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Why is the Telstra share price running higher today?

Posted: 2 February 2022 12:32 pm
News
Telstra-shares-02Feb_1800x1000_Finder

Shares in the telecoms operator climbed 28% in the last 12 months, continuing its strong run today.

Shares in Australia’s biggest telecoms operator Telstra (ASX: TLS) are among the top traded stocks on the ASX.

While it has been a good year for investors, the last month has been turbulent, dropping nearly 6%.

But today it rose more than 1% to $3.98.

Shares in rival TPG (ASX: TPM) were also up 0.7%.

Why are investors cheering the Telstra stock price?

Telstra on Wednesday announced it will invest as much as $1.6 billion over the next 5 years in 2 projects that will boost its inter-city optical fibre network and also build ground infrastructure for satellite Internet.

The telecoms major will build and manage the ground infrastructure and fibre network in Australia for global telecommunications company Viasat, which supplies in-flight Wi-Fi for Qantas.

The project will see 3 ViaSat-3 terabit-class satellites deployed as part of a 16-year contract, with each satellite providing more than 1TB of network capacity to deliver data and video streaming speeds of over 150Mbps.

Telstra will also build a major new fibre project offering state-of-the-art intercity dual fibre paths, which will add up to 20,000 new route kilometres to increase the capacity of Telstra’s extensive optical fibre network.

The company expects to invest up to 70% of the total commitment across its T25 planning period, with an additional $350 million of capital expenditure annually from fiscal year 2023 to fiscal 2025.

Growth focus

The latest investment boost comes just days after the telco announced the purchase of Aqura Technologies for $30 million and Brisbane-based industrial automation service provider Alliance Automation in an effort to boost its capabilities in the Internet of Things (IoT) space.

The company also teamed up with the Australian government recently to acquire the Pacific operations of telecoms firm Digicel for $2.5 billion.

The spending push has followed the unveiling of the telecom giant’s new T25 strategy last year, under which Telstra is targeting annual growth rates in the "high-teens" for underlying earnings per share until FY25.

The company has also pledged to extend its 5G coverage to most of Australia’s population, and will add 100,000 square kilometres of new 4G and 5G regional coverage under the plan.

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