TELSTRA'S $670 million sale of its New Zealand operations to Vodafone New Zealand is a taste of sweet fortunes to come, an analyst says.
The telco's shares rose to their highest level since December 2008 ($3.90) after it announced it would sell TelstraClear - including its voice and data-based services, network infrastructure and New Zealand customer base - yesterday.
The chief executive, David Thodey, said: "The deal is a natural one, bringing together TelstraClear's fixed telecommunications and data products and corporate client base with Vodafone New Zealand's mobile offering and retail customer base."
Telstra closed 1? lower at $3.85 a share last night, ending five days of gains. Its stock is up almost 17 per cent this year, compared with about 1 per cent for the overall market.
Wealth Within's investment analyst Janine Cox said the company's share price had been rising over the past four months and was expected to peak at $4.20 a share in the next few.
"It's [due to] the fact that it was already in a nice up-trend, which is a good selling story for the brokers," she said. "The fact that this news has come out and that there's a dividend coming up just bodes well for Telstra."
Telstra said it would return about $NZ490 million ($380 million) in cash from the sale to the company using a special dividend. The company said it would book a separate charge for foreign exchange losses for the last financial year and the current one.
Ms Cox said the share price took a beating last year on investor uncertainty around plans for the national broadband network. But she said Telstra's structural split of its fixed wholesale and retail arms in February had helped the company "turn a corner" and become a more attractive investment.
But she warned the upward trend may not last too long, with money possibly moving back into resources stocks after the reporting season.
The telecoms analyst Mark McDonnell, of BBY, said the sale of Telstra's New Zealand arm was "long overdue". He said Telstra's dabble on the other side of the Tasman had been misguided.
Frequently Asked Questions about this Article…
What did Telstra sell in New Zealand and who bought it?
Telstra sold its New Zealand operations, including TelstraClear’s voice and data services, network infrastructure and customer base, to Vodafone New Zealand.
How much was Telstra’s New Zealand sale worth and what cash return did the company announce?
The deal was valued at about $670 million, and Telstra said it would return roughly NZ$490 million (about $380 million) in cash from the sale using a special dividend.
How did the New Zealand sale affect Telstra’s share price?
After the announcement Telstra’s shares rose to their highest level since December 2008 (about $3.90) and the stock closed at $3.85, contributing to a strong run for the year (up almost 17% year-to-date).
Are analysts optimistic about Telstra’s near-term share price after the sale?
Some analysts are upbeat: Wealth Within’s Janine Cox said Telstra’s share price has been rising and expected it could peak around $4.20 in the near term, citing the up‑trend and the special dividend as positive factors.
What strategic reasons did Telstra give for selling its New Zealand arm to Vodafone NZ?
Telstra’s CEO David Thodey said the deal combines TelstraClear’s fixed telecommunications and corporate client offerings with Vodafone New Zealand’s mobile services and retail customer base, calling it a ‘natural’ fit.
Did Telstra report any accounting impacts from the sale?
Yes. Telstra said it would book a separate charge for foreign exchange losses affecting the last financial year and the current financial year related to the transaction.
What differing analyst views were expressed about Telstra’s exit from New Zealand?
Views varied: Janine Cox framed the sale as helping Telstra ‘turn a corner’ after earlier uncertainty, while telecoms analyst Mark McDonnell described the New Zealand venture as ‘long overdue’ to be sold and suggested the company’s Tasman-side dabble had been misguided.
What investor risks or short-term headwinds did the article say could affect Telstra shares after the sale?
The article noted a warning from Janine Cox that the upward trend might not last long, with the possibility that money could rotate back into resource stocks after the reporting season—something everyday investors should watch.
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