Category: Stock Market

The 4DMedical Ltd (ASX: 4DX) share price is ripping ahead today. This follows the company’s latest announcement regarding a commercial contract.

At the time of writing, shares in the medical imaging software company are 12% higher to $1.67.

Let’s unpack the latest announcement.

Breaking ground

Investors are bidding up the 4DMedical share price today on the company’s latest news. According to the release, the excitement stems from the signing of a commercial contract with Novartis AG (SWX: NOVN). For those unaware, Novartis is a Swiss multinational pharmaceutical company. It boasts a market capitalisation of roughly A$306 billion, making it one of the largest pharmaceutical companies in the world.

Furthermore, the contract with Novartis involves the commercial use of 4DMedical’s XV Lung Ventilation Software (XV LVAS). The deal is a first for the ASX-listed small-cap, being the first commercial use of XV LVAS in the pharmaceutical industry.

The agreement will see the respiratory imaging platform used to assess patient outcomes in a clinical program focused on novel therapies to treat Chronic Obstructive Pulmonary Disease. Additionally, the program will be conducted at the University of Miami in the United States.

However, the company noted the contract is not monetarily significant for its business at this stage. Despite that statement, the announcement is clearly positive for the 4DMedical share price today.

Commenting on the news, 4DMedical founder and Chief Executive Officer, Andreas Fouras said:

The program will further validate the application of XV LVAS to improving the lives of those living with COPD, which remains a key indication for the Company’s technology. Whilst the contract is not substantial in terms of revenue at this stage, it also represents the beginning of our commercial relationship with Novartis and expands our commercial product offering to the pharmaceutical and medical device industries.

4DMedical share price snapshot

It has been a volatile past year for the 4DMedical share price. At one point the company’s shares were going for as much as $2.98 before gradually falling to a low of $1.12. Despite the volatility, investors have snagged an 8.2% return over the past 12 months.

Since July, optimism appears to have returned to an extent. This coincides with the release of 4DMedical’s fourth-quarter result.

The post 4DMedical (ASX:4DX) share price soars on contract with $305b pharma giant appeared first on The Motley Fool Australia.

More reading

• Here’s why the 4DMedical (ASX:4DX) share price is gaining today

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The “buy now, pay later” (BNPL) craze hit fever pitch this week with payments giant Square (NYSE: SQ) making a $29 billion play for the global leader in the space, Afterpay. The company’s innovative twist on microlending is incredibly popular with young shoppers, making it prime real estate for companies that want to capture a slice of the future. 

The deal shines a light on other potential opportunities in the industry. E-commerce giant Shopify (NYSE: SHOP) has been working with BNPL provider Affirm Holdings (NASDAQ: AFRM) for the last year, and it owns 7.6% of the company’s stock. They recently took their partnership to the next level after Shopify integrated Affirm’s technology into its online merchant checkout process, allowing customers to directly finance their purchases. 

Let’s consider three reasons for Shopify to take Affirm fully under its wing.

1. Stronger together

Over 5.4 million consumers are actively using Affirm across 12,000 integrated merchants. When shoppers check out with Affirm, their purchase is financed at an annual percentage rate of 0% to 30% depending on their credit, with the option to repay the money in three, six, or 12 months. 

Affirm’s customer base is a drop in the bucket when you consider Shopify powers an estimated 1.75 million online stores, which are the primary focus of the partnership between the two companies. 

But focusing on the merchant side might be too one-dimensional. Affirm recently announced it will be launching the Affirm Card, a consumer-focused product that will allow shoppers to take advantage of BNPL anywhere they wish. It separates the Affirm experience from the shackles of its merchant system, and sets consumers free to take advantage of the same benefits at stores more suited to their needs. 

Shopify currently has 118 million registered users across its Shop virtual assistant platform and Shop Pay payments product, which is a substantial pool of consumers who might be enticed by the offer of a new-age replacement for their credit card. Square is already planning key Afterpay integrations with both its Seller platform (merchants) and its 70 million CashApp-using consumers, and this is a move Shopify could learn from.

