Telstra shareholders could be in for a windfall after the Australian telco giant sold a 47.7 per cent stake in Chinese online carsales group Autohome for $US1.6 billion ($A2.08 billion).
Telstra shares bounced on Monday following the telco's announcement after the markets closed last week that it was selling the stake to financial services group Ping An Insurance.
Deutsche Bank analyst Craig Wong-Pan said the sale value - of $US29.55 a share - was a 13 per cent premium on the volume weighted average price and a 74 per cent premium on the IPO price in December 2013, although it was a two per cent discount on the stock's last closing price.
He said the money flowing from the sale had implications for Telstra's capital management strategy, with surplus cash flow after dividends and interest payments over the coming five years already expected to come in at $3.6 billion ($0.29/share).
"Given the company has a low franking credit balance, we expect any capital return would be in the form of a buyback," he said.
However, he said, Telstra was expected to retain most of that in order to retain flexibility for making investments in Asia and for supporting the Australian business.
Telstra chief executive Andrew Penn on Friday said the telco was "proud of its role in Autohome's rapid growth and it was the right time to realise significant value for Telstra shareholders".
The telco expects to book about $1.8 billion from the sale - which is subject to Chinese regulatory approval - in the second half of the 2016 financial year. Telstra will retain a 6.5 per cent stake in Autohome as Asia remains a key element of its growth strategy.
Mr Penn said the company would take "a balanced approach" including "potential capital management options" when considering how to use the sale proceeds.
Telstra's stock on Monday was outperforming the broader, lower, Australian market.
Its shares were up 9.0 cents, or 1.72 per cent, at $5.33, at 1227 AEST.
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