Why is the Telstra share price stumbling today?
Shares in the telecoms giant have lifted more than 15% over the last 12 months.
Shares in Australia's biggest telecoms operator Telstra (ASX: TLS) are among the notable losers despite the benchmark ASX indices rising to hit a 3-month high. Telstra shares were trading 0.5% lower at $3.89 in early trading.
By contrast, shares in rival TPG (ASX: TPG) jumped 1.2% to $5.77.
Why is the Telstra stock price losing ground today?
Telstra shares have slipped after chief executive Andrew Penn announced his surprise decision to retire, after helming the telecoms giant for more than 7 years. He will leave the company on 31 August.
Telstra said chief financial officer Vicki Brady will take over from Penn as CEO on 1 September, becoming the first woman to lead the telecom operator. She has held the role of group executive responsible for strategy and group executive for consumer and small business in addition to her current role of CFO.
The announcement comes as a surprise, because Penn had shrugged off questions from reporters over succession planning last month at its half year results. He also unveiled the company's T25 growth strategy late last year.
"Andy has led Telstra during a period of significant change and will be known for his courage in setting a bold ambition through the T22 strategy to deliver a transformed experience for customers, shareholders and employees," Telstra chairman John Mullen said in a statement to the ASX.
During his 9 years at Telstra, the first 2 as CFO, Penn is credited with leading the Australian telecoms giant through several major transformations.
This included the T22 program, under which Telstra slashed its employee count by around 8,000, delivered a massive $2.5 billion in cost savings and streamlined the business, allowing it to focus on growth opportunities.
He also outlined the telco's new T25 strategy, under which it is targeting annual growth rates in the "high-teens" for underlying earnings per share until FY25.
Recent months have seen a simultaneous spending push that includes investing $1.6 billion in 2 projects to boost its optical fibre network and build ground infrastructure for satellite Internet; teaming up with the Australian government to acquire the Pacific operations of telecoms firm Digicel, and pledging to boost regional coverage and extend 5G coverage to most of Australia's population.
In February, Telstra reported a 34% slide in its half year net profit to $700 million, but analysts were still impressed by the significant positive momentum in its core business, thanks to a continued focus on mobile network leadership, despite growing competition from TPG and Optus.
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