Amazingly, NBN Co could save the Telstra Corporation Ltd (ASX: TLS) share price.
That's quite a stunning thought considering it was the introduction of the NBN that has been a major reason why the Telstra share price and earnings have fallen over the past few years.
According to the AFR and Vodafone, the NBN owns a large amount of unused 5G spectrum that could drop the cost of 5G services.
Vodafone chief strategy officer Dan Lloyd said opening up this spectrum would provide "earlier access to 5G, better network performance, lower costs and a more competitive 5G market in Australia."
The NBN has initially said no. It needs the spectrum to provide its broadband services. But, the government could generate some money if it leases access to the unused portion of the spectrum that Vodafone are referring to. So I wouldn't rule it out just yet.
5G seems to be the key point to an investment in Telstra, besides the telco's low share price. Last month Telstra invested $386 million in the 5G spectrum auction to secure 30-80 MHz nationwide. Combined, Telstra now owns 60MHz of contiguous 5G spectrum in all major capital cities and between 50-80 MHz of contiguous 5G spectrum in all regional areas.
It could be argued that within a few years the NBN infrastructure will become materially inferior to the speed which consumers could get using a 5G network. It could be possible to simply deactivate a broadband service and use 5G for all a home's needs. This is how Telstra could use its scale to attract the most customers and create an unassailable market position.
Foolish takeaway
Telstra is trading at 14x FY19's estimated earnings with a trailing grossed-up dividend yield of 10.8%. Some investors may be attracted to Telstra at this level, but until I can see how Telstra will price 5G services and what that means for its profit I'm not going to consider buying any shares.
