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  • Australian telco giant Telstra (TLS) has secured a €500 million (~A$860 million) bond issue to shore up its balance sheet
  • The bond will be used for general corporate purposes including the pre-funding of future debt maturities
  • Since mid-March Telstra has secured an additional $940 million in bank facilities
  • The bond issue and the additional bank facilities are both well below Telstra’s current average cost of funds, providing stability and liquidity
  • By providing its customers with additional services and debt relief, Telstra has been at the vanguard of helping people survive and thrive while life assumes a new normal
  • Telstra is up a slight 0.79 per cent in early trade with shares priced at $3.18 each

Australian telco giant Telstra (TLS) has secured a €500 million (~A$860 million) bond issue to shore up its balance sheet.

Why now?

The bond will be used mainly for general corporate purposes including the pre-funding of future debt maturities. With a term of 10 years, the bond issue is a reflection of the company’s strategy to consolidate its debt and remain liquid in troubled economic times.

Since mid-March, Telstra has also secured an additional $940 million in bank facilities, and the company now has a total of $3.6 billion in committed bank facilities.

The bond issue and the additional bank facilities are both well below Telstra’s current average cost of funds, providing stability and liquidity.

Hey big spender

The company has been proactive in responding to its customers’ needs through the tribulations of the COVID-19 pandemic, and the low-cost debt facilities will enhance the company’s ability to fund additional and expedited programs through the current crisis.

Telstra has brought forward significant capital expenditure on network upgrades and 5G rollouts, guaranteed there’ll be no further job reductions for six months, and hired an extra 1,000 contractors to deal with increased call centre volumes.

The company has also provided relief to small business and consumer customers unable to pay their bills by suspending late payment fees and disconnections until at least the end of April.

Telstra has also increased data limits for its mobile customers and offered unlimited use to its broadband customers as consumers deal with lockdown boredom and remote working arrangements.

Telstra CEO Andrew Penn says telecommunications play a critical role in all aspects of people’s lives and the economy, as the current environment has clearly demonstrated.

“COVID-19 is having a profound impact on business across the country. At Telstra we already have more than 25,000 people successfully working from home, and we are supporting many of our customers as they grapple with shifting to working and studying from home.

“It is at times like these that big business can show leadership and make a contribution to the national response and that is what we at Telstra are doing.”

Telstra CEO Andrew Penn

A helping hand

While there’s no clear end in sight for the current global crisis, private sector engagement in relief efforts has been vital to keep economies going and help other businesses and citizens navigate a trying time. By providing its customers with additional services and offering debt relief to business customers, Telstra has been at the vanguard of helping people survive and thrive while life assumes a new normal.

“The most important thing is that as many businesses as possible are still here when we get through this crisis,” Mr Penn says.

“While it is critical we maintain a strong position we also believe there are a range of additional initiatives we can undertake now to help support the broader economy.”

Telstra is in a strong position to be able to help given its A-band credit ratings. Its access to low-cost capital will help fund both short-term spikes and longer-term slow-burn initiatives deployed to help its customers and maintain and grow its market share.

This confidence in the telco giant was affirmed in early April, with both S&P and Moody’s reaffirming Telstra’s A-band stable credit ratings.

Telstra is up a slight 0.79 per cent, with shares priced at $3.18 each as at 11:20 am AEST.

TLS by the numbers
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