Why the Telstra (ASX:TLS) share price rose 11% in March

The Telstra Corporation Ltd (ASX:TLS) share price had a top month in March, rising 11%. Here's what went right for Telstra shares

Sebastian Bowen

Author Bio Sebastian Bowen has been a Motley Fool contributor since late 2018. Sebastian found his passion for writing and educating others about shares and all things finance after completing his studies in political, economic and social science and enjoys bringing this passion to life at the Fool. His investment philosophy is a simple one – buying high-quality companies at prices that make sense. When he’s not researching his next investment at all hours of the morning, Sebastian enjoys classic movies and likes to unwind with a good book, newspaper or record. Areas of Expertise Dividend investing ETFs Education Bachelor of Political, Economic, and Social Sciences (Government and International Relations), University of Sydney Social Media X/Twitter Favorite Investment Quote "In the short run, the market is a voting machine, but in the long run, it is a weighing machine." – Benjamin Graham

Published April 1, 2021 2:09 pm AEDT

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.

high share price — Image source: Getty Images

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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