Can 5G Mobile Save The Telstra (TLS) Share Price?


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Is it possible that 5G mobile will save the Telstra Corporation Ltd (ASX: TLS) share price?

Telstra is Australia’s largest and oldest telecommunications business, having built the first telegraph line in 1854. Today, it provides more than 17 million retail mobile services, nearly 5 million retail fixed voice services (e.g. home phones) and 3.6 million broadband services.

Can 5G save the Telstra share price?

The Australian Financial Review is reporting that Telstra customers will be able to buy the first 5G-ready phones in stores by the end of June. Telstra has signed deals with multiple smartphone manufacturers to get exclusive access to their first 5G-ready phones.

Telstra currently has more than 200 5G mobile base stations in Australia, which are located across all of the capital cities as well as Launceston, Toowoomba and the Gold Coast, but not throughout the rest of the country just yet.

Telstra’s CEO Andrew Penn called 2019 the year of 5G at the Consumer Electronics Show (CES) in Las Vegas. But, analysts are unsure if 2019 will also be the year of recovery for the Telstra share price.

The AFR quoted Mr Penn saying: “As a world leader in the testing and development of 5G, we have been working closely with numerous global manufacturing and industry partners to make this revolutionary technology real-world ready.”

Telecommunications consultant Paul Budde told the AFR the first 5G phones would not represent a major advance. It won’t be until the 26 GHz band comes online that the true power of 5G will be felt — and the auction isn’t until 2020. Initially, consumers will just get access to faster internet speeds.

However, all of the exciting technology that the future promises, like automated cars, fully-connected homes and talking fridges, will rely on the full-speed 5G network.

Will Australian Consumers Pay More For 5G?

Telstra management is hoping that the faster speeds and better technology of 5G will encourage consumers to pay more, but no details about 5G prices have been released. According to Telstra’s FY18 report, the average revenue per user (including paying off a phone) was $58.

I think a valid question is, will Australian household budgets be able to stretch to pay materially higher phone bills for technology that arguably we don’t need? The 4G speeds already seem good enough to do almost anything a user could want like watching Netflix, looking at Instagram or… reading fantastic investing articles on Rask Media!

Is It Time To Buy Telstra Shares?

The market will usually only increase the value of a share price if the earnings/profits are growing — and if Telstra’s revenue can’t grow materially its earnings may not budge materially earlier.

Competition is important too. TPG Telecom Ltd (ASX: TPM), Optus and Vodafone are sure to challenge Telstra in the race for 5G, as they have done with 4G.

As Rask Media’s Owen Raszkiewicz wrote in this in-depth analysis of Telstra’s valuation, there may be a better price to pay for the telco’s shares, and there other shares to consider.

In fact, one of Telstra’s competitors could turn out to be a more reliable investment in 2019. Our analyst provides his thoughts on the telco in the free report below.

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Jaz Harrison

Jaz Harrison

Jaz is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.