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Telstra to improve 4G coverage

Telstra (ASX: TLS) is set to further its competitive advantage with the rollout of its 4G network, as it seeks to cover 85% of the population by Christmas.

After already meeting its target of 66% by June 30, Telstra has said its network was already experiencing data increases of up to 23%. The network now hosts over 2.1 million devices. Chief operations officer Brendon Riley said “Given the take up we’re seeing we’ve made the decision to change our investment strategy so we’re now going to be deploying 4G as a capacity play instead of deploying 3G in that way”.

As smart phones become more complex, they require more bandwidth to operate efficiently and the 4G network is fast becoming a must-have for new mobile devices. The increasing popularity of faster mobile devices has given Telstra an opportunity to lure customers away from other networks with less coverage.

The company said its $1.2 billion investment into the network may pay off, with Goldman Sachs analyst Raymond Tong saying that it would increase the company’s competitive advantage given the number of base stations it currently operates. Mr Tong told The Financial Review that “by [the] end of 2013, Telstra [will] have 3500 4G base stations compared with Optus which we estimate will have 1000-1250 4G base stations and Vodafone [will have] over 1000 base stations”.

Optus is owned by Singapore Telecommunications (ASX: SGT) and Vodafone is 50% owned by Hutchison Telecommunications Australia (ASX: HTA). Both carriers operate 4G networks of their own and invested huge amounts into making their networks faster or more competent than Telstra’s.

Foolish takeaway

Telstra’s coverage in 4G networks should see it connect more customers from other providers. Vodafone’s network in Sydney and Melbourne may be a more superior frequency, however Telstra’s coverage will enable it to reach more customers and increase its market share.

With its legendary, fully franked 28 cent dividend, Telstra is the darling of Aussie investors. But with its share price skyrocketing over the past year, is Telstra past its prime? Click here for our brand-new report: “Is It Time to Sell Telstra?”

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Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.

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