2. Buy now, pay later drives sales

It probably comes as no surprise that financing consumer purchases with no fees and little interest encourages people to spend. But it might surprise you just how much.

Shopify is in the process of pitching its BNPL solution (powered by Affirm) to its merchants, and it has provided a series of selling points. The company claims it will increase conversion by 50%, reduce cart abandonment by 28%, and enable larger cart sizes because consumers have the flexibility to buy more.

Half of Affirm’s customers are either millennials or from Gen Z, and the company notes that 79% of this cohort shop using a smartphone. Its BNPL product is driving engagement, with 64% of transactions in fiscal 2020 made by repeat customers who spend $2,200 annually on average.

If Shopify absorbed Affirm, it would have the opportunity to unleash this across its ecosystem of over 100 million users, providing incredible benefits to its merchant base. 

3. They’re already partners

In July 2020, Affirm announced that it would partner with Shopify to power its new Shop Pay Installments feature, an attempt by Shopify to introduce BNPL to its merchants and customers. 

Affirm was still a private company at the time, and as part of the deal it handed over warrants that entitled Shopify to purchase up to 20.3 million shares in the company — equivalent to about 7.6% — for just $0.01 each. Affirm proceeded to list on the stock exchange in January this year, and Shopify maintains its stake worth about $1.3 billion today.

Since the two companies have been working on product integrations for the last 12 months, the merger into one company could be almost seamless. Shopify’s merchants are already familiar with the new features powered by Affirm, so if Shopify views BNPL as a big part of its future, then absorbing Affirm feels like the smart way to go.

Shopify has a market capitalization of over $190 billion compared to Affirm’s $17 billion, so an all-stock deal similar to the way Square acquired Afterpay would result in minimal dilution for shareholders, especially considering it already owns 7.6%. Shopify also has $7.7 billion in cash on its balance sheet, and although using it wouldn’t be ideal, it puts some options on the table (like a part-cash, part-debt deal, or a part-cash, part-stock agreement). 

But the most important thing is that BNPL represents an opportunity to capture highly engaged young shoppers, and the company’s merchants and shareholders alike stand to benefit greatly from that. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 reasons Shopify should buy Affirm appeared first on The Motley Fool Australia.

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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO, Affirm Holdings, Inc., Shopify, and Square. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $1,140 calls on Shopify and short January 2023 $1,160 calls on Shopify. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Aurizon Holdings Ltd (ASX: AZJ) share price has been up and down in trade this Monday after the company reported its earnings for the 2021 financial year this morning. At the time of writing, Aurizon shares are up 0.25% to $4.07 a share.

Aurizon share price rises following dividend increase

• Aurizon raises dividend by 5%
• Revenues fall 1%, but earnings up
• Profits flat at $533 million
• Earnings per share rises 5%

What happened in FY21 for Aurizon?

Aurizon has reported a revenue slump of 1% for FY21 to $3.019 billion, down from the $3.065 billion reported in the previous year (FY20). Despite this, Aurizon managed to grow its earnings before interest, tax, depreciation and amortisation (EBITDA) to $1.482 billion, up 1% from FY20’s $1.468 billion. However, net profits after tax (NPAT) were essentially flat, rising from $531 million in FY20 to $533 million for FY21.

As mentioned above, Aurizon has also announced a final dividend of 14.4 cents per share, franked to 70%, to be paid out to shareholders on 22 September. That represents a 5% increase in its total dividends for FY21 to 28.8 cents per share, up from last year’s 27.4 cents per share. Aurizon tells us that this dividend is “based on [the] 100% payout ratio of underlying continuing NPAT”.

Aurizon also managed to grow its earnings per share (EPS) by 5% as well, which went from 27.2 cents per share in FY20 to 28.5 cents per share for FY21. This was supported by Aurizon’s $300 million share buyback program, which was completed over FY21.

