The Telstra Corporation Ltd (ASX: TLS) share price seems to have turned a corner this year.
Telstra is our country’s oldest telecommunications business, having built the first telegraph line in 1854. In 2019, it provides more than 17 million retail mobile services, around 5 million retail fixed voice services (e.g. home phones) and 3.6 million broadband services. Telstra also has operations in eHealth, network applications and subsea cabling. In 1997 (until 2006), the Government sold Telstra to Australian investors by listing the shares on the ASX. The second batch of Government share sales, called “T2”, was conducted in 1999 at $7.40 per share.
What’s Going On With Telstra?
In 2019 the Telstra share price has gone up 26.7% in the year so far, which is pretty great for a ASX blue chip.
Some of the things that investors may be getting excited about are that Telstra may have gone through the worst of the negativity, although there may still be a couple of painful reports to come.
As a reminder, in the report total income was down 4.1% to $13.8 billion, EBITDA declined by 16.4% to $4.3 billion (click here to learn what EBITDA is), net profit after tax (NPAT) dropped by 27.4% to $1.2 billion and there dividend was cut by about 27% to 8 cents per share, down from 11 cents per share a year earlier.
What Is There To Be Positive About?
Investors recently learned that Telstra is considering selling a 49% stake of its telecommunication exchange properties for up to $1.5 billion by creating an unlisted property trust.
Telstra investors may also like the fact that TPG Telecom Ltd (ASX: TPM) has said that it isn’t going to create its own mobile network, it’s going to continue to pursue a merger with Vodafone Australia. Whatever happens here, it seems Telstra won’t have a large ultra-low-cost competitor.
However, to deliver market beating returns I think it’s necessary for a business to achieve profit (and revenue) growth, which I can’t see happening for Telstra until 5G is widespread.
Instead of Telstra, I would rather invest in one of the proven and reliable ASX shares in the free report below.
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