TLS - Telstra Corporation

[Dreadweave]

Well I don't think that Thodey is the same "bad" management that Sol may have been, the current media coverage shows that he is taking a major run at improving customer service, whilst also beginning to squeeze the competition on cost - see their quick change in smart phone plans.
They also have the hardware that Australia will need in the future, like it or not, and very big corporate muscle, so it is quite questionable to label TLS a company that is just rubbish and finished and going down the drain.
Although they have not performed and are losing market share, this does not change the underlying fact that they are tesltra, not Optus or 3; that is a big difference...I have friends who have recently moved back to TLS for their service recently, I wonder if this is reflected in their churn over the coming quarters?

exactly right. in the past 6 months telstra has released more compedative mobilephone, mobile Internet, and fixed broadband plans. With the fixed broadband and foxtel bundles, I think things are moving in the right direction.

happy to say I'm in today at 2.8

making me a shareholder, as well as an employee and customer of telstra.
working in a marketing and sales type of position Im happy to say I have finally put my money where my mouth is lol.

 

[noie]

exactly right. in the past 6 months telstra has released more compedative mobilephone, mobile Internet, and fixed broadband plans. With the fixed broadband and foxtel bundles, I think things are moving in the right direction.

happy to say I'm in today at 2.8

making me a shareholder, as well as an employee and customer of telstra.
working in a marketing and sales type of position Im happy to say I have finally put my money where my mouth is lol.

Well if they can keep there balance sheet looking nice (as it is at present) for another half, i value the company at 3.30-3.50 depending on the NROE
remember it only dropped below 3.00 after some bad earning results in Feb

 

[malachii]

Malachii you may not own Tls shares now but you certainly seem to have been burnt from them in the past.
Sol was a biggest set back for Telstra & he's gone now.
I have faith in the management and what they can deliver.
I look for a company like Telstra where it's been dogged in the past & has the ability to gain back customers and revenue.
Huntleys last analyst was the 16th of August 2010 with a fair value of $3.60.
I suppose you could find better returns in other companies but if there were double dip with GFC Telstra shares would be least affected as it has been in the past. Each to their own.

To suggest this is personal and that I am bagging TLS "because I was burnt" is dodging the facts. I have made no dispersion on any persons comments - just asked for some facts to back up predictions/expectations. And I am still waiting!

Other than last week for a period from Fri 13/8/2010 to Mon 16/8/2010 I haven't owned TLS since it first floated (2 Trades - bought 2 parcels of 10 000 @ $2.90 and sold 10 000 @$2.91 and 10 000 @ $2.95). I bought in on the inital T1 float and sold about 8 months later (for a profit) so I have never been "burnt" by it.

TLS managment has been there for years and have done nothing but run it into the ground. You can bag Sol but at least he tried something. It didn't work but he did try. The current managment has been promoted from within and have done nothing. Thodey has been there is 2001 (2009 as ceo). Stanhope has been there since 1967. How much time do they want? What are they doing differently? When do they expect the changes to take effect? Even their outlook for the company is enemic! Why would you place any more faith (and $$$) in them?

They are not predicting an overall increase in customers nor revenue as far as I can see in their report.

There is NO evidence that TLS would not be hit less or more than any other company with a double dip. When revenues fell in 2008/2009 they blamed the GFC. Why would GFC 2 be any different?

Huntleys released a report back in late may that had a $3.60 target so maybe they are rehashing reports.

I am not critisizing you or anyone else for holding TLS. I cannot make an investment case for them but that does not mean I am not wrong. My main concern with the company is really that they should have a basically bullet proof company but dont seem to be able to "get it together". I am, and have been, looking for evidence to the contrary - but cannot find it. If you can show me then please do. I am always willing to be corrected by facts but not beaten over the head by emotions.

