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Is it time to buy Telstra Corporation Ltd?

During an investor presentation and Q1 update today, Telstra Corporation Ltd (ASX: TLS) said positive business momentum from last year has carried into FY15 with CEO David Thodey confirming the company’s FY15 guidance.

He also said: “The iPhone 6 launch was pleasing for us and our postpaid handheld ARPUs are continuing to improve,” but continued to say, “overall, in mobiles, market customer growth continues to moderate… however, our strong mobile revenue trends have continued.”

The company’s fast growing Network Application Services (NAS) division also continued to perform well. However a big focus of today’s presentation was on innovation and Asia.

In Asia, Telstra sees huge possibilities as emerging markets transition from legacy technologies such as 2G mobile networks, into 3G and 4G. Inadequate fixed broadband networks are another area where it believes it can leverage off its local success.

By 2020, Mr Thodey hopes the telco will draw up to one third of its revenues from Asia.

Indeed, the Asian story is nothing new to Telstra and it has already invested heavily in the region to develop a huge communications network with 2.5 terabytes per second capacity and 18 offshore data centres.

Last year the company floated its Chinese online automotive website, Autohome Inc (ADR) (NYSE: ATHM) on the New York Stock Exchange, realising a profit of $US133 million. Telstra currently holds 62.9% of the US$5.16 billion company –more than twice the size of Australia’s Carsales.Com Ltd (ASX: CRZ).

Closer to home, Telstra is continuing to invest in its already superior communications technologies, such as its extensive mobile network and, more recently, a $100 million nationwide Wi-Fi rollout.

Telstra stands to receive some $90 billion from the government’s NBN Co over the next three decades, giving it a massive advantage over rivals such as Optus – owned by Singapore Telecommunications Ltd (CHESS) (ASX: SGT) – and iiNET Limited (ASX: IIN), which are also planning to rollout similar Wi-Fi networks for their customers.

Buy, Hold or Sell

Telstra’s future is looking bright. However no stock is a buy at any price and when it comes to valuation, Telstra trades above an acceptable buying range. Indeed, I’d prefer to see a price well below $4.70 before hitting the buy button. Until then, it will remain on my watchlist.

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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies. 

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