Is the Telstra Corporation Ltd (ASX: TLS) share price a buy? The Telstra share price has been rising in recent weeks, going up 11% in two weeks.
What has happened recently?
The telco has been making progress on its proposed legal corporate structure so that it can better realise the value of its infrastructure assets, take advantage of potential monetisation opportunities and create additional value for shareholders.
It plans to separate the business into a few different segments.
The first, called 'InfraCo Fixed', would own and operate Telstra's passive or physical infrastructure assets: the ducts, fibre, data centres and exchanges that underpin Telstra's fixed telecommunications network. The aim of this is to provide optionality to create additional value from these assets in the future.
Next, 'InfraCo Towers', which would own and operate Telstra's passive or physical mobile tower assets, which Telstra is looking to monetise given the strong demand and compelling valuations for this type of high-quality infrastructure according to Telstra.
The third is called 'ServeCo', which would continue to focus on creating innovative products and services, supporting customers and aiming to deliver the best customer experience. ServeCo would own the active parts of the network, including the radio access network and spectrum assets to ensure Telstra continues to maintain its lead of mobile coverage and network superiority in the industry, according to the telco.
Finally, Telstra said it also intends to establish its international business under a separate subsidiary within the Telstra business to keep that part of the business, including subsea cables, together as one entity.
The Telstra Chair John Mullen said that realising more value from Telstra's infrastructure assets was one of the fundamental pillars of Telstra's T22 strategy.
Mr Mullen said:
Even before the COVID-19 pandemic reminded us of the enormous importance of telecommunications infrastructure globally, we could see the opportunity to provide transparency of our assets and opportunities to deliver additional value for shareholders.
The legal restructure is a step toward that outcome. It also reflects the new post-COVID world we are living in and the fact that our assets are a critical part of the infrastructure that is enabling that nation's growing digital economy.
FY21 half-year result
Telstra also announced a few different things in its half-year result. It said that income dropped 10.4% to $12 billion and net profit after tax (NPAT) declined by 2.2% to $1.1 billion.
The company continues to work on its goal of reducing costs and now management have set "bold" earnings before interest, tax, depreciation and amortisation (EBITDA) targets of mid to high single digit growth of underlying EBITDA in FY22 and $7.5 billion to $8.5 billion of underlying EBITDA in FY23.
What do brokers think of the Telstra share price?
There are a mixture of thoughts about Telstra shares at the moment.
Morgan Stanley has a price target of $3 for Telstra and rates it as a sell.
However, Ord Minnett thinks the Telstra share price is a buy and has a price target of $4.05.
The performance of Telstra shares may depend on its ability to hit those EBITDA targets.
