The Telstra Corporation Ltd (ASX: TLS) share price has dropped lower for a second day in a row following the NBN Company's decision to cease sales of hybrid fibre co-axial (HFC) technology for the next six to nine months.
The telco giant is now assessing the impact of this decision on its outlook for FY 2018 and plans to advise the market once complete.
One thing that is certain, though, is that the delay in the NBN rollout will delay a proportion of the payments to Telstra from NBN into future periods.
This has many concerned that Telstra will have to cut is proposed 22 cents per share dividend in FY 2018.
One broker that believes this could be the case is Citi. According to a note out of the broker, its analysts believe this could impact Telstra's earnings by as much as 3% in FY 2018.
As a result, they think Telstra may have to adjust its dividend policy if it is to pay 22 cents per share. Citi has retained its sell rating and $3.25 price target.
However, not everyone agrees. Credit Suisse doesn't appear to believe this will have much impact on the company.
The broker expects Telstra to ultimately benefit due the fact that it will now take longer for users to be transferred over to the NBN. It has held firm with its overweight rating and $4.00 price target.
Should you invest?
While I would side with Credit Suisse on this one, I do believe it would be prudent to hold off investing until Telstra does provide an update on how the NBN news will impact its business.
If the impact is minimal and its dividend is sustainable then I would snap up shares in Telstra ahead of industry peers TPG Telecom Ltd (ASX: TPM) and Vocus Group Ltd (ASX: VOC).
