The Telstra Corporation Ltd (ASX: TLS) share price has been one of the better performing S&P/ASX 200 Index (ASX: XJO) shares over the past few months. Telstra shares are currently sitting at $3.90 a share at the time of writing. That's down 1.02% for the day so far. Even so, that still puts the Telstra share price up around 29.6% year to date in 2021. As well as up an even better 36.4% over the past 12 months.
Not bad for an old ASX 200 blue chip telco like Telstra.
So Telstra shares have been on an impressive run. But is there still gas in the tank for the Telstra share price? After all, longer-term investors might still remember the days of $5, $6 or even $7 Telstra shares.
Is the Telstra share price still undervalued?
Well, according to an article in The Australian this week, there is one investor who thinks the Telstra share price might still be undervalued today. That investor is US bank JPMorgan. JP Morgan analysts reckon the telecommunications infrastructure that Telstra owns could collectively be worth as much as $30 billion. These analysts predict that this could "generate substantial value, which could lead to higher capital returns" if some of these were to be sold off.
We have already seen this in action. Earlier this year, Telstra excited the markets when it announced the sale of 49% of its mobile towers infrastructure business InfraCo Towers. This stake was sold to a consortium of institutional investors, including the Future Fund. Telstra was able to pull off this sale with a price that was equivalent to 28 times InfraCo Towers' earnings.
Telstra as a whole is currently being priced with a price-to-earnings (P/E) ratio of 24.97. That gives it a total market capitalisation of $46.85 billion.
So you can see where JPMorgan's optimism comes from here.
Although the company has now sold half of its Towers business, it still retails a majority stake in the other half. As well as the entirety of its InfraCo Fixed division. InfraCo Fixed also contains a treasure trove of infrastructure assets. These include telephony exchanges, subsea cables and fibre optic ducts.
The Australian also speculates that a further sell down of Telstra's infrastructure could fund a potential future purchase of the government-owned NBN network. We could see some further details of Telstra's future plans at the company's investor day on 16 September.
At the current Telstra share price, the company has a dividend yield of 4.11%.
