Rivals fear Telstra cash pile
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Telstra Corporation’s (TLS) recent divestments, which will leave it with a cash pile of over $5 billion, has its local rivals fearful it will use the funds to launch a push for greater market share in Australia, according to The Australian Financial Review.
In the wake of the $US2.4 billion sale of its Hong Kong mobiles business CSL and the divestment of 70 per cent of its Sensis directories business for $454 million, the market has been abuzz with talk of the next move for Telstra.
Many analysts see acquisitions ahead in Asia, while others expect higher dividends and a share buyback, though the telco’s local competition fear it could focus on expanding its mobile network and lifting marketing spend.
“Telstra has extraordinary market power,” a senior executive at a rival firm told the AFR. “They can’t conduct many mergers and acquisitions but they can certainly pursue winning retail share.”
Another exec at a Telstra competitor told the paper that much of the group’s free cash would be eaten up by shareholder dividends, while the industry was already expecting a marketing offensive given the group’s multi-billion dollar deal with NBN Co.