Morgans explains that Telstra has effectively increased its capex guidance for the next five years by committing to around -$1.5bn of capex to build two major infrastructure projects.
The analyst cautions that competition could crimp the company’s expectation for a mid-teen IRR on the combined spend, if not all players remain economically rational. Other carriers are also aggressively pursuing similar projects, according to the broker.
Morgans makes immaterial EPS forecast changes. The target price rises to $4.56 from $4.55 and the Add rating is maintained.
Sector: Telecommunication Services.
Target price is $4.56.Current Price is $3.98. Difference: $0.58 – (brackets indicate current price is over target). If TLS meets the Morgans target it will return approximately 13% (excluding dividends, fees and charges – negative figures indicate an expected loss).
