The Telstra Corporation Ltd (ASX: TLS) share price is having a decent start to April today. At the time of writing, Telstra shares are up 0.44% to $3.42 a share. But we’re not here to talk about April, we’re here to talk about the Telstra share price in March.
And March was an unusually good month for the ASX’s largest telco. The Telstra share price started March at $3.08 a share (the closing price on 26 February). Telstra shares closed at $3.42 yesterday. That means Telstra shares were up 11.04% in March overall. And that’s not even including the 8 cents per share fully franked dividend Telstra shareholders received last week.
An 11% rise is a very decent move, especially for an old blue chip share like Telstra.
And it’s fairly obvious why this company had such a good month if we dig in. So let’s do it.
March madness for Telstra shares
So the first thing to note is that the S&P/ASX 200 Index (ASX: XJO) experienced something of a ‘rotation’ over March. A rotation is a rather horrible Wall Street term for when large fund managers move together in shifting money out of one sector into another. In this case, it was growth shares into value shares, to put it a little too simply.
Rising bond yields over February and March sparked a distaste for high flying growth shares. That’s why we saw blue chips like Telstra and the big banks do well over the month, while growth shares like Afterpay Ltd (ASX: APT) got walloped. That supported Telstra from the get-go.
But Telstra also excited the market with some details regarding its planned structural separation. On 22 March, Telstra outlined how it intended to split its core operations into four divisions: InfraCo Fixed, InfraCo Towers, ServeCo and Telstra International. This split will still see Telstra remain one company on paper (under the name ‘Telstra Group’). But these divisions will be legally and regulatorily separate. The company is planning on completing this split by the end of the year.
This was evidently well-received by Telstra investors. It seems the consensus is that a move like this will unlock significant value in the telco’s assets. This view was supported by a well-known broker. As my Fool colleague James Mickleboro reported at the time, Morgans upgraded its price target for Telstra shares from $3 a share to $4 following the announcement.
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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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