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In reply to: Oavde on Wednesday 23/08/06 01:23pm

Oavde you should be grateful that there are people that hold blind faith in falling stock.

Imagine if all share holders followed charts,we would be hard pressed to make profits as easily as we do,go short on this one i say,

Tech one good ,snapper fishing great ,what more could one want,have a great weekend ,cheers mrbear

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Forget the past, now is different!

 

Telstra and the government are now cooperating on T3. If management were good at ramping the sp down then they are probably just as good at ramping it up. The reasons to continue to ramp it down have gone. T3 will make the gov a minority investor and no longer in control. Agreeing to maintain the bush with existing services is a small price to pay for 100% privatisation. The FTTN is not on the cards. Once privatised, (after T3) any new regulation applies to all telcos equally making the playing field level.

 

Deciding not to roll out the FTTN was the right decision. Any network rolled out by telstra after privatisation will be 100% owned and controlled by telstra. An FTTN or FTTP would replace many existing (copper) services making them low maintenance. The new services available to the public (eg HiDef TV) would produce more return.

 

T3 is likely to get snapped up in no time and mostly by small investors. Why:

 

1) SP at record low (oversold) and small investors have priority.

2) Pay by 3 interest free instalments over 18mths and get ~5% discount on price.

3) Get 2 dividend payments in first 10mths (totalling ~14% fully franked, ~20% return on outlay, assuming no cap gain or loss.)

4) When (if) telstra reaches $5, T3 investors will have 50% return on investment.

5) Instos will miss out on T3, for these reasons, and will be hungry for tls like sharks. (Why? See below.)

 

Has anyone heard of the "Investable Weighting Factor" (IWF) used to calculate S&P ASX indices? Well this is used to determine how much of a stock comprises the S&P ASX indices.

 

When telstra is fully privatised its IWF will double. So instos and super funds have to double their holdings. Well, would they prefer to do that now, with the sp around record low $3.50, or wait a couple of years for 100% privatisation to take effect? No doubt, they have good reason to want to scare the small investor away from T3 and talk (ramp) the sp down. Me thinks they won't succeed! Too many of them in competition and hungry. Feeding frenzy more likely!

 

I'm no investment advisor. So please do your own research. This is just what I have gathered from some quick research. Feel free to correct me if I am wrong anywhere.

 

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In reply to: kacy on Saturday 26/08/06 09:54pm

QUOTE
4) When (if) telstra reaches $5, T3 investors will have 50% return on investment.

 

YES And when ZFX reaches $20, investors will have about 80% return on investment

 

I know which im putting my money on

 

The trend iwith TLS is CLEARLY DOWN

 

So what if the sp is at record low, $4 was also a record low, so was $3.80, and so was $3.60, that didnt stop it from going lower

 

This is the worst of the dogs in a dog industry

 

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In reply to: nizar on Saturday 26/08/06 10:09pm

If you believe the future is entirely determined by the past, then why not try driving to work tomorrow by just looking out the back window http://www.sharescene.com/html/emoticons/ph34r.gif and see where that gets you! http://www.sharescene.com/html/emoticons/wacko.gif

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In reply to: kacy on Saturday 26/08/06 11:06pm

well my point is dont put price targets on a stock which has underperformed just about every analyst price target in the last 12 months

 

i hope telstra has a run and u make a killing i really do but i personally will not be taking part

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QUOTE


Caution - T3 offer is no easy call

Richard Webb
August 27, 2006

Telstra will still be in limbo after the $8 billion T3 share offer, and that's one reason for investors to treat the sale hype with extreme caution, analysts say.

What the Federal Government is proposing is "the second-worst" outcome for the company and its shareholders, according to one fund manager.

"The worst outcome would have been if it had done nothing, as at least they've removed the politics around the stock," he said. "But we will still have this huge stock overhang for years to come." The sale process, unveiled on Friday, means $15 billion of Telstra shares will be parked in the Future Fund to be unloaded over the next five years or so, probably as soon as the share price shows signs of strength.

That will keep a brake on the share price, even if the business overhaul by the management team headed by the US import, Sol Trujillo, halts the recent sharp fall in earnings.

That's another reason to be super cautious about T3. When the Government unloaded T2 at a heady $7.40 a share in November 1999 (Telstra shares closed at $3.50 on Friday, less than half that), Australia's biggest communications company was seen (misguidedly, it proved) as having big technology growth prospects.

