‘Just didn’t cut it’: Look out Telstra, a new high-speed start-up is coming for you!

Telstra is facing a fresh competitor. Here’s what we know…

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Cute little child dressed in a suit talking on his smartphone representing a young telco that is targeting ASX company Telstra

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Key points

  • Telstra has long been the dominant player in the Aussie telco market
  • But a new telco start-up plans to disrupt the sector
  • It's called GigaComm and here's what it is planning for Australia

It’s been decades now since Telstra Corporation Ltd (ASX: TLS) first faced meaningful competition. It might seem absurd today, but Telstra used to be a government-owned company with a monopoly on telecommunications services in Australia.

But those days are long gone. Telstra now not only faces competition from old rival Optus, but also from a bevvy of other telco providers. These include ASX shares TPG Telecom Ltd (ASX: TPG) and Aussie Broadband Ltd (ASX: ABB).

Even so, Telstra remains the dominant telco in Australia with a formidable market share across both mobile and broadband products.

But perhaps Telstra will finally be nudged out of its top spot by its newest competitor.

According to reporting in the Australian Financial Review (AFR) this week, a new telco start-up is setting its sights on Telstra and the other major players in the Australian telecommunications market.

Telstra faces a new threat from telco start-up GigaComm

GigaComm was founded in Melbourne out of frustration over internet speeds that “just didn’t cut it”. That’s according to Gigacomm CEO and co-founder Sophearom En.

“We were getting 10 megabits per second … for $70 per month”, En told the AFR. “I have a background in telcos as both an investor and an operator and I just knew there had to be a better wayIf you’re waiting minutes, or tens of minutes, for something to upload or download, that’s lost productivity time”.

Reportedly, GigaComm has just secured a $20.5 million capital raise, led by Palisade Impact and Endeavour Asset Management. This will help the start-up continue to build out its own infrastructure, which includes fibre optic cabling and fixed wireless technology.

The company offers plans that start at $79 per month with speeds of up to 200 megabits per second. That’s four times the average Australian download speed.

GigaComm is now present in 28 “metropolitan suburbs” across both Sydney and Melbourne.

The company will allocate the latest round of funding proceeds to further expansion in Sydney and Melbourne. As well as into the Brisbane and Canberra markets.

“We’re adding new suburbs and buildings every week. Our objective is to hit 1 million premises in the next few years,” said En.

It will be interesting to see if GigaComm can indeed build a significant presence in what is becoming a rather crowded field. No doubt Telstra is watching these developments closely.

Motley Fool contributor Sebastian Bowen has positions in Telstra Corporation Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Aussie Broadband Limited and TPG Telecom Limited. 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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