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The pressure on Telstra's beleaguered stock will be unrelenting this week as a wave of analysts' downgrades continues to wash through the market just days before the telco's biggest shareholder gets the green light to offload another block of shares.
According to The Australian, The commonwealth's $66 billion Future Fund, which owns 10.9 per cent of Telstra, will be able to continue selling its stake from Tuesday next week. While there is no suggestion the fund is actively considering the sale of more stock, its release from trading restrictions is likely to add to the market uncertainty that surrounds the $38bn company.
Telstra last week used its half-year results to cut its sales guidance for the third time in six months, prompting a series of downgrades from analysts such as Bank of America Merrill Lynch's Alice Bennett and Macquarie Group's Andrew Levy.
Most analysts cut their 12-month price targets on the stock, with Ms Bennett setting a new mark of $3.20, down from $3.35, and Goldman Sachs JB Were's Christian Guerra cutting his forecast from $4.40 to $4.10 as he lowered his Telstra recommendation from "buy" to "hold".
Telstra shares have dropped 27c - almost 8 per cent - since it reported net profit for the six months to December 31 slumped 3.3 per cent to $1.85bn after a worse than expected decline in fixed-line phone revenues and increased competition in the fixed broadband and mobile markets.
The latest downgrade prompted some analysts, such as RBS Equities' Ian Martin, to question the company's ability to make forecasts.
Chief executive David Thodey acknowledged that negotiations with the federal government over the telco's involvement in the proposed National Broadband Network had proved a distraction for senior management.
Communications Minister Stephen Conroy might force the sale of Telstra's 50 per cent stake in pay-TV operator Foxtel - or prevent it from bidding for mobile phone spectrum auctions - unless its agrees to migrate its customer base to the NBN's fibre network.
