Telstra Corporation Ltd in home energy battle with utilities

Could Telstra Corporation Ltd (ASX:TLS) begin offering energy solutions along with broadband bundles?

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Telstra Corporation Ltd (ASX: TLS) has signalled its intention to enter the home energy market, potentially offering solar and battery storage solutions to millions of Australians in direct competition with the major utilities.

As Telstra’s head of International & New Businesses, Cynthia Whelan writes on her corporate blog, “We see energy as relevant to our Connected Home strategy, where more and more machines are connected in what is called the Internet of Things.

Research has forecast an estimated 10 billion plus connected machines by 2019, from smart dishwashers that run themselves when energy costs are lowest, to an app integrating weather data with home thermostats, Ms Whelan added.

Telstra is installing solar systems and battery storage at a number of its exchanges, so it’s not like the telco has zero experience here.

Ms Whelan notes that Telstra connects more Australians to the things they love and enjoy than anyone else, via its broadband internet, landline phones, mobile networks and its half share in pay-TV operator Foxtel. The company obviously sees connecting Australians to other ‘smart appliances’ such as batteries and solar systems as a next step.

Telstra says that the number and diversity of ‘things’ to connect is rapidly increasing. Ms Whelan is putting together a team led by Ben Burge – who comes from online renewable energy company Powershop. The team will look at opportunities to help customers monitor and manage many different aspects of the home – including energy.

A number of commentators have warned that energy utilities face increasing competition from technology companies and unless they embrace new technologies, including renewables, they will be left behind to wither and die.

Origin Energy Limited (ASX: ORG), AGL Energy Limited (ASX: AGL) and Energy Australia are now offering renewable energy solutions to their customers in light of the looming threat to their traditional power businesses.

Foolish takeaway

We don’t yet know how Telstra will integrate energy solutions into its existing offering, but we’ve already seen M2 Group (ASX: MTU) – now part of Vocus Communications Ltd (ASX: VOC) – offering energy deals as part of its bundles through its Dodo brand.

That appears a logical first step for Telstra to take.

Motley Fool writer/analyst Mike King owns shares in M2 Group, Vocus and Telstra.聽You can follow Mike on Twitter聽@TMFKinga Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering adiverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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