Telstra hit hard by NBN decision
TELSTRA’S bid to monetise up to $5.5 billion worth of future income from national broadband network payments has been shot down by the company rolling out the network.
Shares in the telco slumped to their lowest level in five years yesterday after it revealed NBN Co had refused to provide consent for the proposed financial transaction.
The move is a fresh blow to Telstra’s plans to minimise the impact of the NBN on its balance sheet with the monetisation strategy designed to free up capital sooner rather than later.
Analysts labelled the development “highly negative” for Telstra.
Telstra said in a statement: “While the proposal is well progressed and supported by equity and debt investors, Telstra has been advised ... that technical consents from NBN Co will not be forthcoming.”
In the wake of the revelation, Telstra’ shares slumped 6 per cent to close at $3.61.
That is the lowest level for Telstra shares since June 2012.
It comes less than two weeks after the share price plunged 10.6 per cent in one session when the group, Australia’s biggest telecommunications company, flagged cuts to its dividends next year.
More than 16 per cent has since been stripped from its share price in an $8.6 billion rout.
In its statement issued yesterday, Telstra quoted NBN Co as saying: “Essentially we can’t see how NBN’s position can be protected/improved by Telstra’s securitisation plan especially given the unpredictability of our operating environment in the 2020s.”
CLSA analyst Roger Samuel said that Telstra management had previously indicated the approval process for the telco’s plan would be straightforward.
“This is highly negative for (Telstra) given the lack of funds available to be used for debt repayments and a share buyback,” Mr Samuel said.
Analysts at investment bank Citi said the rejection meant that proposed share buybacks Telstra intended to fund with the NBN cash were unlikely to proceed. SURFWEAR label Billabong has suffered a dramatic blowout in its full-year loss after writing down the value of a string of its brands.
But the Australian fashion retailer insists it has turned the corner, citing factors including a growing “followership” on social media.
Billabong posted a net loss of $77.1 million for the year to June – threefold the $23.7 million loss a year earlier.
Despite the flood of red ink, Billabong chief Neil Fiske said the group was confident about the outlook.
“This result marks a turning point for the company and one on which we can build,” he said.
Mr Fiske said Billabong had a growing “followership” on social media, boding well for the future.
“The key to our ongoing success is the relevance of our brands,” he said. “We continue to strengthen the connection with our customers, with global social media followership up 42 per cent year-on-year to almost 37 million.”
In the year to June, Billabong’s underlying earnings – which strip out the impact of one-off items – fell short of the group’s forecast range at $51.1 million before interest, tax, depreciation and amortisation.
That was up 2.8 per cent on the previous year in constant currency terms – a tally that assumes exchange rates do not fluctuate. But it was shy of Billabong’s forecast range of $52 million to $57 million.