Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Telstra (ASX:TLS) share price on watch with restructuring plans

The Telstra Corporation Ltd (ASX:TLS) share price could be a mover today after revealing that it's going to do more restructuring. 

The Telstra Corporation Ltd (ASX: TLS) share price could be a mover today after revealing that it’s going to do more restructuring.

What did Telstra announce?

The telco has announced plans to change its restructuring plans so that it can potentially sell some assets.

It plans to make four different divisions.

The first will be InfraCo Fixed which will own and operate Telstra’s passive or physical infrastructure assets, this relates to the ducts, fibre, data centres and exchanges that support Telstra’s fixed telecommunications network. Separating this will give Telstra the potential to “create additional value from these assets in the future.”

The next group of assets will be in InfraCo Towers. This division would own and operate Telstra’s passive or physical mobile tower assets, which Telstra is looking to sell some of because of the strong demand and compelling valuations for this type of infrastructure, which investors view as high-quality.

The third group is going to be called ServeCo, which will continue to own the active parts of the network, including the radio access network and spectrum assets to ensure Telstra continues to maintain its industry leading mobile coverage and network superiority. This division will serve and support the customers.

Telstra also plans to make an international business under a separate subsidiary to keep that part of the business, including undersea cables, together as one entity.

The telco also said that it’s going to establish a new holding company for the Telstra Group, with the transfer of assets being done through a scheme of arrangement/takeover offer.

After the restructure, Telstra shareholders will own shares in the new holding company on a like for like basis, with no change to their ownership levels.

Leadership comments

Telstra Chairman John Mullen said:

Even before the COVID pandemic reminded us of the enormous importance of telecommunications infrastructure globally, we could see the opportunity to provide transparency of our assets and opportunities to deliver additional value for shareholders.

The legal restructure is a step toward that outcome. It also reflects the new post-COVID world we are living in and the fact that our assets are a critical part of the infrastructure that is enabling the nation’s rapidly growing digital economy.”

The Telstra CEO said that the proposed plan to monetise InfraCo Towers remains on track for FY22.

My thoughts on this and the Telstra share price

The Telstra share price seems like it is going to respond positively to this news. I’d bet that large Telstra shareholders like the sound of receiving large amounts of cash for assets that aren’t essential to the Telstra business.

I do think it makes sense to do this in the current low interest rate environment. But there are still question marks in my mind about Telstra’s ability to grow profit into the future. I don’t view the Telstra share price as a compelling long term buy at the moment because of its limited revenue growth options.

Before you consider Telstra, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.
Skip to content