Telstra Group’s (ASX:TLS) decision not to divest its InfraCo unit has been deemed the right move by Jefferies.

The investment firm defends this decision, given the demand from hyperscalers to support the sector’s artificial intelligence needs.

Telstra Group had shelved plans last Thursday to sell a stake in its physical infrastructure unit, InfraCo, which led to a drop in its shares by around 2.5%.

Nevertheless, Jefferies retains a ‘buy’ status on Telstra Group shares, with expectations of the company gaining more market share in the mobile business.

Additionally, they foresee the company securing more long-term contracts for its infrastructure unit.

Analysts at Morningstar said the decision to keep InfraCo sent shockwaves among investors and likely investment bankers too.

However, they also do not see a rush in divesting the unit which is linked to the mobile business as it could limit other potential partnerships.

Despite the initial drop, Telstra Group’s stock has seen an overall rise of 3.5% this year, as of the last close.

Telstra Group is an Australian telecommunications company that owns InfraCo, a physical infrastructure unit.