares to create an average of 3.35. now they are sitting at 2.84 (a 52 week low) and i now have a $6220 loss on a $40000 investment. By my calculation if i average down again, i can buy another $10000 worth. That equates to around another 3500 shares, creating 15300 shares at an average of $3.25 and turning a $6220 loss into $3967. (i think) is this a good idea?

 

[sptrawler]

What does everyone think about averaging down TLS? I stupidly bought 9000 TLS at 3.42 and a couple weeks ago averaged down by adding another 2800 shares to create an average of 3.35. now they are sitting at 2.84 (a 52 week low) and i now have a $6220 loss on a $40000 investment. By my calculation if i average down again, i can buy another $10000 worth. That equates to around another 3500 shares, creating 15300 shares at an average of $3.25 and turning a $6220 loss into $3967. (i think) is this a good idea?

That is something no one can tell you, we aren't advisers, just people who chat about our own thoughts on shares.
Read through the TLS share thread and make up your own mind, there is a lot of history in the thread, so it should give you food for thought.

 

[Ferret]

TLS is one I've lost money on in the past, but I am also interested again at current prices.

I last added some at 2.62 in 2018. I might add some more now.

 

[sptrawler]

TLS is one I've lost money on in the past, but I am also interested again at current prices.

I last added some at 2.62 in 2018. I might add some more now.

I tend to agree with you Ferret, IMO at current prices they should provide a reasonable dividend going froward, I will be buying in just have to work out what to sell to get the money together.

 

[cutz]

I tend to agree with you Ferret, IMO at current prices they should provide a reasonable dividend going froward, I will be buying in just have to work out what to sell to get the money together.

Same here, over the years I haven't been a particular fan of TLS, but with price action of late indicating oversold I couldn't resist entering into a low risk leveraged strategy.

 

[sptrawler]

I was having a think today, where does Telstra get its growth from?
Technology is a fast moving and highly competitive space, so the advantage Telstra has is better coverage in remote areas, but that gives much lower returns due to sparse population and high service costs.
So does Telstra get an advantage in high density, high volume areas? dubious most users are very price conscious, which in reality forced Telstra to introduce "beyond" the budget plan section.
Will 5G be a game changer? possibly for the short term, but competitors will introduce it and cramp margins again.
The other problem is as technology is so fast moving, how long before 6G and 7G? this will be another cost to Telstra as it spends to keep up.
The problem is the return on investment for Telstra isn't a lot, when they can't charge a lot more for the new technology, people don't want to spend a lot more for the perceived improvement.
I just can't work out where Telstra's growth is going to come from.
Maybe someone can enlighten me?

 

[Newt]

From a TA price momentum perspective, TLS has recently made new 18 month lows, currently has no sign of an upward trend on medium to long timeframes (weekly, monthly), is below the 200 day (daily) Moving Average, and has less bullish price momentum than a garden snail with a tummy full of Yates slug and snail pellets.

It would normally seem prudent to await at least 6 month new highs, and bullish action above, at least, a very long period moving average. As attractive as the dividend might be, any gains could be quickly eroded by any further price falls.

(Disclaimer: I would also say a 33% reduction in price requires a 50% gain to recoup losses, which some FA investors on ASF would argue is a falsehood )