The Motley Fool

Are TPG Telecom shares a buy today?

The TPG Telecom Ltd (ASX: TPM) share price has had something of a rough year. The shares of this ASX telco have been static for most of 2019 so far, bouncing around the $6–7 range and opening trading this morning at a price of $6.61. The share price is up 5% YTD but still down almost 30% from its 52-week high of $9.31.

This is especially demoralising for the shareholders of TPG, seeing as they have had to watch the shares of rival telco Telstra Corporation Ltd (ASX: TLS) rise almost 40% in 2019 so far. So are TPG shares a buy today? Let’s have a look at what’s going on at the company

An update on TPG

TPG has been a phenomenal success story of the ASX. Founded in 1986 by the enigmatic David Teoh as Total Peripherals Group, TPG has rapidly expanded over the last three decades to become Australia’s second-largest provider of fixed-broadband services (behind Telstra) through its TPG and iiNet brands. The company also currently holds around a 20% market share of NBN services.

TPG also provides mobile as well as fixed-line services and has been expanding into the Singapore mobile market, establishing itself as the ‘fourth provider’ of mobile services in the country after launching in 2016.

Like other telcos, the NBN has proved to have been a bearer of bad news for TPG. TPG shares were trading north of $12 in 2016 but with an expanding NBN network undermining many of TPG’s established infrastructure, the company was forced to write down earnings as well as the value of its assets and its share price has yet to recover from these previous highs.

What does the future hold for TPG?

TPG announced last year that it was planning a ‘merger of equals’ with Vodafone Hutchison Australia Pty Ltd in order to “provide scale and financial strength to compete more effectively with Telstra and Optus”. However, this move was blocked by the ACCC, with a legal challenge to this decision still pending. TPG has still not flagged what this decision will mean for the company going forward if it is upheld. Further, TPG’s plans to build a 5G network remain on ice following the earlier decision by the Government to ban the use of Chinese telco Huawei’s 5G equipment. TPG had planned on using Huawei to enter the 5G space and this now looks to be dead in the water, at least for the time being.

Foolish takeaway

I think there is a lot of fog surrounding the future direction of TPG as a company right now. As such, I will not be looking to open a position until there is more certainty over the company’s future plans, as well as its strategy to ‘go it alone’ if the merger is definitely blocked.

I would prefer to own these great businesses right now!

Our Top 3 Blue Chip Shares for 2019 – NOW AVAILABLE!

You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.

So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!

Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...

While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...

Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.

You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!


Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.