Will its energy expansion drive the Telstra (ASX:TLS) share price to new heights?

Telstra has its eyes on the energy market…

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The Telstra Corporation Ltd (ASX: TLS) share price has been a strong performer in 2021

Since the start of the year, the telco giant’s shares have risen an impressive 34%.

Why is the Telstra share price up 34% in 2021?

Investors have been bidding the Telstra share price higher this year amid its improving outlook, which is being underpinned by its T22 strategy and the newly announced T25 strategy.

T22 was based on transforming the company, whereas T25 is going to be about driving growth. So much so, management is targeting mid-single digit underlying EBITDA and high-teens underlying earnings per share (EPS) compound annual growth rates between FY 2021 and FY 2025.

While the mobile business and its cost cutting plan will play a key role in this growth, they won’t be the only things driving it.

Expansion into the energy sector

Leading energy retailers AGL Energy Limited (ASX: AGL) and Origin Energy Ltd (ASX: ORG) may want to watch their backs, because Telstra has its eyes on the energy market.

At its T25 event, the company revealed plans to launch a simple, sustainable and integrated energy proposition through its Telstra Energy business. After which, it is aiming to be a top five energy retailer with 0.5 million+ customers by 2025.

And given its relationships with 5.4 million households and 0.9 million small to medium sized businesses, this is being seen as an achievable target.

But Telstra won’t be the only newcomer. The Australian highlights today that global energy giant Shell is also planning to enter the market in the near future, much to the dismay of the big energy retailers.

In fact, The Australian thinks AGL and Origin should be nervous, suggesting that “the environment the newcomers plan to create will be akin to the internet’s impact on the rivers of gold in print classified newspapers.”

All in all, these are interesting times for the Telstra share price and the energy market.

Motley Fool contributor James Mickleboro 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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