TLS The Morgan View June 2018

TLS’s investor day saw a number of announcements including
:1) a significant simplification/ operational restructure;
2) FY19 guidance which assumes material NBN delays and internal restructuring costs;
3) plans for up to A$2bn of divestments; and
4) plans for an additional A$1bn pa of cost out.


If all goes to plan FY19 could be the low point for earnings and dividends,


but it's complex. ■ In the medium term these moves should reshape TLS into a sustainable business (or two if they demerge “InfraCo”) however in the short term the restructuring costs and assumed NBN delays mean earnings decline materially. We have lowered our valuation (as we roll forward to lower earnings in FY19) and reduced our dividend forecasts from 22cps to 17cps in FY19 and beyond.