MENU

Telstra sees growth in Asia, e-Health, NAS and connectivity

Today Telstra (ASX: TLS) shareholders went to company’s AGM armed with over 1,600 questions on the NBN, remuneration, dividends and redundancies.

Chair Catherine Livingstone and CEO David Thodey passed briefly over redundancies and dividends, telling shareholders the telco has performed well and they expect dividends to be reviewed on a six-month basis in 2014. The future of the NBN remains largely unknown as a result of ongoing reviews within the NBN Co.

Telstra also defends its position on offshoring as the dynamics of the industry change, allowing more customer service online whilst improved standards means overseas call centres have no excuses regarding poor service. In addition Mr Thodey said, “Ultimately, our aim is to keep creating new jobs that are sustainable in an increasingly digital, mobile and global world, and that’s what we’re doing.”

At the forefront of both investors’ and shareholders’ minds is the future growth prospects of the company. It’s important to remember however, that Telstra is in an industry which constantly changes. The technology and telecommunications space requires companies to always be on their toes because things are changing rapidly. It is responding to changes bought on domestic rivals such iiNET (ASX: IIN) and TPG Telecom (ASX: TPM) but also international tech companies such as Google (NASDAQ: GOOG) and Apple (NASDAQ: AAPL).

Whilst the company’s fixed line voice revenues have dropped 8% (as a percentage of total revenue) since 2009, mobiles now represent 36% of revenue. This is an area in which Telstra is dominant and still growing. “This shift in revenue illustrates how fundamentally mobility, connectivity, and data demand have redefined our business… to grow as a company, we need to constantly adapt,” Ms Livingstone said.

Mr Thodey reiterated the rebranding of the telco as a positive step towards “a brilliant connected future for the company.” He said the company’s focus is fixed on customer service and the key growth areas of e-Health, NAS, the Asian middle class, cloud, mobile and connectivity between individuals and businesses. Telstra has made “strategic investments” in each of these areas including: cloud bases in Hong Kong and Singapore, dual band mobile networks in Australia and acquisitions/stakes in HealthEngine, DCA Health, IP Health and Fred IT.

Foolish takeaway

Investors and shareholders know Telstra is the dominant player in internet and mobile throughout Australia but its dominance has raised concerns that the stock price has already run its course. However for investors who welcome “low single digit growth” and excellent dividends with the reassurance and safety of a major Australian brand, Telstra is worthy of a spot in portfolios as a ‘core’ stock.

Telstra pays legendary dividends but we think we’ve got one that’s even better! Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading


Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.