News from TPG lifts the Telco names

Stock

Telstra (ASX: TLS) $3.11 as at 29/01/2019
TPG Telecom Limited (ASX: TPM) $7.22 as at 29/01/2019

Event

TPG surprised the market this morning announcing they would cease the roll out of their planned Australian mobile network which has caused the telco sector to jump today. The biggest beneficiary of the news is rival Telstra (ASX: TLS) which has seen a 5% pop in their share price.

Telstra (ASX: TLS) Chart

Telstra (TLS)

The announcement from TPG comes following the Australian Government’s ban on using equipment from Chinese company Huawei on security grounds. TPG had planned to build a network using  Huawei componentry.

TPG had spent $100m on Huawei products before halting construction of the network when the ban was originally announced back in August 2018, as well as around $1.5b on investment in spectrum since 2017.

The company noted that their decision to employ Huawei products came down to the ease of upgrade to 5G and changing now to a new infrastructure provider would incur costly challenges .

Vodafone Australia & TPG still remain in merger talks, with the proposal currently being reviewed by the ACCC. The competition watchdog did raise some reservations for the merger last year however we doubt they will ultimately have a problem with the deal. Vodafone-Hutchinson (ASX: HTA), which has a 50% stake in Vodafone Australia, was set to be the biggest beneficiary of TPG’s new network as it would vastly improve their coverage. As a result HTA shares are currently trading down -4%.

TPG Telecom (ASX: TPM) Chart

 TPG Telecom

Market Matters Take/Outlook

You need to be a member to view this article

REGISTER FOR FREE INSTANT ACCESS

Already a member? Login Here