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TLS - Telstra News Story

NZD3.72 0.0  0.0%

Last Trade - 14/05/21

Sector
Telecoms
Size
Large Cap
Market Cap £22.56bn
Enterprise Value £32.38bn
Revenue £12.39bn
Position in Universe 16th / 1913

UPDATE 1-Australia's Telstra to split into three in major shake-up, shares rise

Wed 11th November, 2020 11:40pm
(Adds share movement)
    Nov 12 (Reuters) - Australia's biggest telecom firm Telstra
Corp  TLS.AX  said on Thursday it would split into three units
as part of a restructuring plan, citing heightened demand for
infrastructure assets, sending its shares up as much as 6.5%.
    The health crisis has driven businesses and entertainment
online, but pressured telcos to spend more to service surging
demand. With fixed pricing structures, it has also left them
with no quick way to monetize the investment.  urn:newsml:reuters.com:*:nL4N2BW1IF
    As a result, Telstra froze job cuts in March and brought
forward significant capital spending at a time when most other
Australian firms were cutting costs.  urn:newsml:reuters.com:*:nL4N2BC5WZ
    "The challenges and disruptions of the last 6-12 months have
reinforced the increasing value of infrastructure assets
globally," Telstra Chief Executive Officer Andrew Penn said.
    "Our proposed new corporate structure reflects this new
world."
    The three new units will be infrastructure assets, mobile
tower assets, and radio access network and spectrum assets, and
the break-up is expected to be completed by December next year.
    While Telstra dominates Australia's mobile and broadband
markets, its mainstay fixed-line business has also been under
pressure from the rollout of a state-owned National Broadband
Network (NBN).
    Telstra said it would seek investment from third parties for
its towers from 2021. 
    "Separating its towers from fixed assets is a good move
because the potential divestment of fibre assets will depend on
NBN Co privatization, which may not happen until the next
election", Jefferies analysts said in a note.
    However, they said the potential valuation for tower assets
will depend on how much control Telstra will have on access from
third parties. 
    Shares of the Melbourne-based company were up at A$3.185 by
2328 GMT, in their biggest intraday percentage jump since Mar.
30.

($1 = 1.3738 Australian dollars)

 (Reporting by Shruti Sonal in Bengaluru; Editing by Arun
Koyyur)
 ((Shruti.Sonal@thomsonreuters.com; Twitter: @shrutisonal26;))
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