The telecommunications giant – Telstra’s share price has rallied from a low of $2.67 per share at the end of October to $3.09 at the time of writing this blog. Telstra shares have returned -12.71% year-to-date, and 15.73% in the last 20 days. Earlier this month, the company planned to restructure its business into 3 separate legal entities.
The proposed restructured entities will be as follows:
- InfraCo Fixed will operate Telstra’s fixed telecommunication network that consists of ducts, fibre, data centres, subsea cables and exchanges.
- InfraCo Towers will be responsible for the physical assets such as mobile towers.
- ServeCo will be the advocate of innovation and be responsible for customer support and customer experience.
The telstra share price has surged 15.73% in the last 20 days. Since the announcement on the 12th of November, the stock dropped and it has stabilized. The planned restructure requires a lot of work that the management has to get right. The firm also needs to fix some of the core problems that it has faced recently – such as declining margins from its broadband business.
Telstra is expecting earnings to be in the $6.6 to $7 billion range for the financial year. The firms did confirm that it will provide an update in February as to how it is going with its guidance forecast. BY 2023, the firm plans to increase its earnings by $1 billion. Dividends have been hit recently and as a result, considering buying Telstra stock has been that much more difficult for investors. These earnings targets are thus extremely important for the dividend policy of the firm.
Hence, all things considered, it may be too early to make a positive call on one of the most unloved stocks on the ASX.
The telstra share price can go higher if it finally fixes the underlying issues that have been plaguing the company, and we will be keeping a close eye on the developments. However, there are several options out there for stocks that have a good growth potential, pay dividends and also come with a lower risk-reward ratio than what Telstra comes with. At Shares in Value, we manage 3 portfolios – Growth, Dividend, and Premium – helping investors pick stocks for their portfolios based on their strategies and objectives.