Telstra Group Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPG) both sit at the heart of Australia's telecommunications market.
For me, though, the choice is fairly clear.
If I were buying one today with a medium to long-term view, I would choose Telstra.
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Telstra shares
The main reason I prefer Telstra is the strength of its core mobile business.
Australians rely heavily on mobile and internet connectivity, and Telstra has spent years investing in the network, spectrum, and infrastructure needed to maintain a leading position.
I like that combination of essential demand and an established competitive advantage.
Telstra also does not need rapid growth to produce a worthwhile result for shareholders. If it can keep customers, gradually increase earnings, and continue lifting its dividend, I think the investment case works well.
The current forecasts support that view. Consensus estimates point to earnings per share of 20.8 cents in FY27 and 21.6 cents in FY28.
Fully franked dividends are forecast at 22 cents and 22.5 cents per share, respectively. That equates to a forward dividend yield of around 4.8% in FY27 and 4.9% in FY28, before considering franking credits.
For me, Telstra shares offer a fairly easy investment case to understand: strong mobile positioning, recurring demand, and attractive income.
TPG Telecom shares
TPG also has plenty going for it. The company owns established telecommunications brands and serves a large base of Australian mobile and broadband customers.
There is also the possibility of stronger earnings ahead. Consensus forecasts put earnings per share at 1.8 cents in FY26 before increasing to 4.4 cents in FY27.
The income forecasts initially look even more eye-catching. TPG is expected to pay dividends of 20 cents per share in FY26 and 22 cents per share in FY27.
At a share price of around $3.79, that represents forecast dividend yields of around 5.3% in FY26 and 5.8% in FY27.
But I would be cautious about reading too much into those numbers. The gap between forecast earnings and dividends makes the income story less straightforward than Telstra's. I would want greater confidence in the sustainability of those payments before choosing TPG primarily for passive income.
TPG may still reward investors from here, particularly if earnings recover strongly. I simply think Telstra shares give me a clearer long-term proposition today.
Foolish takeaway
This comparison comes down to which business I would feel more comfortable owning through the next several years.
For me, that is Telstra. Its leading mobile position, resilient demand, forecast earnings growth, and fully franked dividends give me more confidence in both the business and the income outlook.
TPG could still perform well, but I would put my money behind Telstra shares first.
