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Why the Telstra share price could be set to soar

The Telstra Corporation Ltd (ASX: TLS) share price could be moving back into the buy zone thanks to the Australian Government.

Why is the Telstra share price one to watch?

According to an article in the yesterday’s, Australian Financial Review (AFR), 5G technology is a hot political topic right now.

Prime Minister Scott Morrison and his Japanese counterpart, Shinzo Abe, reportedly discussed strengthening bilateral cooperation between the two countries on 5G. 

That bodes well for leading telecommunications companies like Telstra going forward. The Aussie telco is shaping up as a leader in the domestic 5G space.

In fact, TPG Telecom Ltd (ASX: TPG) Executive Chairman, David Teoh, said a combined Vodafone-TPG would be playing catch-up with Telstra and Optus. That comment was made back in March prior to the recently approved $15 billion merger.

If the virtual summit between Prime Ministers Morrison and Abe is anything to go by, that race could be heating up. 

According to the AFR, Japan has ‘vowed to close the gap’ on Asian rival China in the 5G space. That should be music to the ears of shareholders who have watched the Telstra share price fall 43.5% in 5 years.

How is Telstra tracking in the 5G space?

I think Telstra’s push to be a 5G leader has been partially catalysed by the disruption from NBN Co. Telstra is proudly the first provider to enable standalone, end-to-end 5G across Australia.

According to the Telstra website, 5G will be ten times faster than existing 4G networks. The telco is also forecasting 1/30th of the latency (i.e. lag) with 10 times the network capacity and scale. 

Those are some impressive numbers. The group’s 5G network push also coincides with the current trend towards more working from home arrangements.

The coronavirus pandemic has forced businesses to rethink how they work. Some aspects of lockdown restrictions could remain in place even as we emerge from the pandemic which could place an emphasis on fast network speeds at home. For those worried about COVID-19 and 5G, Telstra also debunked a lot of rumours on its website here.

Foolish takeaway

I feel strengthening Australian-Japanese relations is a good sign for the Aussie economy. Much of our success right now is heavily reliant on China with relations currently a little frosty.

If Telstra can continue to be a market leader in the 5G space, it could well capitalise on strengthened collaboration with Japan beyond 2020.

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Motley Fool contributor Ken Hall 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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