The ASX telecommunications sector has been in focus this week following the Optus outage last week.
As reported by the Motley Fool's Bernd Struben, disaster struck last Thursday when a reported software maintenance update at the telco shut down the company's Triple Zero services.
According to media reports, up to 600 customers were potentially impacted. Most tragically, three people died after they or others on their behalf tried, and failed, to reach 000 via Optus.
Following this tragic event, Macquarie Group Ltd (ASX: MQG) released a report that considered the potential impact on Telstra Group Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPG) shares.
Let's see how the broker analysed the situation.
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Telecommunications in the spotlight
In its 13 September report "Optus-ing out: outage impacts for TLS & TPG", Macquarie discussed scale and potential brand impact for Optus.
The broker noted that this is Optus' third major operational issue in as many years. As a result, Macquarie believes there will be substantial brand damage.
Macquarie noted that, in the 2022 EFTM mobile survey following Optus' Cyber event, 10% of Optus customers had already changed to another telco provider, and 40% were considering changing providers.
The broker predicts that every 1% of Optus mobile service in operation (SIO) churn presents 36bps of upside to Telstra's share price and 27bps to TPG Telecom.
Macquarie said:
Combined, this could lead to pre- and postpaid mobile market share gains for TLS & TPG. In particular, TLS postpaid share gains (to 51.0% mkt share) and TPG (to 16.6% mkt share) over the next 12 months could drive ~A$55m and ~A $24m of EBITDA upside. This is particularly true for TLS, where underlying postpaid churn has decreased for two consecutive halves to ~11% in 2H25.
Higher share gains to MVNOs limit upside in prepaid, with this analysis holding TLS' share broadly flat, with minor expansion for TPG of ~0.5%. We estimate prepaid share gains drive ~A$8m for TLS and ~A$6m for TPG of EBITDA upside, respectively.
Are Telstra and TPG Telecom a buy?
Telstra is considered a strong defensive play. It has market dominance, stable average revenue per user (ARPU) growth, and reliable dividends.
Meanwhile, TPG Telecom exhibits higher-growth potential via untapped mobile virtual network operator (MVNO) pricing power and hardware focus.
Over the past 5 years, Telstra has soared more than 70%, while TPG Telecom has declined more than 30%.
Today, Macquarie has an outperform rating on both TPG Telecom and Telstra shares.
The broker has a price target of $5.03 on Telstra shares, and a price target of $5.60 on TPG Telecom shares.
Given the share prices at the time of writing, this suggests TPG Telecom has more potential upside.
