The Telstra Corp Ltd [ASX:TLS] share price has made some big moves over the past few days as a the world readies for a COVID-19 vaccine and the telco’s hidden value is revealed.
Today, the TLS share price has continued its upward trajectory, pushing shares within arm’s reach of its pre-COVID level.
At time of writing the TLS share price is up 8.5 cents or 2.84% to trade at $3.08 per share.
Telstra unveils true value of its assets
Today’s announcement may be the most significant release since the telco was privatised beginning in 1997.
As part of the company’s ‘T22’ strategy, TLS has proposed the restructuring of the organisation to create three separate legal entities within the Telstra Group.
CEO Andrew Penn said the restructure would enable TLS to take advantage of potential monetisation opportunities for its infrastructure assets where this might create value for shareholders.
How much value are we talking about?
According to TLS, its mobile towers are in its books at $280 million but are probably worth about $4 billion on the open market.
Similarly, TLS’s fibre, ducts, pipes and exchanges are in the books at $9.8 billion but are probably worth about $28 billion.
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Mr Penn said:
‘Our proposed new corporate structure reflects this new world and will help us support the foundation for it – one that is in the interests of our shareholders, our employees, our customers, and ultimately one that benefits the country overall.’
The proposed legal structure of the new look Telstra Group is expected to be completed by December 2021, and would look something like this:
- InfraCo Fixed, which would own and operate Telstra’s passive or physical infrastructure assets
- InfraCo Towers, which would own and operate Telstra’s passive or physical mobile tower assets
- ServeCo, which would continue to focus on creating innovative products and services
A dividend return could be on the cards
The telco giant also reconfirmed its FY21 guidance provided to the market at its FY20 Full Year Results in August.
With the NBN rollout effectively complete and being more than halfway through its T22 strategy, TLS believed it would turn underlying EBITDA back to growth by FY22.
The company said it is extremely focused on delivering its ambitious earnings target of $7.5–8.5 billion of underlying EBITDA by FY23.
Which means a dividend upwards of $2 per share could still be a year or two away.
However, that might be why we are spared another cut in dividends.
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