Can 5G save Telstra Corporation Ltd?

Long-suffering Telstra Corporation Ltd (ASX:TLS) shareholders have watched their stock sink over the years. But is that going to change?

| More on:
a woman

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

Back in July 2015 the Telstra Corporation Ltd (ASX: TLS) share price was trading at around $6.50.

Since then, Telstra shares have lost more than half their value after closing on Thursday at $2.82.

It's a similar story for other ASX-listed telecommunications providers. Vocus Group Ltd (ASX: VOC) shareholders have watched their stock sink, shedding more than 30% over the past year. Although,TPG Telecom Ltd (ASX: TPG) shareholders had a relatively good year with returns exceeding 3% over that period.

While the last few years have been far from spectacular for shareholders of Australia's telecommunications providers, it seems things are set to change.

In February, Telstra opened its 5G Innovation Centre for testing of next generation technologies. A 5G equipped car sporting a Telstra logo was seen driving near the centre shortly after and the impact of 5G on gaming was also demonstrated.

While these developments may come across as publicity stunts, they also demonstrate something very real: 5G has arrived and it's already changing the way consumers behave.

For instance, I'm on the market for a new phone. But wouldn't I be better off waiting for the new technology to rollout rather than purchasing a product that will soon be almost obsolete? And it seems I'm not alone with that thought.

According to research conducted by technology firm Telsyte, 4.3 million smart phones were sold in the first half of 2018 in Australia, a decline of 3.7% on the 4.4 million smart phones sold during the prior corresponding period.

Some are tipping that trend to continue with an increasing number of people expected to delay phone upgrades as the arrival of the new technology approaches.

In the short term telecommunications companies may suffer as a result.

But that trend is expected to reverse upon rollout of the 5G network and is likely to benefit Telstra shareholders.

Telstra appears to be leading the way in 5G technology in Australia. Some are confident Australia's largest telecommunications provider is well placed to profit from the imminent technological shift; Morgans has raised its price target on Telstra shares to $3.47.

All this means that at today's price of $2.82, Telstra looks like a buy in my opinion.

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited, TPG Telecom Limited, and Vocus Communications Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

a man leans back in his chair with his arms supporting his head as he smiles a satisfied smile while sitting at his desk with his laptop computer open in front of him.
Dividend Investing

With a 5% dividend yield, why I think this leading ASX share is a buy

I think this business offers pleasing income with potential capital gains too.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

3 top ASX dividend shares for income investors to buy

Analysts have good things to say about these income options.

Read more »

Woman smiling whilst shopping in a clothing store.
Dividend Investing

Why this quality ASX 300 dividend stock is tipped to surge 54%

A leading fund manager forecasts significant outperformance from this quality ASX 300 dividend stock.

Read more »

Man smiling at a laptop because of a rising share price.
Dividend Investing

Why this is one of my top ASX dividend shares to buy in June

This ASX dividend share provides everything I’m looking for.

Read more »

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Dividend Investing

Forget Westpac and buy these ASX dividend shares

Let's see what analysts are saying about these income options.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Dividend Investing

Brokers say Harvey Norman and these ASX dividend stocks are buys

Let's see what brokers are recommending as buys for income investors.

Read more »

Happy man holding Australian dollar notes, representing dividends.
Dividend Investing

Analysts say these ASX dividend stocks are top buys for income investors

Let's see which stocks are being tipped as buys.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for 4% to 11% yields

Analysts expect these buy-rated shares to offer great dividend yields.

Read more »