Spotlight on Telstra Shares After $350m Acquisition (ASX:TLS)

The Telstra Corporation Ltd [ASX:TLS] share price rose slightly today after announcing a $350 million acquisition of MedicalDirector.

At time of writing, Telstra share price is trading for $3.81 a share, up a modest 0.3%.

ASX TLS - Telstra Share Price Chart

Source: Tradingview.com

Tongues were wagging this morning after Telstra confirmed rumours of a new acquisition deal to be true.

The Aussie telco giant’s health division Telstra Health will acquire SaaS company MedicalDirector for $350 million.

This is big news for Telstra investors who have been eagerly following along in the long-running story of Telstra’s expansion into new territory.

Telstra has now officially entered into a binding agreement with MedicalDirector, with the transaction expected to complete in Q1 FY22.

As a result, the ASX will be keeping watch to see how this announcement affects the share price in the coming days…

Why is the acquisition turning heads?

MedicalDirector isn’t just any old company.

It’s a leading software platform that helps general health practitioners and clinical practices focus on spending more time on the provision of quality services and less time on admin and paperwork.

The company facilitates virtual consultations, electronic prescriptions, and easy billing, as well as real-time alerts on drug safety and other data relevant to patients.

In a time where digital access to healthcare resources is perhaps more important than ever before, Telstra’s alliance with a firm at the forefront of innovation in the health industry could be a highly lucrative move.

After all, telehealth is more or less ‘the new normal’.

If all goes to plan, Telstra’s latest strategic development should not only open the gates to a customer pool of approximately 23,000 medical practitioners, but it will also serve to strengthen the company’s presence overseas.

MedicalDirector has established strong ties to the UK in recent years, and Telstra will now be able to tap into this global market.

But is this move enough to cement Telstra’s success?

What’s the long-term strategy?

Aggressive competition in the mobile and broadband markets has long been a catalyst for key players in the industry to make bold expansion plans.

Telstra’s acquisition of MedicalDirector (which is used to deliver more than 80 million consultations a year) could very well propel success for both the company — and investors — as a result.

But only time will tell.

In any case, management is showing no signs of poor confidence.

The acquisition ‘reflects [Telstra’s] continuing maturity as a business and its importance as part of Telstra’s long-term growth strategy,’ according to Telstra Health Board Chair Brendon Riley.

Telstra Health’s vision is to be a leading partner to the health and aged care visions, and this move is proof that the company’s actions are certainly backing up their words.

Back in February this year, Telstra shared that it was fast building momentum through 1H21 financial results.

This claim was backed up by the following numbers:

  • Reported Total Income of $12B, EBITDA of $4.1B and NPAT of $1.1B
  • First-half underlying EBITDA of $3.3 billion with second half guidance of $3.3–3.6 billion, with ambition for mid-to-high single-digit percentage growth in FY22
  • Interim dividend of 8 cents per share and expected FY21 total dividend of 16 cents per share
  • Strong mobile performance, 80,000-plus retail post-paid handheld services, TMMC $3-plus
  • T22 cost reduction target increased to $2.7 billion by FY22
  • Revised FY21 guidance for total income, underlying EBITDA and free cash flow

What’s the outlook for the Telstra share price?

Telstra remains up for consideration for ASX blue chip investors — particularly in light of this recent announcement.

But before you go pouring all your capital on one stock, keep in mind that there could be several attractive opportunities on the ASX right now for investors looking to earn dividends as part of their investment income.

Our Editorial Director Greg Canavan believes he’s found five of them and has revealed the details in a free report, available for you to

We recommend you have a read and see what you think.

Regards,

Lachlann Tierney,

Analyst, The Rum Rebellion

PS: Interested in earning dividends from stocks in 2021? Top Aussie investing expert Greg Canavan has revealed five stocks on the ASX he believes could be top performers this year. Claim your free report here.

 


Lachlann Tierney is a writer for The Rum Rebellion and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. 


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