Telstra to maintain dividend this year

Telstra on Monday said it would maintain its dividend this year, reducing some of the uncertainty surrounding the government’s plan to sell its remaining stake in Australia’s dominant telecommunications company.

A cut in Telstra’s annual dividend, currently 28 cents a share, could have derailed the government’s plan to sell its remaining 51.8 per cent stake in the incumbent operator. Although it remains unclear whether the A$23bn ($17bn) divestment will proceed, Canberra is expected to make its long-delayed decision in coming weeks.

Many of Telstra’s 1.6m retail shareholders invested in the group because of its high and steady dividend policy. Although the share price has lost about a quarter of its value over the past year amid regulatory concerns, analysts said the high dividend had at least prevented a nosedive.

Telstra said that it would maintain the dividend for the year that ends next June 30, but provided no forecast beyond that, given its current regulatory woes.

The Australian competition regulator last week ruled that Telstra would need to cut the access charge for a competitor to its network, potentially hurting its revenues.

Telstra on Monday cut its profit growth target for the year to 1.5 to 2 per cent from 2 to 2.5 per cent. Its shares, which turned ex-dividend on Monday, fell 3 per cent by late morning at A$3.52, a near nine-year low.