Telstra heads for $4.20 level after NZ sale, says analyst
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.
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.