Aurizon largely blames coal volumes and pricing declines for the fall in EBITDA, pointing to a “challenging” Chinese market and the conclusion of contracts. That was despite a drop in operating costs over the period, thanks to lower fuel prices and maintenance costs.

These earnings are the first to reflect the sale of Aurizon’s Queensland rail terminal, which the company finalised back in March. The Aurizon share price dipped at the time on this news.

What did management say?

Here’s some of what Aurizon CEO Andrew Harding had to say on these results:

The Company has delivered solid operational and financial performance in challenging markets that have been  impacted by the COVID-19 pandemic and China import restrictions. We expect coal volume growth of around 5% in FY22, as markets recover and with Australian coal successfully redirected into alternative markets.

Our Bulk business has continued to perform well as it grows volumes and revenue with existing and new customers… We have aspirations to double the earnings of the Bulk business over the next decade. This includes organic growth, extending across the supply chain and acquisitions such as our new ports businesses in Newcastle and Townsville.

What next for Aurizon?

Aurizon has also given investors a glimpse as to what it sees ahead for FY22. The company tells us that it is expecting Group EDITDA to be “in the range of” $1.435 billion to $1.5 billion for FY22, which includes sustaining capital expenditure in the range of $475 million to $525 million.

Aurizon expects a 5% growth rate in coal volumes over the coming financial year, but also anticipates lower contract rates to offset lower costs. It’s also expecting continued revenue growth from its bulk business.

The Aurizon share price has had a subdued 2021 so far. The company is up 3.83% in 2021 so far, compared to the 12.97% the S&P/ASX 200 Index (ASX: XJO) has put on over the year to date. At the current share price, Aurizon has a market capitalisation of $7.47 billion, a price-to-earnings (P/E) ratio of 14.46 and a trailing dividend yield of 6.9%.

The post Aurizon Holdings (ASX:AZJ) share price wobbly on FY21 earnings appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Westpac Banking Corp (ASX: WBC) share price is gaining today after the bank announced the sale of its life insurance business.

The bank advised Westpac Life Insurance Services Limited will go to TAL. This is a subsidiary of global life insurance services provider Dai-ichi Life Group.

TAL will pay $900 million for the business. It will also enter a strategic alliance to provide Westpac’s Australian customers with the service for another 20 years.

Right now, the Westpac share price is trading at $25.44. That’s 1.27% higher than its previous closing price.

Let’s take a closer look at today’s news from Westpac.

Westpac opts out of life insurance

Today’s positive Westpac share price movement may be responding to the bank’s confirmation of the life insurance service sale.

According to Westpac, the divestment “releases significant capital”.

Westpac has lost a total of $1.3 billion (post-tax) on the sale. However, it will add around 12 basis points to Westpac’s Level 2 common equity Tier 1 capital ratio. 

The big bank will record a post-tax loss of $300 million for the life insurance business in its financial year 2021 results. The immediate loss mainly relates to transaction and separation costs.  

The remaining loss will the noted when the sale is completed, which is expected to be in late 2022.

Rumours of the sale have been swirling for months now, with TAL tipped as an interested party in June.

Commentary from management

Westpac’s group chief executive specialist businesses and group strategy Jason Yetton welcomed the news, saying:

This transaction is another step in simplifying the bank while continuing to help customers with their life insurance needs by partnering with TAL.

Life insurance is an important product for many Australians and this sale provides certainty for customers and new opportunities for our people with TAL.

TAL already offers insurance products to more than 4.5 million Australians and is well placed to help Westpac’s customers protect the people they love.

Westpac share price snapshot

The Westpac share price has had a good run lately.

It is currently 29% higher than it was at the start of 2021. It has also gained 47% since this time last year.

The post The Westpac (ASX:WBC) share price is higher today after sale update appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Charger Metals NL (ASX: CHR) share price has rallied for four consecutive days, surging more than 100% from 21.5 cents to 52.5 cents.

Charger Metals successfully listed on the ASX on 9 July, raising $6 million at an issue price of 20 cents.

The company owns a majority interest in a number of prospective nickel, copper, cobalt, lithium and gold projects.

