The Vita Group Limited (ASX:VTG) share price leapt 20% to $1.50 this morning, after the company announced a conclusion of its talks with Telstra Corporation Ltd (ASX:TLS).
Readers will be aware that Telstra and Vita Group have been renegotiating their agreement, leading to a volatile share price and at times a market that has at times arguably been uninformed. Still, today's announcement looks a positive for Vita, with several key points:
- A minimum of 3 years notice provided by either party in advance should a termination of the agreement be desired
- According to Vita, assuming that rolling 1-year expansions are granted annually, forward tenure will always be at least 5 years
- Expansion of Vita's footprint to 110 (115 from July 2019) in return for Vita agreeing to forego 7%-8% of retail remuneration
Investors were glad to have certainty in the agreement, as reflected by the jump in the share price today. Vita remains hard to value though, especially considering Telstra holds the upper hand in any remuneration changes. It may be wise to wait until its annual results come out with further information, before considering a purchase.
