Despite a steep fall in the Telstra Corporation Ltd (ASX: TLS) share price, Citi analysts say the telecommunications giant is worth just $3.35 per share, according to FNArena.
TLS share price
It has been a brutal 12 months for shareholders of Telstra. As can be seen in the chart above, shares of Australia's largest provider of communications solutions have fallen 27% while the market or S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is 10% higher.
The NBN's ongoing rollout is leveling the playing field for rival telecommunications companies, which has spooked investors. Meanwhile, TPG Telecom Ltd (ASX: TPM) is gearing up to launch its own 5G mobile network.
Last year, Telstra forecast up to a $3 billion decrease in operating profit as a result of the NBN. Unsurprisingly, it lowered its dividend payment last month in a bid to shore up its balance sheet and invest for growth.
However, some analysts have been quick to jump on the bandwagon and lower their valuation of Telstra shares. FNArena is reporting that the telco's profits will halve between 2018 and 2022. That's according to Citi analysts, which forecast Telstra's August dividend cut back in July.
Foolish Takeaway
If Telstra shares fall to $3.35, I believe more analysts would be moving to upgrade Telstra shares to a buy. Telstra remains the leader in a number of key markets like mobile and continues to generate robust cash flows from its operations. While that could change in time, the company is currently forecast to pay a 6.1% fully franked dividend and trades at just 10 times its forecast profit.