The purpose of the initial public offering was to fund the company’s exploration activities with the aim of defining valuable mineral resources that can be monetised either through further development or sale.

Why the Charger Metals share price surging

Renewables hype

Charger Metals portfolio is focused on critical metals used in industries such as battery storage, solar and electric vehicles.

As investors might have noticed, this sector has been on fire lately with other ASX-listed lithium developers and producers surging in the past month. This includes:

• Pilbara Minerals Ltd (ASX: PLS) up 42.95% to $2.13
• Galaxy Resources Limited (ASX: GXY) up 31.8% to $4.93
• Lake Resources N.L. (ASX: LKE) up 64% to 61 cents
• Core Lithium Ltd (ASX: CXO) up 56% to 36 cents

With all the above lithium companies surging in valuation, Charger Metals share price might be at the right place at the right time.

Prospective projects

Charger Metals has an interest in the following projects:

• A 70% interest in the Coates Nickel-Copper-Cobalt project
• An 85% interest in Coates North Project
• A 70% interest in the Bynoe Lithium and Gold project
• A 70% interest in the Lake Johnston Lithium and Gold project

In the company’s July presentation, it cited that lithium, nickel, copper and platinum group metals are “all metals in demand”.

Charger Metals described the Coates project as a “Julimar geochemical lookalike requiring drilling”.

For those that don’t know, the Julimar project is owned by Chalice Mining Ltd (ASX: CHN).

Chalice has described Julimar as a “globally significant discovery” with multiple prospects of high grade nickel, copper, platinum, cobalt and gold.

Chalice has been undergoing drilling activities at Julimar since March 2020. During this time, its share price has surged more than 1,000% from around 40 cents to $6.72 at the time of writing.

In addition, Charger Metals has described Bynoe as “fertile area close to a proposed Li mine” and Lake Johnson as a “large landholding with known spodumene”.

The post Here’s why the Charger Metals (ASX:CHR) share price has surged 100% in a week appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun owns shares of Core Exploration Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Novonix Ltd (ASX: NVX) share price is frozen today as the company prepares to release an announcement to the market.

The company requested the ASX halt the trading of its shares as it undertakes a strategic capital raise.

The Novonix share price finished Friday’s session trading for $3.02.

Let’s take a closer look at the graphite exploration and battery technology company’s trading halt.

Novonix freezes over

The Novonix share price is frozen while the company gears up to release news of a strategic capital raise.

Unless the freeze is extended, Novonix’s shares will begin trade when the company makes its next announcement, or when the market opens on 11 August, whichever comes first.

The capital raise comes at what appears to be an odd time for the Novonix share price.

Novonix’s latest quarterly cash flow report stated the company has enough cash to run its current operations for another 140 quarters. That’s a whopping 35 years’ worth of funding.

Additionally, Novonix underwent a capital raise in February. The capital raise saw Novonix raise approximately $115 million from institutional investors.

The funds were to go towards increasing the company’s anode materials production capabilities to 10,000 tonnes per annum.

It also intended to begin a share purchase plan (SPP) to raise another $15 million in March. However, the SPP was first delayed, then cancelled. The company said the SPP’s cancellation was due to fluctuations in the Novonix share price.

Finally, the company recently expressed interest in listing on the NASDAQ exchange.

We’ll soon find out if the strategic capital raise is to do with the potential dual listing.

Although, Novonix could be raising capital for entirely different reasons. Many market watchers are likely anticipating the company’s next announcement.

Novonix share price snapshot

It’s been a fantastic year on the ASX for the Novonix share price.

It has gained 143.5% since the start of 2021. It has also increased by 139.6% since this time last year.

The company has a market capitalisation of around $1.2 billion, with approximately 404 million shares outstanding.

The post Why is the Novonix (ASX:NVX) share price frozen today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Global Energy Ventures Ltd (ASX: GEV) share price is leaping higher today, up 6% at time of writing, having earlier posted gains of more than 9%.

