Is the Telstra Corporation Ltd share price a bargain buy?

The Telstra Corporation Ltd (ASX:TLS) share price is down 21% in the last 12 months. Is now the time to invest?

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Despite the Telstra Corporation Ltd (ASX: TLS) share price rising 2% yesterday, it is still down sharply over the last 12 months.

In fact, as of yesterday's close the telco giant's shares had lost 21% of their value since this time last year.

Does this make Telstra a bargain buy?

Whilst I wouldn't necessarily class Telstra as a bargain, I do believe that its shares are still great value at a little over 13x trailing earnings.

Especially for income investors. There are few shares on the Australian share market that provide as big a yield as Telstra.

Investors that snap up shares at today's price will receive a fully franked 7% dividend over the next 12 months should the telco giant maintain its current pay out.

Whilst there are concerns that both the decision by TPG Telecom Ltd (ASX: TPM) to launch Australia's fourth mobile network and weaker-than-expected NBN margins could impact Telstra's earnings and force it to cut its dividend, I remain confident that its sizeable cost-cutting program will prevent this from being the case.

Telstra plans to achieve at least $1 billion in net productivity over the next five years.

But I agree with Goldman Sachs that these estimates are conservative and believe there are significant cost-saving opportunities from self-help services and automation.

Should you invest?

Overall I think this makes Telstra a great option for investors and a good alternative to the big banks for those in search of dividends.

Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Telstra Limited and TPG Telecom Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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