What: Telecom market leader Telstra Corporation Ltd (ASX: TLS) told shareholders at a recent company presentation that plans for Asian expansion are still a top priority for future growth. Australia is comparatively advanced in telecommunications and taking Telstra's technical know-how and industry experience to developing Asian economies can open up huge business opportunities.
So What: The company has several key areas that it wants to focus on.
– Enterprise business and Network Application and Services
Beyond text and talking, the growth engine of telecommunications is data. As more and more information transmission and storage is needed, Telstra wants to establish itself as a centre for enterprise business and cloud communications.
Its domestic Network Application and Services (NAS) business shot up 27% in sales for FY 2014, well above growth in mobile services. It could replicate this service into much wider areas in South East Asia.
— Working with incumbent service providers
Many Australians have the latest 4G network mobile phones, yet in Asia 2G networks are mostly the norm, principally for text and talking. The big move to data hasn't occurred yet. Telstra is creating strategic partnerships with established Asian service providers to create the next stage of telecom growth.
In Indonesia, it is working with Telkom Indonesia, the largest telecom in that highly populated country, to offer enterprise services and cloud and unified communications. The move is to extend the reach and scope of Telstra's Network and Application Services (NAS) division. Telstra can act as a consultant to assist other countries in the region to take the next big digital step.
Now What: Telstra is involved with a number of Asian businesses like its majority controlled Autohome Inc (NYSE: ATHM), the world's largest car sales website. It invested early on in the company and listed it on the New York Stock Exchange last year.
Just recently, the company acquired Silicon Valley based Ooyala to help develop video streaming technologies and services. Telstra has also announced it will commit $1 billion for further acquisitions and investments to expand its footprint in Asia. In addition, it expects to get around $11 billion for turning over its copper phone line infrastructure for the NBN rollout.
Investors need to look at the long-term goals and progress of the company. I think having a position in Telstra stock, small or big, is a good plan and you get the hefty 5.4% dividend yield while you watch this Asian expansion.
