Hi SB,
I agree. Ethical is entitled to his views, but for the following reasons, I believe that Telstra is not yet in the category of a rekindled growth stock (a dividend paying utility stock, yes, but not a growth stock):
1)
underlying operating revenue continues to decline;
2)
basic service revenue is slowing;
3)
mobile revenue is growing (due to the re-introduction of handset subsidies), but the ARPU values are declining rapidly, meaning that the overall quality of the customer is continuing to fall;
4)
Telstra's profit growth continues to come at the expense of forward CAPEX (ie: Telstra continues to defer on replenishing its network capacity and capabilities) - this is a ticking timebomb for which Telstra is trading away 2006 and onwards for short-term 2004 financial gains;
5)
by end 2004, Optus (SingTel) will likely be the largest mobile company in Australia - Optus continues to take market share from Telstra, as well as its corporate accounts, and is recording higher average ARPUs;
6)
Telstra is still in too many domestic market segments where more nimble niche players are nibbling away at the edges (whilst Telstra retains older standard equipment in place);
7)
outside of Australia, Telstra is a relative minnow, in circumstances where the likes of SingTel are 4-5x greater in subscriber size (etc);
8)
Telstra either has to exit from, or commit to, its international strategy - a decision which must be made within the next 6 months, barring which time decay will become a very real issue for the Company;
9)
if Labor gets elected at the next election, then going by today's media, the ALP will become highly interventionist in Telstra's forward strategy (whatever it may be); and
10)
today Fitch ratings confirmed a negative outlook for Telstra whilst re-affirming its current ratings (ie: ratings' agencies tend to like many of the factors that I have criticised above).
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