The Telstra beast of today is something quite different. It's a dividend-generating stock with few growth prospects, fighting a rearguard action to try to stem a decline in profits as people shift from fixed-line phones to mobiles. Telstra has an effective monopoly position in fixed lines (and makes something like 80 cents profit in every dollar received), but faces much stiffer competition on mobiles (where it makes about 30 cents in the dollar).

If Mr Trujillo fails to stop this earnings decline, even the company's dividend will come under pressure.

This was evident recently when the management team left a question mark over the level of future dividend distributions before apparently getting their arm twisted ahead of news of the T3 offer on Friday.

What also will not change is Telstra's fight with the Government over regulation and access to its monopoly copper cable network. It might quieten down while the T3 sale is in train, but will return with a vengeance once it's over.

That is because this fight goes right to the heart of what Telstra does now as a semi-private company - it tries to get the best deal it can for its shareholders, and this is often at odds with what the Government wants.

The T3 offer will be sold on its yield, which will be attractive, particularly for self-funded retirees seeking dividend income. The instalment process, where you pay some money upfront and the rest at a later date but still receive the dividend, means the initial yield will be around a superb 14 per cent, according to some estimates.

But a high yield is good only if you are not losing capital at the same time, should the shares slide further: remember T2.

Finally, one thing that has changed dramatically since 1999 is that investors are now more savvy about shares and share investing. Many also learnt a big lesson about investing from the slide in their T2 shares. That's going to make the T3 sales process that much tougher.
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Thanks Nizar, It's nice to see some rational thought back on the telstra forum. I'm not a telstra follower. Apart from last week, I have not invested in it for about 5 years (lost big time on T2). Its been politically hammered alright and that has stuffed up the fundamentals IMO. But I think this could be over now and telstra still has a bright future for all the reasons mentioned previously on this forum. As stated on Nizar's quoted post below, the politics is on the old copper network. But who gives a stuff about that! The future is with FTTN and FTTP.

 

I doubt the mobile phone will replace the broadband socket connection. Sooner rather than later this will become increasingly fibre, and will deliver your TV, movies, phone, internet, surveillance, etc. Optus has offered telstra $1b toward the FTTN network. Telstra's reply: "Go build your own and give us our free access to it!". Optus is now stuffed! Telstra owns the infrastructure, ie those pmg pits on the footpath with the tubes interconnecting them carrying the copper cables. So how easy is it for telstra to install FTTN and FTTP. Just a matter of threading up new fibre cables. Is Optus going to go back to nailing their cable to the power poles? I donÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢t think so. Telstra now has the big advantage where FTTN is concerned and Optus is going to have to pay to use it.

 

So it appears telstra has a business plan to recover its monopoly with home and business communications and the other telco's can only go begging cap in hand. Not the best thing for cheap high speed internet connections, but certainly good for the sp. Perhaps Sol Trujillo is not so bad for telstra afterall.

 

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In reply to: kacy on Sunday 27/08/06 03:26pm

Hi Kacy,

 

Since my last post I have just been standing on the sidelines watching developments. IMO the FTTN is only a matter of time and it will be built by Telstra. The ACCC is not without fault - it is the market that determines risk not the ACCC. If the market - TLS, Optus, G9 and all investment banks and corporates - is not willing to built the FTTN on their terms then quite obviously the ACCC is wrong. Clearly Telstra has a huge advantage - the FTTN will firmly re-assert its monopoly status - all other ISPs [previously cherry pickers] will simple have to revert back to being resellers. The ULLL decision is not worth worrying about down the track - even right now the sums involved is relatively minor.

 

I would prefer to see the Future Fund takes up 20% but I can live with the 32% and 2 year escrow. Most important [absolutely crucial in fact] to me is for the govt to exit - looks to me that they will no longer have influence on TLS board/management. Solly can now tell the TLS story - plenty of blue sky backed by a strong incumbent position, market shares, cashflow and balance sheet. The company is undergoing transformation from the old to the new - i happen to believe that the no-nonsense current management/board is the way to go. Free of the govt at last AND re-monopolising the fix line last mile!

 

Looks like you and I see a lot of positives on Telstra but it seems that alongside religion and politics, TLS generates an enormous amount of angst - whipped along by the barking dogs of the media. I am only looking out for the investment opportunity - I just hope to get the lowest price possible - perhaps it is about now!

 

Cheers, GASBAG http://www.sharescene.com/html/emoticons/biggrin.gif

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