Telstra Dividends At Risk As Shares Dive
Following yesterday’s profit update, shares in Telstra have dropped below $3 for the first time in over five years. The news comes as analysts raise doubts over the telco’s ability to deliver a 22 cent/per share dividend.
Yesterday, Telstra announced it expects full-year EBITDA to be in the “bottom end” of its former $10.1 billion – $10.6 billion forecast, citing margin pressure and “challenging trading conditions”.
Despite this, the telco re-affirmed its pledge to a 22 cent dividend.
As per The Australian, Citi analyst, David Kaynes, claims there’s “limited scope for revenue growth”, adding they “no longer believe Telstra can generate sufficient earnings” to maintain the dividend.
Despite the profit update, Telstra has continued to increase subscriber numbers and mobile usage. The telco claims its fallen victim to “competitive dynamics”, causing increased margin pressures in its fixed, mobile and NBN divisions.
The telco claims it has continued to decrease “core fixed costs” – a 7% decline expected – with $300 million in restructuring costs.
Telstra Chief Executive, Andrew Penn, is scheduled to make a major speech at the JP Morgan TMT Equity Conference in Boston.
Penn will reportedly touch on the negative effect the government’s NBN has had on earnings.
Shares in Telstra are currently trading 4.44% lower to $2.90.