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Telstra will not buy shares with NBN cash
20 April 2012
Australian operator rules out share buy-back using NBN deal funds instead focusing on long-term performance
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Telstra
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Australia
National Broadband Network
Telstra will not opt for an immediate share buy-back despite obtaining funds through its A$11 billion (US $11.39 billion) deal with Australia’s National Broadband Network.
Shareholders were expecting Telstra to undertake a buy-back with the funds received from the deal with NBNCo, the Australian government-owned firm responsible for the national broadband network, reports Dow Jones Newswires?.
Under the deal, NBNCo will buy Telstra’s local copper network and transfer customers to its new fibre-to-the-home service. The deal will generate about $3 billion of free cash over the next three years, buy Telstra’s CFO Andrew Penn has decided this is not enough to permit a share buy-back.
Telstra’s actual excess free cash will depend on market conditions and the rollout schedule for the new internet network, and Penn said the operator would aim for higher dividends in the long term.
David Thodey, CEO of Telstra, told DJ the NBN deal also protects the operator from the possible change of government at the upcoming federal election in 2013. GTB
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