Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Equity Bottom-Up

We retain our AUD 6.00 fair value estimate for narrow moat-rated Telstra, following the update of its playbook to address the key issues on investors' minds. First, we are encouraged by the details of plans to plug the AUD 2 to 3 billion per year EBITDA hole, when the National Broadband Network, or NBN, is rolled out. While the AUD 1 billion in net cost savings per year goal is ambitious, many of the measures are within Telstra's control. Second, despite intensifying competition in mobile, Telstra's average revenue per user and churn are stabilising. This should allay concerns on a division that accounts for 41% of group earnings, and is a key cog in the plan to offset the NBN impact. Third, we view as positive the decision to highlight the quantum of compensation payments still due from NBN, and the reduced capital intensity for Telstra post the NBN rollout. This should improve sentiment of investors fretting about the higher capital spending over the next three years. Critically, it has prompted Telstra to review its capital allocation strategy--a move that could encompass further capital management initiatives.Analyst: Brian Han

We retain our AUD 6.00 fair value estimate for narrow moat-rated Telstra, following the update of its playbook to address the key issues on investors' minds. First, we are encouraged by the details of plans to plug the AUD 2 to 3 billion per year EBITDA hole, when the National Broadband Network, or NBN, is rolled out. While the AUD 1 billion in net cost savings per year goal is ambitious, many of the measures are within Telstra's control. Second, despite intensifying competition in mobile, Telstra's average revenue per user and churn are stabilising. This should allay concerns on a division that accounts for 41% of group earnings, and is a key cog in the plan to offset the NBN impact. Third, we view as positive the decision to highlight the quantum of compensation payments still due from NBN, and the reduced capital intensity for Telstra post the NBN rollout. This should improve sentiment of investors fretting about the higher capital spending over the next three years. Critically, it has prompted Telstra to review its capital allocation strategy--a move that could encompass further capital management initiatives.Analyst: Brian Han

Telstra Lays Down the Roadmap to Plugging the NBN Earnings Hole

Telstra Corp

Telstra Lays Down the Roadmap to Plugging the NBN Earnings Hole