Telstra - Company Update and View

The market was unimpressed by Telstra's recent company results.

There were a number of factors here. The EBITDA was down by 0.3% to $5.32 Billion. Revenue for the six months ending 2008 was down by 2.8%.

The company said that it was experiencing "challenging market conditions". Revenue from traditional fixed line was down by $222 Million. Revenue from other businesses were down by $53 Million. Revenue from mobile services, how ever was growing strongly , up $145 Million.

The stock has been trading in a consolidation pattern now for over 12 months against the recent rally in the stock market. It has not enjoyed the upward momentum, that a lot of other stocks have enjoyed over the last 12 months. The stock is currently trading on a dividend yield of 8.26%, which is extremely attractive.

In my experience, when stocks start to pay yields that are self-funding then you tend to find that they have bottomed. When I talk about self-funding it means that the yield from the security is greater than what you can borrow funds for. I am not saying that the stock is ready to turn around and rocket to the moon, but it is attractive down here against other forms of investment yields such as term deposits and such.

Happy trading