Two ways to capitalise on Telstra Corporation’s dominance

Telstra launches national wi-fi network

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Telstra Corporation Ltd (ASX: TLS) continues to show its rivals no mercy in the battle for Australian mobile and broadband subscribers.

The giant telco has announced a plan to rollout what it claims is one of the world’s largest wireless networks. At a cost of $100 million, the country’s largest mobile carrier will install up to 8,000 of its own wi-fi hotspots and connect to another 2 million hotspots at small business and public buildings across Australia over the next few years.

The move is designed to beat its rivals, including Optus – owned by Singapore Telecommunications Ltd (ASX: SGT), Vodafone – partly owned by Hutchison Telecommunications (ASX: HTA) and iiNet Limited (ASX: IIN) to the punch.

The wi-fi network will allow Telstra customers to better use its broadband services, with mobile customers expected to connect to the wi-fi networks for free, while non-Telstra customers will have to pay a ‘small fee’. The move will also enhance customers’ mobile experience, as the wi-fi network is expected to have larger ‘pipes’ – meaning faster speeds – than the 3G and 4G networks that use mobile phone towers. iiNet launched a similar plan in January this year, but it appears to have been more of a marketing exercise.

One also wonders how this could affect the National Broadband Network (NBN). Why sign up for a fixed broadband contract when you can get superfast wi-fi around Australia?

Now investors can simply buy shares in Telstra to take advantage of these moves, or you could take a closer look at a small company that runs around 85 of Telstra’s retail stores around Australia. Vita Group Limited (ASX: VTG) is expected to see that number increase, and holds a Telstra master licence which expires in August 2018. At the current price of 76 cents, Vita Group shares look cheap, and as a bonus the company pays a 4.7% fully franked dividend.

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

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