 

[malachii]

Well if they can keep there balance sheet looking nice (as it is at present) for another half, i value the company at 3.30-3.50 depending on the NROE
remember it only dropped below 3.00 after some bad earning results in Feb

Show me the last earnings results that didn't cause a drop. It has been dropping after earnings results almost consistently since it was $9 something.

malachii

 

[ROE]

So it's unreasonable to buy a stock with the expectation that the SP will rise?
Yes, I suppose if you have no expectations of making a capital profit, you're not going to be so disappointed when the SP falls.
Sorry, ROE, but - unless you're taking a very, very long term view (and even that's suspect under the present circumstances) - that's a pretty hard sell imo.

Long term bonds are a very poor investment at present. But why limit the comparison of buying TLS to just bonds?
I'm currently getting 8% on a term deposit, certainly no chance of capital gain, but in the current market, having no risk of capital loss feels pretty good to me.


So why wouldn't you in the meantime put your funds into something with more security, or if choosing shares, a company with a more optimistic outlook regarding rising SP?

That is because I cant time the market

I do go in with the intension of getting capital grow what I can't do
is predict it...that where the margin of safety come in....

can you predict share price movement?

what I am saying is price violity doesnt bother me, you saying TLS suffer price decline that because you have hindinsight 20/20 ..if you are really sure TLS going to go down

why don't you short it? lot of people can make lot of money if they know for sure it's going down or up....

why I go in doesn't really matter to anyone but me because of my margin of safety and I'm not encouraging to anyone to buy TLS, I just put forward a view based on TLS figures...

if you ask any respectable people about money they will tell you
when you place money outside bonds you expect your money is under some form of risk

to compensate for better return...these risks range from regulations, competition, technologies etc...but if these risk can be contained, minimise or eleminated then your return on investment will be rewarded for you to take money outside bonds...

I'm not talking about high risk, high return crab that is a falacy.
you can get low risk high return based on intrinsic value of the business...

and yes my investment horizon is long term, very long term... 25 years plus
TLS may not be around by then but I keep close eyes on most of my baskets..

2 years is short in my time frame, intrindsic value doesnt works well in
short time frame.

I wont get into an argument with bonds and bank deposit and stuff as this is up to individual how they measure risk free premium.....

good luck maybe your short or long TLS

I be back here in three years and see

if my investment in TLS is a loss making venture or a profitable one.
and while I sit on my ass I'm happy with 15-20 cents payout a year other
may want a lot more for their money and good luck to them...

 

[jancha]

To suggest this is personal and that I am bagging TLS "because I was burnt" is dodging the facts. I have made no dispersion on any persons comments - just asked for some facts to back up predictions/expectations. And I am still waiting!

Other than last week for a period from Fri 13/8/2010 to Mon 16/8/2010 I haven't owned TLS since it first floated (2 Trades - bought 2 parcels of 10 000 @ $2.90 and sold 10 000 @$2.91 and 10 000 @ $2.95). I bought in on the inital T1 float and sold about 8 months later (for a profit) so I have never been "burnt" by it.

TLS managment has been there for years and have done nothing but run it into the ground. You can bag Sol but at least he tried something. It didn't work but he did try. The current managment has been promoted from within and have done nothing. Thodey has been there is 2001 (2009 as ceo). Stanhope has been there since 1967. How much time do they want? What are they doing differently? When do they expect the changes to take effect? Even their outlook for the company is enemic! Why would you place any more faith (and $$$) in them?

They are not predicting an overall increase in customers nor revenue as far as I can see in their report.

There is NO evidence that TLS would not be hit less or more than any other company with a double dip. When revenues fell in 2008/2009 they blamed the GFC. Why would GFC 2 be any different?

Huntleys released a report back in late may that had a $3.60 target so maybe they are rehashing reports.

I am not critisizing you or anyone else for holding TLS. I cannot make an investment case for them but that does not mean I am not wrong. My main concern with the company is really that they should have a basically bullet proof company but dont seem to be able to "get it together". I am, and have been, looking for evidence to the contrary - but cannot find it. If you can show me then please do. I am always willing to be corrected by facts but not beaten over the head by emotions.

