A small boost to funding of mobile networks could help the TPG Telecom Ltd (ASX: TPG) and Telstra Corporation Ltd (ASX: TLS) share price
The post Why it might be time to give the TPG (ASX:TPG) and Telstra (ASX:TLS) share price a second look appeared first on The Motley Fool Australia. –
Budget spending to drive to support Australia’s digital economy
The Australian Government’s 2021-22 Federal Budget features $1.2 billion in government spending over six years as part of its Digital Economy Strategy.
Several funding measures acknowledge the importance of mobile telecommunications and broadband infrastructure to the digital economy. This includes:
- $31.7 million over four years from 2021-22 to enhance the security of Australia’s mobile networks and accelerate the commercialisation of sovereign network and data security solutions;
- $16.4 million over three years from 2021-22 to establish a Peri-Urban Mobile Program to improve mobile phone reception in peri-urban fringe areas that are prone to bushfires; and
- $7.7 million over four years from 2021-22 for the Australian Competition and Consumer Commission to continue and extend the Measuring Broadband Australia program, which will be extended to cover fixed wireless broadband services.
The budget also allocated funding support to improve Australia’s technology workforce, focusing on artificial intelligence, emerging technologies and cybersecurity.
Why Morgan Stanley thinks TPG and Telstra share price could be a buy
The Federal Budget reaffirmed Morgan Stanley’s view of the cyclical and structural tailwinds driving the technology, media and telecom sector.
In the context of TPG and Telstra, the broker highlights the small boost to the funding of mobile networks.
Today, the broker retained an overweight rating and $4.00 target for the Telstra share price. Telstra shares have made a solid start to 2021, up 15% year-to-date and currently trading at $3.48.
Morgan Stanley also retained an overweight rating for TPG shares with a $9.75 target price. TPG shares have slipped 25% year to date, driven by the resignation of its founder, David Teoh and CFO Stephen Banfield. The optimistic target price would represent an upside of more than 80%, given TPG’s current share price of $5.26.
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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.