Volatile day for Telstra investors

 

More trades within the hour than any day last month.

Telstra (ASX:TLS) investors have traded more shares within an hour of the market opening today than any day in the past month.

The increased activity follows Telstra's announcement of an $11 billion agreement with NBN Co yesterday, which it flagged on the ASX as news that may affect its share price.

Investors reacted quickly to the news, trading a total of 104.55 million shares by 11am - more than double Telstra's three-month average of 51.23 million shares traded per day.

Telstra shares reached a monthly high of $3.23 when the market closed on Friday. Shares opened at $3.44 this morning, declining to $3.38 within the hour.

At noon, Telstra was trading at $3.37 on the ASX, with a total of 128.89 million shares traded since the market opened today.

During the following two hours, the share price hovered between $3.37 and $3.36, ending up at the latter at 1pm and the former at 2pm.

It returned to $3.36 at 3pm, dropping to a low of $3.34 in that hour. The market closed at 4pm with Telstra trading at $3.34 and 211.18 million shares traded today.

Although the closing price was 3.41 percent higher than Friday's close, it still did not reach Goldman Sachs JBWere's forecast of $3.45 to $3.65 per share.

Melbourne-based analysts Christian Guerra and Raymond Tong yesterday valued the $11 billion injection at $0.90 per share, but expected this to translate to an increase of only $0.45 to $0.65 on the market.

In a report to clients, Guerra and Tong said their $3.45 - $3.65 estimate could be depressed by investors looking to offload their shares for a profit.

The analysts expected Telstra's business model to change, with more investment in content and fixed line margins falling from 60 percent currently to 20 to 25 percent by 2030.

"Essentially, Telstra will move from being a vertically integrated fixed line provider to a retail service," they wrote.

"In our view, despite losing network ownership, Telstra will be well placed to compete in the future NBN world," they wrote, highlighting benefits of Telstra's incumbency, fixed-line and wireless network ownership, balance sheet capacity and bundling.


Volatile day for Telstra investors
 
 
 
Top Stories
Meet FABACUS, Westpac's first computer
GE225 operators celebrate gold anniversary.
 
NSW Govt gets ready to throw out the floppy disks
[Opinion] Dominic Perrottet says its time for government to catch up.
 
iiNet facing new copyright battle with Hollywood
Fighting to protect customer details.
 
 
Sign up to receive iTnews email bulletins
   FOLLOW US...
Latest Comments
Polls
In which area is your IT shop hiring the most staff?




   |   View results
IT security and risk
  26%
 
Sourcing and strategy
  12%
 
IT infrastructure (servers, storage, networking)
  22%
 
End user computing (desktops, mobiles, apps)
  15%
 
Software development
  26%
TOTAL VOTES: 333

Vote
Would your InfoSec team be prepared to share threat data with the Australian Government?

   |   View results
Yes
  57%
 
No
  43%
TOTAL VOTES: 138

Vote