Telstra Corporation Ltd (ASX: TLS) and TPG Telecom Ltd (ASX: TPG) are both trading near their all-time lows right now. The Telstra share price has certainly taken a beating over the last few years. The TPG share price seems to be following suit. Could they be worthy of an investment at current prices?
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Performance
Telstra share price
The coronavirus pandemic was surprisingly harsh on the Telstra share price. To be honest, with such a large portion of the population working remotely, I'm surprised that the share price hasn't recovered more. Almost every company I look at has either bounced back from the March lows or even exceeded previous highs in some instances. Telstra has gone in the opposite direction.
After a brief period of recovery between April and July, the Telstra share price has fallen dramatically. On 12 August, the Telstra share price plummeted from around $3.38 all the way down to $3.11 in a single trading day. After this, the price continued to fall, and currently sits around $2.78 today. Telstra's all-time low share price sits at $2.55, which occurred at the very end of 2010. Since then the price rapidly recovered from $2.55 all the way up to $6.60 in 2015. It has been on a downward trend ever since. Its current price looks to be on its way for another retest of the telco's all-time low. Will Telstra hold its ground here and begin to rise?
TPG share price
TPG is a relatively new company to the ASX, being listed around 30 June 2020. Its shares first listed at $8.49 and unfortunately have steadily fallen since then, down to today's price of around $7.50. Twice this year already it has come close to its all-time low of $7.01. I'm curious now as to whether TPG will follow Telstra's lead and continue down to that level again.
In my view, both companies represent a potential buying opportunity if they can hold their ground above these lows.
Dividends
Investors looking for a holistic analysis will be pleased to know that Telstra offers a current dividend yield of 5.78%. TPG has no history of issuing dividends, however when TPG announced a merger with Vodafone Hutchinson Australia in June, investors were treated to a 'special dividend' of around 52 cents per share. However, this special dividend does not really constitute a dividend yield.
Both the Telstra share price and the TPG share price are currently sitting low, however Telstra is ahead of TPG with the dividend factored in.
Potential
It's hard to compare Telstra to TPG considering the age difference of the companies. TPG is certainly the up-and-comer in the telecom sector and obviously trying to take market share from Telstra. However, Telstra's long history of being a strong company and a blue-chip stock mean it has loyal investors and a sizeable footprint in the market. Its ability to capitalise on future trends will often put Telstra ahead of its competitors, particularly for future developments.
One of those potential future developments is the 5G network. Telstra is in prime position to take advantage of any potential future rollouts of a 5G Network. They are also a large carrier of the Apple iPhone. Apple has recently hinted that its latest iPhone may be 5G compatible, so this could be a potential catalyst in the making. Telstra generally has its finger in every pie and while it may not be the latest and most exciting telecom on the block, it's certainly a force to be reckoned with.
Foolish takeaway
In my personal opinion Telstra and TPG are 2 completely different companies and therefore quite hard to truly compare.
I see Telstra as more compatible for long-term investors, potentially those seeking more stable returns and a solid dividend payout.
TPG, on the other hand, is an exciting new contender that's only been on the market for less than 6 months.
If I was looking to hedge my bets I might take a position in Telstra for stability and income and TPG for growth potential. The merger between TPG and Vodaphone was certainly an interesting move and could lead to an evolution of both the company and its competitive position in the market.
