TLS - Telstra Corporation

[malachii]

Taltan,

The comparison was not between a telco but rather a company that is considered "strong".

As for TLS being considered "defensive" - I struggle with any company that has lost 67% of shareholders' value being called "defensive".

I would agree the things I have used to back up my opinions are historical - but all factual company analysis is based on history - your opening comment is value based on P/E ratio - a pure historical fact. We dont know the future. We can make best guess but usually this is based on the past, and the past shows this company sux.

Could you also expand on the comment about about the current managment team. Most of them were around in 2000 in senior managment roles. Stanhope has been there since 1967 and as CFO since 2003 even Thodey started in 2001/2002. Surely you cant argue that they are now going to "change" the company completely. They sure haven't made any remarkable changes yet. I'll admit they are taking a more concilitary role with the government - but this doesn't seem to have made any difference yet to either the NBN or their customer service generally.

TLS has as near to a monopoly as you can get. This (and as far as I can tell - only this) is it's one redeeming feature. And even this seems to be slipping through it's fingers.

If this stock can get back to $9 in the next decade - I'll be astounded (but there again - I have been wrong many times before!). Even if it does though - it will only be back to where it was in 2000. That is not a great return on investment. If the biggest shareholder (government through the future fund) thought it was a good buy - do you really think they would be offloading large chunks?

malachii

 

[Taltan]

Dont get me wrong $6 is a long strech and $9 is fanciful. But you have to weigh it up for the price you can get it - approx $3. My only argument is that due to its monopoly, large voter base and being in a defensive industry (the industry is defensive not the particular stock) it can't go to $0 either. In fact if it stays at $3 and maintains 9.3% fully franked dividends your doing well.

Historically there have been a lot of mistakes most notably bringing in an American to act out what is essentially a political role, basically akin to appointing a foreigner to run for PM. Thodey is more aware of our tall poppy syndromes and is taking a smarter approach.

Of course only time will tell

 

[vincent191]

In fact if it stays at $3 and maintains 9.3% fully franked dividends your doing well.

Telstra is a GREAT investment. It is the only Company in the world that can maintain a very high dividend whilst profits and cash are going south.

 

[snowking]

Was this the news that gave Telstra's sp a bit of a spark today

Australia's proposed A$43 billion national high-speed broadband network could be built cheaper and faster with the involvement of Telstra Corp. (TLS.AU), Australian Communications Minister Stephen Conroy said Monday.

http://online.wsj.com/article/BT-CO-20100412-702937.html?mod=WSJ_World_MIDDLEHeadlinesAsia

 

[snabbu]

The previous one created enemies with everyone. All they left behind was a supper wireless network that will/could be of value.

The current one has done nothing except say they are going to focus on customer service which back fired spectacularly as everyone knows their service is a disgrace and a mess. End result was that they have done nothing about it except realise that if they talk about it their customers just complain more. So now Thodey doesn't mention it. As far as management its the same old same old. Thodey had a chance to shake it up when he came in but his left the same people there to not fix the same old problems.

BS. Their meaty PTSN is accelerating downwards. Their Mobile voice is under pressure from optus etc. There wireless data is losing its premium price faster than they can add extra traffic. They will probably loss Foxtel. And there wholesale section.

Just what bits have been "steady and growing"?

"small rock" "very bright" Too funny!!

I would make a couple of comments
1: Fiscal matters
(a) Bond issue oversubscribed I think 6 times 1.5 B euro 20 years at 4.25%
About half the going rate for Greece.

(b) We are in the box seat we can use our copper until it becomes uneconomical, then and only then we can become the NBN's customer. We don't need to do this all at once we can do it area by area.

2 Political matters
What is it about share analysts that makes them ignore the political aspects of the TLS price. Whether you like it or not if you have super you own TLS
I think there are also 1.5 million Ma and pa Telstra investors, I think they all probably vote. Have you heard of vote buying?

The NBN has to give the board something to put to me, that I might accept, I am currently so pissed of with the labor party that there is a premium on my acquiescence. perhaps just perhaps we may say " give us something that doubles the share price or go **** yourself Kevin" Who knows what we may say. But this has little to do with value. A bloke that will spend 900K on a shade house will surely give me $6 or $7 for my tls. Ok Maybe $4.50 would be sweet. For get the value feel the politics.





Cheers

Gary the Good

 

[drsmith]

While this government likes to splash the cash I can't see it offering $4.50.

If it was to offer $3.60 it could gloat an 11% pre tax return through the dividends for investors who participated in T3. Not bad when comparing to how investment markets have fared over the same period.

In any case I suspect most Ma and Pa direct shareholders would be Coalition supporters regardless of the fate of Telstra.

 

[snabbu]

While this government likes to splash the cash I can't see it offering $4.50.

If it was to offer $3.60 it could gloat an 11% pre tax return through the dividends for investors who participated in T3. Not bad when comparing to how investment markets have fared over the same period.

In any case I suspect most Ma and Pa direct shareholders would be Coalition supporters regardless of the fate of Telstra.

I suspect you are correct in regards to politics however you have to understand that Krud like all politicians is delusional.

I'd be happy with anything over $3.20 as I was dividend stripping, the price just dropped a bit more than I expected, although I think we are only at about 45 days plus 2 and the price has almost recovered to pre dividend levels, so 6.25% after tax in under 60 days is not to be sneezed at.

Today will be interesting

Cheers

Gary

 

[drsmith]

I suspect you are correct in regards to politics however you have to understand that Krud like all politicians is delusional.

Politicians are not delusional, they just concentrate a little too much on their short term political well being.

