Telstra (ASX: TLS) is responding to pressure from competitors and customers to offer more mobile plans as it seeks to expand on its already huge market share.
Whilst Vodafone, part-owned by Hutchison Telecommunications Australia (ASX: HTA), and Singapore Telecommunications’ (ASX: SGT) Optus have been busy rolling out new plans to attract a bigger market share, Telstra has focused its efforts on doing what it’s best at — providing unbeatable network coverage and reliability, something Telstra’s head of products and innovation, Kate McKenzie, says is “a really important differentiator for us”.
However when asked directly by The Australian Financial Review whether the company had a plan to counter Optus’ and Vodafone’ new marketing strategies, she responded by saying: “I think there’s rumours out there about a certain vendor that might be having a new device soon, something I can’t talk about right now. Certainly between now and Christmas you can expect to see a lot of activity with the new propositions that we’re planning to put out there in the market.”
Gearing up for the new iPhone release isn’t all that’s on the cards at Telstra, it has also been designing new shop fronts and systems to attract more business customers, something that will bode well for them in the long term.
Despite its huge market share the number of Telstra mobiles has grown substantially in recent years – currently boasting some 15.1 million customers. However, Citigroup analyst Justin Diddams thinks Telstra’s strategy to implement a new plan to counter the marketing of its two biggest competitors is important. “A segment of the market have been raising their eyebrows at the renewed competition from the number one and two players”, Mr Diddams told the AFR.
Telstra’s new plan will enable multiple devices to share downloads. For example, if a family has multiple devices on the network they could each share the allowed data downloads for a small fee in one easy bill. It could be a good way to gain market share but “accelerates the decline in average revenue per user in the medium [term] and causes unintended deflation in the price of data”, Mr Diddams said.
Telstra’s number of mobile customers has increased from just over 12 million in 2011 up to a current 15.1 million. It could be other companies’ bad performance, such as Vodafone’s continued network failures, or Telstra’s superior coverage and reliability that drew in customers. However this Fool thinks it will too hard for competitors to start catching up to Telstra anytime soon, particularly with the company’s renewed focus on customer service and continuous network upgrades.
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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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