Why is Telstra launching a bargain mobile brand?

Angus Kidman 21 August 2017 NEWS

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Belong is expanding, but there are cheap ways to get on Telstra's network right now.

During its annual results presentation last week, Telstra announced that it's planning to expand its existing bargain broadband brand Belong into the mobile market. "Building on the success of Belong Fixed in attracting new fixed broadband customers with simple no-frills offers, we will be launching Belong Mobile in the price-sensitive segment of the mobile market," CEO Andy Penn said. "Price-sensitive" in this context means "not keen on paying more than I have to for mobile data", which ideally would describe every single consumer.

Belong has been a success for Telstra, with 150,000 customers signing up so far. That's a healthy number, but still only a small proportion (around 5%) of its total broadband customer base. In part, that's because most broadband plans from Telstra are purchased in a bundle along with other services like landlines, mobile and Foxtel. In the most recent financial year, 88% of Telstra's broadband customers signed up for a bundle.

That won't necessarily be replicated in the mobile plans market, where competition is much tighter. Telstra's own estimate is that 30% of the market by 2020 will be driven primarily by price. Right now, Telstra's plans are amongst the most expensive available. Many analysts are also presuming that the entry of TPG into the market with its own 4G network, which is due to arrive next year, is prompting Telstra to make changes.

In reality, you don't have to wait until Telstra rolls out Belong Mobile to score cheaper plans that run on Telstra's networks. Telstra already sells wholesale access to a number of existing players, the most prominent being Boost, ALDImobile and Woolworths Mobile.

Yes, it's true that those plans generally only run on "parts of" Telstra's 4G and 3G networks (the exact details vary for each brand). That's likely to be true for Belong as well. After all, if it offered the exact same network as Telstra, why go for the more expensive choice?

The arrival of Belong will undoubtedly create more competitive pressure, and that's a good thing for mobile buyers. The ongoing trend in mobile plan pricing is downwards, and I for one am not complaining.

Angus Kidman's Findings column looks at new developments and research that help you save money, make wise decisions and enjoy your life more. It appears regularly on finder.com.au.

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