The ASX share market has been acting like a rollercoaster in 2022 – but largely like the downward, hair-raising section. The Telstra Corporation Ltd (ASX: TLS) share price has seen a decline too this year, though it's only down by 9%.
September was a rough month for investors. The S&P/ASX 200 Index (ASX: XJO) as a whole declined by 7.3%. But, that's just the combined movement from all the different names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) and Woodside Energy Group Ltd (ASX: WDS).
Telstra share price resilience
Telstra did see a bit of a decline in September, but not as much as the market.
Last month, the Telstra share price only declined by 3%.
This means that the telco outperformed the ASX share market by more than 4%.
Ideally, a defensive ASX share wouldn't even fall when markets go backwards. However, volatility is just part of the fun of investing.
I think that delivering outperformance when the market goes down is solid from Telstra.
What happened during the month?
September was another interesting month for markets as central banks increased interest rates again to try to bring inflation down. The Reserve Bank of Australia (RBA) increased the interest rate by 50 basis points (0.50%) while the US Federal Reserve went for a 75 basis point (0.75%) rise.
Higher interest rates are theoretically meant to have the effect of pushing down asset valuations. That has certainly happened this year, with the Telstra share price also seemingly experiencing a decline.
But there were a couple of interesting announcements regarding Telstra.
Shareholders were given a presentation at its 2022 retail shareholder meeting.
Telstra went through its T22 strategy's achievements, such as the $2.7 billion of cost reductions since FY16 and the $2 billion of asset monetisation, or almost $5 billion including Amplitel. It also highlighted that there has been a 71% reduction in annual contact centre calls since FY18.
The telco also highlighted its T25 strategy which includes further cost reductions, growing profit and achieving a strong position with its 5G network. Telstra also reminded shareholders that in FY22 it grew underlying earnings per share (EPS) by 48.5% and the total dividend was grown by 3.1% to 16.5 cents per share.
The other announcement related to Telstra's desire to work with TPG Telecom Ltd (ASX: TPG) on a regional network share agreement. The ACCC said it's calling for further submissions from stakeholders. Under the deal, Telstra would get access to much of TPG's mobile spectrum in a range of outer-urban and regional areas. TPG would shut down 556 mobile sites in those areas and receive mobile network services from Telstra for mobile coverage.
Optus hack
One of the biggest pieces of recent news in the telco space was that some Optus customers had their important information (such as phone numbers and addresses) accessed/hacked.
The broker Morgan Stanley has an overweight rating on the telco with a Telstra share price target of $4.60 – that's a possible rise of around 20% over the next year. The broker thinks the Optus hack will benefit Telstra if it leads to customers switching over.
However, Telstra has its own data breach to deal with. The telco has confirmed that as many as 30,000 current and former workers had their names and email addresses exposed, according to reporting by the Australian Financial Review.
