Telstra (ASX:TLS) share price struggles as Optus cries foul

This comes after it hit a new 52-week high earlier today.
The post Telstra (ASX:TLS) share price struggles as Optus cries foul appeared first on The Motley Fool Australia. –

Telstra Corporation Ltd (ASX: TLS) shares finished Thursday’s trading session flat.

By the close of trade, the Telstra share price was sitting at $3.78, the same price at which it ended yesterday’s session.

This came after the company’s shares hit a new 52-week high of $3.80 during intraday trading today before partially retreating.

It was also against a backdrop of reports over a battle that’s surfacing between Telstra and rival telco Optus.

The tensions are due to a set of proposed restrictions to be placed on Telstra at an upcoming auction for low-band spectrum in November.

Let’s take a closer look at what’s unfolding between the two Australian telco giants.

Proposed limits on Telstra

Low-band spectrum enables mobile data to be carried over great distances in regional Australia, so it stands to reason it is of high importance for regional communities.

Under the restrictions, proposed by the Australian Competition and Consumer Commission (ACCC), the amount of low-band spectrum Telstra can buy at the auction in November will be capped.

The proposal also dictates that Telstra would be forced to hand over a portion of the spectrum it already owns, for independent sale.

Telstra is nudging the ACCC to allow it to bid for up to 43% of the spectrum available in the auction.

Telstra chief executive Andrew Penn voiced opposition to the proposed restrictions on Telstra at the upcoming auction in yesterday’s Sydney Morning Herald.

Penn believes the restrictions will affect the quality of services in regional areas:

If our spectrum is reduced, our network experience and coverage will effectively be reduced for regional and rural Australia.

Optus’ battle of words

Telco rival Optus, which is owned by Singapore Telecommunications Limited, has since weighed in on the debate and is urging the ACCC to impose further restrictions on its rival.

Optus chief executive Kelly Bayer Rosmarin hit back at Penn’s comments, as today’s Sydney Morning Herald (SMH) reported.

Bayer Rosmarin stated:

The current proposed auction rules ensure that all mobile operators have the opportunity to purchase enough spectrum to meet their current and future needs.

Optus vice-president of regulatory and public affairs, Andrew Sheridan, stated (also quoted by SMH):

If we don’t have a limit in this auction, then the risk is we won’t be able to get more spectrum.

Auction limits promote competition in the bidding process. They are considered to be routine in Australia.

Telstra share price snapshot

The Telstra share price has posted a year to date return of almost 27%, extending the previous 12 months’ return of around 9%.

These returns have beaten the S&P/ASX 200 Index (ASX: XJO)’s return of ~11% this year.

However, Telstra shares have lagged the broad index’s 12 month return of 21%.

At the time of writing, Telstra has a market capitalisation of around $45 billion.

The post Telstra (ASX:TLS) share price struggles as Optus cries foul appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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