Analysts remain cautious about Telstra's outlook amid concerns of tough competition, falling fixed-line margins and the impact of the NBN.
Telstra used its investor day this week to highlight its plan to focus more on 5G and the so-called Internet of Things (IoT), which enables more services to be delivered over its mobile network.
But while analysts at Citi believe there is scope to boost IoT earnings, they said Telstra's plan is likely to require significant investment, both organically and in acquisitions.
The broker said it remains cautious and maintained its sell rating despite Telstra's dominance in both fixed and mobile.
Telstra boss Andy Penn this week described the economics of the NBN as challenging, and said wholesale prices made for "extremely slim" margins for retailers offering services on the network.
The NBN rollout, once completed, is expected to cost Telstra $3 billion in earnings.
Telstra's mobile services revenue is also under pressure and continued to decline in the first quarter of the 2018 financial year on the back of lower average revenue per user (APRU) due to falling overuse charges.
"Telstra's approach to mobile pricing - offer more data while getting the customer to pay more - is a difficult sell," Citi said.
The broker expects APRUs will remain under pressure even before TPG Telecom moves to become the fourth major operator.
Morningstar senior equity analyst Brian Han said Telstra's evolution into a more technology-driven vision is inevitable.
"Only by doing so can Telstra maintain its competitive advantage, or its narrow moat, which stems from unrivalled infrastructure assets," Mr Han said in a note.
"The Internet of Things, 5G mobile and Big Data are all significant developments and there is no shortage of rosy expert projections on how much value they can create for companies like Telstra."
