tls-update<\/title><\/p>\nBy Chris Shaw<\/p>\nLast week ended on a mixed note for telecommunications giant Telstra \n((TLS)), the company advising the market of weaker than expected \nrevenues at the same time as noting it had reached some agreements with \nNBN Co. with respect to a role in the National Broadband Network \nproject.<\/p>\nAs Cit notes the revised guidance is primarily a revenue issue, with \nthe combination of a stronger Australian dollar impacting on overseas \nearnings and an increasing trend towards homes in Australia shunning \nfixed line connections for just a mobile phone, as well as increased \ncompetition in the mobile sector, meaning revenue for FY10 is likely to \nbe flat rather than the low single digit growth previously indicated.<\/p>\nAt the same time Deutsche Bank notes Telstra is beginning to position \nitself for a migration of customers to the NBN, a trend it expects will \nsee margins weaken from an expected 43% in FY10 to around 40% by FY15. \nDeutsche Bank points out such a customer migration is its least \npreferred structural separation outcome as it makes it difficult for \nthe inherent value in the existing copper network to be crystallised.<\/p>\nTo reflect the update, Deutsche Bank has cut its profit forecasts from \nFY10 on by around 4%, while the market view of the earnings \nimpact is relatively limited given Bank of America Merrill \nLynch has cut its earnings per share (EPS) forecasts by 1.5% in both \nFY10 and FY11 and Citi has trimmed its estimates by a similar amount to \nDeutsche Bank.<\/p>\nConsensus earnings per share forecasts for Telstra according to the \nFNArena database now stand at 32.6c for FY10 and 34.8c for FY11, though \nof importance according to Deutsche Bank is dividend expectations of \n30c and 31c respectively are unchanged, while consensus dividend \nforecasts are 29.7c and 31.7c for FY10 and FY11. The stock continues to \noffer value given a yield of around 9%, which Deutsche sees as \nattractive.<\/p>\nThe news wasn’t all bad, Citi pointing out the update on the NBN \ndiscussions were positive with respect to the structure of any \nagreement as there was some progress with respect to factors such as \ntraffic migration and duct access and these form part of its preferred \nmodel. <\/p>\nBut as Bank of America Merrill Lynch pointed out, there was also a lack \nof detail with respect to the progress of the NBN discussions, \nsomething it suggests will see the stock range bound until further \ndetails are made available. Even with few details Credit Suisse \ncontinues to see valuation upside for Telstra from any NBN deal as it \nsuggests indications are the NBN wants access to the company’s \ninfrastructure, which is likely to mean annual payments to Telstra that \ncould replace cash flows lost as the copper network is gradually \nswitched off.<\/p>\nWithout Telstra’s infrastructure Credit Suisse estimates the Government \nwould have to subsidise the network to the tune of $7-$17 billion, \nmeaning an agreement between it and Telstra makes compelling financial \nsuccess and therefore remains likely. Deutsche Bank agrees, continuing \nto suggest the stock could enjoy a re-rating as any NBN deal is \nfinalised.<\/p>\nOverall the FNArena database shows Telstra is rated as Buy seven times \nand Hold three times, which is unchanged from before the latest update \nfrom the company. The average share price target is $3.85, up from \n$3.83 previously. Shares in Telstra today are weaker and as at 11.40am \nthe stock was down 9c at $3.34. Over the past year the stock has traded \nbetween $2.93 and $3.87.<\/p>\n","protected":false},"excerpt":{"rendered":"Telstra last week advised the market FY10 revenues would be weaker than previously indicated, but with NBN discussions progressing, brokers remain generally positive on the stock.<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6],"tags":[30],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56159"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=56159"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56159\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=56159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=56159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=56159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

##{"id":56159,"date":"2009-12-21T11:53:07","date_gmt":"2009-12-21T00:53:07","guid":{"rendered":"http:\/\/www.fnarena.com\/index.php\/2009\/12\/21\/weaker-revenues-for-telstra-but-brokers-remain-positive\/"},"modified":"2009-12-21T11:53:07","modified_gmt":"2009-12-21T00:53:07","slug":"weaker-revenues-for-telstra-but-brokers-remain-positive","status":"publish","type":"post","link":"https:\/\/staging.fnarena.com\/index.php\/2009\/12\/21\/weaker-revenues-for-telstra-but-brokers-remain-positive\/","title":{"rendered":"Weaker Revenues For Telstra But Brokers Remain Positive"},"content":{"rendered":"