Telstra shares are stuck in a two-year slump since peaking in the middle of 2015.
More recently, the company’s stock has so far failed to recover from a 10% fall when it reported full-year results on August 17.
Telstra has been consistently trading below $4 a share since that point, for the first time since 2012.
This chart shows the sharp fall on reporting day:
That price fall in reporting season was due in large part to an announcement from Telstra that it would be cutting its dividend.
The market reaction was severe, and while that raises its own concerns about Australian investors’ over-reliance on dividends, Telstra’s share price have been steadily declining since the middle of 2015.
The price peaked in early July 2015, which was just after current CEO Andy Penn took over the reigns from David Thodey.
Since then, shares in Telstra have been unable to gain any traction. The price earlier this afternoon of $3.86 is almost identical to the closing price of $3.85 on 30 August, 2012.
Here’s the company’s stock chart over a five-year timeframe:
Under Thodey, Telstra stock climbed by almost 120% as the company increased profits and took a dominant position in the mobile phone market.
Telstra reported a $5.8 billion profit in August last year, which was boosted by the $1.8 billion sale of its shares in Chinese online car sales business Autohome.
As part of those results, Telstra also wrote down the bulk of its $250 million investment in video streaming platform Ooyala, made under Thodey’s tenure.
Late last year the company was struggling with network outages which saw senior executives docked some of their bonus pay.
In addition to more competition in the mobile phone market, Telstra has also struggled operationally.
Although the company sealed a multi-billion dollar deal with the government for the roll-out of the national broadband network (NBN), the project has suffered cost blowouts.
CEO Andy Penn said at the company’s 2017 full-year results that the negative effect from the NBN would be at the upper end of the company’s guidance of $2-3 billion.
To be fair, the most recent price fall was driven Telstra’s announcement that it was cutting dividends and putting a strategic focus on capital allocation.
One could argue that the market reaction was overly harsh, and the decision by management was a prudent one.
Still, it’s been a disappointing decline for the company’s stock price since Telstra shares peaked at $6.50 in 2015 after years of under-performance.