Tuesday, 16 December 2014 05:41

Telstra the big winner from NBN deal Featured

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Telstra’s share price at the end of each quarter, 2005-14, by CEO Telstra’s share price at the end of each quarter, 2005-14, by CEO

After steep rises in recent months, Telstra’s share price rose again yesterday. The market knows it’s on a winner with the NBN deal.

Take a look at this remarkable graph of Telstra’s share price, under three CEOs, over the past ten years. After faltering under Ziggy Switkowski (now chairman of the board at NBN Co) and halving under the unlamented Sol Trujillo, the trajectory has been steadily upward during the five and a half years David Thodey has been at the helm.

And after a steady year or so where it hovered around the $5.00 mark, the last few months has seen another significant rise, to the point where it closed at $5.74 on the ASX yesterday, after the announcement of the rejigged deal with NBN Co. 

Throughout the lengthy negotiations necessitated by Malcolm Turnbull’s rejigging of the NBN, Thodey’s mantra was “protecting shareholder value”. He has demonstrably done that, well into the future, by ensuring a steady stream of revenue from NBN Co – not to mention capturing more than half Australia’s mobile phone markets.

Telstra is in the enviable position of not being able to lose. Successive governments – first Labor, then Coalition – have removed all the risk that Telstra would have confronted building its own broadband network, as Trujillo wanted to do.

But it still gets all the benefits. All it has to do is sit back and watch the rivers of gold flow into its coffers. As the former public monopoly it already had a favoured market position. Now it appears unassailable. Rivals bleat, but there is nothing they can do.

I have a friend who is considering selling all his property and other investment assets and just putting the lot into Telstra shares. He’s sick of all the management overhead. He could do a lot worse. Like Telstra, all he has to do is watch.


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Graeme Philipson

Graeme Philipson is senior associate editor at iTWire. He is one of Australia’s longest serving and most experienced IT journalists. He is author of the only definitive history of the Australian IT industry, ‘A Vision Splendid: The History of Australian Computing.’

He has been in the high tech industry for more than 30 years, most of that time as a market researcher, analyst and journalist. He was founding editor of MIS magazine, and is a former editor of Computerworld Australia. He was a research director for Gartner Asia Pacific and research manager for the Yankee Group Australia. He was a long time weekly IT columnist in The Age and The Sydney Morning Herald, and is a recipient of the Kester Award for lifetime achievement in IT journalism.

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