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Telstra Corporation Ltd is caught up in the US trade sanctions

Telstra Corporation Ltd (ASX: TLS) announced on its website that it has stopped selling Chinese made 22 Telstra-branded phones and Wi-Fi dongles. Telstra’s decision is based on a new prohibition on US companies selling device components and software to ZTE that has led to the company halting operations. ZTE, the second largest Chinese manufacturer is on the US trade sanction list due to selling telecommunication products with US sourced components to North Korea and Iran.

The share price of Telstra is down 2% at the time of writing to $3.18 and has lost 28% in a year. Currently, Telstra is trading on a forward price-earnings- ratio (PER) of 10x and is paying an 8% yield, which is fully franked.

In the same sector and vying for the position of the fourth largest Telco provider is TPG Telecom Ltd (ASX: TPM), which announced an aggressive new mobile plan with “unlimited” data, although speeds will be capped once 1GB is reached daily.

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Motley Fool contributor Rosemary Steinfort 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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