The NBN corporate plan now forecasts around -500,000 fewer households being forcibly disconnected from Telstra and placed on the NBN in FY20.
This has led Telstra to downgrade FY20 operating earnings (EBITDA) estimates by -2.5% and Morgans, in turn, reduces its forecasts. In addition, Morgans makes further cuts to FY21 to reflect this being the peak year for NBN headwinds for Telstra.
While the price to access the NBN continues to increase, the broker assesses telcos are starting to charge consumers more for access to the NBN/fixed line as well as mobile services, which indicates a return to more rational economics.
Add rating maintained. Target is reduced to $4.46 from $4.49.
Sector: Telecommunication Services.
Target price is $4.46.Current Price is $3.64. Difference: $0.82 - (brackets indicate current price is over target). If TLS meets the Morgans target it will return approximately 18% (excluding dividends, fees and charges - negative figures indicate an expected loss).
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