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Is The TPG Telecom (ASX:TPM) Share Price A Buy?

Is the TPG Telecom Ltd (ASX: TPM) share price a buy with everything that’s going on?

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.

Is The TPG Telecom Share Price A Buy?

It’s been a bizarre last 12 months for the TPG share price. It has risen by 32% over the past year, but it’s actually down by 26% since the end of August 2018.

The planned merger with Vodafone Australia really excited investors in 2018. The operational synergies of a combined entity would be substantial, particularly due to the fact only one 5G network would need to be constructed.

However, there is a significant potential roadblock – the Australian Competition and Consumer Commission (ACCC). It raised valid concerns about what might happen to competition and prices if Vodafone Australia and TPG combine. The ACCC could still block the merger from going ahead. A decision is expected some time next month.

Shareholders were recently told that TPG had cancelled its mobile network roll-out plans. Since April 2017 TPG had been designing and implementing a mobile network based on small cell architecture using Huawei as the principal equipment vendor, which has since been banned from the 5G network by the Australian government.

The ban has meant TPG has had to write off at least $130 million that has already been committed to that network plan.

TPG recently reported its half year earnings showing that underlying profit slightly increased but the statutory profit decreased because of the 5G Huawei write off.

Despite all of the issues relating to the NBN, lower profit margins and so on, TPG managed to create a slightly higher profit, which I thought was quietly impressive compared to Telstra Corporation Ltd (ASX: TLS).

Is The TPG Share Price A Buy?

Over the next couple of months the TPG share price could move by more than 10% higher or lower depending on what the ACCC’s decision is. I don’t like making a ‘bet’ like that, so I’d rather wait to see what the decision is before committing to TPG shares. If it goes through then there could be plenty of upside over the shorter term.

But if you’re looking for faster growth than low single digits, then the rapid growth shares in the free report below could be better choices.

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