Telco turns to the stars. What does it mean for Telstra shares?

Will Telstra's hookup with Elon Musk's Starlink boost the company's fortunes?

| More on:
A farmer stands in a field using his mobile phone

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Telstra shares are trading steady to start the week
  • The company has revealed a partnership with Elon Musk's Starlink satellite company
  • Telstra intends to use Starlink's services to provide better mobile and internet to rural Australians from the end of this year

The Telstra Group Ltd (ASX: TLS) share price is having a steady start to the trading week. At the time of writing, Telstra shares are even at $4.30 each.

It's possible that investors may be considering some big news out of the ASX 200 telco today.

This morning, Telstra released an announcement to customers and investors. The company revealed it has partnered with the US-based Starlink to provide satellite-based telephony internet services to regional Australians.

Starlink is an American company owned by the space exploration company SpaceX. SpaceX is helmed by none other than Tesla CEO Elon Musk. Starlink uses SpaceX satellites to deliver internet and mobile services from space – exciting stuff.

So this morning, Telstra indeed announced that it would be partnering up with Starlink to deliver services to regional areas of Australia. Here's some of what the Telstra media release had to say:

To help provide additional solutions for these customers, we're now working with Starlink to deliver Low Earth Orbit (LEO) satellite connectivity to provide voice and fixed broadband services in remote and hard to reach places.

In a world-first offering, Telstra will be able to provide home phone service and Starlink broadband services to Aussies as a bundle offer, as well as local tech support and the option of professional installation.

This agreement also provides connectivity options for our business customers, with a higher bandwidth business option available in areas without fixed and mobile connectivity. The business offer will be available to purchase from Telstra both locally and in select countries overseas.

We're expecting to be able to offer this to customers and businesses towards the end of 2023, when we'll also be able to share our unique pricing and plan details as well as how basic voice calls will work with our modem which will be offered with the service.

So this is a big deal for Telstra and its investors. But how might this news impact the Telstra share price?

What will the Starlink deal mean for Telstra shares?

Well, seeing as Telstra's Starlink services won't begin until at least the end of this year, it's hard to pinpoint exactly what this might mean for the Telstra share price going forward. Telstra already has a reputation as the telco that provides the best coverage and services for regional and rural Australians.

Indeed, in its most recent financial results (covering the first half of FY2023), Telstra revealed that it continues to boast Australia's largest 5G network, providing coverage to 81.2% of the population. It is aiming for 95% coverage by FY2025, as well as service coverage of an additional 100,000 square kilometres in regional Australia. No doubt the Starlink deal will help in this endeavour.

ASX brokers are already bullish on Telstra shares, so today's news will probably do little harm to that optimism. As we coverd last month, ASX broker Morgans has recently rated the telco as a buy, with a share price target of $4.70. Goldman Sachs is also rating Telstra shares as a buy, with the same 12-month share price target of $4.70.

Morgans cited Telstra's " strong earnings momentum and a strong balance sheet" for its conviction. It also highlighted Tesltra's long-life assets like InfraCo as reasons why it thinks Telstra shares could keep bringing, as well as the woes of its rivals like Optus in the cybersecurity space.

But only time will tell what kinds of benefits this Starlink deal will bring for the company. Let's wait and see what its Starlink services look like when they roll out at the end of 2023.

Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Tesla. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Communication Shares

group of friends checking facebook on their smartphones
Communication Shares

How much could $5,000 invested in Telstra shares be worth next year?

Let's see what analysts think a $5,000 investment could turn into.

Read more »

A woman sits at her computer with her chin resting on her hand as she contemplates her next potential investment.
Communication Shares

Own Telstra shares? Here's why the ASX 200 telco just backed this AI startup

Telstra Ventures is upping its exposure to AI.

Read more »

A man looking at his laptop and thinking.
Communication Shares

Guess which ASX 200 insider just dumped $4 million in company shares

Is it a sign of rocky times ahead, or just another routine sale?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Communication Shares

Aussie Broadband shares are falling on a big sale today

The Aussie Broadband and Superloop saga continues...

Read more »

A man in trendy clothing sits on a bench in a shopping mall looking at his phone with interest and a surprised look on his face.
Communication Shares

Should ASX investors buy the dip in Telstra stock?

The telco is widely held by retail investors but has disappointed for most of its life. Is a bull run…

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Investing for passive income? Keep any eye out for that boosted Telstra dividend today!

If you own Telstra shares, keep an eye out for that juicy dividend payout today.

Read more »

Buy, hold and sell ratings written on signs on a wooden pole.
Communication Shares

Is Telstra stock a buy, sell, or hold?

Do experts rate Telstra as a buy or a sell?

Read more »

A young couple look upset as they use their phones.
Communication Shares

Aussie Broadband share price whipsaws as company denies rumours

Aussie Broadband shares are having a wild month indeed.

Read more »