Telstra (ASX:TLS) on investors' radar. Here's all you need to know

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Telstra (ASX:TLS) on investors' radar. Here's all you need to know

Telstra shares, fully-franked dividend, telecommunication company, low-band spectrum, Telstra Plus members, Optus, TPG Telecom, NBN Co
Image source: © Tktktk | Megapixl.com

Highlights

  • Telstra's shares closed at AU$3.880 per share on ASX today.
  • At today's share price, the company's shares are over 25% higher compared to last year's price.
  • Last year, the company had expressed confidence in maintaining a minimum 16 cent per share fully-franked dividend.

Shares of telco giant Telstra Corporation Limited (ASX:TLS) are on investors’ radar lately. The stock has shown strong performance over the recent months, and on 27 January 2022, the stock closed at AU$3.880 per share on ASX.

At today’s share price, the company’s shares are more than 25% strong if compared to the last year's price on the same day (AU$3.09 per share).

What makes this Australian telecommunication company worth watching out for is the rollout of 5G infrastructure.

Telstra provides mobile coverage and service to its customers in Australia. It holds 2x40MHz of low-band spectrum in prominent cities and 2x45MHz in regional and other remote areas. Last December, Telstra secured 2x10MHz in the Australian Communications and Media Authority’s 850/900 MHz band auction.  The spectrum licence is expected to help the telco meet its target to provide 5G coverage to around 95% of the population by 2025. 

The company sees immense potential and opportunity for its business as the country is rapidly digitalising, paced migration to regional areas, and billions of devices, such as water sensors, home and business security cameras, along with smart meters, continue to generate data like never before.

In its T25 strategy, the company had unveiled its targets to grow Telstra Plus members to 6 million by FY25. Telstra’s new capital management structure includes magnifying its fully-franked dividends and desires to grow them over time to invest for growth and return excess cash to the company’s shareholders.

Last year, the company had expressed confidence in maintaining a minimum 16 cent per share fully-franked dividend, provided there are no unexpected material events. As per analysts, the inflow of capital from asset sales and sound free cash flow could increase Telstra’s share price to more than AU$4.50 per share. However, all is not hunky-dory for Telstra given the pricing pressure from rivals like Optus, TPG Telecom, NBN Co and Vocus Group and new market entrants like MyRepublic. During FY21, Telstra’s NPAT increased 3.4% to AU$1.9 billion.

In its 2021 annual report, the company stated that it would return approximately AU$1.35 billion of the net cash proceeds from its recently announced Telstra InfraCo Towers transaction to shareholders in FY22 through an on-market share buy-back.

As far as FY22 guidance is concerned, the company expects its total Income to be between AU$21.6 billion to AU$23.6 billion.

Meanwhile, today, the stock closed 1.273% lower at AU$3.880 per share on ASX.

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