The Telstra Corporation Ltd (ASX: TLS) share price is on watch after the telco revealed the biggest Internet of Things deal.
Telstra sees the Internet of Things as an important part of the future. This is where most of our devices are connected to the internet and also able to communicate with each other.
Telstra’s IoT megadeal
According to reporting by the Australian Financial Review, Telstra has signed a record-breaking deal in the Internet of Things space.
The telco is going to supply up to 4.1 million IoT SIMs to the smart electricity meter provider Intellihub over the next ten years. This contract is to be valued at $100 million.
All of Intellihub’s new meters are going to connect to Telstra’s IoT network. Intellihub will become a major supplier of smart meters for Telstra Energy’s business which is due to launch this year.
Telstra’s SIMs will be soldered into each Intellihub device at the time of manufacture.
According to reporting by the AFR, Telstra boasts that it has the largest IoT network in Australia, with around 4 million sq km of narrowband coverage and around 3 million sq km of LTE-M coverage, which is purely for IoT. This could be helpful for earnings and the Telstra share price.
What’s the benefit of this?
Smart meters can be very helpful with billing. By connecting to the internet and sending data, it removes the need for someone having to go round properties to check the readings.
But there is another benefit. The boss of Intellihub, Wes Ballantine, said that these devices are getting more popular for households who want to use a power mix, including from renewable sources, to track their usage and make money by selling power back to the grid, according to the AFR.
Mr Ballantine said:
We are seeing an explosion of optionality with these meters in terms of both the importance of managing solar on the roof, and the interaction of solar and other renewable capabilities with the electricity network itself.
Our devices enable a two-way communication between the network and the home, to both facilitate the most efficient use of renewables in the home, but then also to provide the connectivity to enable trading on the grid itself.
There are now 5 million devices on the Telstra IoT network and 2,000 more get added every day. There are other sectors that can also be transformed by this, including livestock, retail, or transportation and logistics.
My thoughts on the Telstra share price
Whilst this announcement isn’t big for Telstra, particularly on an annual basis, all extra income is welcome and it builds on the market dominance of the business.
Telstra is turning things around, with useful acquisitions, further cost cuts and expectations of profit growth. I think it’s one of the better ideas of the biggest 10 ASX shares. But there may be even better ASX dividend shares out there.