Facts are they are the leading telecommunications service with the ability to turn things around.
At least Sol tried something different? What a Joke!! Going logger head with the government?
The new billing system?
How many people had billing mistakes?
Telstras customer service would've been run off their feet and would have only heard from customers that were short changed not the ones that were in credit. A shamble and waste of share holders money.
I'd hate to think how much revenue was lost over it!
Anyway to fix something like that doesn't happen over night.
You obviously dont think they can gain customers back and thats basically what it all comes down to.
If you want to stick to facts dont assume that Huntleys are rehashing from May report with latest report dated 16/08/2010.

 

[malachii]

Facts are they are the leading telecommunications service with the ability to turn things around.
At least Sol tried something different? What a Joke!! Going logger head with the government?
The new billing system?
How many people had billing mistakes?
Telstras customer service would've been run off their feet and would have only heard from customers that were short changed not the ones that were in credit. A shamble and waste of share holders money.
I'd hate to think how much revenue was lost over it!
Anyway to fix something like that doesn't happen over night.
You obviously dont think they can gain customers back and thats basically what it all comes down to.
If you want to stick to facts dont assume that Huntleys are rehashing from May report with latest report dated 16/08/2010.

I can agree they are the largest telecomm. company - not sure about the leading. The rest of your points seem to be reasons to not invest rather than to invest. As I said - What Sol tried was a mistake - but he did try something. I wasn't assuming a May report, the assumption was they may have rehashed it. I cannot tell because I dont have the report from 16/8. That was all I was trying to say.

I am not trying to make this personal. For everyone selling - someone is buying. My comments were just in response to people asking for opinions - that is all. I dont own the company as I have made clear. I have no interest in it from a long or short term perspective. Occaisonally I may short term trade it but even that is rare because for this to work - volatility is best and TLS is not particularly volatile most of the time.

You cannot argue that it has been in a downtrend for years. It may be on the brink of a turn around, I dont know but there is no sustained evidence (that I can find) to support this. I hope you are right. I hope that the largest shareholder of this company is wrong and they have made a mistake unloading large chunks of TLS. I hope that the last 10 years of performance is not indicative of the next 10. I hope for a lot of things but I try not to make my investment or trading decisions based on hope.

Can we agree to disagree. You think this stock is a bargain and I dont. Lets leave it at that and allow the discussion to continue.

malachii

 

[Julia]

Can we agree to disagree. You think this stock is a bargain and I dont. Lets leave it at that and allow the discussion to continue.

malachii

Yep, I doubt the different points of view here are going to be resolved.
Largely it seems to depend on whether you buy and sell based on fundamentals or price action. I have no idea about the fundamentals, but wouldn't touch it just on what the price action shows regarding market sentiment overall to TLS.

Re Huntleys: they mostly take the FA approach. If you look at some of their results they sometimes don't even match the index. Each to his own, of course, but I wouldn't be regarding Huntleys as any sort of bible for investment guidance. Do enjoy Ian Huntley's general political commentary though.

ROE, good luck with TLS. I hope it turns around and starts to make you some money.
My point was simply that there are much better companies out there actually showing a rising SP, even in these difficult times.

 

[pixel]

Yep, I doubt the different points of view here are going to be resolved.
Largely it seems to depend on whether you buy and sell based on fundamentals or price action. I have no idea about the fundamentals, but wouldn't touch it just on what the price action shows regarding market sentiment overall to TLS.

Re Huntleys: they mostly take the FA approach. If you look at some of their results they sometimes don't even match the index. Each to his own, of course, but I wouldn't be regarding Huntleys as any sort of bible for investment guidance. Do enjoy Ian Huntley's general political commentary though.

ROE, good luck with TLS. I hope it turns around and starts to make you some money.
My point was simply that there are much better companies out there actually showing a rising SP, even in these difficult times.

