The Telstra Corporation Ltd (ASX: TLS) share price is edging higher in morning trade, up 0.5%.
Below we take a look at the S&P/ASX 200 Index (ASX: XJO) listed telco’s update on the proposed legal restructure of its infrastructure assets.
What did Telstra report on its infrastructure restructuring plans?
The Telstra share price is edging up after the company reporting it expects its proposed legal restructure to be completed by this December.
As part of that plan, InfraCo Fixed would own and operate Australia’s biggest telco’s ducts, fibre, data centres, and exchanges. InfraCo Towers would own and operate Telstra’s passive or physical mobile tower assets. And ServeCo would own the radio access network and spectrum assets.
The telco said it plans to establish its international business “under a separate subsidiary within the Telstra Group to keep that part of the business, including subsea cables, together as one entity”. The international assets will be transferred to the new subsidiary over time, subject to relevant approvals and engagement with appropriate stakeholders.
Telstra reported it will move to establish a new holding company and create separate subsidiaries – InfraCo Fixed, InfraCo Towers, ServeCo and Telstra International – and “transfer the relevant assets into InfraCo Towers and ServeCo”. The company plans to seek shareholder approval of its proposed schemes in October at this year’s annual general meeting (AGM).
When the restructure is completed, Telstra shareholders will own shares in the new holding company on a like for like basis.
Commenting to the restructure, Telstra Chairman John Mullen said:
Even before the COVID pandemic reminded us of the enormous importance of telecommunications infrastructure globally, we could see the opportunity to provide transparency of our assets and opportunities to deliver additional value for shareholders.
The legal restructure is a step toward that outcome. It also reflects the new post-COVID world we are living in and the fact that our assets are a critical part of the infrastructure that is enabling the nation’s rapidly growing digital economy.
Mullen added that aside to shareholder and court approval, “there a number of other steps to work through, including taxation, stamp duty rulings and discussions with government, regulators and other key stakeholders”.
Telstra share price snapshot
Telstra shares have struggled to hold onto their post pandemic selloff gains, and are currently up only 3.9% over the past 12 months. By comparison the ASX 200 has gained 47.6% over that same time. (Remember, this time last year marked the ASX 200 lows.)
Year to date, the Telstra share price has shown renewed strength, currently up 6.6% in 2021. Telstra pays an annual dividend yield of 3.1%, fully franked.