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
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
Market Matters Take/Outlook
