ASX:TLS

Since breaking down through the $3.00 mark on May 15th, shares of TLS have range traded between $2.70 and $2.90.

Much of the negative commentary about the Telco giant has revolved around its ability  to hold on to its 47% market share,  increase its profit margins via 5-G technology and maintain its dividend.

We feel that these questions will be answered in the affirmative during their business update call on June 20th.

At current prices, TLS has a dividend yield of 7.9% and a P/E ratio of 9.30, which we feel is good value for investors.

Telstra

Shares of TLS have been in a basing pattern above the $3.00 level and there are solid fundamental reasons for accumulating shares in this current range.

Since the share price has slipped over 17% over the last 12 months, the current yield is now close to 10%, including the franking credits.

Mobile is the company’s biggest earner and its most important revenue stream. TLS added 235,00 net new retail customers in  H1 compared to 200,000 a year ago and only 18,000 in the June half of 2017.

A recent analyst research letter forecasts the continued dominance in the Telco space, as well as diversification into other data streams will lift the share price into the $4.60 area over the medium-term.

As such, we continue to favor the long side of TLS for value investors looking for growth and a solid dividend.

Telstra

Shares of Telstra have been under pressure for the last 12 months and posted an 8-year low of $3.08 in early trade today.

Investors’ concerns over the telco giant’s profitability and decision to cut its dividend have been the driving forcesa in the share’s decline.

We remain upbeat on the TLS’s prospects and expect market sentiment will soon become positive.

It’s reasonable to expect that the Federal Government will decide to write down the value of the NBN, which will lead to higher margins for TLS.

This would make its 22 cents per share dividend secure over the longer-term.

At the current share price, that pencils out to a fully-franked yield of 7%.

Telstra

Since the release of their H1 earnings results on February 15th, shares of TLS have traded in a narrow 10 cent range between $3.40 and $3.50.

Looking past the $273 million impairment made against its Ooyala business, the growth in the TLS Enterprise and Whole businesses has been encouraging for top line growth.

The company reported earnings per share of 14.3 cents for the period and declared an interim fully franked dividend of 11 cents per share.

This was made up of a 7.5 cents per share ordinary dividend and a 3.5 cents per share special dividend.

The record date for both dividends is March 1, with payment then expected to be made on March 29.

It’s reasonable to expect some buying interest to come into the share price in front of the dividend date.

We prefer the long side of TLS at these levels and look for a return to the $4.00 handle over the medium-term.

Telstra

Over the course of the last six months, TLS shares have been beaten down as the company purges its liabilities to the NBN and re-calibrates other assets.

As part of that process, the telecom giant announced that it will be writing down the value of its Ooyala video streaming firm to zero.

This will result in an impairment charge of $273 million in the half year numbers.

Technically, TLS shares have been building a solid base in the $3.50 to $3.60 area and we expect to see the stock trade back into the $4.00 handle over the medium-term.

With an annual dividend yield just under 8%, we suggest investors look to accumulate TLS shares in this price area.

Telstra

Shares of TLS have traded back into a significant technical price area.

Looking back to mid-August, the share price was beaten down from $4.33 to $3.50 just 10 trading sessions. This price action has left several gaps on the daily chart which are now being challenged.

TLS goes ex-dividend on March 1st and is on about a 6% yield at current prices.

It’s reasonable to believe that the current technical buying could lift the share price back over $4.00, which would still pencil out to over 5% yield, fully franked.

We still believe accumulating shares of TLS in this price range will benefit investor portfolios throughout 2018.

Telstra

Even with the 10% rally from the $3.34 low posted on November 28th, shares of Telstra dropped close to 30% in calendar year 2017.

We believe that investors were overly focused on past NBN issues and earnings estimates which seem to be pricing in worst case scenarios that assume TLS could be losing its dominate position in the telecommunications sector.

With the best existing mobile network and largest customer base, it’s our view that TLS is best positioned to profit from the growth area of mobile data application outside the NBN.

At $3.65, the projected full year dividend of 31 cents pencils out to an 8.5% yield. We consider TLS a solid addition to portfolios at these levels.

Telstra

Since posting a low of $3.34 on November 28th, shares of Telstra have gained over 10% reaching a high of $3.72 in early trade.

Much of this recent optimism in the company stems from TLS wrapping up the second phase of their transmission network upgrade and deploying their high capacity optical technology, which is known as “5G”

This increased capacity and faster download speed is shaping up as a winner as TLS is outperforming its rivals on the new iPhone X and iPhone 8 orders.

Because TLS has greater network capacity, they are able to charge a premium on these new mobile phone systems.

Technically, the next price hurdle will be at $3.83, which is the bottom end of a gap lower on August 29th.

  Telstra

During the recent AGM, Telstra chairman John Mullen covered many topics including market penetration to the NBN.

However, what shareholders were most interested in hearing was that the 22 cent dividend would be a low as it would go and, if anything, will be increased.

Shares of TLS have been beaten down pretty hard since trading over $5.00 earlier this year. In our view there is plenty of pessimism priced into the stock.

TLS is the dominant player in the domestic telecom industry, with strong brand recognition and a network quality advantage which underpins a 49% subscriber advantage.

The stock currently trades on a P/E of 10X and hasn’t been this fundamentally cheap since 2010, when base interest rates were 5.5%.

It’s our view that TLS offers good value at current levels and we have a medium-term price target of $4.15.

Telstra