rudd stimulus package, page-13

Huntley has a BUY as of yesterdays news letter



Note: Marker indicates price of $3.65 at publication date.

Investment Rating
TLS is the leading telecommunications and information service provider in Australia. TLS provides a full suite of services across voice, mobile, data and internet products and has either a dominant or significant market share in each service category. TLS also offers services including directories, advertising and Pay TV. It operates in a highly regulated industry where the extent of regulation penalises it due to its market position and historic ownership. The Strategic Review of November 2005 outlined a wide-sweeping transformation of TLS from the complex to the simple - from price-based to value-based competition with broadband anchoring the future direction. If successful TLS will boast significant free cash flow by 2010 but a lot of hard work lies ahead. Yield and turnaround attraction.


Result Description
Telstra excluded from the National Broadband network (NBN) request for proposals RFP) process.


Impact
The Expert Panel has excluded Telstra has excluded Telstra. The Minster for Broadband, Communications and the Digital Economy, Stephen Conroy can accept or reject the Panels’ decision. Cabinet will make the ultimate decision and is likely to require legislation to implement.


The Panel suggests that Telstra’s NBN proposal – lodged on November 26 - did not address small and medium enterprises in the building of the NBN. Telstra provided a SME plan to the Government in early December, and in Telstra’s view in accordance with the RFP.


TLS has several options with existing technology for future high speed broadband delivery using Hybrid Fibre Coaxial (HFC) cable networks and Wireless. The existing ADSL and ADSL2+ services will be increased to 20-25 Mbps.


TLS is in the process of increasing the speed on the Next G™ network to 21 Mbps and aims to go to 40 Mbps by December 2009.


We continue to recommend TLS.


No change to fair value, earnings estimates or price triggers.


Recommendation Impact (Last Updated: 15/12/2008)
No Change