Buyback for Telstra coming: analyst

Credit Suisse expects $2bn buyback; Macquarie Telecom chides Telstra's rural power.

Credit Suisse research analyst Fraser McLeish has reportedly told clients to expect a $2 billion share buyback announcement from Telstra (TLS) at its 2013/14 financial results.

“This would be large enough to be meaningful (3% of issued share capital) but would still leave plenty of capacity for Asian acquisitions,” said Mr McLeish, according to Fairfax Media.

Capital management rumours have consistently circled the telco since the agreement over the National Broadband Network under the previous Labor government.

The recent sale of its Hong Kong mobile service company and a 70% stake in directories business Sensis has added to expectations that Telstra will conduct a share buyback.

Telstra has maintained it aims to generate 30% of its revenue and profits from Asia by 2020, which would require acquisitions.

Fairfax Media reports three of Australia’s largest Telstra shareholders and fund managers prefer capital management.

“If Telstra does a buyback over six months it’ll have very little impact on such a liquid stock,” said one fund manager, who according to Fairfax declined to be named.

“But when you go offshore the acquisition strike rate for Australian companies is very chequered.”

Meanwhile, Macquarie Telecom has accused Telstra of using its market power to stifle competition in the bush, The Australian reports.

According to the newspaper, Macquarie Telecom has written to the Australian Competition and Consumer Commission accusing Telstra of implementing “highly unusual and restrictive pricing constructs at a wholesale level”, in rural areas, diminishing competition.

Macquarie Telecom has also urged the competition regulator to use its power to loosen Telstra grip on the bush.