The Telstra Group Ltd (ASX: TLS) share price pushed higher on Monday after the telco giant announced mobile plan increases.
The company's shares ended the day 0.7% higher at $4.35.
This latest gain means the Telstra share price is now up 9% since the start of the year.
Are these plan increases good news for the Telstra share price?
Analysts at Goldman Sachs have responded to the news positively and believe this action is supportive of solid earnings growth in FY 2024.
The broker also believes that the price increases are evidence of rational competition in the telco industry, which is good news for future returns. The broker explains:
Telstra has announced that postpaid mobile plans will be increasing in price by $3-6/m from July-23, in-line with inflation & our recent expectations. Although not impacting our earnings forecasts, today's announcement: (1) Reinforces our confidence in our +5.6% EBITDA growth in FY24E, which is driven by Telstra mobile division (=99% of our EBITDA growth); (2) Is evidence of Telstra continuing to be a rational incumbent, leading mobile market pricing higher, and signaling to competitors it remains focused on improving industry returns; and (3) Increases the likelihood that Telstra will fully utilize CPI within its 2024 plan revision – with our +3.1% inflation forecast in the Mar-24 qtr implying a $2/m increase.
In light of the above, Goldman remains very positive on the Telstra share price and has reiterated its buy rating and $4.70 price target.
This implies potential upside of 8% for investors over the next 12 months from current levels.
In addition, the broker is expecting a 17 cents per share dividend in FY 2023 and an 18 cents per share dividend in FY 2024. This equates to fully franked yields of 3.9% and 4.1%, respectively, stretching the total potential 12-month return to approximately 12%.
