Phone wars: Optus targets Telstra

Optus has targeted Telstra’s mobile phone plans in a nationwide television campaign, in a bid to protect its market share and potentially steal customers from the giant tleco.

Singapore Telecommunications (ASX: SGT) owned Optus is attempting to promote its brand as being fairer, but could draw the ire of Telstra Corporation (ASX: TLS). In the ads Optus claims there is little difference between the mobile networks of both companies, despite Telstra spending significantly more on mobile infrastructure.

“When it comes to the percentage of Australians the Optus mobile network reaches there isn’t much difference between us and Telstra,” Optus’ television ad says. “In fact it’s less than 1 per cent. But when you compare our $60 plans and what you could be charged in excess fees if you slip over your talk or data limit the difference becomes much, much, much bigger.”

The campaign is being run on TV and as ads on social media websites, according to the Australian Financial Review (AFR). Optus chief Kevin Russell has told the AFR that Telstra’s mobile plans were based on what customers were willing to bear rather than providing a good deal. Mr Russell says Optus wants to stand out and be differentiated by doing the right thing by its customers every day. (It may also be a move to placate customers after Optus admitted ripping them off for years).

Of course this may just be a push by Optus to beat its rivals, Telstra and Vodafone- partly owned by Hutchison Telecommunicaitons (ASX: HTA) – and sign up customers in the lead up to Christmas. Mobile phones are often given as Christmas presents.

Telstra is likely to hit back strongly, with a 4G network offering significant advantages over Optus’ and Vodafone’s networks. According to analysts, Telstra will have around 3 times as many 4G base stations as its competitors. And as anyone who has gone bush with a non-Telstra mobile can tell you, there’s very little coverage available, with 4G phones on the Telstra network in high demand.

Foolish takeaway

As the dominant market leader, Telstra could be seen as offering a premium product and charging premium prices for its services. Optus and Vodafone appear ever more likely to be forced into niche positions in the mobile market, unless they spend billions to compete head-to-head with Telstra.

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?"

Motley Fool writer/analyst Mike King owns shares in Telstra. You can follow Mike on Twitter @TMFKinga

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