Why the Telstra Share Price Sank This Week

Why the Telstra Share Price Sank This Week

TELSTRA

What happened to Telstra’s share price?

Shares in Telstra [ASX:TLS] sank more than 6.5% on Thursday, as the market reacted negatively to its half-year results. While that mightn’t be a big move for a small-cap, it’s a big hit for a company of Telstra’s size. Enough to wipe $3.7 billion off its market value.

Why did Telstra shares sink on Thursday?

The market wasn’t expecting anything big from Telstra; more of a ‘business as usual’ type of result. What the market wasn’t expecting, though, was a 14.4% drop in profit.

Telstra put the majority of this down to regulatory changes, such as the ACCC’s decision to limit the amount telcos can charge each other for using each other’s services. As the biggest player in the market, this was a $400 million hit to its bottom line.

The result was enough to put the skids on other telco stocks, with TPG Telecom [ASX:TPM]

and Vocus Group [ASX:VOC] falling 4.8% and 4.6% respectively.

What now for Telstra?

Despite the drop in profit, it’s not all bad news. Telstra is ramping up its market share in an extremely competitive environment.

Over the past six months, Telstra added 200,000 new mobile customers and connected 292,000 new customers to the NBN network — giving it a 51% share of this market. Another 124,000 customers took up bundling packages.

There will be plenty of shareholders sticking around to pick up Telstra’s 15.5 cent, fully franked dividend, due to be paid in March. The real test for long-time holders of Telstra shares will be what the price does after that.

By Matt Hibbard

Matt Hibbard

Matt Hibbard

Editor at Total Income
Matt Hibbard is Money Morning’s income specialist. While most investors focus on making money in the short term, Matt takes a different view. He’s focussed on how you can invest today to grow wealthy in 10 or 15 years’ time. In Money Morning, Matt shares his insights on how you can make the financial markets PAY YOU an income that could greatly increase your wealth in later life…and let you focus on more important things than money.
Matt Hibbard is Money Morning’s income specialist.While most investors focus on making money in the short term, Matt takes a different view. He’s focussed on how you can invest today to grow wealthy in 10 or 15 years’ time.
Matt researches income investments. You can find more of Matt’s work over at Total Income where he’s hunting down the next generation of companies that could pay you more each year than you initially invest. Having worked both for himself and with global firms for almost three decades, Matt’s traded nearly every asset in existence. But now he’s on a very different mission — generating income from the market over the long term. Not just years, but decades. And getting companies to pay you a steady, stable income with minimal stress and the least risk possible. Matt doesn’t believe you have the luxury of being a bull or a bear in the market right now. Because you have to earn an income from it, regardless of whether stocks are going up or down. In Money Morning, Matt shares his insights on how you can make the financial markets PAY YOU an income that could greatly increase your wealth in later life…and let you focus on more important things than money. If you’re interested in more than just hot stocks or global finance talk that doesn’t actually help you with your own investing, check out Matt’s articles below. You can also have his regular investment insights delivered direct to your inbox. Just take out a free subscription to Money Morning here. And if you’d like to learn about the specific investments Matt is recommending, take a 30-day trial of his income investing service Total Income here. Official websites and financial e-letters Matt writes for:

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