Telstra T3: Would You Buy?
November 20th 2006 10:20
Would you, my reader, buy today shares in Telstra T3?
The news today, 20 November 2006, are that Finance Minister Nick Minchin said investment banks responsible for the $15.5 billion Telstra share sale have “earned every single penny” of the more than $100 million they will collectively receive.
The Government sold its initial $9.25 billion of shares to retail investors and announced it would sell an additional $6.25 billion to institutional investors. Institutional investors pay $3.70 a share which is a 10c premium to retail investors.
Government Tesltra shareholding will be reduced to 17 per cent and it will be transferred to the independently run Future Fund in January.
The banks involved in the T3 share offer are: Goldman Sachs JBWere, ABN Amro Rothschild and UBS AG. The Government kept as private adviser the Caliburn Partnership.
This news was published in the online version of The Age, www.theage.com.au, under the title “Minchin lauds T3 sale effort” and was written by Jesse Hogan. Click here to open this page: http://www.theage.com.au/news/business/minchin-lauds-t3-sale-effort/2006/11/19/1163871272538.html.
Always that I read something about Telstra I wonder what other people think about it. The T3 sale is on and I ask if you are going to buy it. If you do so, then why?
I’m sceptical about Telstra.
Telstra is a communications giant, that’s for sure, which in past years enjoyed a comfortable position as a legal monopoly. Life in open competition hasn’t been so fruitful, though.
Just as an illustration, Telstra (ASX: TLS) in 2001 had a net profit of $4.058 billion which decreased in 2006 to $3.181 billion, even though its Return On Equity is still a respectable 30.7%.
Revenues have increased from $18.718 billion in 2001 to $22.772 billion in 2006, which, coupled with the figures above, just shows that TLS has found it hard to convert sales into profits.
The question for me is simple: how can Telstra further grow?
Telstra is already such a giant—its capitalisation is $45.169 billion—that I wonder whether it could further grow its business.
Is it going to be by the implementation of new technologies, such as faster Internet broadband infrastructure or anything technologically new that it could put into operation?
Even though that is possible, Telstra's success will always depend on favourable Government regulation, on things such as allowing it to have the exclusive of some activity.
Fact is: while Telstra looks for a position in the sun, its competitors—Vodafone, Optus, Virgin and Hutchinson—are doing extremely well and taking its share of the cake away.
Fact is: Telstra plans for the near and more distant future are uncertain and its management has been heavily criticised.
Where is Telstra going tomorrow?
End
The news today, 20 November 2006, are that Finance Minister Nick Minchin said investment banks responsible for the $15.5 billion Telstra share sale have “earned every single penny” of the more than $100 million they will collectively receive.
The Government sold its initial $9.25 billion of shares to retail investors and announced it would sell an additional $6.25 billion to institutional investors. Institutional investors pay $3.70 a share which is a 10c premium to retail investors.
Government Tesltra shareholding will be reduced to 17 per cent and it will be transferred to the independently run Future Fund in January.
The banks involved in the T3 share offer are: Goldman Sachs JBWere, ABN Amro Rothschild and UBS AG. The Government kept as private adviser the Caliburn Partnership.
This news was published in the online version of The Age, www.theage.com.au, under the title “Minchin lauds T3 sale effort” and was written by Jesse Hogan. Click here to open this page: http://www.theage.com.au/news/business/minchin-lauds-t3-sale-effort/2006/11/19/1163871272538.html.
Always that I read something about Telstra I wonder what other people think about it. The T3 sale is on and I ask if you are going to buy it. If you do so, then why?
I’m sceptical about Telstra.
Telstra is a communications giant, that’s for sure, which in past years enjoyed a comfortable position as a legal monopoly. Life in open competition hasn’t been so fruitful, though.
Just as an illustration, Telstra (ASX: TLS) in 2001 had a net profit of $4.058 billion which decreased in 2006 to $3.181 billion, even though its Return On Equity is still a respectable 30.7%.
Revenues have increased from $18.718 billion in 2001 to $22.772 billion in 2006, which, coupled with the figures above, just shows that TLS has found it hard to convert sales into profits.
The question for me is simple: how can Telstra further grow?
Telstra is already such a giant—its capitalisation is $45.169 billion—that I wonder whether it could further grow its business.
Is it going to be by the implementation of new technologies, such as faster Internet broadband infrastructure or anything technologically new that it could put into operation?
Even though that is possible, Telstra's success will always depend on favourable Government regulation, on things such as allowing it to have the exclusive of some activity.
Fact is: while Telstra looks for a position in the sun, its competitors—Vodafone, Optus, Virgin and Hutchinson—are doing extremely well and taking its share of the cake away.
Fact is: Telstra plans for the near and more distant future are uncertain and its management has been heavily criticised.
Where is Telstra going tomorrow?
End
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Comment by Howard
Real Crash
The public private operations on roads, bridges, tolls, railroads are the next big ripoffs.
It's better to admit that we are bankrupt, and have a bankruptcy reorganization for the US, Australia, etc.