Telstra (TLS) shares joined the general rise yesterday as investors tried to anticipate a settling of the US budget and debt ceiling impasse.
In Telstra’s case, though, yesterday was annual meeting day and there was nothing said to shareholders to spook investors.
Telstra shares rose 7c to $5, a rise of 1.4%.
The 28c a share annual dividend seems in place, but the chances of that rising with the interim next February remain linked to whatever deal the company strikes with the new Abbott government on the NBN.
Chairman Catherine Livingston told the meeting that Telstra is determined to defend the $11 billion NBN deal with the government, which is under review at the moment after the election.
"We will seek to preserve the value in those agreements in any renegotiation," she said.
"A move to predominantly use Fibre to the Node in the rollout of the NBN could result in the renegotiation of some aspects of our Definitive Agreements.
"In the meantime, Telstra will continue to fulfil the obligations set out for us in the existing Agreements, and continue to work constructively with the Government and NBN Co. and in the best interests of our shareholders," Ms Livingston said.
On the dividend question, she told shareholders, "In accordance with our guidance, the dividend for the year was 28 cents per share, returning $3.5 billion to shareholders.
"This represented 91 per cent of our earnings, and saw us return to a dividend payout ratio of less than 100 per cent for the first time in 3 years.
"As previously announced, in 2014, your company will return to its usual practice of considering dividends on a half yearly basis, as part of the regular Board process."
So it will be early February 2014 before shareholders learn whether the dividend will rise for this year.
TLS YTD – Telstra shares stronger on NBN, dividend and offshore jobs promises
And with more criticism of the company for sending jobs and work offshore, Ms Livingston had a strong defence, telling the meeting that, "Telstra has adapted well to change in recent years, creating a new business model based on the demand for data, and network based solution delivery.
"To grow as a company, we need to constantly adapt.
“The size and nature of our workforce is re-balancing to reflect the fact that some parts of our business are reducing in size, while other parts are growing. We are responding to the changing market structure, including the establishment of the NBN, and changing demand for our fixed line services.
"We will continue to drive value from the core of our business, especially our network advantage; to encourage an innovation culture built around solving the problems of our customers; and to make the strategic decisions necessary to keep serving our customers and growing your business."
And in that she was (naturally) supported by CEO David Thodey who said in his address that, “On the off shoring of work, our customers increasingly want to interact with us online. Forty per cent of customers transactions were completed online in 2013 – compared to only 30 per cent in 2012 – and this percentage will grow again this year.
“This means that our contact centre work is declining quickly and will continue to so.”
Mr Thodey said all of the company’s contact centres must be held to the same standards of customer service, privacy and security information.
Both Mr Thodey and Ms Livingston emphasised the importance of Asia to the future of the company’s growth strategy in a speech to shareholders.
“Asia’s rise is creating opportunities for us to expand our footprint across Asia, and help Australian, European and American companies make the leap into Asian markets,” Mr Thodey said,"that’s why we are making strategic investment across Asia, such as new data centres in Singapore and cloud-enabled nodes in Singapore and Hong Kong."
And the Ms Livingston told the meeting, "We have adopted a similar approach to growing our International business, making strategic investments in facilities such as a new data centre in Singapore, and cloud-enabled nodes in Singapore and Hong Kong".
And for as long as Telstra moves deeper into Asia (it has to do something with the cash the NBN deals will bring it besides repaying some to shareholders in capital management initiatives), employment will rise faster offshore than in Australia and more and more jobs will either disappear here or be created offshore.
