In the second game of the semi-finals we have two of Australia's behemoths lining up, in BHP Billiton Limited (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS).
And on paper, it appears that BHP has the edge all over Telstra. But looks can be deceiving. With commodity prices falling, this may be as good as it gets for BHP for at least a few years. Having accounted for its resources competitors Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) in fairly easy fashion, BHP could struggle to go through to the next round.
Here's how the pair line up:
| Measure | BHP Billiton | Telstra Corp |
| Market Cap | $199.14 billion | $65.8 billion |
| Last price | $37.37 | $5.30 |
| Total shareholder return – 10 years | 13.8% | 8.8% |
| Dividend Yield | 3.5% | 5.4% |
| Price to book ratio | 2.6x | 5.2x |
| P/E ratio | 13.4 | 16.4 |
Source: CapitalIQ, Commsec
Game On
And BHP takes an early lead thanks to its lower P/E and P/B ratios, suggesting the giant miner could be cheap at these prices. With the potential sale of its nickel operations and other non-core assets, BHP could see up to US$20 billion flow into its coffers. Some of that could well find its way into shareholders pockets through buybacks or special dividends. BHP scores another goal to take a 2-0 lead.
But the giant telco is not letting BHP control the match, and strikes back thanks to its mobile dominance in Australia, its exposure to massive growing demand for data and electronic communications and its link to NBN and the potential $11 billion in payments. BHP 2-1.
The telco's legendary fully franked dividend scores another goal to equalise the scores, especially as the dividend could rise this year. BHP also shoots at goal with its potential to return cash to shareholders, thanks to cost cutting, and asset sales, but falling coal and iron ore prices get in the way. In a terrible mix up, Telstra is allowed to steam upfield and with its rising star, Network Application Services (NAS) slots one into the back of BHP's net, that not even the company's diversity could keep out. 3-2 to Telstra, with 15 mins to go.
News the Telco is sticking it to its rivals and plans to launch a nationwide wi-fi network, sees Telstra boss David Thodey score another and end BHP's run in this tournament.
Final score is Telstra 4, BHP 2.
