TLS - Telstra Corporation

[nulla nulla]

This might help explain some of the recent share price drop.

http://www.smh.com.au/business/future-fund-hedges-its-bets-20100920-15jq0.html

"THE Future Fund has plunged almost $10 billion, or 15 per cent of its assets, into a suite of hedge funds in the United States in an effort to diversify overseas and away from its dominant holding in Telstra.

The fund, which invests superannuation for government employees, appointed nine hedge funds in the US and a boutique hedge fund in Britain to manage $9.8 billion last financial year, up from an allocation of $2.6 billion in June last year.

More than 15 per cent of assets are now invested in the ''alternatives program'', which the fund describes as ''[using] skilled managers to take advantage of capital scarcity and market inefficiency''.

Overall, the Future Fund generated returns of 10.6 per cent in the past year.

It also sold down its stake in Telstra from 16.4 per cent to 10.9 per cent last month."

The above quote was cut and pasted to the thread, from the linked article, shortly after I read the article on the front page of the "Sydney Morning Herald - Business Day" section on 21 September 2010.

I have retrieved the BusinessDay section for 21 September 2010 from the recycle bin and it definitel went to post claiming "It also sold down its stake in Telstra from 16.4 per cent to 10.9 per cent last month".

This is interesting, not so much that the online article has since been edited/corrected, but because (imo) it is likely that the media allegation that the future fund was selling down "last month" would have contributed to the sell down this week also.

 

[Frank D]

Telstra

Timeframe support on TLS @ 2.46

'Bear trend' will only be over once price is trading above the Primary trend 50% level.

That level is defined by the Yearly 50% level in 2011 (currently 2.98)

 

[alphaman]

This is interesting, not so much that the online article has since been edited/corrected, but because (imo) it is likely that the media allegation that the future fund was selling down "last month" would have contributed to the sell down this week also.

Hard to say. People who can really move markets definitely would know that was a mistake. Retail investors might have got fooled, but they are not influential.

 

[BrightGreenGlow]

Article from The Australian... The quote the NBN deal being worth 90c+ SP jump.

http://www.theaustralian.com.au/bus...-near-record-low/story-e6frg8zx-1225929099447

 

[nulla nulla]

Good article. I like the idea of $0.90c upside to the current share price. One thing about the high recent turnover is that for every nervous seller there is an optimistic buyer.

 

[BrightGreenGlow]

This is true. Hopefully we will get an NBN deal and yeah to sell one must buy!

 

[drsmith]

The 90c potential upside is known to the market and easy to calculate.

If it goes ahead, the NBN deal is worth $11bn to Telstra which in turn has ~12.5bn shares.

That's 88c per share.

 

[So_Cynical]

Article from The Australian... The quote the NBN deal being worth 90c+ SP jump.

http://www.theaustralian.com.au/bus...-near-record-low/story-e6frg8zx-1225929099447

Interesting that Telstra have lost half a million shareholders...we should probably keep in mind that we are now 13 years on from the T1 float and there's been alot of change in Telstra over those years....perhaps with there new CEO and other management changes, NBN deal, Growth of smart phones and next-G etc...it mite be time to take a fresh look at Telstra.

The 90c potential upside is known to the market and easy to calculate.

If it goes ahead, the NBN deal is worth $11bn to Telstra which in turn has ~12.5bn shares.

That's 88c per share.

But is it really priced in? i very much doubt that it is.

 

[skc]

Interesting that Telstra have lost half a million shareholders...we should probably keep in mind that we are now 13 years on from the T1 float and there's been alot of change in Telstra over those years....perhaps with there new CEO and other management changes, NBN deal, Growth of smart phones and next-G etc...it mite be time to take a fresh look at Telstra.



But is it really priced in? i very much doubt that it is.

I suppose you mean that you doubt that it isn't priced in? Probably not fully priced in would be my guess due to the uncertainties. But I have to say, with so so so much negativity out there on TLS - it's due for a rally soon...

The decline in number of retail shareholders is not unexpected. I did this analysis some years back on major public floats and the number of shareholders always decline rapidly. You can get shareholder numbers from annual reports to verify yourself. QAN, AMP, IAG etc will all show the same picture. TLS will be more confusing due to the multiple tranches.

 

[oldblue]

The market, on the other hand is wary about what effect increasing govt regulation might have on TLS. Every right to be concerned, IMO, considering recent past and similar heavy handed interference of telcos in Britain and NZ, just to mention a couple.

I posted this back in April and see no reason to change my view.

TLS is still unattractive to me, particularly when there are plenty of other well performing investments with far less regulatory and technology risk.

 

[nulla nulla]

The 90c potential upside is known to the market and easy to calculate.

If it goes ahead, the NBN deal is worth $11bn to Telstra which in turn has ~12.5bn shares.

That's 88c per share.

Hmmm....On these calculations the $400mil from the offloading of Soufun Holdings into the float would only be worth between 3 or 4 cents per share holder. Can't see them doing a special div for that.

 

[So_Cynical]

I suppose you mean that you doubt that it isn't priced in? Probably not fully priced in would be my guess due to the uncertainties. But I have to say, with so so so much negativity out there on TLS - it's due for a rally soon.

LOL no im suggesting that the positive upside of the NBN deal isn't priced in appropriately, without a doubt the uncertainty is priced in, perhaps over priced in....its a sideways bear market and ive found that what happens is that the uncertainty and negativity is always over priced in and tends to dominate.

