The privatisation of Telstra was a financial bonanza for the Howard/ Costello government. The first tranche alone, selling 33% of the government’s telecommunications enterprises, raised A$14 billion for federal coffers. Presumably the total revenue raised topped $50 billion. Along with the mining boom, it enabled the Coalition to bring down a succession of positive budgets.
But for the one million odd shareholders who bought into the three floats, (1997, 1999 and 2006) or on market, it has been a poor investment. Today the share-price is about one-half what it was in 1998. Long-suffering retail investors, faced with a falling share-price, comforted themselves with the thought that they were still getting a fully franked return of 6-7% on their investment. However, should a future government withdraw imputation credits for Self-managed Super Funds, the value of this consolation prize would be diminished, and the share-price likely fall even lower.
With the share-price hovering just above $3, it is likely that “Value Investors” will be looking closely at Telstra’s prospects for a turn-around in fortunes.
From a technical analysis perspective, one would first like to see the 3 year down-trend that has followed loss of business over the NBN reversed. A signal to enter might be if the share price were to surge above the previously broken support level of $3.50.
Readers are advised not to rely on technical analysis alone, but to consult their broker or financial advisor about Telstra’s prospects before making changes to their portfolios.