Why the Telstra Corporation Ltd (ASX:TLS) share price is pushing higher

Source: Telstra presentation

The market may have dropped lower again today, but that hasn’t stopped the Telstra Corporation Ltd (ASX: TLS) share price from pushing higher.

At one stage the telco giant’s shares were up 2.3% to $3.10. They have since fallen back a touch, but still sit over 1% higher in late morning trade.

Why are Telstra’s shares pushing higher?

Today’s push higher could be down to the latest quarterly NBN subscriber data that was released by the ACCC yesterday and a related broker note out of Goldman Sachs.

During the last quarter Telstra captured 52.7% of net adds, up 97 basis points on the second half of FY 2018. This was driven by market share gains in both metro and regional Australia.

As a comparison, rival TPG Telecom Ltd (ASX: TPM) captured 20% of net adds during the quarter, whereas Vocus Group Ltd (ASX: VOC) captured 7% of them.

This was a quarter on quarter improvement for TPG Telecom, but a reasonably sharp decline for Vocus.

According to Goldman Sachs, the latter was likely to be caused by the Dodo rebrand that occurred during August.

What now?

The broker expects more of the same from Telstra in the coming quarters and believes its forecast of 40,000 net broadband subscriber additions during the first half of FY 2019 is more than achievable.

In light of this, Goldman continues to rate Telstra’s shares as a buy and has a $3.60 price target on its shares. This price target implies potential upside of 17% excluding dividends over the next 12 months.

The broker has also held firm with its neutral rating on Vocus and its sell rating on TPG Telecom.

Should you buy Telstra’s shares?

I think Telstra is an attractive option for investors at these levels. However, I intend to wait and see what its dividend plans are for FY 2019 before considering an investment.

In the meantime, I think this dividend share is a less risky option for income investors.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended TPG Telecom Limited and Vocus Communications 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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