What happened with the Telstra share price?
Shares of Telstra [ASX:TLS] gained over 3.19% today.
Why did the Telstra share price rise?
The Australian telecommunications provider scored a big win after the Australian Competition and Consumer Commission (ACCC) said it won’t order wholesale domestic mobile roaming service.
What does this mean for Telstra’s Share Price?
Basically, Telstra doesn’t have to share its infrastructure network with rivals in rural areas. In an announcement, the ACCC declared that even though there is not much choice in rural and regional areas, there is ‘insufficient evidence’ to show that mobile roaming in rural areas would improve prices and services overall. This is the third time the ACCC has shut down the roaming issue.
Telstra shares went from $4.27 to $4.40 at time of writing, the highest rise since 2011.
According to Goldman Sachs, regulating domestic roaming would have caused Telstra to burn $550 million in full year earnings for fiscal year 2018. The move would have allowed Telstra’s competitors — like Vodafone and TPG — to benefit from accessing the former government owned monopoly’s network.
ACCC commissioner Rod Sums told The Australian:
‘We felt that you would lose some of the important investment where Telstra and Optus are competing against each other to improve coverage.’
What now for Telstra?
After the decision, Telstra has promised to expand its 4G mobile coverage to 99% of the population by the end of the year.
Telstra’s CEO Andrew Penn told The Australian:
‘Today’s announcement means that all telcos will continue to have the opportunity to invest in regional areas to ensure more people can enjoy the benefit of future technology upgrades. It ensures that the industry still has an incentive to invest.’
For Money Morning