Telstra Dividend: Does the 22cps Dividend (7% Yield) Hold? We Think It Does.

Telstra: Earnings Under Pressure in FY19 but Move to Mobile Should Lead to Gains from FY20.

Telstra's Road to Recovery Paved With Cost-Cut Opportunities

Australian Telcos: Competitive Landscape May Change Dramatically if VHA/TPG Merge.

Australian Reporting Season: Aurizon Holdings, Bendigo & Adelaide Bank and GPT Group

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New Street Research Insights

New Street Research

Research is provided by our team of experienced analysts. Our work is idea driven, based on independence of thought, sector expertise, and firmly focused on fundamentals and valuation of telecoms and internet names globally. New Street is headquartered in London with offices in New York, Singapore and Australia. 

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Pan European Telecom Services and Cable
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Global Emerging Market Telecoms
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We also provide debt research on:
Pan European Telecom Services and Cable

Equity Bottom-Up

Telstra faces three significant structural changes (two positive and one negative) over the next three years which offer it the opportunity to reset the earnings outlook after peak NBN impact in FY19 (June 19). The current financial year is difficult driven by NBN migration and mobile competition but this is now largely within expectations. The gains from cost reductions and increased on net mobile usage lag the NBN effects but do point to some growth in FY20 and beyond. We retain our BUY recommendation but lower the target price from A$4.00 to A$3.70 to reflect a slow earnings recovery but also a retained 22cps dividend.
Significant changes facing Telstra:
<ol class="">
<li>Strong subscriber growth and its T22 strategy (long-term plan) should set the company up for good customer life-cycle value (CLV) gains post-NBN completion.</li>
<li>Resolution of key NBN issues is likely to commence in 2019 and may offer Telstra shareholders an opportunity to realize the long-term value in NBN and secure a stake in a standalone infrastructure company. </li>
<li>The likely merger of VHA and TPG will create a stronger third full-service player with a negative long-term impact on market share and ARPU at Telstra, although the impact may be more severe at Optus.</li>
</ol>
Telstra valuation:
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/071/519/original/tls%20multiples.jpg?1543397718" class="editor-image img-responsive" data-smartkarma-image-id="71519"></figure>
<div class="content-caption">Source: New Street Research</div>

Telstra faces three significant structural changes (two positive and one negative) over the next three years which offer it the opportunity to reset the earnings outlook after peak NBN impact in FY19 (June 19). The current financial year is difficult driven by NBN migration and mobile competition but this is now largely within expectations. The gains from cost reductions and increased on net mobile usage lag the NBN effects but do point to some growth in FY20 and beyond. We retain our BUY recommendation but lower the target price from A$4.00 to A$3.70 to reflect a slow earnings recovery but also a retained 22cps dividend.
Significant changes facing Telstra:

Strong subscriber growth and its T22 strategy (long-term plan) should set the company up for good customer life-cycle value (CLV) gains post-NBN completion.
Resolution of key NBN issues is likely to commence in 2019 and may offer Telstra shareholders an opportunity to realize the long-term value in NBN and secure a stake in a standalone infrastructure company. 
The likely merger of VHA and TPG will create a stronger third full-service player with a negative long-term impact on market share and ARPU at Telstra, although the impact may be more severe at Optus.

Telstra valuation:

Source: New Street Research

Singtel (Singapore Telecommunications) (ST SP)

テルストラは今後3年間で大きな構造変化に直面するが、回復の兆しも見えている

Telstra Corp

テルストラは今後3年間で大きな構造変化に直面するが、回復の兆しも見えている