Inclined to side with you there, Julia;

as last week's share price couldn't even hold $3 with the imminent 14c (ff=20c) dividend, I decided to sell on Friday, "cashing in" the ff dividend immediately, rather than waiting a month and a year. Today's drop by said 20c suggests I did the right thing.

wrt Aspect-Huntleys, I agree even more. Their guesses are at times "bluddy woeful" and I regret ever having come into contact with them (as a freebie "advisory service" from one of my online brokers, who is now even charging for access )

 

[sptrawler]

I forgot to mention, Congratulations ROE, picking them at $2.92 was a winner.
Even if Liberal win the election my guess is they will continue on with the NBN. Business and government require a secure network, wireless doesn't provide it and Telstra was being shafted to have to provide it(with the copper network)at the shareholders expense.
With the NBN the Government will be supplying the secure infrastructure that is required(as it should be) not the Telstra shareholder.
Telstra will be leasing out it's exchanges and infrastructure to the government to provide the secure service. Telstra will then be able to compete with the other users eg Optus, to supply retail services at competitive prices with a much better and far reaching wireless network.
I can only see upside for Telstra with the burden of the Universal Service Obligation being lifted and the dying copper network being taken over by the Government, leaving Telstra with the best wireless network and leasing it's infrastructure for ongoing income. $h!t it has been a long time coming but maybe the outcome will have been a torturous but excellent result.

.

Well a couple of months in politics is a long time, but I still feel whoever gets in will have to continue to some degree with the NBN. As I stated in the earlier post, wireless is very hard to secure, business is wanting to move more data electronically not in hard copy, Government has to be able to monitor internet activity for security reasons. Therefore even if there is a change of Government I think it will go ahead (Libs will be told), time will tell, these are only my personal thoughts.

By the way Julia can you let me know where I can pick up 8% on cash.

 

[Julia]

.
By the way Julia can you let me know where I can pick up 8% on cash.

Sorry, sptrawler, I doubt you'll find it now. I have that for a five year term with SUN who were not advertising it, but who happily agreed when I asked them to match what Westpac were offering about six months ago. Even then, it was a high rate, and obviously only applied from those banks who were anxious to shore up deposits at the time.

And before anyone suggests it's unwise to tie up funds for five years, I'll say that there is a proportion of my SMSF which I always keep in cash, and I'm more than happy to be getting 8% on it.

One thing I really would say, though, is to never be shy about asking a bank for a better rate than they are advertising. I've only once been turned down doing this (by CBA). Usually they seem happy to meet what their competitors are asking.

 

[sptrawler]

As per usual Julia, you are moving on light feet, while I plod on. 8% for 5 years when the market is treading water is a good move, especially in a low tax vehicle.

 

[noie]

Show me the last earnings results that didn't cause a drop. It has been dropping after earnings results almost consistently since it was $9 something.

malachii

Well that is kinda my point..
30/06/2010 IS the first time we have not seen a decent drop that satys down after a new balance sheet: close at 3.25 ,carried on for 40 days then election faf, has beaten it with a stick.

 

[malachii]

Well that is kinda my point..
30/06/2010 IS the first time we have not seen a decent drop that satys down after a new balance sheet: close at 3.25 ,carried on for 40 days then election faf, has beaten it with a stick.

G'day Noie,

Not sure what you mean about staying up for 40 days. Financial results were released 12th Aug and shareprice got canned 12th Aug - The market reacted as soon as the results were released. It had nothing to do with election.

malachii

 

[BrightGreenGlow]

As per usual Julia, you are moving on light feet, while I plod on. 8% for 5 years when the market is treading water is a good move, especially in a low tax vehicle.

Are you being sarcastic Sptrawler? As anyone would know on a good wage $100k+ that bank interest is crap due to the tax. Unless you have houses to rent I guess.


Anyways.. who is thinking of buying TLS now? $2.77 screams cheap. Surely it wouldn't dive much further?? or... ???

 

[Julia]

As per usual Julia, you are moving on light feet, while I plod on. 8% for 5 years when the market is treading water is a good move, especially in a low tax vehicle.

