Why did Telstra have a mediocre performance in November?

The Telstra Group Ltd (ASX: TLS) share price made only a modest gain in November.

Shares of the telco giant opened for $3.90 each on 1 November and currently trade for $3.955 apiece, marking a 1.4% gain at the time of writing.

The S&P/ASX 200 Telecommunication Services Index (ASX: XTJ) performed slightly better over the same period, gaining 1.76%.

Broader still, the S&P/ASX 200 Index (ASX: XJO) more than tripled Telstra’s gains in November, moving 6.1% higher at the time of writing.

So let’s recap Telstra’s events for the month to see if we can piece together the reason for its lukewarm performance.

What happened for Telstra in November?

Most recently, the Telstra share price received some positive coverage in a report released by a global asset manager. Telstra made it into Janus Henderson’s 36th edition of its global dividend index, which noted the share’s substantial dividend increase in the third quarter of this year.

My Fool colleague Monica noted that Telstra’s dividend increased by 50% during the quarter to 7.5 cents per share, fully franked. That was up from 5 cents per share in FY2021.

During November, Telstra also received praise from various brokers and fund managers.

Perpetual Asset Management said that Telstra’s defensive revenue attributes made it an “appealing proposition”. Meantime, Morgans gave the share and add rating with a price target of $4.60. That was an upside of 16.16% at the time.

Morgans also noted its belief the market has not yet priced in Telstra’s InfraCo assets and this could unlock further value for investors moving forward.

ACMA criticises Telstra’s credit management processes

Despite the generally bullish sentiment that surrounded the Telstra share in November, some events transpired which could have dampened investor optimism.

The Australian Communications and Media Authority (ACMA) said Telstra must address its credit management processes or potentially face harsh penalties. As part of an ACMA investigation, Telstra admitted it mistakenly took action against some of its customers who were under payment arrangements due to financial hardship. This is a breach of ACMA’s compliance standards.

While Telstra emerged from ACMA’s investigation relatively unscathed, it was not so lucky with defending a court case against the Australian Competition and Consumer Commission (ACCC).

Telstra gets fined $15 million

The ACCC said that Telstra, along with TPG Telecom Ltd (ASX: TPG) and Optus, misled consumers about their fibre-to-the-node plans. It said the telcos did not have “adequate systems, processes and policies” to notify their customers if the advertised speeds of those plans could not be reached. This was something the telcos agreed to do.

Telstra was penalised $15 million for their infringements, while TPG was fined $5 million and Optus $13.5 million.

Finally, Telstra announced the churn of one of its key leaders on 14 November. Telstra’s now former group executive for transformation, communications and people Alex Badenoch left the company after serving an “instrumental” role in Telstra’s T22 strategy and navigating the COVID-19 pandemic.

The post Why did Telstra have a mediocre performance in November? appeared first on The Motley Fool Australia.

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Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended TPG Telecom Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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