Interesting to also note that Telstra's total revenue at the time of the T1 float (1997) was 16 billion, in 2001 it was 23 billion, this years total sales revenue is 24 billion...so for a company that's had its core business smashed over the last 13 years and had belligerent management and faced massive technical and logistical hurdles and ridiculous expectations from the bulk of its customer base...big picture its not doing that badly.

Worth serious consideration at these prices IMO.

 

[Boggo]

TLS, the facts (or a dose of reality)...

Examples of annual profits for a "cash cow" with a great dividend yield
FY 2005 - $4.31 billion
FY 2006 - $3.18 billion
FY 2009 - $4.07 billion
FY 2010 - $3.88 billion

 

[skc]

LOL no im suggesting that the positive upside of the NBN deal isn't priced in appropriately, without a doubt the uncertainty is priced in, perhaps over priced in....its a sideways bear market and ive found that what happens is that the uncertainty and negativity is always over priced in and tends to dominate.

Interesting to also note that Telstra's total revenue at the time of the T1 float (1997) was 16 billion, in 2001 it was 23 billion, this years total sales revenue is 24 billion...so for a company that's had its core business smashed over the last 13 years and had belligerent management and faced massive technical and logistical hurdles and ridiculous expectations from the bulk of its customer base...big picture its not doing that badly.

Worth serious consideration at these prices IMO.

I think we are talking about the same thing. We both believe the 90c is not fully priced in - just described it from a different starting point.

The revenue is just one side of the story. You probably need to look at the industry growth and whether TLS's revenue growth was above or below industry growth rate. Personally I know I spend way more on telecommunications every month these days then I did back in 1997, but TLS is getting $0 of my revenue at the moment.

 

[So_Cynical]

I think we are talking about the same thing. We both believe the 90c is not fully priced in - just described it from a different starting point.

Agree

Personally I know I spend way more on telecommunications every month these days then I did back in 1997, but TLS is getting $0 of my revenue at the moment.

You me and everyone else spends more on telecommunications...in 13 years the pie has grown alot, while Telstra's share has remained static, however the ingredients of the pie have been changing... internet and mobile has significantly grown at the expense of PSTN...Telstra was always going to lose that fixed line revenue because it was there's to lose, so no surprises there.

One positive with Telstra is that they have been able to maintain total revenue while in transition from one dominating revenue stream to another, unfortunately and unavoidably they have taken on debt to build the best mobile network in the country, and its a given the dividend is unsustainable at current levels.

I cant help but think that for someone looking at Telstra for the first time (an outsider) could possibly see some potential for a bottom and a contrarian, great turn around story in the making....a Telco giant on the brink of a comeback.

Apparently, according to a recent thread...there's some money to be made being contrarian.

 

[BrightGreenGlow]

Agree



You me and everyone else spends more on telecommunications...in 13 years the pie has grown alot, while Telstra's share has remained static, however the ingredients of the pie have been changing... internet and mobile has significantly grown at the expense of PSTN...Telstra was always going to lose that fixed line revenue because it was there's to lose, so no surprises there.

One positive with Telstra is that they have been able to maintain total revenue while in transition from one dominating revenue stream to another, unfortunately and unavoidably they have taken on debt to build the best mobile network in the country, and its a given the dividend is unsustainable at current levels.

I cant help but think that for someone looking at Telstra for the first time (an outsider) could possibly see some potential for a bottom and a contrarian, great turn around story in the making....a Telco giant on the brink of a comeback.

Apparently, according to a recent thread...there's some money to be made being contrarian.

This is a good point.... obviously a very very very small example but I know of atleast 5 mates who have in the last 2 months become 24mth TLS contract mobile phone users... coming from optus and Voda... In March when my contract end I'll also be on the TLS network as will my girlfriend. On top of that I know of another 5+ people about to switch to TLS due to their coverage and improved plans.

Other providers just don't cut it outside the capital cities....

 

[Tatts]

This is a good point.... obviously a very very very small example but I know of atleast 5 mates who have in the last 2 months become 24mth TLS contract mobile phone users... coming from optus and Voda... In March when my contract end I'll also be on the TLS network as will my girlfriend. On top of that I know of another 5+ people about to switch to TLS due to their coverage and improved plans.

Other providers just don't cut it outside the capital cities....

I'm going to move to Telstra when my current plan ends. Also know a few others that are planning to/already have. Same reasons as you, for the times when i am away from a capital city and can't get reception with any network.

 

[jonnycage]

i got back in a 2.65, and happy with that position, will take a quick
gain if the gods allow it lol jonny c

 

[BrightGreenGlow]

This is from today's media release...

In the first 2 months 10/11 Telstra:
"Added 73,000 post-paid mobile subscriptions (compared to a net gain of 91,000 in 2009/10)."

So this means their mobile phone plan changes have accelerated plan growth by x4. Sounds good to me.

"Added 32,000 fixed broadband subscribers (compared to a net loss in 2009/10) and 176,000 wireless broadband subscribers (compared to a net gain of 608,000 in 2009/10)."

Another big improvement.

"Lost fewer fixed-line telephony customers than for any two-month period since 2007."

Thodey ends with ... "Telstra will be faster and more customer-centric. We will have lower costs and higher productivity. We will have sales and marketing expertise to match our network and engineering experience. And we will have capitalised on profitable new growth businesses in media, international markets and network-based applications and services"

 

[BrightGreenGlow]

Also on Dividends....

"“Telstra's board has always been acutely aware of the importance of dividends to shareholders. Because of our strong free cash flow, Telstra could comfortably fund a 28 cent share dividend in 2010-11,” Mr Thodey said."