Why Telstra Share Price surged on the ASX today?
Telstra shares on the ASX saw a massive uptick in trading volume today as TLS stock price jumped 4.44% on a day when the ASX 200 index also bounced back from a couple of red trading sessions. Telstra shares were upbeat as the firm announced the sale of 49% of Telstra’s Tower business for $2.8 billion to a consortium comprising the Future Fund, Commonwealth Superannuation Corporation and Sunsuper.
Telstra’s Tower business is the largest mobile tower infrastructure provider in Australia with approximately 8,200 towers. The overall value of the business comes in at $5.9 billion, representing an FY21 pro forma EV/EBITDA multiple of 28x. Telstra expects net cash proceeds after transaction costs of $2.8 billion at completion and the Towers entity will have no debt. Completion is expected in the first quarter of FY22. Telstra intends to return approximately 50% of net proceeds to shareholders in FY22. This boost in dividends and the availability of funds has sent the Telstra share price in a frenzy as buying volumes were significantly higher than the average trading volumes for TLS shares.
The deal is a milestone in the T22 strategy that Telstra is actively working on to unlock the value of their assets. Andrew Penn, Telstra CEO said “Telstra’s objective in seeking a strategic partner has been to maximise overall value for our shareholders, maintain control of the assets and agree terms that secure Telstra’s mobile network leadership and competitive differentiation into the future. I am pleased that we have been able t o achieve that ahead of schedule through this transaction announced today.”
Telstra shares closed at $3.76 a share today, and a significant dividend boost is now expected in FY22, courtesy of the deal.
Looking for best dividend stocks to invest on the ASX?
Get stock tips with our Market Experts. We help self-directed investors and self-managed super funds (SMSF) make smarter investment decisions and get better returns. Fill in your details and download your ‘Top 3 Income Stocks to buy in 2021’ Report instantly for free! Click here to download now!
