Should Telstra shareholders worry about the Optus 5G plan?

Optus has announced its plans surrounding 5G, should Telstra Corporation Ltd (ASX:TLS) shareholders worry?

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Optus has announced its plans surrounding 5G, should Telstra Corporation Ltd (ASX: TLS) shareholders worry?

As a major competitor to Telstra, Optus has the power to set the tone for 5G pricing which others may have to match.

Optus has announced its "5G Home Broadband Plan", which is essentially a wireless broadband offering using 5G.

The telco is pricing it at $70 per month with unlimited data and a 50Mbps guarantee. Optus described the plan as "plug & play" self-installation, with no need for appointments or technician visits. No existing phone line or fixed service is required either. Plus, it can all be managed through an 'easy-to-use app'. If that sounds appealing, then perhaps Telstra shareholders should indeed worry.

At this point Optus are just looking for expressions of interest, there is only a limited number of suburbs in areas where there will be a 5G-enabled service. Optus said 5G devices are scheduled to be delivered from mid-2019, so it's going to be a few months until people go online via 5G.

Optus said it's committed to continually expanding its 5G network throughout 2019 and beyond. According to the AFR, two of the 49 suburbs that 5G is currently planned for is already live – both of those suburbs are in Canberra. The 5G plans should be on the market sometime between March 2019 and June 2019.

Telstra's current unlimited NBN package is currently priced at $89 per month, so Optus appears to be offering a hefty discount as an alternative.

My major fear for Telstra optimists that the price war we are seeing with 4G plans is going to happen again with 5G. You can't offer more data than unlimited. The one thing that Telstra (and Optus) may be able to charge more for is faster speeds, more heavy-duty capacity for multiple users and perhaps better reliability.

Foolish takeaway

Perhaps Telstra will be able to generate more revenue when services such as automated cars become a reality on our roads. However, that's speculation so I'd rather leave Telstra out of my portfolio at this stage until we get more information.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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.

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