These ASX 200 companies just lost market share to a small-cap rival

This dog-eat-dog industry is seeing customers flee from the big players to smaller providers, seeking a better deal.

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Young woman using computer laptop smiling in love showing heart symbol and shape with hands. as she switches from a big telco to Aussie Broadband which is capturing more market share

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It’s been a tough year for S&P/ASX 200 Index (ASX: XJO) companies, but it just became that much worse for a couple of giant telcos.

The Australian Competition and Consumer Commission today released the latest NBN wholesale market figures, and it’s bad news for Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPG).

In the quarter ending 31 March, the report showed the two largest players, Telstra and TPG (which owns the Vodafone brand), each lost 0.3 percentage points of the NBN market.

The third-largest NBN retailer, Optus, also lost 0.3 percentage points of market share.

So who’s winning then?

It seems Australians are drifting away from the big ASX 200 telcos to sign up with smaller players offering better deals.

In fact, the market share of all the small providers outside the top four increased by one full percentage point.

The charge was led by Aussie Broadband Ltd (ASX: ABB), which boosted its share by a massive 0.5 percentage points. It now has 6.1% of the NBN market.

“The smaller internet providers are growing, and in doing so they are increasing competition in the residential broadband market,” said ACCC commissioner Anna Brakey.

“The presence of smaller players with competitive offers is keeping the larger providers on their toes.”

Despite its share of the pie shrinking, Telstra is still dominant, holding 43.7% of the market. TPG retains 23.3%, while Optus is down to 13.9%.

How are ASX telco shares doing this year?

Aussie Broadband shares have fared better than many other growing technology stocks, falling 15.8% for the year so far.

The stock price was actually up 17.3% year-to-date before a disappointing performance update sent it plummeting at the start of this month.

According to CMC Markets, three out of five analysts still rate it as a strong buy.

TPG shares have done well this year, actually gaining 2.7% since the first trading day of the year. This compares very favourably to the general ASX 200 index, which has plunged 7.1%.

The telco has also given out a 2.8% dividend yield to add to the capital growth.

The Telstra share price has largely followed the fortunes of the ASX 200, dropping 5.92% for the year so far.

Telstra shareholders enjoy a 2.77% dividend yield.

Motley Fool contributor Tony Yoo has positions in Aussie Broadband Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Aussie Broadband Limited. The Motley Fool Australia has positions in and has recommended Telstra Corporation Limited. The Motley Fool Australia has recommended Aussie Broadband Limited and TPG Telecom Limited. 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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