If the government purchased Telstra back at $3.60 per share it would cost about as much as the BB network. They could then use it'as cashflow/sell off parts of the business over time to roll out the BB network.

Sounds good in principal but I suspect in practice it would be political suicide. The opposition would (should ?) have a field day if the government did that. It would be low on the government's list of options.

 

[sptrawler]

Maybe I am missing something, but can some one explain to me how Telstras maket capitalisation is less than Singtel's(Optus). When Telstra owns the infrastructure, makes a massive amount more profit than Singtel(Optus) and pays a much bigger dividend. Maybe people are over reacting and the sum of Telstras parts are worth more than people are factoring in. If Telstra sells it's infrastucture and gives a return of capital to share holders of say $1-2. Then it becomes a carrier the same as Optus but with a much broader wireless network and also has its national service obligation lifted and the punitive regulation that stops it offering equivalent products as other carriers cancelled out. It would be a much stronger carrier than Optus and one would think it's share price would reflect that. One can only hope or maybe I am missing something.

 

[ChilliBlue]

Let us not forget that TLS also owns a substantial chunk of Foxtel which other players are desperate to get their hands on.

 

[malachii]

Singtel own much more than just Optus so the comparison is unfair. They are a massive international telecommunications company and Optus is only a small chunk. You cant take the whole value of Singtel and value Optus at that amount and compare it to the whole of TLS.

malachii

 

[shinobi346]

I have to agree there. Here in Australia telstra is massive, but overseas, singtel, virgin group, vodaphone and three are massive corporations.

 

[sptrawler]

So therefore Malachi and shinobi346 why is the Government try to stuff the little aussie battler instead of making these massive multinationals put some money up to put in infrastructure. No instead they will use taxpayers money and then the multinationals can use that. What a winner.

 

[oldblue]

Intervention/regulation by the govt isn't just an Australian phenomenon. A very similar thing has happened in other countries, Britain and NZ included, as governments try to encourage more competition in telecoms.

As for competing against giants, it just so happens that they are the ones who happen to be interested. For example, in NZ, Telecom is up against the likes of Vodafone and Telstra, both many times NZ Telecom's size.

I don't invest in telecom companies. Too much govt interference.

 

[malachii]

Sorry sptrawler - are you saying that TLS is a good investment, pays great dividends, makes massive profits and is a bargain or that it is stuffed? You cant have it both ways.

malachii

 

[BrightGreenGlow]

I see the price lately has been hovering around 3.15 - 3.20 so this is decent and whoever bought them at 2.9 would have to be very happy at the moment. With the election creeping up surely a deal with be made and a favourable one at that for Telstra.

PS: Does Krudd realise Telstra is an Australian company yet Optus, Voda, 3 and Virgin are not? Does this not mean anything or is he yet again on his knees ready to accept with his mouth wide open? ....

 

[oldblue]

I see the price lately has been hovering around 3.15 - 3.20 so this is decent and whoever bought them at 2.9 would have to be very happy at the moment. With the election creeping up surely a deal with be made and a favourable one at that for Telstra.

PS: Does Krudd realise Telstra is an Australian company yet Optus, Voda, 3 and Virgin are not? Does this not mean anything or is he yet again on his knees ready to accept with his mouth wide open? ....

We need to remember that there are more voters than there are TLS shareholders.

Govts throughout the world have courted favour by appearing to deliver better telco services to their electorates by encouraging competition, usually at the expense of the dominant incumbent. eg BT in Britain, Telecom in NZ, TLS in Australia.

 

[Mofra]

PS: Does Krudd realise Telstra is an Australian company yet Optus, Voda, 3 and Virgin are not? Does this not mean anything or is he yet again on his knees ready to accept with his mouth wide open? ....

Virgin is just a CSP though - all traffic flows through the troika of major carriers through interconnect agreements so isn't a huge player in the local telco industry.

Given Sol's fractuous relationship with the Government, it's no surprise the government is going to look at ways to reduce Telstra's dominance of the marketplace (approx 2/3 of the market according to the ACMA's eligible telco revenue figures). Thodey has more than a few bridges to mend in Canberra, and in an election year one has to question how much time he has to do it.

 

[sptrawler]

Actually malachi what i am inferring is the Government is playing with fire. They will have to either give Telstra a fair and equitable price for its infrastructure or the shareholders won't accept it. Then the Government has a real problem, build its own infrastructure which it can't afford to do or scrap the NBN which it should do but is politically another back flip. If it decides to build it,who is going to jump onto a fibre fixed line when it will cost more and when people are leaving fixed line connections in droves. If the take up is low how will it be funded? Maybe the Government will treat it like sewage and water and force owners to pay for it when it goes past the house, political suicide. So malachi it is just a punt on who will blink first. One thing for sure is Telstra owns it and is making money from it, the Liberals if they get in will reduce spending and Telstra should be off the radar. If Labor keep going the way they are, another potential $43billion stuff up will see them out in the wilderness for another 20years.
It is a dead set loser for Rudd and I think that makes Tls a potentially good buy at around $3. But as with all shares it is just a punt on outcomes. I have taken the plunge on Tls again hope I don't get burnt again.

 

[boofhead]

sptrawler: Any references to say using FTTH will be more expensive for the consumer? So far it is mostly only opinions.

Reason why I ask is Internode's heavy plans for fibre are cheaper than resold TW plans. So as a consumer it would be cheaper for me to ditch copper and switch to fibre. I'm not sure about plans for phone calls using typical phone devices though. Internode may not be the best example as they often have a premium but their site does list FTTH and ADSL plans. You could probably do the same exercise with iiNet.