Telstra Oulook Flat; Westpac A$2 B RMBS Bonds

Darlington Musarurwa
18 Dec, 2009
New York City

Telstra sales revenue to be flat in fiscal 2010 and the telecom operator formalises terms with NBN. Westpac Bank priced A$2 billion of residential mortgage bonds, significantly higher than A$1 billion of expected offering.

[R]3:00 AM New York, 7:00 PM Sydney - Telstra sales revenue to be flat in fiscal 2010 and the telecom operator formalises terms with NBN. Westpac Bank priced A$2 billion of residential mortgage bonds, significantly higher than A$1 billion of expected offering. [/R]

Australia stocks declined 0.4% after Telstra announced that it forecasts sales revenue for fiscal year 2010 to be nearly flat.

In Sydney trading ASX 200 Index fell 0.4% or 19.8 to 4,650.80.

Of the ASX 200 Index stocks, 88 gained, 102 dropped, and 10 were unchanged. Abacus Property led gainers in the index shares with a rise of 7.4% followed by Cudeco increasing 6.4%.

Telstra Sales Revenue to Be Flat

Telstra reported today that it forecasts sales revenue for the fiscal year 2010 will be flattish compared to a year ago.

The company’s revenues growth will be weighed on by a strength in the Australian dollar, tough operating conditions on Hong Kong, strong domestic competition and a shift to wireless-only homes “which is impacting on revenues from fixed telephone lines.

However, the company forecasts that 2010 free cash flow target will remain at A$6 billion.

Separately, the company also announced that it has formalised its terms with NBN Co. to facilitate its potential participation in the roll out of the National Broadband Network.

The parties are discussing commercial wholesale arrangements for NBN Co. use of Telstra’s passive infrastructure and backhaul.

According to the report, it is “too early” to determine whether any final agreement between the parties will be reached and approved by shareholders and regulators.

Westpac Bank Prices A$2 billion of RMBS

The Australian reported Westpac Bank priced A$2 billion of residential mortgage backed securities as confidence begins to claw back to the securitisation market.

The report notes that smaller, regional banks have so far in the year raised A$3 billion through the RMBS bonds sale.

Westpac''s A$1.84 billion Class A notes, rated AAA/Aaa with a weighted average life of 2.6 years, were priced at 130 basis points over swap.

But pricing on the A$110 million Class B and A$50 million Class C tranches, with a weighted average life of 7.6 years, was not announced.

In the securitization deal 10,000 mortgages were bundled.

ASX Movers

PanAust Limited led the decliners in the S&P ASX 200 index with a loss of 6.9% followed by losses in Sundance Resources Limited of 6.6%, in Medusa Mining Limited of 6.5%, in Bradken Limited 6.4% and in Avoca Resources Limited 6.0%.

Abacus Property Group led gainers in the S&P ASX 200 index with a rise of 7.4% followed by gains in CuDeco Limited 6.3%, in West Australian Newspapers Holdings Limited of 5.9% and in Asciano Group of 5.3%.

Other Movers

Abacus Property Group increased 7.4% to A$0.43.

AMP Limited added 2.5% to A$6.51 after chief executive Michael Smith, speaking to media after the bank''s annual meeting, said the bank remained focused on consummating its recent buy-out of a wealth management joint venture with Dutch financial group ING.

AXA Asia Pacific Holdings Limited businesses advanced 1.8% to A$6.49 a day after it agreed to a buyout offer from NAB. National Australia Bank Limited decreased 2.4% to A$25.99.

Caltex Australia Limited fell 1.5% to A$8.17.

Commonwealth Bank of Australia climbed 1.5% to A$52.86 and the bank said it has completed the sale of its Fijian banking and insurance business to the Bank of South Pacific Limited.

PanAust Limited the mine developer dropped 6.9% to A$0.53.

Sundance Resources Limited the exploration of iron ore slipped 6.6% to A$0.14.

Telstra Corporation Limited declined 3.3% to A$3.43 after the phone company said on Friday it expects sales revenue to be ""flattish"" in fiscal 2010, compared with its previous forecast of low single-digit growth.

Westpac Banking Corporation rose 0.6% to A$23.49 after the bank priced A$2.0 billion of residential mortgage backed securities. The amount of securities sold was far larger than bank’s initial plan to price A$1.0 billion of securities according to Dow Jones.