Watching indeed :) Somebody might get an unexpected phone call....

Watching indeed Somebody might get an unexpected phone call.

Telstra is expected to start considering the future of its struggling health business as it looks to cover its $3 billion revenue black hole and the forgone benefits of its NBN earnings securitisation plan.
NBN Co’s decision to stop Telstra fast-forwarding the delivery on its NBN payments means the telco will forgo about $5.5bn.
The revenue was not officially accounted but was a major part of its future plans and the telco was keen to lock in the payments. Under the existing plan, Telstra will still receive the annual payments of $1bn for the next 30 years.
The move by NBN to say no means that Telstra’s future buyback programs will be put on hold, along with debt-reduction plans, in yet another decision that is likely to displease Telstra’s already weary investors.


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The dividend payout ratio was reduced this year to preserve capital and naturally investors are now starting to wonder where the next leg of growth will come from.
Telstra chief executive Andy Penn last year warned that the company was facing a $3bn capital black hole after 2021 as the NBN rollout progressed.
The company has flagged $2bn in cost cuts but the plan won’t cover the entire revenue loss, prompting speculation as to Telstra’s next step.
There is a growing chance that Telstra Health could be put on the chopping block, despite investing in the business over the past 2.5 years.

Telstra has spent more than $200 million buying about 18 businesses focused on health software, to try to build e-health in Australia.

But the plan has not fired to the extent that Telstra had hoped, and it understood that questions over its future position in the telco’s portfolio are emerging.

Telstra is already scaling back its international business.
That is expected to continue as it tries to fill that revenue black hole.

With Telstra’s share price languishing at a five-year low, the pressure is mounting on Mr Penn to implement a solid plan to that will pump up the company and prepare it for the future.

A number of shareholders believe Telstra’s plans so far have been lacklustre and with Kerry Stokes listed as one of the telco’s major investors, the pressure is likely to be intense.

The prospect of a big purchase to help shore up future revenue is off the table and some say the structure of the company needs to be looked at.

Telstra has given guidance that a 22c dividend payment is likely in 2018 and Citi analysts forecast that will be made up of a 15c ordinary dividend and a 7c special. The bank tips after that the dividend in 2019 could be as low as 13c, but the board could look at some special dividends to soothe investors.