Telstra (ASX: TLS) is in the news this morning after the telco received some good news from NBN Co.
Telstra is our country’s oldest telecommunications business, having built the first telegraph line in 1854. In 2019, it provides more than 17 million retail mobile services, around 5 million retail fixed voice services (e.g. home phones) and 3.6 million broadband services. Telstra also has operations in eHealth, network applications and subsea cabling. In 1997 (until 2006), the Government sold Telstra to Australian investors by listing the shares on the ASX. The second batch of Government share sales, called “T2”, was conducted in 1999 at $7.40 per share.
Telstra’s NBN News
According to reporting by the Australian Financial Review, NBN Co will give retail service providers like Telstra, TPG Telecom (ASX: TPM) and Optus more bandwidth and higher speeds at no extra cost.
The telcos like Telstra will have the ability to spread the extra bandwidth capacity across their whole customer base which could reduce congestion and improve speeds.
It is also being reported that NBN Co will increase its speed by around 15%, making it easier for Telstra and others to reach the advertised speeds.
This isn’t an immediate change, the faster speeds will come into effect in May 2020.
The AFR quoted NBN Co chief customer officer for the residential business, Brad Whitcomb, “It will save [retailers] money in terms of complexity, and it should save them some money in terms of how much CVC they will have to purchase. We’re confident that we can put these pricing proposals in place and still stay within our corporate plan revenue forecast.”
However, both Optus and Telstra don’t think NBN Co has gone far enough. Optus is concerned that price changes will need to occur as data consumption grows whilst Telstra wants NBN to just have a pricing structure based on speed tiers, not CVC charging which causes some retailers to pay for less CVC, which increases congestion and reduces speeds at busy times.
The NBN has been the biggest cause of Telstra’s profit declines in recent years according to the telco.
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At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.