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I’m curious, well actually a little nervous, as to why Telstra’s price is dropping so steadily prior to going ex-dividend. The announcement of a new chairman seems to have caused an even further fall. I would be interested in any comments/opinions regarding Telstra as a long term hold for income.
A: I think it is pretty much a case of the market being a little underwhelmed by the Telstra result.
Although they met their guidance targets, it was at the bottom end of the range with EBITDA increasing by only 1.7% and EPS by 1.8%. In mobiles, previously a key area of growth, revenue grew by just 3.7%, while the margin weakened to 39%.
The brokers remain neutral to negative on Telstra. Following the result, UBS upgraded from Sell to Neutral, while Morgan Stanly went the other way – from Equal Weight to Underweight.
I think Telstra remains a hold for income, and around the $5.00 mark, looks reasonable value.
