I think it is fair to say that the Telstra Corporation Ltd (ASX: TLS) share price performance in 2018 has been a bit of a disappointment.
Year to date the telco giant's shares have fallen a sizeable 23%.
Will 2019 be better for the Telstra share price?
I think there are two key events in 2019 that will have a big say in whether the Telstra share price outperforms or underperforms next year.
The first one is the proposed TPG Telecom Ltd (ASX: TPM) and Vodafone Australia merger.
Earlier this month the ACCC stated that it was concerned that removing TPG Telecom as a new independent competitor would substantially lessen competition in the telco market.
It fears that a mobile market "with three major players rather than four is likely to lead to higher prices and less innovative plans for mobile customers."
The competition watchdog also voiced concerns over the removal of Vodafone as a competitor in the fixed broadband market.
ACCC chair Rod Sims explained that: "Although Vodafone is currently a relatively minor player in fixed broadband, we consider it may become an increasingly effective competitor because of its high level of brand recognition and existing retail mobile customer base."
On March 28 2019 the ACCC will make a final decision on the merger. If the merger goes ahead then I believe it would be a positive for Telstra, TPG Telecom, Vocus Group Ltd (ASX: VOC) and the rest of the industry and could ease margin pressures. This could be a boost for the Telstra share price.
The second key event is likely to be the company's first half results release on February 14. At this event the telco giant will declare its interim dividend and provide expectations for the full year.
As I mentioned here recently, a number of brokers have pencilled in dividend cuts this year. Citi expects a dividend cut to 16 cents per share, Morgans has predicted a 17 cents per share dividend, and UBS also expects a 16 cents per share dividend.
If Telstra does cut its dividend down to 16 cents per share, then I wouldn't be surprised to see its shares slide in response to this.
What now?
At this point, I would suggest investors stay clear of Telstra until the end of March and then make an investment decision based on its half year results and the ACCC's decision.
