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Date : 09/12/2021

Telstra Strengthens Its Mobile Network. Stock Price Set To Rise

Investors are closely watching Telstra Group Limited (ASX: TLS). The Telstra share price has been one of the most-watched stocks on the ASX on Wednesday. This follows an announcement from the Telco giant yesterday.

TLS share price is on watch after the company released an announcement relating to the mobile spectrum. According to the release, Telstra AU has invested $616 million to secure 2x10MHz in the Australian Communications and Media Authority’s 850/900 MHz band auction. This represents the maximum amount of low band spectrum Telstra was allowed to bid for under the competition limits set by the Government.

Telstra Group believes this is a win for its customers. Especially for the people, businesses, and communities of regional and rural Australia. Telstra AU now holds the 2x40MHz network of low-band spectrum in the major cities. In the remote areas, it is 2x45MHz. It is worth noting that this is more than any other carrier.

As Telstra Group strengthens its mobile network, the company sees the TLS ASX stock price set to rise.

What Is Driving TLS Share Price Up On the ASX?

At present, Telstra’s 5G network extends to more than four-thousand sites across the country, reaching 75% of the population. This new spectrum is a key milestone to support the company to meet its T25 commitment. The aim is to provide 5G coverage to 95% of the population by 2025.

This will also allow Telstra Group to extend its lead over rivals by an unthinkable amount. Over the last seven years, Telstra has invested about $11 billion in its mobile network nationally. Four billion of this is to develop the regional mobile network. Because of this Telstra’s mobile network now covers one million square kilometres more than any of its competitors.

But it won’t stop there. Telstra AU revealed that the group will continue to invest to ensure that the company maintains its leading mobile coverage. The aim is to help regional and remote communities fully participate in the digital economy.

FY22 is another pivotal year for Telstra as the firm moves past the FY21 inflexion point and sets to complete the T22 strategy. For FY22 guidance, we expect to see Telstra’s EBITDA between $7 billion and $7.3 billion, along with a Capital Expenditure ranging from $2.8 billion to $3 billion.

Telstra is still facing in-year national broadband network headwinds of approximately $350 million. Furthermore, the underlying EBITDA in FY22 also includes approximately $50 million of non-cash accounting headwind from insourcing retail channels and no return of revenue from international mobile roaming.

Overall, the Telco sector is facing intense competition. Telecom companies are struggling to maintain their profit margin. Despite all the efforts to expand their network, these companies are still fighting to turn around their businesses and return to earnings growth. The COVID-19 crisis has disrupted demand, challenged supply chains, dragged down earnings, raised costs for many businesses, and injected uncertainty into outlooks.

As of the time of writing, TLS share price (ASX: TLS) trades at $4.06, slightly down by 0.12% for the day. Year-to-date, ASX TLS shares gained 35.91%.

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