Is this company the ASX’s best telco?

Australian-based multimedia telecommunications company TPG Telecom Ltd (ASX: TPM) is certainly gaining the attention of investors as the emerging telco looks to be working pretty hard to take on the likes of Telstra Corporation Ltd (ASX: TLS) and Amaysim Australia Ltd (ASX: AYS).

Shares in TPG have had a rough 12-months and are currently sitting at $5.50 at the time of writing after a strong start to the year in the realm of $6.76 in January.

But while Telstra, Optus and Vodafone still dominate the mobile network market, TPG’s new mobile market is a legitimate threat to the trio, and its NBN speeds have been found to be faster than Telstra’s and Optus’ during peak times too – according to a consumer watchdog investigation.

So, is TPG the Amazon of the telco space?

In my opinion, hopefully.

Something has to be done to knock Telstra from its pedestal, with disgruntled customers tired of decades of bad service and infrastructure monopolisation.

TPG is likely to go in hard to bid for 5G spectrum at the government auction in October but it is not alone in its position as a telco giant challenger.

A “coalition” of telecommunications companies known as Commpete – which includes the ASX-listed Amaysim – are also readying themselves to push for a 30% share of the telco market, with the focus on customer value and benefit – something Telstra hasn’t done so well in focusing on in the last few years.

TPG is rumoured to be spending $600 million on its mobile network, with claims it will be able to service more than 80% of the Australian population with entry-level mobile plans priced at 30% to 60% less than current prices.

But in the background Telstra is preparing for the competitive onslaught, with investments in its network ramping up before the 5G rollout and subscriber growth still sitting at its strongest in 5 years.

Telstra shares have been on the decline for the best part of 3 years, with its $3.11 price at the time of writing a far cry from its mid-2015 high of $6.59.

No matter which way you cut it, TPG is a disruptive force in the telco realm, and things will continue to hot up in the space as we approach 5G in October – break out the popcorn and get comfortable.

TPG delivered strong results for the half-year ending January 31, 2018 with upgraded EBITDA guidance for the FY18 now in the range of between $825 million and $830 million.

TPG shares look to be back on the up this month but are still relatively cheap for investors considering an in and back the company to deliver a successful mobile launch and snatch decent market share from the big players.

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Motley Fool contributor Carin Pickworth owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended 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 Scott Phillips.

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