Telstra Corporation Ltd

Announced the first unlimited data plan: Telstra Corporation Ltd (ASX: TLS) stock fell 0.31% on May 02, 2018 after the release of presentation and speech delivered by Warwick Bray, Chief Financial Officer, at the Macquarie Australia Conference and the announcement of its first unlimited data smart phone. In the 1H 2018, the company posted strong mobile net adds and strong momentum in productivity as the core fixed costs declined $249m. The nbn market share in 1H 2018 was 51% ex-satellite. Now more than 92% of the Australian population have access to double the mobile speeds of the company’s original 4G through 4GX. Moreover, TLS has enhanced cyber security offerings including opening of new security operations, investing in two subsea cables from Hong Kong to the US and Perth to Singapore and Jakarta and posting strong growth in Internet of Things (IoT) business. Further, TLS is increasing their focus on reducing costs.
 
As per its Strategic investment program, TLS is investing up to $3bn incremental capex over 3 years to 30 June 2019. The company is on track to deliver benefits from the strategic investment program. Additionally, TLS has accelerated and increased productivity target of $1.5bn by FY22. The company expects to achieve full run rate of $500m EBITDA benefits by FY21 with $100m being delivered this financial year. The company also continues to manage the efficiency and timing of converting EBITDA to cash and EPS. On the other hand, TLS has announced that the new plan will have 40GB of uncapped speeds, but beyond 40GB it will be slowed down to a maximum of 1.5MBps for the rest of the month. The users will not be charged for additional data. The new unlimited Telstra plan will cost $69 per month for a 12-month contract and it is not a month-to-month offering. Meanwhile, TLS has suffered an outage of 4G and NBN voice calls across Australia on May 01, 2018. TLS stock has otherwise fallen 11.20% in three months as on May 01, 2018 and is trading at a low P/E level. While short-term hurdles may prevail, we are positive on the stock given the capability to mitigate the challenges and establishing new catalysts with focus on costs.
 

Resetting the cost base (Source: Company Reports)

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