Telstra’s Share Price Steady after Revisiting 2019 Financial Year Guidance

Telstra’s share price has been steadily climbing over the last week on the back of its new 2019 financial year guidance. Where it surged by around 4.33% to $3.13 on Thursday.

Since then, Telstra Corporation Ltd [ASX:TLS] has remained pretty consistent, shares are trading at $3.12 at time of writing.

New NBN corporate plan set to help Telstra’s share price

Last week, Telstra revised their 2019FY guidance after taking into account the NBN co corporate plan which was revealed 31 August 2018.

Although there is some cost reduction, the $3 billion cost to the NBN has had some negative impacts to Telstra’s share price, as they are forced to pay CVC and AVC.

But it’s not all doom and gloom, Telstra has received recurring NBN payments, as well as some potential cost reductions that otherwise wouldn’t have been possible without the NBN. And Telstra has announced that the NBN rollout is largely in accordance with its current best estimates.

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There was also the announcement that Telstra has appointed a new head of product and technology. Telstra’s CEO Andrew Penn welcomed Christian von Reventlow, who will be in charge of driving Telstra’s integrated product and technology plans. Mr Penn said:

I am very pleased to have someone with Christians product credentials coming on broad to deliver innovative and simple product experiences for customers that will lead the market and drive profitable growth. He has spent his career developing and deploying breakthrough mobile, Cloud, software and hardware solutions to customers. He will be accountable for Telstra’s products strategy, product lifecycle, and technology and innovation where products are incubated and brought to scale.’

Future looking positive for Telstra’s share price

Telstra appears to be following their new structure in plan to simplify products and services built on new technology. TLS has also given expectations well into the 2022 financial year.

‘…The new end-to-end products and technology function will significantly increase our technical capabilities around product development and management,’ Mr Penn said.

While the lower volumes are impacting Telstra’s guidance for 2019, it’s expected that these changes will be financially positive to Telstra over the NBN rollout because of the effects of the natural hedge.

Regards,

Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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