The Telstra Group Ltd (ASX: TLS) share price is having a steady start to the trading week. At the time of writing, Telstra shares are even at $4.30 each.
It’s possible that investors may be considering some big news out of the ASX 200 telco today.
This morning, Telstra released an announcement to customers and investors. The company revealed it has partnered with the US-based Starlink to provide satellite-based telephony internet services to regional Australians.
Starlink is an American company owned by the space exploration company SpaceX. SpaceX is helmed by none other than Tesla CEO Elon Musk. Starlink uses SpaceX satellites to deliver internet and mobile services from space – exciting stuff.
So this morning, Telstra indeed announced that it would be partnering up with Starlink to deliver services to regional areas of Australia. Here’s some of what the Telstra media release had to say:
To help provide additional solutions for these customers, we’re now working with Starlink to deliver Low Earth Orbit (LEO) satellite connectivity to provide voice and fixed broadband services in remote and hard to reach places.
In a world-first offering, Telstra will be able to provide home phone service and Starlink broadband services to Aussies as a bundle offer, as well as local tech support and the option of professional installation.
This agreement also provides connectivity options for our business customers, with a higher bandwidth business option available in areas without fixed and mobile connectivity. The business offer will be available to purchase from Telstra both locally and in select countries overseas.
We’re expecting to be able to offer this to customers and businesses towards the end of 2023, when we’ll also be able to share our unique pricing and plan details as well as how basic voice calls will work with our modem which will be offered with the service.
So this is a big deal for Telstra and its investors. But how might this news impact the Telstra share price?
What will the Starlink deal mean for Telstra shares?
Well, seeing as Telstra’s Starlink services won’t begin until at least the end of this year, it’s hard to pinpoint exactly what this might mean for the Telstra share price going forward. Telstra already has a reputation as the telco that provides the best coverage and services for regional and rural Australians.
Indeed, in its most recent financial results (covering the first half of FY2023), Telstra revealed that it continues to boast Australia’s largest 5G network, providing coverage to 81.2% of the population. It is aiming for 95% coverage by FY2025, as well as service coverage of an additional 100,000 square kilometres in regional Australia. No doubt the Starlink deal will help in this endeavour.
ASX brokers are already bullish on Telstra shares, so today’s news will probably do little harm to that optimism. As we coverd last month, ASX broker Morgans has recently rated the telco as a buy, with a share price target of $4.70. Goldman Sachs is also rating Telstra shares as a buy, with the same 12-month share price target of $4.70.
Morgans cited Telstra’s ” strong earnings momentum and a strong balance sheet” for its conviction. It also highlighted Tesltra’s long-life assets like InfraCo as reasons why it thinks Telstra shares could keep bringing, as well as the woes of its rivals like Optus in the cybersecurity space.
But only time will tell what kinds of benefits this Starlink deal will bring for the company. Let’s wait and see what its Starlink services look like when they roll out at the end of 2023.