The company is focused on delivering compressed shipping solutions to produce, store and transport compressed hydrogen to regional markets surrounding Australia.

Below we take a look at the ASX energy share’s announcement that appears to be driving ASX investor interest.

What did Global Energy announce?

Global Energy’s share price is surging after the company reported it has entered into a non-binding Memorandum of Understanding MOU) with Province Resources Ltd (ASX: PRL) and Total Eren on a new green hydrogen shipping study.

The partnership will help determine the feasibility, both commercial and technical, of exporting compressed hydrogen from the HyEnergy Project in Western Australia to select markets in Asia-Pacific, making use of Global Energy’s compressed hydrogen marine supply chain.

Following completion of the study, Global Energy hopes the partners of the HyEnergy Project will have sufficient confidence to select its C-H2 marine transport supply chain for green hydrogen exports in the next phase of project engineering.

Commenting on the MOU, Global Energy’s managing director Martin Carolan said:

The HyEnergy Project is an ideal green hydrogen export project for our compressed hydrogen shipping solution given its strategic location on the W.A. Gascoyne coastline, within a regional distance to multiple Asian markets with a future requirement for imported hydrogen.

Province Resources CEO, David Frances added:

The HyEnergy Project partners are keen to understand the benefits of compressed hydrogen in relation to other means of transporting our potential green hydrogen product to market. GEV are leaders in this technology and will bring that experience to the study.

The non-binding, non-exclusive MOU expires on 31 December 2022.

Global Energy share price snapshot

Over the past 12 months Global Energy’s share price has gained 18%, trailing the 25% returns posted by the All Ordinaries Index (ASX: XAO).

Year-to-date the Global Energy share price has struggled, down 11% in 2021.

The post Here’s why the Global Energy (ASX:GEV) share price is leaping higher today appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Inflation can be a persistent and pervasive problem. It tends to erode the value of hard-earned cash by steadily reducing its purchasing power. To maintain that all-important spending power, ASX investors need to find stocks that will provide returns that exceed the rate of inflation. An expert considers Wesfarmers Ltd (ASX: WES) to be one such company.

One Australian fund manager has shared a characteristic that makes companies potentially more capable of defending against corrosive inflation.

Defeating the effects of inflation

Inflation is when prices for goods and services increase over time. This means that it costs more to buy groceries or fill up your fuel tank than it did before.

However, consumers are often not alone in their inflation woes. Companies can also feel the pinch of rising costs due to inflation, whether this is in the form of increased material costs or labour expenses.

Portfolio Manager and Head of Research at Airlie Funds Emma Fisher shared her insights on combating inflammatory inflation. In an interview, Fisher highlighted pricing power as an important trait of companies able to ward off the impact of inflation.

Ultimately when we look across the portfolio, I think the key thing to worry about is that the businesses that you’re invested in have pricing power. Inflation is going up in the near term. The unanimous feedback from corporates is that they are seeing raw material and increasingly labour market inflation coming through. Their hope is that they are going to be able to pass that through to the end consumer in the form of higher prices.

In addition to this, Fisher suggested examples of these inflation-fighting shares include Wesfarmers, James Hardie Industries PLC (ASX: JHX), Woolworths Group Ltd (ASX: WOW), and Reece Ltd (ASX: REH).

Back in May, Wesfarmers CEO Rob Scott confessed that the whole market is facing cost pressures. However, the leader of the $72 billion business suggested they weren’t simply looking at increasing prices to offset inflationary costs. Instead, the company is attempting to use its scale to negotiate lower costs with its suppliers.

Wesfarmers’ plan is to capture a greater market share while other companies pass on increased costs to customers.

When will Wesfarmers report to the ASX?

Being one of the largest companies on the ASX, the Wesfarmers FY21 annual report is highly anticipated. The diversified business conglomerate expects to release its annual results on Friday 27 August.

Shareholders of Wesfarmers are also likely on the lookout for a renewed bid for Australian Pharmaceutical Industries Ltd (ASX: API). This follows the company’s initial $1.38 per share bid for the pharmacy chain operator which was rejected.

