On Friday the Telstra Corporation Ltd (ASX: TLS) share price pushed higher after it announced a $277 million investment in 5G spectrum.
The telco giant expects this investment to further extend its leadership in 5G now and into the future.
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Was this a good move by Telstra?
This morning analysts at Goldman Sachs gave their verdict on this investment and the one that rival TPG Telecom Ltd (ASX: TPG) made in the same auction.
In respect to Telstra, Goldman was pleased with its investment, which was broadly in line with its expectations. However, TPG's investment was smaller than the broker was expecting.
It commented: "TLS secured 1,000MHz (in-line with GSe, auction limit), TPG secured a smaller amount than expected, with 400MHz across Melbourne/Sydney/Perth and 600MHz across other geographies (GSe 700MHz), while Optus secured 800MHz nationally excl. Margaret River/Hobart (600MHz)."
As for pricing, the broker notes that prices per Mhz were broadly in line with expectations.
What was Goldman's overall thoughts?
Overall, Goldman Sachs believes Telstra did better than TPG from the auction and is now in a position to grow its fixed wireless business in the coming years.
It said: "We believe TPG's lower than expected share of the mmWave spectrum (especially underweight Syd/Melb) could limit overall capacity on their fixed wireless networks (launching in 1H21), which we see as somewhat surprising given we believe it is a key focus. While for Telstra, the outcome is broadly as expected; we forecast Fixed Wireless to grow to a meaningful level for TLS (>10% Fixed wireless penetration of broadband subs by FY24), noting their Fixed Wireless product launch is expected in coming months."
In light of this, the broker has retained its buy rating and $4.00 price target on the Telstra share price and neutral rating and $7.10 price target on the TPG share price.
