Last week telecommunications giant Telstra Corporation Ltd (ASX: TLS) held an investor day which was attended primarily by fund managers and analysts.
The title of the day was "Growth through network and product differentiation". Here are five important points you need to know about what was presented during the meeting:
- Telstra is positioned for the future explosion in data demand with 2.3 million square kilometres covered by its network. This captures 99.3% of the population including a forecast for 94% of the population to have access to 4G speeds by June.
- Mobile communications is both an important device for consumers as well as a major profit generator for Telstra. Telstra boasts 6.7 million devices now on its 4G network, including 1.1 million with 4GX-capabilities. Through improvements such as a reduction in excess data charges and the introduction of international travel passes, Telstra is implementing changes to defend and grow its share of this important market segment.
- Telstra is predicting that by 2019 approximately 72% of network traffic will be video streaming. This reality would obviously mean consumers requiring large amounts of data and also at high speed. Telstra's LTE spectrum will step-up and provide its share of this demand and given the group's range and reliability it will be the "go to" option for many corporates and consumers alike.
- Telstra is also positioning itself as a leading provider of cyber security with systems and services to keep customers' data safe and Telstra's networks secure. The company's strength in this market has been improved in the past couple of years by the key hire of the previous head of cyber and information security at the Australian Signals Directorate.
- One of the exciting future digital ecosystems is 'smart home services'. This term refers to the concept of your whole house being 'wired' including security, home energy usage and home automation. Through Telstra's leading offering and already established position in many homes through current services such as Foxtel, the group is well positioned to be a leader in this exciting new area of growth.
Telstra is turning into a great investment for many of its shareholders. Over the past five years the share price has risen 98% which is far superior to the 19% rise in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
Arguably much of Telstra's rally has been due to the investment phenomena known as 'chase for yield' which has become a dominant theme both in Australia and around the world as investors seek out solid, dividend-paying stocks to boost their income in this low interest rate environment.
While Telstra's dividend holds appeal for income-seeking investors, all investors should be interested in its dominant market position within the Australian telecommunications sector. Given the tailwind of a growing population and increased demands for data, coupled with Telstra's enviable product and service offering as highlighted in the above five points, the company's future appears bright.
