Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Is The Telstra (ASX:TLS) Share Price A Buy For Its New Loyalty Plan?

I believe it’s worth considering if the Telstra Corporation Ltd (ASX: TLS) share price is a buy on news of its new loyalty plan.

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. It also has operations stretching across eHealth, network applications and subsea cabling. Starting in 1997 (until 2006), the Australian Government sold Telstra to Australian investors via the ASX. The second batch of Government share sales, called “T2”, was conducted in 1999 at $7.40 per share.

Is the Telstra share price a buy?

Telstra recently reported its half year result showing a dividend cut of around 27% to 8 cents per share and the net profit was also down by 27.4% to $1.2 billion.

The narrowing profit margins due to NBN competition as well as mobile competition has seen Telstra’s half yearly dividend nearly halve over the past couple of years.

But, the telco may have a plan. According to the Australian Financial Review, sources said Telstra would look to reward long-time customers and those with multiple devices & services with the telco by offering more than plain-old discounts. Telstra applied on January 25 to register the name Telstra Plus with IP Australia.

Just like week Telstra sent out marketing to pre paid customers offering them more for their money including more data, longer recharge periods and additional countries that customers can call for an unlimited amount of time.

Telstra upped the data for $30 and $40 recharges. However, interestingly, Telstra has included a 6-month expiry recharge for 60GB for $150 and a 12-month expiry recharge for 150GB for $300. Monthly rechargers have the option to pay for many months upfront and save on money whilst also getting more data.

Who knows if this will work? There is a huge amount of competition facing Telstra including Optus, Vodafone, TPG Telecom Ltd (ASX: TPM) brands, Vocus Group Ltd (ASX: VOC) brands, Amaysim Australia Ltd (ASX: AYS), BoostMobile, Aldi Mobile and so on.

Aside from perhaps winning some brownie points and loyalty from customers, these long-dated contracts could have the pleasing effect of bringing forward revenue and profit.

Whilst this is a clever idea by Telstra, I don’t think it’s enough to rescue the profit (or share price) in FY19. Telstra continues to lose customers from higher-margin non-NBN services. I’d rather invest in one of the proven ASX shares below instead.

3 Proven ASX Shares To Consider Ahead Of Telstra

[ls_content_block id=”14945″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. 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. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content