NBNCo will delay the rollout of HFC connections for 6-9 months while it figures out why they don’t work. For Telstra this means lower disconnection payments from the NBN in FY18 and reduced receipts from premises linked and ready for service, the broker notes.
This will mean a slight reduction in FY18 earnings but given it is only a delay, this should be picked up in subsequent years. The broker does not believe Telstra will be forced to lower its FY18 dividend. Neutral and $3.90 target retained.
Sector: Telecommunication Services.
Target price is $3.90.Current Price is $3.46. Difference: $0.44 – (brackets indicate current price is over target). If TLS meets the UBS target it will return approximately 11% (excluding dividends, fees and charges – negative figures indicate an expected loss).