Shares of telecommunications giant, Telstra Corporation Ltd (ASX: TLS), were trading slightly higher on Thursday following the completion of a key acquisition.
In an announcement to the ASX, Telstra said its acquisition of Pacnet has been completed, with only regulatory approval from the United States remaining.
Pacnet is a provider of subsea cables, managed services, data centres and more. At the time Telstra CEO, David Thodey, said the $US697 million acquisition would help the Australian telco become a "leading provider of enterprise services to multinational companies and carriers in the region."
Pacnet operates around 30 interconnected data centres across the Asia-Pacific region and ties in nicely with Telstra's ongoing push into the booming markets. Shortly before announcing he'll be stepping down from the top job at Telstra, Mr Thodey said the company had a goal of deriving one third of revenues from Asia by 2020.
The Group Executive of Global Enterprise and Services, Brendon Riley, said, "The acquisition provides us greater specialisation and scale, including the delivery of enhanced services, such as software-defined networking and opens up significant incremental opportunities for our business."
The acquisition will double Telstra's customer base in Asia and increase network reach and data centre capabilities.
As soon as practicable Telstra will refinance Pacnet's $US350 million in debt and high-yield notes.
Should you buy Telstra Corporation shares?
Telstra shares have run hard in recent years as investors' desire for reliable high-yielding stocks took hold of equity markets. Operationally, Telstra has also been kicking goals for shareholders by revitalising its brand, laying the foundations for growth in Asia and divesting non-core assets.
Whilst Telstra could find a spot in almost any share portfolio, at today's price, I think Telstra is more likely a 'Hold' than a 'Buy'. Investors should wait for a meaningful pullback in price before committing to a purchase of stock.
