Should you buy this telecommunication stock - Telstra Corporation Ltd?

TLS Details
Sold remaining stake in Autohome: Telstra Corporation Ltd (ASX: TLS) has sold its remaining 6.5 per cent interest in Chinese online business, Autohome to Ping An Insurance Group for US$217 million (A$282 million based on current exchange rates). The sale price of US$29.30 per share is in line with Autohome’s volume weighted average price over the past 60 days, and Autohome is recently trading at its highest levels in the past 12 months. Further as a result of the sale, TLS’s nominee director to the Autohome Board has resigned.
 
Technology Innovations to the market: TLS has come up with a mobile hotspot device Telstra Nighthawk M1. This device is currently the fastest mobile device in the world and is capable of delivering an incredible one gigabit per second download speed. Moreover, TLS has launched Pixel smartphone through an exclusive partnership with Google in Australia. TLS has launched Data Centre Interconnect product enabling customers to connect to 30 data centers globally. The acquisitions of Kloud and Readify, have reinforced TLS credentials as a leading provider of enterprise Microsoft products in Australia bringing more than 250 specialist enterprise software developers to Telstra.
 
Profit fall in 1H 2017: Telstra EBITDA fell by 1.6% to $5.2 billion, and net profit after tax reduced to $1.8 billion, including planned restructuring costs. TLS has added 200,000 domestic retail mobile services, 90,000 retail fixed broadband customers, 124,000 retail bundle customers, 292,000 nbn connections and 322,000 Telstra TV devices. The underlying core fixed costs got reduced by 2.6% or $92 million. TLS has also completed $1.5 billion share buy-backs in the 1H 2017. But, TLS has reconfirmed FY17 guidance of mid to high-single digit income growth and low to mid-single digit EBITDA growth. The free cash flow is expected to be in the range of $3.5-4 billion and capital expenditure is expected to be over 18% of sales. Additionally, TLS has outlined the plans that would see more than $1 billion of investments directed towards the regional and rural Australia over the next four to five years. However, imposition of regulatory roaming might remove the business case for the investment. 

1H 17 Financial Performance (Source: Company Reports)
 
Recommendation: In November 2016, TLS had planned to review the capital allocation strategy over a six to 12-month period to take into account factors such as longer-term capex requirements etc. TLS stock has fallen 10.08% in the last one month as on March 10, 2017, and the pressure might continue in the coming months. We give an “Expensive” recommendation on the stock at the current price of – $ 4.65

 
TLS Daily Chart (Source: Thomson Reuters)

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