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Is The Telstra (ASX:TLS) Share Price A Buy?

Is the Telstra Corporation Ltd (ASX: TLS) share price worth buying at the current level?

Telstra is Australia’s largest and oldest telecommunications business, having built the first telegraph line in 1854. Today, it provides more than 17 million retail mobile services, nearly 5 million retail fixed voice services (e.g. home phones) and 3.6 million broadband services. It also has operations stretching across eHealth, network applications and subsea cabling. Starting in 1997 (until 2006), the Australian Government sold Telstra to Australian investors via the ASX. The second batch of Government share sales, called “T2”, was conducted in 1999 at $7.40 per share.

Is It Time To Buy At The Current Telstra Share Price?

The Telstra share price has been one of the better-performing ASX blue chips, it has gone up 18% so far during 2019.

Telstra seems to be gaining a bit of sentiment back with investors who see that the 5G launch is getting closer. The telco has already secured a deal with smartphone makers to sell 5G devices before its competitors like Optus and Vodafone.

Australia’s largest telco has also been launching ideas to increase customer loyalty as well as perhaps winning new customers over, such as the new Telstra loyalty plan.

Telstra sees a compelling future for 5G with automated cars and the internet of things (IoT), although it remains to be seen if telcos can capture this value. With 4G it has mostly been the internet companies like Alphabet (Google) and Facebook that have captured most of the value created.

Telstra Is No Longer A Dividend Share

Telstra’s dividend has been cut by almost 50% in the past few years, so much so that its dividend yield is now only a fully franked yield of 4.9%, despite the fall of the share price over the past few years.

I think it’s a good thing the dividend payout has fallen as the current share price and dividend yield better reflects the fundamentals of a challenged business.

According to CommSec, Telstra is valued at around 15 times the 2019 financial year’s estimated earnings. I don’t believe this is an attractive price.

Instead, I would rather own shares of the proven top-notch businesses in the free report below.

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