Home > Communication > 5G > Telstra 5G Strategy Has Holes In It, Share Value Tipped To Fall Over Concerns

Telstra 5G Strategy Has Holes In It, Share Value Tipped To Fall Over Concerns

Is 5G set to be another 3D with millions of Australians staying with their 4G or moving to a cheap fast fixed wireless offering offering over the fast new and expensive 5G platform being rolled out by by Telstra.

For months now Telstra boss Andrew Penn has been banging on about 5G, he has tried very hard to pump up the looming technology platform in an effort to prevent Telstra shares sinking further than what they currently are.

Now he has conceded that selling the 5G message to shareholders will be a challenge, for the simple reason that the early Telstra 5G network is set to be limited, the handsets expensive and as for coverage consumers are going to be better off staying with their 4G handsets or investing in a cheaper fixed wireless 5G offering from Optus.

He has also admitted that 5G networks may offer better services relevant to businesses rather than homes.

And therein lies one of the problems as Telstra is seen as a carrier that is primarily focused on providing mobile services to consumers, the telco recently signed up a number of deals with handset makers — Samsung, LG and Oppo — to offer 5G phones to consumers.

“5G is a highly technical area and the traditional world of telecommunications, which was about electrical engineering, is converging with the world of computing,” he told The Weekend Australian at the Mobile World Congress in Barcelona.

“Telcos haven’t had the skills to bring technology solutions like cloud computing, artificial engineering and automation to customers, but we have been building these longer than anyone else and are miles ahead of our competitors.”

Applications and services become increasingly important in the 5G world because telcos won’t be able to charge customers extra for 5G services.

While Telstra’s Network Applications and Services (NAS) unit is designed to provide a suite of value-added services, primarily to enterprise customers, its performance remains patchy.

The Australian pointed out that the unit posted a 4.1 per cent drop in revenue to $1.6 billion for the first half of fiscal 2019. Margins on the NAS business, at 10 per cent, are also lower than what Telstra earns — close to 40 per cent — on its mobile business.

“The profitability is a bit lumpy for the unit and we do need to keep improving that,” Mr Penn said.

LG’s flagship V50 set to hit Telstra stores in June sporting a price tag of $1999. With no apparent 5G applications available to justify the high prices, there is considerable doubt on whether consumers will pick up the phones.

Penn appears to be unperturbed by concerns about the lack of an apparent “killer app”.

5G phones are still unknown entities in the market, and according to analysts are unlikely to end the current softening in the number of smartphones being sold.

According to Fidelity International’s technology analyst Casey McLean, 5G is an evolution, not a revolution, at least for smartphones.

“While 5G will create much higher data speeds and lower latency, the killer app still remains unclear,” he said.

Arch rival Optus has backed fixed wireless services to deliver 5G-powered high-speed broadband to homes, launching a 50 megabits per second service, priced at $70, last month.

Penn who is under pressure to lift revenues is now downplaying the threat posed by the service to Telstra and the National Broadband Network, saying the technology is hamstrung by a lack of spectrum.

“Fixed wireless is definitely an opportunity with 5G, but it only becomes significant through the use of millimetre wave spectrum.

You may also like
Optus Trials Amazon-Style Fast Delivery With Uber
Optus Installs mmWave In Brisbane Flagstore Store
Telstra Opens Data Centres For Use By Other Telcos
NBN Co Still Undecided On Retail IP Relief
Boost Mobile 10 Year Deal With Telstra & Cheap Prime Signage