At time of writing, Telstra Corporation Limited [ASX:TLS] shares are trading at $3.04, which marks a massive drop of 5.88% from yesterday’s figures.
The telecom company is likely under great stress from the many changes within their marketing sector, the NBN rollout, as well as the new TPG-Vodafone merger.
Latest Telstra News
Just after 3pm today, Telstra released a statement on the ASX, addressing their FY19 guidance which they released earlier this month.
The statement reiterated that the FY19 guidance is ‘based on Telstra management’s best estimates and may need to be adjusted when nbn co releases its Corporate Plan, which is expected on 31 August.’
That’s today. So what is the latest update?
‘Telstra will assess the effect of the nbn co Corporate Plan 2019 on its outlook for FY19 and advise the market once that assessment is complete.’
Well, it looks like shareholders aren’t prepared to sit and wait.
Profit Taking Before Profit Is Lost
On 7 August, Telstra shares were trading at just $2.79 a piece. That means today’s price of $3.04 shows an increase of over 8% in just three weeks.
There’s no doubt about it; Telstra has had a recent good run. And because of that, investors are taking their profit with the worry that all this new telecom rearranging will hurt the tech giant. After all, the TPG-Vodafone merger aspires to be intense competition against Telstra.
Looking ahead for Telstra
While this new competition looks scary, it will also create a more rational competition level. This means the price war that has been hurting Telstra’s profits will cease, as the game moves to one of innovation rather than money-saving.
And it’s not like Telstra weren’t expecting the challenge. Accompanying their FY18 results, Telstra CEO Andrew Penn had this to say:
‘The challenging trading conditions are expected to continue in FY19.’
The T22 strategy is being implemented for these exact challenges.
So yes, the road ahead, at least for 2019, looks concerning for Telstra. But they know this, and they’re ready for it.
Hopefully the longer road ahead sees their pre-planning pay off.
For Markets and Money
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