Credit Suisse suspects the NBN investment to upgrade 6.0m premises to speeds close to 1.0GB per second at a cost of $3.5bn while significant should have a limited impact on service providers and higher access costs are likely to be passed through to end-users.
The broker also notes NBN has not increased revenue projections despite the higher investment and has, in fact, lowered short-term forecasts.
Credit Suisse retains an Outperform rating and reduces Telstra’s target to $3.85 from $3.90. A potential return to growth in mobile is considered the key driver of the stock.
Sector: Telecommunication Services.
Target price is $3.85.Current Price is $2.85. Difference: $1.00 – (brackets indicate current price is over target). If TLS meets the Credit Suisse target it will return approximately 26% (excluding dividends, fees and charges – negative figures indicate an expected loss).