The post Pricing-power shares like Wesfarmers (ASX:WES) help fight inflation: expert appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Appen Ltd (ASX: APX) share price is dropping during early afternoon trade on Monday. This comes despite no new news being released by the artificial intelligence data services company.

At the time of writing, Appen shares are fetching for $12.24, down 2.47%. In comparison, the S&P/ASX 200 Index (ASX: XJO) touched an all-time high of 7,549 points, up 0.1%.

What’s going on with the Appen share price?

It appears investors are taking some profit off the table after Appen shares bounced 8% higher last week.

The company’s share price has been hit hard by the onslaught of COVID-19, falling 67% since this time last year.

In May, Appen delivered a trading update and announced a restructure to focus on its core business interests. Instead of reporting the usual double-digit growth however, the company is expecting a mid-to-high single-digit increase for FY21.

In addition, Appen shares were kicked out of the ASX 100 Index as its market capitalisation sank, making way for Harvey Norman Holdings Limited (ASX: HVN).

The United States dollar is also weighing in on Appen’s bottom line. The company traditionally reports in US dollars as most of its revenue is derived from there. However, with the Australian currency rising against the greenback, this will deflate Appen’s potential earnings. Currently, US$1 buys A$1.36.

Appen is scheduled to report its financial results for FY21 on 26 August 2021.

Is Appen shares a buy?

The most recent broker note came from Bell Potter in mid-June. The investment firm cut its 12-month price target by 5.3% to $13.50 for Appen shares. Based on the current share price, this implies an upside of around 9%.

The post Appen (ASX:APX) share price drops after a fantastic week appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras owns shares of Appen Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Appen Ltd. The Motley Fool Australia owns shares of and has recommended Appen Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price is in the green. It comes amid news the company has secured a “win” over new regional radio frequency limits set by the Federal Government.

Telstra shares are trading for $3.82 as of writing – up 0.39%. The S&P/ASX 200 Index, meanwhile, is 0.19% higher.

Let’s a closer look at today’s news.

Telstra share price on the rise

According to a report in the Sydney Morning Herald (SMH), Communications Minister Paul Fletcher has agreed to a 45% purchase limit of low-band frequency for telcos in regional areas. It exceeds the ACCC’s recommendation of 40% and even the 43% that Telstra had asked for.

Telstra is already the leading telco, ahead of competitors like Optus and TPG Telecom Ltd (ASX: TPG), in regional areas – at least according to consumer website Finder.

The government will auction off the rights to the low-band spectrum later this year. The lease will last for 20 years.

Investors appear to have welcomed today’s news, judging by the Telstra share price movement.

Defending his decision to go above the competition watch dog’s recommendation, Fletcher said (as quoted in the SMH):

We very carefully configured this so that we don’t end up with an auction outcome that leaves the customers of Optus or TPG worse off.

Let’s be clear, [Optus and TPG] will be able to get significant additional spectrum should they want it in both regional and metro under these limits.

Telstra CEO Andy Penn welcomed the decision, saying:

It will mean we can bid for enough spectrum to maintain our leading mobile network.

Recent Telstra and government dealings

As Motley Fool has previously reported, the Federal Government and Telstra are working on a deal to buy Pacific mobile provider Digicel for approximately $2 billion.

Apparently, the Government’s interest in the Pacific telco relates to national security concerns.

“…Beijing could use the [Digicel] networks to spy on political elites and neighbouring island nations”, according to the Australian Financial Review.

The Commonwealth will provide “significant debt financing” to Telstra to finance the acquisition.

The Telstra share price lifted on the news.

Telstra share price snapshot

Over the past 12 months, the Telstra share price has underperformed the ASX 200 by about 11 percentage points. It’s increased about 12% in that time to the index’s 23%. Year-to-date, however, it has overperformed the benchmark 27% to 13%.

Telstra Corporation has a market capitalisation of $45.2 billion.

The post Telstra (ASX:TLS) share price rises after regional frequency win appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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