UPDATE 1-Australia's Telstra promises steady fat dividend
* Shares jump 1.6%, outpace market (Adds details, shareholder comment)MELBOURNE, Oct 18 (Reuters) - Telstra Corp , Australia’s biggest phone company, reaffirmed it would hold its dividend steady this year and next, ahead of a shareholder vote on Tuesday to hand over its copper network to the government for $11 billion.Telstra shares jumped 1.6 percent to A$3.16 in a broader market that was down on Tuesday, as investors turned to stocks with solid dividends. On Tuesday’s trade, Telstra was paying a yield of nearly 9 percent.The network deal, which marks the biggest overhaul of Australia’s telecoms industry since Telstra was privatised 14 years ago, still needs approval from the country’s competition watchdog.”This AGM comes at a historic moment, because we are poised to decide on a transaction, a transaction that will deliver long-term financial and strategic benefits for our company,” Chairwoman Catherine Livingstone told shareholders.The company said any changes to the deal to meet concerns raised by the Australian Competition and Consumer Commission were not expected to be material, but if they were, it would seek fresh approval from shareholders.Livingstone said the company would consider returning capital to shareholders after the deal with the government’s new A$38 billion ($39 billion) high speed fibre network goes through.”Nevertheless, to avoid any uncertainty in the short term, I can confirm that it is the board’s intention to maintain a 28 cent fully franked dividend for fiscal 2012 and fiscal 2013,” she said.The alternative to the handover, competing against Australia’s new state-owned high speed broadband company, losing access to new digital spectrum, and nursing a fixed line business with falling revenue, would have left Telstra $5 billion worse off, according to an independent expert’s advice to shareholders.”Any company that can sell a structurally challenged business in return for a high yielding government bond is a great outcome for shareholders,” said Rhett Kessler, portfolio manager at Pengana Australian Equities Core Fund, which owns Telstra shares.The Labor government’s plan is to wire up the whole country to high-speed services and provide a neutral platform on which rival firms, including Telstra, would compete for customers.The conservative Coalition, which would trounce Labor if an election were held today, is opposed to the national broadband network (NBN) and has said it would review the rollout if it comes to power.To protect itself against a change of policy, the network deal includes compensation of up to A$500 million to Telstra if the rollout ceases after reaching at least 20 percent of its coverage target.Shareholders have been eager to vote on the plan to separate off Telstra’s fixed-line assets, looking to end two years of uncertainty sparked by the government’s plan to shake up the industry which sent the company’s shares to record lows.($1 = 0.976 Australian Dollars)
Is Telstra Worth The Extra Cost?
So here’s my gripe. It’s about Telstra. Yes they’re the big kid, with the big coverage. They have the speed. They have the best uniforms in their stores. But.
What’s with their pricing?
Optus have been advertising the Samsung Galaxy S2 for the last 6 days or so - $49 per month plan. It’ll probably be back up to a $59 per month plan by the time you read this. Good price I reckon. Their network covers 97% of the population according to their propaganda. Nice, especially for a city boy like me.
On the other hand is Telstra. Superior rural coverage is a plus but the price of their mobiles is exorbitant. For the very same Galaxy S2 they are stinging their customers $79 per month for the privilege. Doing some serious mathematical calculations leads me to believe that I’ll be paying $720 extra over a two year contract compared to the $49 Optus offerering.
Why Telstra, why?
Probably because a lot of you are willing to pay.
Stop it will you!
Australia's Telstra promises to hold dividend steady
“Nevertheless, to avoid any uncertainty in the short term, I can confirm that it is the board’s intention to maintain a 28 cent fully franked dividend for fiscal 2012 and fiscal 2013,” she said in a speech prepared for the group’s annual meeting.($1 = 0.976 Australian Dollars)
Telstra shareholders back $11 bln network sale
The alternative, competing against Australia’s new state-owned high speed broadband company, losing access to new digital spectrum and nursing a fixed line network with declining revenue, would have left Telstra nearly $5 billion worse off, according to an independent expert’s advice to shareholders.