The Telstra Corporation Ltd (ASX: TLS) share price is not having a great day today. A the time of writing, Telstra shares are down 1.47% to $3.34 a share. That’s a disappointing pullback for investors seeing as it was only last week that Telstra was hitting new 8-month highs of $3.48 a share and got mighty close to its 52-week high of $3.54.
Even so, this is an ASX blue chip that climbed more than 30% between 30 October and 12 February. One of the reasons investors could be relatively bullish on the Telstra share price is its 5G rollout.
5G is the next generation technology for mobile internet. It promises to revolutionize connectivity in the same way the shift to 4G technology did years ago by allowing dramatically higher download speed, as well as reduced latency. The problem is that investment in 5G infrastructure is a Herculean task.
Analysis from Ausbil Investment Management recently stated that a 5G network requires “up to 10 times more towers, base stations and macro-cells to provide ‘blanket’ wireless coverage for users to the same reach as 4G”. That means that the telco which is able to put together a 5G network most effectively stands to benefit from this barrier to entry. And, as Ausbil predicts, “an extra leg of growth as the new 5G networks are deployed”.
There is evidence to suggest Telstra is winning the 5G race here in Australia.
Telstra leads 5G race
According to Telstra’s investor day presentation last year, the company estimates it is the “clear market leader… with the best 5G network in the country”. Telstra’s 5G network already covers more than 50% of Australia’s population, and the company tells us that it will hit 75% by June, just 2 months away.
The telco has also stated that, as of February 2021, it has roughly 1 million active 5G devices on its network. It also stated that 5G is already having a positive impact on its mobiles segment. Here is some of what Telstra said on that matter back in its earnings presentation in February:
We continued to see strong customer growth in mobiles. We added 80,000 net retail postpaid mobile services… This is in fact the strongest branded performance in several halves, and it reinforces the benefits of our clear leadership in 5G.
So from all of this, we can reasonably conclude that Telstra’s investment in a 5G network is already paying dividends (pardon the pun). As with all emerging technologies, the full spectrum of benefits that 5G will bring is not entirely clear yet. What we do know is that Telstra seems to be the best-placed telco to harvest those benefits if and when they do appear.