Telstra fever sparks stampede
Sydney Morning Herald
Thursday September 17, 2009
A RUSH on Telstra shares helped push the sharemarket to its highest point this year as analysts debated whether the structural separation demanded by the Federal Government would damage the company's profits and dividends.Forecasts for the share price range from $2.80 to $4.50, with large investment banks favouring the higher price and recommending it to investors because of reliable fully franked dividends. Telstra shares gained 13c to $3.24, but until the company reveals its reaction to the Government's demands that it separate its wholesale reselling of communications infrastructure from its retail business, even the biggest shareholders do not know whether to buy or sell their Telstra shares.One fund manager, who has not held Telstra shares for five years, said a separation of Foxtel, BigPond and Telstra Mobile from the parent company would provide the best returns to shareholders. "The whole thing together over the last five years has not grown," said the chief investment officer of Platypus Asset Management, Donald Williams."If all of those businesses were separate businesses they would probably do better than as a telco conglomerate."Dividends had stagnated at 28c a year and were more likely to decline than rise, he added. "With this regulatory overhang it is probably going to remain the weakest stock in the top 50 for 12 to 18 months," he said.The large investment firms UBS and RBS predicted yesterday that Telstra shares would be trading at $4.50 in a year.
© 2009 Sydney Morning Herald