Telstra Share Price Drops 1.4% After Another Mobile Outage

Telstra [ASX:TLS] shares were down by 1.4% this afternoon, after news spread of yet another widespread network outage.

The problem was reported across both the 3G and 4G networks in Melbourne, Perth, Sydney, Adelaide and Brisbane. Other metropolitan hotspots around the country were also shown to be affected.

Telstra has apologised for the inconvenience, but is yet to reveal the root cause or restore network coverage to many of its customers.

How has the market reacted?

Occasional outages are not unheard of in the telecommunications industry, but it seems that Telstra is a serial offender.

Earlier in May, people were unable to make triple-O voice calls after a Telstra cable in NSW was damaged by an apparent lightning strike.

The vitriol towards Telstra after this latest outage is palpable. Twitter has been abuzz with disgruntled customers demanding answers, and the share price plummeted to a shocking seven-year low of $2.81, shortly before midday.

This couldn’t be poorer timing for the fallen telecommunications giant.

Only two days ago, its chief executive Andy Penn admitted to difficulty after the share price plunged a little under 10%.

Penn revealed a strategy to improve the network, cut costs and focus on new products.

While a new course of action could be Telstra’s saving grace, many investors are less than pleased with Penn. After all, under his leadership, more than $40 billion of Telstra’s market value has gone up in smoke.

What’s next for Telstra?

Anyone can see that Telstra is in dire straits, but Penn is trying to sway the public to focus on the future.

We are now on the cusp of a pretty significant next step in technology transformation in the telecommunications industry,” he says. “The worst thing would be to not continue to invest. That would be a bad decision. It would be short term. It would undo a significant journey.’

The CEO has expressed his vision, for Telstra to be ‘a world class technology company that empowers people to connect’, leaving analysts wondering what exactly the new suite of products would look like.

Are Penn’s words coming from a place of desperation or hope? Probably a bit of both, but it’s up to the market to decide whether to buy into this brave new world or not. Harsh public sentiment is indicating these difficult times don’t appear to be ending anytime soon.


Ryan Dinse,
For Markets & Money

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Ryan Dinse is an analyst at Markets and Money. He has two decades of experience in financial planning, equity analysis and credit markets. Ryan combines fundamental, technical and economic analysis to identify and invest in good ideas at the appropriate stage of the economic cycle. He has a strong interest in technology, economic history and disruptive business models. His focus at the moment is as lead analyst on two of our most recent and innovative investor services, Crash Market Investor and Sam Volkering’s Secret Crypto Network. He will write about the exciting opportunities for investors to benefit from significant changes in world markets. He is a member of Fintech Australia, a former member of the Digital Currency Council, and is a fully accredited financial adviser.

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