UBS analysts, courtesy of The Australian newspaper, have warned that TPG Telecom Ltd (ASX: TPM) has "overreached" and is unlikely to make money from its aggressive "unlimited" mobile plan.
TPG is investing heavily to become the fourth player in the mobile market. The company has a mobile offer of a competitive plan that will be free for the first six months and then cost $9.99 a month. The catch is that data speed will be capped daily for data over 1 GB. The coverage of TPG is also inferior to Telstra Corporation Ltd (ASX: TLS), Optus and Vodafone. UBS analysts believe that TPG's new plan, with aggressive promotion will be unlikely to return "a positive net present value".
The shares are trading on a forward price-earnings- ratio of 13x and the share price is down 1% in a year.
