Telstra to return capital to shareholders

Morgans Financial Limited

In mid-April TLS announced it had divested 47.7% of Autohome for ~A$2.1bn. Gearing sits below the bottom end of the Board's target gearing range. Consequently, TLS has announced a capital management program of at least A$1.5bn. In October 2014 (when TLS had a higher franking balance than now) it completed an A$1bn off-market buyback. We have to wait until TLS's result for capital management details but expect the most obvious structure is an on-market buy-back which would allow TLS to lower its share by ~2% (at today's price) without having to dilute its franking balance. We await TLS's FY16 result for quantification of capital management initiatives. We think an on-market buy-back looks most likely, but we have not yet included this in our forecasts. See the update on Telstra here: (VIEW LINK)

Morgans Financial Limited

Morgans is Australia's largest national full-service retail stockbroking and wealth management firm, with more than 300,000 clients, 500 authorised representatives and 850 staff, operating from offices in all states and territories. As well as...


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