Telstra (ASX:TLS) share price rises after regional frequency win

The federal Government has delivered a win for Telstra in regional Australia.

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The Telstra Corporation Ltd (ASX: TLS) share price is in the green. It comes amid news the company has secured a “win” over new regional radio frequency limits set by the Federal Government.

Telstra shares are trading for $3.82 as of writing – up 0.39%. The S&P/ASX 200 Index, meanwhile, is 0.19% higher.

Let’s a closer look at today’s news.

Telstra share price on the rise

According to a report in the Sydney Morning Herald (SMH), Communications Minister Paul Fletcher has agreed to a 45% purchase limit of low-band frequency for telcos in regional areas. It exceeds the ACCC’s recommendation of 40% and even the 43% that Telstra had asked for.

Telstra is already the leading telco, ahead of competitors like Optus and TPG Telecom Ltd (ASX: TPG), in regional areas – at least according to consumer website Finder.

The government will auction off the rights to the low-band spectrum later this year. The lease will last for 20 years.

Investors appear to have welcomed today’s news, judging by the Telstra share price movement.

Defending his decision to go above the competition watch dog’s recommendation, Fletcher said (as quoted in the SMH):

We very carefully configured this so that we don’t end up with an auction outcome that leaves the customers of Optus or TPG worse off.

Let’s be clear, [Optus and TPG] will be able to get significant additional spectrum should they want it in both regional and metro under these limits.

Telstra CEO Andy Penn welcomed the decision, saying:

It will mean we can bid for enough spectrum to maintain our leading mobile network.

Recent Telstra and government dealings

As Motley Fool has previously reported, the Federal Government and Telstra are working on a deal to buy Pacific mobile provider Digicel for approximately $2 billion.

Apparently, the Government’s interest in the Pacific telco relates to national security concerns.

“…Beijing could use the [Digicel] networks to spy on political elites and neighbouring island nations”, according to the Australian Financial Review.

The Commonwealth will provide “significant debt financing” to Telstra to finance the acquisition.

The Telstra share price lifted on the news.

Telstra share price snapshot

Over the past 12 months, the Telstra share price has underperformed the ASX 200 by about 11 percentage points. It’s increased about 12% in that time to the index’s 23%. Year-to-date, however, it has overperformed the benchmark 27% to 13%.

Telstra Corporation has a market capitalisation of $45.2 billion.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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