Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site. Click here to give us your advice and feedback.

Forget Telstra (ASX:TLS) Shares, I’d Buy TPG (ASX:TPM) First

I think TPG Telecom Ltd (ASX:TPM) is a better telco pick than Telstra Corporation Ltd (ASX:TLS). 

I think TPG Telecom Ltd (ASX: TPM) is a better telco pick than Telstra Corporation Ltd (ASX: TLS).

TPG Telecom is one of Australia’s largest broadband and mobile phone providers, with around 2 million broadband subscribers. In 2018, TPG planned to merge with the owner of Vodafone Australia, Hutchison Telecommunications (ASX: HTA), in a potential $15 billion deal.

Why I’d Pick TPG Shares Over Telstra Shares

Telstra is clearly Australia’s largest telco, but I think that means it’s the best. In-fact, I believe that just puts a bigger target on the company’s back for competitors like TPG, Amaysim Australia Ltd (ASX: AYS) and others.

The strength of Telstra was previously built on its cable infrastructure that it could sell access to others for a good price with a monopoly setup.

But, with all of the telcos now all competing with each other to sell NBN services, the only differentiation is brand & price for the customer and operating expenses for the telco.

TPG and iiNet (both part of the TPG group) have built good customer recognition for price and brand/customer service quality respectively.

Meanwhile, TPG has a leaner operating model than Telstra so it can either offer a cheaper price or generate a higher profit margin from its NBN services. That’s why Telstra is looking to seriously reduce its workforce and costs – which will take years to finish and a lot of redundancy costs in the meantime.

On the mobile side of things TPG is trying to merge with Vodafone to form an Australian powerhouse to compete with Telstra’s dominance. A combined entity would have even stronger operational cost benefits and it would only have to construct one 5G network rather than two.

Looking at the CommSec estimates, TPG is valued at 21 times the estimated earnings for the 2020 financial year. If the Vodafone merger goes ahead I think TPG is likely to be a much better idea than Telstra.

But neither of them are going to grow fast these days, the rapid growth shares in the free report below could grow a lot more.

[ls_content_block id=”14947″ para=”paragraphs”]

[ls_content_block id=”18380″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

Skip to content