Telstra share price dips after third network outage in a month

Telstra’s month has gone from bad to worse with customers threatening to switch to rival providers after a national mobile outage on Monday, marking the third major network problem in May.A fortnight after a suspected lightning strike on a Telstra cable took out the national triple zero emergency line, customers were left unable to call out or connect to the internet on their devices for several hours on Monday morning and afternoon. Telstra has not confirmed what caused the outage.
                                                                                                                                                                                         

Australia's largest telecommunications company reported another issue, on May 1, when customers across the country faced an outage for National Broadband Network and 4G services.

Aussie Outages' live outage map shows complaints about network problems across all major capital cities and recorded more than 10,000 incidences on Monday morning, with hundreds of people taking to social media to report their inability to call out. Triple zero services were not affected by this outage and not all mobile customers were affected.

Telstra Group managing director of networks Mike Wright apologised for the problem, which impacted voice and data services from 10am onwards, saying the majority of services across the country had been fixed by 2.30pm.
“Any time we have an event like this we work day and night to identify what the route cause was and make sure we move quickly to fix what it was,” Mr Wright said at a press conference in Brisbane.

“Sometimes it's a software fault, sometimes it's a bit of hardware, so we will be working as quickly as possible," he said.

Mr Wright said the company would manage customers on an individual basis for compensation. Despite this, some have threatened to leave the telco on social media, pointing to other recent outages, while others were keen for "free data" days.

This is the latest in a string of problems for Telstra. Last week, the telco’s share price fell to the lowest level in seven years after updating guidance to the lower end of its full year earnings expectation of between $10.1 billion and $10.6 billion before interest and tax on the back of headwinds from the NBN and intense mobile competition.

And by the end of Monday, following the outage, Telstra’s share price had declined 1.75 per cent to $2.80. On May 1, the share price was $3.20. Intelligent Investor deputy head of research Guarav Sodhi, at the Australian Shareholders Association conference on Monday, flagged "more pain to come” for the incumbent telcos in a disrupted mobile market.

In particular, TPG Telecom’s upcoming fourth network and low-cost plans are seen as a threat to the major telcos in a “price war” for mobile customers. Intelligent Investor holds TPG shares.

“The incumbents should be worried. They need to make a response and as investors we need to respond. If you think Telstra looks like a bargain at these levels I just think we should sit back and be a bit more patient,” he said.

“All their advantage, all their profits come from being a telco in Australia [while] all their ambition, all their capital expenditure, is actually trying to be a global tech company, which makes no sense.

"So the really scary part for Telstra isn’t that they’re being disrupted, it’s their response to being disrupted, which appears quite panicky and mindless,” he said.

A Telstra spokesman said the "majority" of capital expenditure was directed to the core business and network.

"We are halfway [through] our up to $3 billion strategic investment program and the weight of this to date has been on the network," he said