One Big Investment Idea from Telstra’s 2013 Technology Predictions List

Australian telecom giant Telstra (ASX: TLS) just released its top ten list of coming tech trends to watch out for in 2013. Consumers hungry for the latest gadget may scan this list for a recommendation as to the next hot device, but for share market investors, the allure of this list likely lies more in whether or not it yields any investable ideas. Here’s a big one… and the one Australian company well positioned to benefit from it.

Introducing the smartwallet

In the numero uno spot, at the very top of Telstra’s list, is the mobile payments trend. Powered by what is known as NFC, or near field communication, mobile payments allow consumers new flexibility in paying for goods and services; on the company side, it presents the opportunity to take a profitable slice of transactions.

Specifically, NFC technology allows “radio communication to be established by touching devices together or bringing them into close proximity,” said Dr. Hugh Bradlow, Telstra Chief Technology Officer, in the press release.

That is, you may soon be using your smartphone as your wallet. Call it a smartwallet. According to Bradlow, this emerging technology “will allow customers to take advantage of some retailers’ plans to roll out contactless terminals which will turn mobile phones with NFC capability into virtual credit cards.”

American giants pile in

Companies that stand to benefit from the mobile-payment trend include relatively well known online payments companies such as eBay’s Paypal (Nasdaq: EBAY) which has seen mobile payment volume rise to $7 billion in 2012 from just $800 million in 2010.  Other big names are diving in too. Search giant Google (Nasdaq: GOOG) has its Google Wallet and Google Checkout offerings, and (Nasdaq: AMZN) operates Amazon Payments.

Some of the most intriguing companies in this space – notably Square, which markets a device that allows credit card payments through iPhone and Android-based phones, and is led by co-founder and former CEO of Twitter Jack Dorsey — are not yet public but still in the start-up stage.

One emerging Australian mobile payments leader

Closer to home, Telstra itself is likely to benefit from the mobile-payments trend. The company has been testing NFC technology in its retail stores, with staff demonstrating to customers just how the technology can be used.

“NFC tags are being used to enable customers with NFC phones to get a link directly to Telstra’s prepaid top-up page, making it easier to recharge their prepaid account while on the move; to obtain an app and access a free trial to pay TV service Foxtel, and to get a free trial to Telstra’s new MOG streaming music service,” reported trade publication this past October.

The once and future Telstra

Telstra has been on quite a tear in the past twelve months, with the company’s shares rising over 30% vs. a 13% rise in the ASX 200 Index (^AXJO). For fiscal 2012, the company reported revenues of $25.2 billion, only a modest increase over fiscal 2011, yet also reported capturing 1.6 million new mobile customers in Australia. Given that Telstra’s domestic mobile business accounts for about one third of its revenues, it follows that any new trend or technology that causes Australians to keep an even tighter grip on their phones is likely to benefit the company and its shareholders.

Thus the big investment idea to come out of Telstra’s 2013 technology predictions list may be just be… Telsta shares.

For an even more exciting investment idea, check out The Motley Fool’s “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool contributor Catherine Baab-Muguira owns shares of Google. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.


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