Telstra share price falls despite $546m investment news

Telstra is boosting its 5G network with a major investment

| More on:
wheelchair user in an office talking on 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

The Telstra Group Ltd (ASX: TLS) share price is edging lower on Thursday despite some good news.

In morning trade, the telco giant's shares are down 0.25% to $3.78.

What's going on with the Telstra share price?

It seems that today's decline has been driven by broad market weakness which has offset the aforementioned good news.

In respect to the latter, according to an announcement, Telstra has successfully secured up to 110 MHz of additional 'mid band' spectrum in the 3.4 / 3.7 GHz spectrum auction held by the Australian Communications and Media Authority.

Telstra invested $546 million in this spectrum, which it expects to deliver even better 5G experiences to mobile customers across most parts of Australia. This includes securing an additional 80 MHz of spectrum in the key capital city markets of Sydney and Melbourne.

Management notes that it acquired a large proportion of the available spectrum at a highly competitive price. This sets up its mid-band spectrum assets for the next 20 years.

As a comparison, TPG Telecom Ltd (ASX: TPG) has also announced that it has secured spectrum to boost its 5G mobile and fixed wireless services. It paid $128.2 million for spectrum in metropolitan and regional areas.

Back to Telstra. It believes the spectrum acquired is the foundation for increasing capacity to support growing demand across metro and regional areas and will enable a significant enhancement in customer network experience and speed.

Telstra's CEO, Vicki Brady, commented:

5G has completely changed how we use mobile devices and we continue to see customers' demand for data growing. Adding this mid-band spectrum to our network means our customers will get an even better and more consistent mobile experience through more capacity to carry data.

This investment moves our mobile leadership forward and enables Telstra to continue to pioneer future capabilities and generations of mobile technology for Australia. Alongside our existing spectrum holdings, the additional 55 to 110 MHz means we'll continue to differentiate ourselves in a competitive market.

Payments to the Australian Communications and Media Authority will be due in FY 2024 and are excluded from its free cashflow after lease payments (FCFaL) guidance of $2.8 billion to $3.2 billion.

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 has positions in and has recommended Telstra Group. The Motley Fool Australia has recommended Tpg Telecom. 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

Happy couple with a car dealer.
Broker Notes

Goldman Sachs says buy despite this ASX 200 stock trading at a record high

Let's find out why.

Read more »

A happy woman stands outside a building looking at her phone and smiling widely
Communication Shares

Down 12% from their highs: Are Telstra shares a post-results bargain buy?

Is now the time to pounce on this telco giant's shares? Let's find out.

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Earnings Results

Telstra shares tumble on half-year disappointment

The telco giant's half-year results fell short of expectations.

Read more »

man looks at phone while disappointed
Earnings Results

Telstra share price on watch amid earnings miss and guidance revision

Will the market be disappointed with the telco giant's update?

Read more »

A woman uses her mobile phone to make a purchase.
Communication Shares

Own Telstra shares? Here's your half-year results preview

Strong earnings growth could be reported by the telco giant this month.

Read more »

A smartly-dressed businesswoman walks outside while making a trade on her mobile phone.
Communication Shares

What could happen to Telstra shares if interest rates fall?

Should you be buying this telco giant's shares when the RBA cuts rates?

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone to text message someone
Communication Shares

Own Telstra shares? You could be on track for an 18% gain in 2024

One ASX broker reckons Telstra shareholders are headed for a fantastic 2024.

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
Communication Shares

Are TPG shares an unloved buying opportunity?

Should investors give this stock a chance?

Read more »