Are you being sarcastic Sptrawler? As anyone would know on a good wage $100k+ that bank interest is crap due to the tax. Unless you have houses to rent I guess.

john, if you'd read sptrawler's post properly you'd note his reference to a low tax vehicle. If the interest is earned in a SMSF in pension phase there is no tax paid. Obviously, also, someone in such a tax environment is unlikely to still be employed at $100K+.

Anyways.. who is thinking of buying TLS now? $2.77 screams cheap. Surely it wouldn't dive much further?? or... ???

Hah! That's what thousands of investors said as they hung onto their ABC Learning, and various other downtrending companies, while they watched them disappear to nothing. Not saying that will happen with TLS, of course, but to say anything can't fall further is a bit like saying you bought something because you HOPE it will come right.

 

[BrightGreenGlow]

john, if you'd read sptrawler's post properly you'd note his reference to a low tax vehicle. If the interest is earned in a SMSF in pension phase there is no tax paid. Obviously, also, someone in such a tax environment is unlikely to still be employed at $100K+.


Hah! That's what thousands of investors said as they hung onto their ABC Learning, and various other downtrending companies, while they watched them disappear to nothing. Not saying that will happen with TLS, of course, but to say anything can't fall further is a bit like saying you bought something because you HOPE it will come right.

Ahh so ur retired Julia? 8% is alll good then I guess i mean TLS is worth far more than where it is at the moment, its all this government uncertainty.

 

[sptrawler]

Are you being sarcastic Sptrawler? As anyone would know on a good wage $100k+ that bank interest is crap due to the tax. Unless you have houses to rent I guess.


Anyways.. who is thinking of buying TLS now? $2.77 screams cheap. Surely it wouldn't dive much further?? or... ???

Not wanting to be funny johnkenndal, but my late father in law once gave me some great advice, you have one mouth and two ears use them accordingly. I have watched the forum for a long time and tend to think Julia adds a lot of sense to a sometimes over excited comentry.

 

[malachii]

Ahh so ur retired Julia? 8% is alll good then I guess i mean TLS is worth far more than where it is at the moment, its all this government uncertainty.

Not trying to be a smart ar$e here but why is it worth more? A company that is in decline and has been for years. A company whose profit is getting smaller every year. A company whose customer base is shrinking. A company that has to borrow funds to pay for its dividend. A company in a very capital intensive industry. A company that is a political football in a very politically unstable environment. I know it looks cheap but is it? On what basis can you say it is worth far more? Every time it comes out with a report - the share price drops lower and people say it's a bargain. The price trickles up a bit until the next report and then it gets smacked down even lower. This cycle repeats itself every 6 months.

Like I said - I know it sounds like I am being a smart ar$e but really I want to know where other people can see value that I cant.

malachii

 

[sptrawler]

Well Malachi, Telstra , as you say is a political football, regulation cramps its earnings, everyone knows this. But they still pull in billions of dollars because they own what is required to provide business and the general public what they want, communication. The more the Government interferes the more sovereign risk escalates, this has been brought more to the fore by the last Government. I think the only thing the last Government did right was relieve Telstra of the public obligation and service requirement, with the NBN.
I suppose the punters see a company with $6b of free cash flow as not bad. You would say the banks earn that, but if the Government suggested a super profit tax on them they would crash. If China turns around and has it's own financial crisis, all of a sudden B.H.P go back to $20 a lot of junior miners become .com companies again. So therefore it boils back to peoples perceptions of value. Some people believe that Telstra has an infrastructure that is worth something, because everywhere you look people are using mobile phones. Telstra is the owner of the background infrastructure. What does Woolies own?
The only thing keeping Tesltra's share price down is Government, through the ACCC and the general public is getting fed up with it. Telstra bashing while a lot of Aussie companies are being bought out by overseas multinationals is becoming political suicide. The public are a lot more informed these days, that is what T.V does.
To put it another way if Telstra said we are shutting down for a day, there would be a state of emergency and an emergency sitting of Parliament. If Woolies said the same everyone would say Oh well i will shop at Coles or I.G.A or the delhi or Safeway or 7/11