Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Search by ticker code:
Generic filters

Telstra (ASX:TLS) shares in focus on plan to invest over $1 billion on fibre routes

The Telstra Group Ltd (ASX: TLS) share price is under the spotlight after revealing a major plan to invest in intercity fibre routes.

Intercity fibre routes

Telstra announced today that five new major routes are going to be built as part of its intercity fibre project, as well as expansion of fibre connections across Western Australia’s Pilbara region.

The telco said that these investments would “deliver next generation digital infrastructure for the country” as demand for connectivity continued to soar.

First announced in February 2022, construction of the intercity fibre project commenced in March 2022. In August 2022, Telstra announced the first five priority routes, and construction is underway with more than 400km of cable already laid.

Detailed planning has commenced on an additional five routes, including connecting into Darwin from Adelaide, which will begin construction in 2025. This route “unlocks pathways to sub-sea cable infrastructure, provides new options for data centre locations including to service Asia”, and provides “important resilience” to the nation’s fibre pathways.

Ten routes, plus a major expansion and upgrade of the fibre network in the Pilbara region, are now in planning for FY23 to FY27. It will expand Telstra’s fibre footprint in the region, with around 165km of new fibre built to connect additional mining sites.

Financial details

Telstra said that funding for the updates to the intercity fibre project and Pilbara extension announced today, plus the Viasat project, would be at the top of the previously announced $1.4 billion to $1.6 billion strategic capital expenditure between FY23 to FY27, which is outside of business as usual (BAU) capital expenditure.

The telco said that the intercity fibre and Viasat projects are “on track” to deliver an internal rate of return (IRR) in the mid-teens or better, a nine-year cash payback, and around “$200 million in additional annuity income once all routes become ready for service and contributing.”

Cash payback and IRR are supported by expected contracts where a significant proportion of the long-term contract value is received upfront.

Management commentary

Telstra CEO Vicki Brady said:

Connectivity will continue to play a key role in our economy and there is enormous potential for digital technologies to rewrite Australia’s growth equation.

As the largest investor in digital infrastructure in Australia we are uniquely positioned to design and deliver this critical infrastructure, which will enable ultrafast connectivity between capital cities. Importantly, we have future-proofed the design and given ourselves the ability to extend this connectivity into regional and remote communities as demand grows and other partnerships arise, which will open up opportunities for regionally based industries and businesses.

This connectivity will build Australia’s fibre resiliency and support data centres that facilitate cloud and AI, remote working and education needs, health services, high-definition entertainment consumption and online gaming, and IoT use cases such as mining and agriculture. We are also continuing to see strong demand from hyperscalers looking for higher capacity and more direct routes.

Final thoughts on the Telstra share price

This seems like a big move, but it could be a smart move by the company. I think this makes it more of a buy than it was before. It was pleasing for shareholders that the company reaffirmed its guidance of underlying EBITDA (EBITDA explained) at between $8.2 billion to $8.4 billion, with strong performance for the mobile business.

$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 — or get it emailed to you — for FREE by CLICKING HERE NOW or the button below.

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.

At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
Skip to content