Telco giant Telstra Corporation Ltd [ASX:TLS] is making moves today. The TLS Share Price is currently trading 0.77% higher after a mixed morning of trading.
It seems investors have latched onto the recent momentum behind the stock. Which includes last week’s announcement of their $1.6 billion takeover of Digicel Pacific in tandem with the Australian government.
And today, Telstra has backed up this partnership with the renewal of yet another key government deal. One that revolves around the Department of Defence.
Let’s take a closer look at the details…
A cornerstone contract
As Telstra notes, it has renewed its five-year contract with the Australian Department of Defence. Rolling out a range of wireless coverage solutions — including 5G capabilities — to defence personnel.
With a total value of $1 billion, this deal — as you’d expect — is a big one. Not only because of the importance of the client, but also the reliability of the network that is required.
Crucially for Telstra though, it will put them on track to reach their goal of delivering growth from their enterprise business operations. A part of the telco that has significantly underdelivered in recent years.
So shareholders should certainly view this deal as a milestone that will hopefully lead to much more.
After all, it wouldn’t surprise us to see Telstra try to line up and secure more government deals in future. As Telstra CEO Andrew Penn comments:
‘We are very pleased to extend and deepen our partnership with the Department of Defence and use our unique sovereign capabilities, decades of experience, and cutting-edge technology to co-design solutions for today and into the future.
‘Telstra is committed to working with the Australian Government to ensure a thriving and safe digital economy and society, including ensuring the Department of Defence and Australian Defence Force have access to world-leading technology.
‘After successfully delivering an enormous program of work under our previous contract with the Department, we are excited by the opportunity to take our collaboration even further.’
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What’s next for the Telstra Share Price?
Looking ahead, the focus for Telstra (long-term) is still its ambitious T25 plan. A target that is designed to completely transform the telco into a modern competitor.
This includes the ongoing rollout of 5G to all mobile customers. As well as the separation of much of its non-mobile assets into the recently created InfraCo. A business that is planned to become a spin-off in the near future.
So shareholders should expect plenty of change right up until the conclusion of this T25 plan. Which will take us to 2025.
For that reason, there will be plenty of speculative opportunities for investors to get involved. With a chance to reap some reward from the restructuring of this iconic telco.
But don’t expect anything earth-shattering.
After all, Telstra is already a well-established company. One that certainly has the ability to capture more growth, but only to a certain extent.
In comparison, if you’re looking for triple- or four-digit percentile returns, then you’re far more likely to find them from small-caps. Stocks that are far more capable of delivering the kind of growth that can net those sorts of returns.
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Regards,
Ryan Clarkson-Ledward,
For Money Morning
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