Telstra Betting on iPhone 5

SYDNEY -- Apple has titillated the media with an invitation to a Sept. 12 event in San Francisco, at the same venue the company announced the iPhone 4. The email invitation had a large 12 on it, casting a shadow in the shape of a five.

Speculation is rife about what features the new phone will have, including a larger screen, faster connectivity, and LTE technology. LTE, or long term evolution, is what we know as 4G. LTE is a super-fast technology, enabling speeds of anywhere from two to five times as fast as 3G.

Telstra Corporation (ASX: TLS.AX) is banking on the iPhone 5 featuring this technology, rushing an  AU$500 million investment into its network over the next two years, much of it dedicated to expanding its 4G coverage.

Mobile phone carriers in Europe and Canada also use LTE technology on their networks already, which makes it more likely that handset makers will include LTE in their latest smartphones.

According to a report in the Australian Financial Review, more than 8 million mobile phone subscribers will be coming off contract during the 2013 financial year. Estimates suggest that between 2.5 and 4 million of those own an Apple iPhone 4, which was first released in September 2010, and may want to upgrade to the newer model.

There could also be more than 700,000 disgruntled Vodafone customers tempted to switch carriers, after two years of ongoing issues with the Vodafone network. Hutchison Telecommunications (ASX: HTA.AX), which owns half of Vodafone, has been losing customers in droves already. In the first half of 2012, 178,000 subscribers left the network.

Telstra, by comparison, added 1.6 million customers in 2012, and being the only telco offering extended 4G coverage, could see many customers from Vodafone and Optus -- owned by Singapore Telecommunications (ASX: SGT.AX) -- switch to Telstra. Optus has only just started rolling out its 4G network, and that's just in Sydney and Perth's central business districts. Vodafone won't launch a 4G network until next year.

The Foolish bottom line
Should the iPhone 5 contain LTE technology, Telstra has a huge lead on its rivals, and I expect the company to be aggressive chasing customers in its drive to dominate the mobile phone market.

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Motley Fool writer/analyst Mike King doesn't owns shares in any company mentioned. The Motley Fool's purpose is to help the world invest -- better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, while it's still available. This article contains general investment advice only (under AFSL 400691). Authorized by Bruce Jackson. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. The Motley Fool has a disclosure policy.
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  • Report this Comment On September 05, 2012, at 5:25 PM, nickk61 wrote:

    I'm team Telstra all the way but this article is highly inaccurate.

    Optus' 4G LTE network will infact be a lot larger than Telstra's initially over the coming year.

    Telstra have now promised over the coming year to expand their 4G LTE network because Optus have covered a lot more land mass.

    So if the iPhone 5 does contain LTE, choose between the carrier that suits you best.

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