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Telstra: 4G “Grand Plan” & Why $11bn NBN Deal Is Safe (Kinda)


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The NBN, 4G and a 28c dividend for 2013 were among the topics discussed at today’s Telstra shareholder Annual General Meeting (AGM).  

In her opening speech, Chairwoman Catherine Livingstone, pounced on the issue of NBN almost immediately, saying the $11bn pay off agreement it signed with NBN Co earlier this year would “form the basis” of any new negotiations if Labor was to get the boot at the next election.

“Should there be a change in government policy in relation to the NBN, these Agreements would form the basis of any renegotiation,” the Chair declared in a move to reassure investors.

Telstra’s Structural Separation Undertaking (SSU) breaks up the telco’s retail and wholesale arms and also outlines the $11bn payout from NBN Co over the next number of years, as it surrenders its copper network to the broadband company.

However, for now, the telco’s main concern is “leveraging the opportunities that arise from the NBN – such as collaborating with NBN Co. on the building of its access network,” CEO Daid Thodey said.

Chairwoman Livingstone also has some good news for shareholders – in the form of a fully franked 28c per share dividend in fiscal 2013, “subject to the normal approval process, and there being no unexpected material events.

“Over the longer term we will consider dividends in the context of our capital management framework.”

Telstra earnings per share increased by 5.4% to 27.5 cents over the past year.

Its 4G network was also hailed by Thodey as “one of the first 4G networks in the world of its type” and told investors about its “very exciting” $1.2bn expansion grand plan for 2013.

The 4G race is now heating up, especially as competitors Optus and iiNet have kicked off  rival 4G network’s recently, with Vodafone to follow suit in 2013.

“We are also accelerating our rollout of 4G in 2013. Our plan is to expand the coverage of 4G from 40% to 66% of the population by the end of the financial year,” announced several weeks ago, Thodey said.

“4G will open the door to new innovative high-speed services,” he added.

Telstra is also the second most valuable brand in Oz , the Telco boss told shareholders “and this year we have seen a significant improvement in our corporate reputation across all stakeholders … but we still have a lot more to do.”

He also alluded to Telstra’s fledgling media business, which he admitted would undergo “significant change” for the next few years, but said he was “pleased’ with Foxtel’s recent acquisition of Austar.

Thodey also reiterated Telstra’s vital stats: revenue of $25.4 billion – up 1.1% y-oy and net profit (after tax) of $3.42 bn, up  5.4%.

30% of all interactions with customers are now online – and that figure will be closer to 50% by the end of this financial year. Online ‘chat’ growth is also accelerating.

Thodey’s outlook for the telco next 12 months is sunny: “I am pleased to report that your company is well positioned for fiscal 2013,” he said.

Telstra’s guidance for 2013 is low single digit total income and earnings growth, and free cashflow between $4.75 -$5.25 billion.

“Our strategy is clear.We plan to keep leading, keep focusing on our customers, and keep delivering on our promises.”

But if the Opposition gets into Canberra, the NBN sweetheart agreement will almost definitely change.