Telstra Corporation Ltd [ASX:TLS] has announced the sale of its South Brisbane Exchange and Telstra Velocity assets. At the time of writing, the Telstra share price is trading at $3.03, up 0.33%.
Why is Telstra selling?
In 2018, Telstra announced a program dubbed T22, with a plan to simplify the business.
Part of the plan involved reducing staff numbers, infrastructure and costs.
All was on track until the T22 plan hit a snag: COVID-19.
The pandemic halted the staff layoffs until February 2021.
However, the other parts of the plan continued.
Telstra recently announced the sale of Telstra Velocity and the South Brisbane Exchange to Uniti Group Ltd [ASX:UWL] for $140 million.
The agreement will see Uniti acquire certain fibre-to-the-premises assets owned by Telstra.
Telstra will become a retail service provider of the Uniti FTTP business, including the Velocity network.
Under the terms of the sale, Telstra will pay Uniti a licence fee of $21.6 million per annum for the continued use of the Velocity assets.
The sale comes as a welcome cash injection for Telstra in a difficult year.
Telstra and the future
In the long term, Telstra is still focused on meeting the targets of its T22 plan.
This may run into fresh challenges in the new year, as the Australian government brings insolvency laws — most of which have been suspended during COVID-19 — back online.
This may impact many of Telstra’s business customers, as many businesses are predicted to face an uncertain future.
In turn, this could affect Telstra negatively if cancellation rates rise due to failed businesses.
Looking at the Telstra share price chart
The Telstra share price is sitting at $3.03 at the time of writing, and has been heading down over the last few weeks. If this trend continues, then the levels of $2.97 and $2.87 may become the focus.
Should it turn to the upside, then the price level of $3.18 may provide future resistance.
Telstra last paid a special final dividend of three cents in August.
With the country’s business landscape looking to change again in the coming year, and with much to complete with regard to the T22 plan, at this stage Telstra is not a share I would consider investing in or look to trade.
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