This appeared last week.
Telstra could sell health unit
- The Australian
- 12:00AM September 1, 2017
Bridget Carter
Scott Murdoch
Telstra is expected to start considering the future of its struggling health business as it looks to cover its $3 billion revenue black hole and the forgone benefits of its NBN earnings securitisation plan.
NBN Co’s decision to stop Telstra fast-forwarding the delivery on its NBN payments means the telco will forgo about $5.5bn.
The revenue was not officially accounted but was a major part of its future plans and the telco was keen to lock in the payments. Under the existing plan, Telstra will still receive the annual payments of $1bn for the next 30 years.
The move by NBN to say no means that Telstra’s future buyback programs will be put on hold, along with debt-reduction plans, in yet another decision that is likely to displease Telstra’s already weary investors.
The dividend payout ratio was reduced this year to preserve capital and naturally investors are now starting to wonder where the next leg of growth will come from.
Telstra chief executive Andy Penn last year warned that the company was facing a $3bn capital black hole after 2021 as the NBN rollout progressed.
The company has flagged $2bn in cost cuts but the plan won’t cover the entire revenue loss, prompting speculation as to Telstra’s next step.
There is a growing chance that Telstra Health could be put on the chopping block, despite investing in the business over the past 2.5 years.
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I guess there will be a few nervous people at the Telstra e-Health Group but I wonder, having put this together, might it not be good to have a separate entity of reasonable scale with the skills and experience they have built up.
I guess it will all depend on just how profitable it can be stand-alone.
As always time will tell and comments welcome.
David.
Commercial entities no matter how big cannot compete with the government solution, it is stifling innovation and now looks to be impacting jobs and growth, under an internationally recognised brand and marketing power some very good Australian ehealth products had export opportunities, unless we can flog the MyHR, oh sorry that is an overseas product.
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