Thodey: Telstra is ‘perfectly ok’

Telstra (ASX: TLS) chief David Thodey has said the copper wires long used by the company are good to go for another 100 years.

Mr Thodey’s words come at an interesting time for both the company and the government. As the NBNCo and Telstra begin to roll out a new fibre optic network, the labour government is battling to stay in power past September but Thodey’s words seem to be adjusting to the likelihood of a coalition government in office.

If the coalition does get into power, it will most likely change the rollout of the project and create ‘cabinets’ on street corners. These cabinets provide the connection from high speed fibre optic cables to houses with broadband via the existing copper wires.

The words are a stark turnaround from only a decade ago when Telstra described the copper network as “five minutes to midnight” and more recently when communications minister Stephen Conroy said it was “ageing” and “decaying”. It seems Telstra is preparing itself for the change, but if the coalition tries to alter the multi-billion dollar agreement Telstra has with the government, it will require a whole new negotiation.

Despite Telstra’s ‘irrelevant’ discovery of asbestos-laden pits and ducts that need to be replaced before the network can continue its rollout, it will be hoping the fibre optic network continues, although at this point it seems unlikely. This will also be good for other companies like TPG Telecom (ASX: TPM) and iiNet (ASX: IIN) who will also be able to connect households to internet speeds of up to 1 gigabit per second.

Foolish takeaway

Telstra is one stock that investors have relied upon for growth, income and security in recent years and you can see why. Despite having a market cap of $56 billion, new projects in the pipeline are only a good thing for the telecommunications giant and with a renowned fully franked dividend, investors could do much worse.

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Motley Fool contributor Owen Raszkiewicz does not own shares in any of the companies mentioned in this article.

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