Telstra shares crumble below $3 for first time since 2011

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Telstra shares crumble below $3 for first time since 2011

Telstra's profit warning on Monday has sent its share price below $3.00 for the first time since 2011.

The value of shares in the country's biggest telecommunications company have been falling steadily all year, down from $3.64 at the start of 2018 to the current price of $2.95 at time of writing.

Shares fell another 3 percent as the market opened this morning, after Telstra yesterday told shareholders that its earnings would be at the lower end of guidance as the impact from the National Broadband Network continues to bite.

The company's market capitalisation sits at $35.1 billion, a dramatic decline over the past two years from more than $70 billion in early 2015, when its share price was over $6.00.

Chief executive Andy Penn addressed some of the telco's challenges in the market update yesterday, which include the NBN as well as the move by competitor TPG into the mobile space.

“[The NBN] is having a very material impact on the economics of the whole industry and has triggered a steep change in the competitive environment,” said Penn.

“In the last 12 months alone we have moved from three big players in mobile and fixed to a situation today where we face a fourth network operator entrant in mobile, an increasing number of MVNOs and more than 170 resellers of fixed.”

On top of the mounting pressures from the NBN, Telstra has committed to investing $3 billion as part of a major digitisation program, including upgrades to its core network infrastructure.

Telstra hopes the upgrades will help to pave the way for new technologies such as 5G, which is expected to launch sometime next year, and the national IoT network which was switched on in September last year.

The telco is also looking to diversify its traditional mobile business with the launch of budget internet brand Belong Mobile in August, which CFO Warwick Bray said was "part of our strategy, which is to make sure that we have a fighter brand at the appropriate part of the market."

By comparison, Telstra's competitor's share prices have all seen marginal drops. The newest network operator, TPG, has seen its share price fall by 14 percent since the start of 2018 to $5.50 at the time of writing.

Shares in Optus' parent company SingTel have dropped more than 6 percent since January to $3.48.

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