Trustee favourite takes a hit, but jumping ship not advised
It's been a tough week for SMSF investors holding considerable shares in Telstra, but some financial planners believe the telco's major restructure could be good news in the long term.
Telstra, a crowd favourite with SMSF investors, this week announced it was slashing 8000 jobs. Cost-cutting in public companies can be positive for share prices, but in this case, a forecast of lower profits in the Telco's disclosures saw values take a hit.
Given that Telstra investors predominantly invest for the dividend, the news of lower profits and possibly lower dividends was the last straw for many jaded investors, said Verante Financial Planning director Liam Shorte.
“However, this move to simplify the business and prepare it for the new market conditions of NBN and 5G Mobile is what analysts had been asking of the company in order for it to compete long term,” he explained.
“So the drop this week in Telstra’s share price is the bad short term news and what we need to understand now is whether the strategy will work in increasing their competitive position against the other players in the market in the medium to long term.”
Mr Shorte said he is hoping for a turnaround in the business, especially as it’s the only option for service in non-metropolitan areas.
“I believe a leaner, meaner Telstra could be a winner but I think many retiree investors will not be prepared to wait for the outcome so now Telstra may become a long-term play for those in accumulation,” he cautioned.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.