Can Telstra Corporation Impress The Market Players In FY 2019?

Can Telstra Corporation Impress The Market Players In FY 2019?

Telstra Corporation Limited (ASX: TLS) is a well-known name in telecom sector and has been on a topsy-turvy ride for the past 2 years when it comes to stock performance.

As per the annual report for FY 2018, Telstra Corporation Limited (ASX: TLS) managed to remain at a decent position amidst the challenging environment. The management of the company, in annual report, stated that the robust momentum was witnessed in the subscriber growth with respect to mobile as well as fixed segments. Also, the company had made an announcement about the T22 strategy which has its focus towards the simplification as well as towards disciplined cost management. However, the strategy also focuses on the experience of the customers. In the annual report of the company, it was mentioned that the work related to new strategy has been started as they have rolled out fresh mobile plans. They have also made an announcement related to the new operating model, structure of the organisation as well as leadership team.

In September 2018, Telstra Corporation Limited had issued a press release related to the guidance for FY 2019. As per the press release, the management of the company stated that they are reducing the expectations and the total income is expected to encounter the reduction of $300 million and they also stated that there would be no change related to the free cash flow. However, the management had indicated that the EBITDA might witness a reduction of $100 million. These reductions relate to the numbers for FY 2019. However, the management has made it very clear that the changes which have been announced above is because of nbn corporate plan 2019 and not because of the other conditions. It needs to be noted that eventually the strategy the group is undertaking in view of the nbn rollout has been stated to be positive for the company in the long run. The management of the company had stated that in the long term the situation will be supportive to the company with respect to the financial position. There might be margin related pressures in short to medium term and the sustainability to dividends has also been questioned; however, the group is expected to stay a bit resilient and be back on a recovery mode over a period of time.

Recently, the company came forward and stated that they had managed to seal the range of 30-80 MHz in the 5G spectrum auction which was conducted recently. The company had even shelled out $386 million so that it can help the launch of national 5G. Considering the giant capital cities, the company possess 60 MHz with respect to the contiguous 5G spectrum if the existing holdings of the company are also considered. The management of Telstra reflected favourable opinions related to this achievement and stated that 5G would create significant prospects related to the growth. The management of the company had also stated that they would be working towards enhancing the coverage of 5G and would be launching plans in the several capital cities, higher demand areas as well as regional centres.

Talking about the performance of the Telstra over the past few months, the stock has delivered the return of 4% in the past six months while over the span of the previous three months, the stock delivered negative returns of 9.24%, as at December 20, 2018. However, the transformation strategy for this group would be key to watch in 2019.


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