The Telstra Corporation Ltd (ASX: TLS) share price could be one to watch in the near term with Australia's largest telco announcing details of its new loyalty plan.
Telstra Plus, or Telstra+, is the name of what Telstra hopes will be a key attraction to retain customers.
Competition is fierce in the telco space with huge data packs in the mobile phone area, and the NBN has opened up the telco sector to almost anyone that wants to try its hand at selling broadband services. TPG Telecom Ltd (ASX: TPM), Optus, Vodafone, Vocus Group Ltd (ASX: VOC) and many others are snapping at Telstra's heels.
According to Telstra, from 14 May 2019 customers will be able to earn 10 points per dollar on every bill or recharge. How useful are these points? We're not quite sure yet, the specifics haven't been revealed.
However, the idea is that these Telstra Plus points can be used towards new devices, accessories and other services.
Telstra Plus will have three membership tiers – member, silver and gold – which will give access to tickets, extras and 'VIP services'. According to the FAQs, the respective annual expenditure amounts required for these tiers are: less than $1,500 for the member tier, between $1,500 and $2,999.99 for silver and $3,000 or above for gold.
The old Telstra Thanks benefits will continue within the Telstra Plus offering.
We will find out what those points amount to "soon" according to Telstra. However, if you're planning on building up lots of points you'll have to spend them in a timely fashion because you have to use points within three years from earning them before they expire.
Foolish takeaway
This seems like a good way for Telstra to get attention, but it depends how attractive the points rewards are. As we've seen with Qantas Airways Limited (ASX: QAN) frequent flyer points over the years, the loyalty points may not amount to much unless you spend a lot.
Telstra is currently trading at over 15x FY19's estimated earnings with a grossed-up dividend yield of 7%. I am not convinced this will make a material difference to Telstra's earnings or share price in the short-term.
