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MarketScreener Homepage  >  Equities  >  AUSTRALIAN SECURITIES EXCHANGE LIMITED  >  Telstra Corporation Ltd    TLS   AU000000TLS2

TELSTRA CORPORATION LTD (TLS)
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Telstra : shares fall on ratings downgrade

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05/28/2018 | 02:33pm CEST

Telstra shares have fallen after the telco`s ratings were downgraded due to intense competition across its core businesses and lower margins.

Standard and Poor`s (S&P) Global Ratings said Telstra`s incumbent position in the industry had been "diminished" and lowered its long-term issuer and issue ratings on the company to A-minus, from A, and the short-term rating to A-2, from A-1.

The ratings agency did, however, describe Telstra`s outlook as stable and acknowledged the company`s dominant network infrastructure.

"The downgrade reflects our view that Telstra`s strong incumbent position within the Australian telecommunications industry has diminished somewhat," S&P Global Ratings said.

"Competition has intensified across Telstra`s core businesses and the company has had to accept lower margins as a means of protecting its dominant market share."

Telstra shares were down three cents, or 1.05 per cent, to $2.84 by 1338 AEST.

The ratings agency said Telstra`s vulnerability to an erosion of its price premium and dominant market share had increased over the past few years, despite elevated network investment.

It also flagged competition from mobile network operators which have made large investments in their networks and product offerings, and forecast competition to further intensify with the likely entry of TPG Telecom as Australia`s fourth mobile network operator.

"In our opinion, there are execution risks associated with the company`s strategic initiatives," the agency said.

Telstra has recently faced scrutiny after warning tough competition and the NBN are putting a squeeze on earnings that will persist into next year.

Earlier in the month, Telstra`s share fell to a seven-year-low after the telco said despite winning customers, the amount each subscriber spends is falling in both fixed broadband and mobiles.

S&P Global Ratings said the potential for an upgrade was "unlikely" in the short term, given the group`s structural industry challenges, but would consider an upgrade if Telstra adopts a more "conservative" financial policy and is able to maintain consistent cash flows from its core operations.

(c) All Rights Reserved - Mubasher Info 2005 - 2018 Provided by SyndiGate Media Inc. (Syndigate.info)., source Middle East & North African Newspapers

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Financials (AUD)
Sales 2019 25 361 M
EBIT 2019 4 238 M
Net income 2019 2 704 M
Debt 2019 15 913 M
Yield 2019 5,58%
P/E ratio 2019 14,92
P/E ratio 2020 14,23
EV / Sales 2019 2,07x
EV / Sales 2020 2,00x
Capitalization 36 631 M
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Mean consensus HOLD
Number of Analysts 12
Average target price 3,20  AUD
Spread / Average Target 3,8%
EPS Revisions
Managers
NameTitle
Andrew Richard Penn Chief Executive Officer, Executive Director & MD
John Patrick Mullen Chairman
Robyn M. Denholm Chief Operating Officer
Warwick Bray Chief Financial Officer
Stephen A. Elop Group Executive-Technology, Innovation & Strategy
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