This week Telstra Corporation Ltd (ASX:TLS) completed its corporate restructure, prompting the question – is this is the start of a strong growth period for the big telco or will it disappoint once again?
Telstra listed on the stock exchange in 1997 and for the vast majority of time it disappointed investors, as it spent more time falling than rising. After a brief period trading under the stock ticker code TLSDA, this week Telstra started trading back under its original ticker TLS.
For those who may not know, Telstra restructured itself so that it is now a holding company of its three business subsidiaries, which include InfraCo Fixed, InfraCo Towers and ServeCo. The restructure will allow Telstra to get more value out of its assets, which will lead to more profit. It also allows Telstra to grow as we move into an age of increasing reliance on communications services.
Investors would be disappointed this year, as Telstra has fallen just under 6% since 1 January, although it has fared better than the All Ordinaries Index generally, which is down over 9% in the same period.
The restructure has been a long time coming and I strongly believe Telstra will now break out of the lacklustre performance over the past few years that has seen it grow by 11% since 1 November 2017.
The good news for long suffering shareholders is that I believe Telstra will be bullish over the long term. Now that the restructure is done, the handbrake will be off, allowing Telstra to take off down the superhighway. The expected price target is at least $4.60 in the not-too-distant future, and between $5 and $6 over the medium term.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the bestselling and award winning book Accelerate YourWealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au