Telstra launches 5G: Is it a game-changer?

The Telstra Corporation Ltd (ASX:TLS) share price has been a strong performer in 2019. Will the launch of 5G take it higher?

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It isn't something that I've been able to say often over the last few years, but the Telstra Corporation Ltd (ASX: TLS) share price has been one of the best performers on the S&P/ASX 200 index this year.

Since the start of the year the telco giant's shares have been on a tear and risen by a sizeable 29%.

Why is the Telstra share price up 29%?

There have been a number of catalysts for Telstra's outperformance in 2019. These include the return of more rational competition, the decision to cut its dividend to a sustainable level, its improving performance, and the ACCC's decision to block the TPG Telecom Ltd (ASX: TPM) merger with Vodafone Australia.

In respect to the latter, many in the market believe that this decision will allow the company to entrench its position as the leader in 5G internet in Australia.

This certainly appears to be the case after Telstra became the first telco company in the country to officially launch a 5G service this week.

On Wednesday 5G became a reality for Australia with the launch of Telstra's first 5G device, the HTC 5G Hub.

According to the company's press release, this launch means Australians can now experience the super-fast response times, high-speed data, and additional capacity the new technology provides.

The company believes it will revolutionise internet in the country. CEO Andrew Penn said: "5G will be a game changer for a range of applications where speed and quick response times (latency) are important, including 4K video, gaming and other new technologies that require advanced connectivity such as autonomous driving."

But it will take a bit of time before the whole country has access to the new technology.

Telstra has started rolling out 5G in 10 cities around Australia and over the next 12 months it expects its 5G coverage to increase in area almost five-fold and reach into at least 35 Australian cities.

What now?

The company advised that it will be launching its new mobile plans at the end of June. Pleasingly for consumers, Telstra will make 5G available for free for a minimum of 12 months. This means that everyone with a compatible device has the opportunity to try 5G when they are in a 5G coverage area.

After which, Mr Penn advised that: "customers on our top two plans will have 5G connectivity included in their plan at no extra charge, and customers on our other plans will have the option of adding 5G connectivity for $15 a month."

Telstra will no doubt be hoping that this leads to a sustained increase in its key average revenue per user metric for its mobile business over the next few years, underpinning solid earnings growth and supporting its dividend.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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