Telstra shares hit a 14 month high yesterday despite the wider market falling 2%, after shareholders voted to take the money and run from the NBN and the federal government.
The shares jumped to $3.17, but eased in late trading to finish at $3.12, up 2c on the day.
Telstra shares are up more than 12% so far this year as the market has warmed to the NBN deal and the company’s improved operations.
The wider market is down 13% this year after the 88 point, 2.04%, fall in the overall market yesterday.
The vote was 99.1% in favour of splitting off its network as part of the federal government’s National Broadband Network rollout.
The vote came after the company had reaffirmed to shareholders that the 28c a share dividend would remain in place for this financial year and the 2013 year.
"I can confirm that it is the board’s intention to maintain a 28 cent fully franked dividend for fiscal 2012 and fiscal 2013," chairwoman Catherine Livingstone said her speech to the meeting in Sydney.
"This is, as always, subject to the usual process for the declaration of dividend at each half year, and there being no unexpected material events."
The AGM was relayed to Brisbane and Melbourne to watch the company’s NBN vote.
Ms Livingstone said the board would consider a share buyback in 2011-12.
"The impact of the NBN transaction in fiscal 2012 will not be material," Ms Livingstone said.
"During this time, the board will consider the actual profile of NBN-related cash flows.
‘‘This will inform our capital management strategies, including the potential for a share buyback.’’
Ms Livingstone told the meeting, "fiscal 2011 saw a fundamental improvement in the value of your company, and we have carried that momentum into 2012".
And on current operations, Telstra CEO David Thodey told the meeting that the "momentum we saw in the second half of 2011 has continued into the first part of the 2012 financial year’’.
Mr Thodey told shareholders the NBN deal does not change Telstra’s strategy.
He said the annual meeting an ”historic event… that will deliver long term strategic benefits to our company".
"We do believe this is the best option. Secondly, and very importantly, we also believe the current proposal protects shareholders under current government policy and very importantly in terms of any future government policy changes.
"The NBN is a transformational even in the history of this industry and therefore it does provide us, Telstra, with new strategic opportunities as we go forward.
"But it does provide us with the unique opportunity to accelerate investment in new technologies.”
He said Telstra had always known that voice over internet would eventually neutralise their revenue from fixed-line voice calls.
"The changes are not new, but the roll-out of the NBN will accelerate our need to migrate to this new world,” he said.
Under the deal, Telstra will progressively decommission its copper-based network and allow NBN Co to access its pits, manholes and exchanges, and sell some infrastructure.
In return, Telstra will receive $11 billion from the federal government, with the financial benefits to come over the next 30 years.
Now that shareholders have given the deal the thumbs up, it’s up to the Australian Competition and Consumer Commission to complete its review of Telstra’s structural separation undertakings (SSU).
The Commission has yet to rule on the undertakings but said in August that Telstra has to do more on its commitment to structurally separate its two arms from 2018.
And Cochlear told shareholders at yesterday’s AGM that it expects the recall of its Nucleus CI500 devices to cost up to $150 million.
The Sydney-based company surprised the market when it recalled the entire range of the product last month after a rise in the number of faults with the CI512 model.
The move saw the company’s shares fall sharply and yesterday they ended the day off 1.8% or 96c at $53.54.
Given that the wider market fell by more than 2%, Cochlear’s performance wasn’t all that bad, especially as the shares were down $1.33 or 2.4% at one stage in early trading.
Chairman Rick Holliday-Smith said told the AGM that, "Based on current information, our view for this provision item, or recall cost, is that the financial impact will be in the range of $130 million to $150 million.
“The provision includes some non-cash items and the after tax cash cost and is expected to be in the range of $20 million to $30 million."
The costs relate to the recall of units, write-off of stock and other relevant costs that may be incurred over time, Mr Holliday-Smith said.
The cost will be included in the company’s results for the half year to December 31.
And to make it clear to the market that the cost would not damage the company’s earnings capability, the chairman said the first half dividend would be boosted to an all time high.
"The Board and Senior Management believe the company will continue to generate strong cash flows and that we will be successful in dealing with the current issues.
"Therefor
