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Investors in the ASX 200 are showing optimism towards Telstra Group Ltd (ASX: TLS) today, driving its share price up by 2.74% to AU$3.75 in afternoon trade. This surge contrasts with a modest 0.6% gain in the broader ASX 200 index at the same time. Previously closing flat at AU$3.65, Telstra's stock is witnessing renewed interest following the company's announcement of forthcoming adjustments to its mobile pricing plans.
Telstra has outlined changes set to take effect later this year, starting with postpaid mobile plans on August 27 and followed by adjustments to prepaid plans from October 22. Most customers can anticipate a monthly increase ranging between AU$2 and AU$4. The telecommunications giant justified these price hikes as necessary to balance customer cost pressures with substantial investments in evolving technologies, aimed at supporting increased demand on its mobile network.
Over the past five years, Telstra reported a significant surge in network traffic, growing approximately 3.5 times, with annual growth rates sustaining at 20%. To manage this escalating demand, the company has invested a substantial AU$1.3 billion in mobile spectrum during FY 2024, enhancing data capabilities and network speeds.
In a strategic shift announced on May 21, Telstra disclosed its decision to move away from linking mobile plan prices to annual inflation reviews, a move that initially received mixed reactions from the market. On the day of the announcement, Telstra's shares closed down by 2.7%, coinciding with news of a workforce reduction by 2,800 employees as part of a broader cost-cutting initiative.
Commenting on the departure from CPI-linked pricing, Telstra's CEO, Vicki Brady, emphasised the decision's flexibility in adjusting prices across different plans based on their respective value propositions and customer needs. Brady reiterated Telstra's commitment to transparent communication with customers regarding any pricing adjustments, reflecting the company's dedication to maintaining customer satisfaction amid evolving market conditions.
Despite today's intraday gains, Telstra's share price has experienced a 6% decline year-to-date in 2024, reflecting ongoing market volatility and investor sentiment surrounding telecommunications sector dynamics.
Telstra continues to highlight the robust performance of its mobile business, citing consistent growth in subscriber numbers throughout the first four months of the fiscal year, aligned with the previous half-year's trends. This growth has bolstered Telstra's EBITDA (earnings before interest, taxes, depreciation, and amortization) in FY 2024, underscoring strong customer demand for its products and the perceived value of its reliable network infrastructure and flexible service plans.
