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Telstra jumps on restructure, CEO set to retire

CEO to reitre
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The Telstra Corporation Ltd (ASX: TLS) share price is in the spotlight after the telco outlined to the market its plans for the legal structure of the company.

Telstra has launched its T25 strategy involving reducing costs, improving profit margins and growing its 5G position. But the legal structure of the business is also important for how it conducts its operations.

Telstra’s business plans

After establishing Telstra InfraCo in 2020, Telstra has proposed a legal restructure as the next step in creating potential opportunities to monetise its infrastructure assets and deliver additional value to shareholders.

  • The final proposed structure will result in a new holding company, Telstra Group Limited, with four main entities – InfraCo Fixed, Amplitel (InfraCo Towers), Telstra Ltd (ServeCo) and Telstra International.

    Telstra shareholders will receive one new Telstra Group Limited share for each one of their existing Telstra shares.

    Progress made to date

    The telco giant said that it has made significant progress to date with its objectives and implementation of its legal structure.

    It has established Amplitel as a standalone business and the subsequent 49% sale, delivering net cash proceeds after transaction costs of $2.8 billion.

    Telstra has taken steps to establish ‘InfraCo Fixed’ as a standalone business, including intercompany agreements developed between InfraCo Fixed and Telstra Limited to support strong and sustainable earnings for both entities.

    There has been a passage of legislation by parliament to reflect the restructure.

    Telstra also said it had made an agreement with NBN Co. This brings additional certainty to Telstra’s ability to realise value from InfraCo Fixed after the restructure is implemented.

    The telco is expecting Telstra Group Limited to become the new parent entity by the end of October 2022.

    Final thoughts on this move and the Telstra share price

    Telstra has done a lot of work on improving the underlying performance over the past few years. It could be about to pay off, with expectations of profit growth in the coming years.

    This is an interesting restructure. It makes sense to have a formal separation between the business units, particularly with changes that are happening, or could happen in the future.

    Telstra seems like a decent ASX blue chip share now, so it could be worth considering. But I’m looking at other ASX dividend shares as ideas for income for my own portfolio.

    Information warning: The information in this article was published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169




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