As far as investor days go, Telstra's did not disappoint.
The telecommunications giant gave fund managers and analysts plenty to think about with one short sentence: "Over the next 6-12 months we will review our capital allocation strategy taking into consideration the long term business and financial profile of Telstra".
That means how to make the best use of one-off and long-term payments from NBN Co.
Telstra is to receive payments for leasings its network to NBN Co up until 2046, with the possibility for an even longer period.
Analysts were quick to point out that Telstra could securitise the NBN payments, offering them to investors as a government-backed annuity stream.
"We have considered a hypothetical theory the recurring infrastructure payments through to FY46 could be securitised by TLS," UBS told clients on Friday morning.
"Given these payments are also guaranteed by the Federal Government, they could be viewed by some investors as a Government-backed annuity (i.e. valued using discount rate nearing the 10 year Government bond rate, plus some sort of spread / premium)."
UBS reckons the infrastructure payments will be worth about $940 million a year by the 2022 financial year.
Applying a 4 per cent discount rate - which is higher than the 2.6 per cent on offer for 10-year Australian government bonds - the value of the securitised NBN recurring revenue would be $12.8 billion, based on UBS numbers.
Credit Suisse analysts said Telstra's capital management review could lead to big changes at the telco, and agreed that securitising the NBN Co revenue was an option.
Also up for review is Telstra closely-watched dividends policy.
"Telstra could consider a relatively radical capital management strategy that involves securitising, and effectively pulling forward, future NBN infrastructure receipts," the analysts told clients.
"It could use the proceeds to either support the dividend or to fund a large one-off capital return to smooth the transition to a lower underlying dividend."
