Its tough having $3bn in your kitty. But this is the dilemma the blue telco now faces.
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Telstra said it expects a $2-3 billlion “excess free cash” in the next three years and revealed spending plans today, which proved rather dull considering the cash it now has at its disposal.
In an investor meeting this morning, the telco revealed its capital management strategy and priorities which include maximise shareholder returns, maintain financial strength and flexibility.
Telstra was making no change to earnings guidance for the 2012 financial year and reconfirmed its intention to pay a 28 cent per share fully-franked dividend in 2012 and 2013.
The principles outlined by Telstra included a set of balance sheet settings that will provide “confidence to the debt and equity markets” following the finalisation of agreements for the National Broadband Network.
However, ther ewas no share buyback, as expected.
These priorities will guide the Board’s decision making, it said today.
Telstra expects $750m of this will be available this year.
However, this windfall – a pay off from NBN Co for Telstra copper network and infrastructure – is subject to the NBN roll out schedule and market conditions. In total, it should receive a $11bn payoff from Mike Quigleys NBN Co.
However, this cash projection is dependent on future of the NBN which could be torn apart if Labor are booted out of power next year, as the Liberal are vehemently opposed the $36bn broadband roll out plan. Telstra CEO David Thodey only this week confirmed it has “enough protection in our contracts” in case there is a change of guard in Canberra.
At today briefing, it also outlined NBN plans for retail and wholesale and its focus on differentiated product offerings and customer service, at today briefing.
“Telstra is focused on serving our customers through improved service, offering new products, as well as leveraging our rich set of assets,” Mr Thodey said.
This is subject to the Board’s approval process for dividend declaration and there being no unexpected material events.