Is Telstra in the Clear?

From an ugly step-sister to Cindarella in 12 months

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Telstra (ASX: TLS) has today announced a deal with Vodafone NZ for the sale of Telstra's New Zealand business, known as Telstra Clear.

The Australian telco will receive $660 million for the business, as long as the NZ Commerce Commission gives the deal its blessing.

From outcast to market darling

The news was well received, with Telstra shares up slightly to $3.865 in late afternoon trading in a down market. After trading as low as $2.70 in August of last year, the company's share price has recovered strongly to be at the best price in over three years – not bad when you consider the $0.84 in dividends it's paid over that time.

After being ignored for years (save the occasional article decrying its falling share price), the investment community seems to have rediscovered Telstra.

Of course, long-time readers will recall we did suggest it might be good value in our New Year's 'Top Stocks for 2012' article. (The others were QBE Insurance (ASX: QBE), Westfield (ASX: WDC) and Coca-Cola Amatil (ASX: CCL), by the way.)

What next?

Guessing the rationale for short term share price moves is enough to send anyone mad, but best guesses range from a rush to so-called 'defensive' businesses to a belated realisation that Telstra wasn't the awful business that popular opinion suggested it was.

The sale of Telstra Clear will further bolster the telco's coffers, and with the company confirming that media acquisitions are off the table, attention is turning to what it will do with the cash. Some are expecting a big acquisition, while many are hoping for a special dividend or share buy-back.

Foolish takeaway

I'd prefer they use the funds to pay down debt, and I'm encouraged that they haven't rushed into any big acquisitions thus far. Here's hoping that management continue to be conservative and avoid anything silly!

If you're in the market for some high yielding ASX shares, look no further than our "Secure Your Future with 3 Rock-Solid Dividend Stocks" report. In this free report, we've put together our best ideas for investors who are looking for solid companies with high dividends and good growth potential. Click here now to find out the names of our three favourite income ideas. But hurry – the report is free for only a limited time.

More reading

Scott Phillips is an investment analyst with The Motley Fool. He owns shares in Telstra, QBE, Westfield and Coca-Cola Amatil. You can follow Scott on Twitter @TMFGilla. Take Stock is The Motley Fool Australia's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »