Telstra’s special dividend at risk

The special dividend of six cents a share that Telstra has foreshadowed it would pay next year may be under threat due to the company’s declining profitability. A number of analysts at investment banks have excluded the planned special dividend from their forecasts of profit, dividends and share valuations. Ratings agency Moody's Investor Services may also cut Telstra’s credit rating on $13 billion of Telstra borrowings. It yesterday warned that the “deterioration in operating performance is a concern”. Telstra and the federal government (the company’s controlling shareholder) are squabbling over changes to regulation of the former telecom monopoly. The Australian Securities and Investments Commission has also launched an investigation into Telstra amid concerns it may have broken rules on disclosure of information.