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.
3 stocks to own in July 2020...
Amidst the COVID-19 confusion, there are some companies still growing FAST (think: online meetings through Zoom, streaming companies like Netflix and eHealth services provided by Teledoc).
While the world grapples with COVID-19, some companies are still growing rapidly. The entire cloud computing market is valued around $US210 billion but if you ask me, it seems clear as day that this market is only going to get bigger in 2020 and beyond.
That's why our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back. He owns all three of them right now!
Claim a FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.
Our report is 100% free and unlocks hundreds of hours of bonus content.
Disclaimer and warning: This information is published by The Rask Group Pty Ltd and contains general financial advice and information. That means, the information/advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read our Terms of Service and Financial Services Guide before using this website.