Telstra is entering the low-cost mobile market with its budget brand Belong

Photo: iStock.

Telstra chief executive Andrew Penn revealed at its earnings call on Thursday that the telco would enter the low-cost mobile market.

Belong Mobile will sell the Telstra network at a discount, competing against other mobile virtual network operators (MVNOs) – such as Amaysim, Kogan, Aldi and Woolworths — that are flogging the Optus and Vodafone networks for cheap, rebadged as their own brands.

Belong has already been selling broadband with a separate image to Telstra’s premium positioning, with Penn saying it now had 150,000 customers representing of 5% of the telco’s fixed-line broadband business.

“We will be providing more details shortly but we are excited about the opportunities available for Belong Mobile and believe it will be as successful as Belong in fixed,” Penn said.

MVNOs are putting downward pressure on the mobile market, selling plans to budget-conscious customers at prices that premium brands like Telstra can’t compete against.

Last month, the Australian Bureau of Statistics reported the communications industry saw a 3.8% fall in prices in the year to June 2017, making it a major drag on Australian inflation.

In addition to MVNOs, TPG bought spectrum in April and revealed plans to spend $1.9 billion to build Australia’s fourth mobile network. Although that network will gradually rollout over three years, the additional competition has left the incumbents unable to increase margins.