The Telstra Corporation Ltd (ASX: TLS) share price has been crunched over recent weeks, but I'd buy Vocus Group Ltd (ASX: VOC) shares first.
TLS share price
As can be seen in the chart above, Telstra shares have been whacked over the past year. Meanwhile, the broader Australian sharemarket, or S&P/ASX 200 (Index: ^AXJO) (ASX: XJO), has risen 11.6%.
Telstra's most recent selloff comes as its rival, TPG Telecom Ltd (ASX: TPM), won an auction for new mobile network spectrum. Having successfully challenged Telstra in the broadband and home phone market, TPG plans to roll out its mobile network with a very low price point.
Up until the announcement last week, Telstra's mobile network was seen as the jewel in the crown of the $50 billion telecommunications heavyweight. This is especially true given the rollout of the National Broadband Network (NBN), which will see Telstra become a retailer (as opposed to the owner) of fixed internet infrastructure.
But these developments were a long time coming, so if you asked me three months ago if I would buy Telstra shares for $4, I would have been very tempted. I have said for years that Telstra would be good value below $4 per share.
Indeed, even if TPG can steal some market share away from Telstra I think it is more likely to affect Optus and Vodafone because Telstra will still have appeal as the premier network provider. That's why I continue to believe Telstra could be a worthy investment at the right price.
However, there is another ASX share I'd buy first…
Vocus is the name behind Dodo, iPrimus, Commander and much more. And while Telstra's share price has fallen 23% in a year, Vocus' has fallen 62%!
Vocus is a retailer of internet products in Australia and New Zealand, to both corporate and consumer customers. It also owns valuable network infrastructure and sells complementary products like mobiles, electricity, gas, and insurance. The ability to bundle products is a key growth strategy for the company.
And following numerous acquisitions, the company is also expected to generate cost savings by integrating its businesses, including M2 Group and NextGen.
Foolish Takeaway
If you wanted to add a little spice to your investments and have a high-risk tolerance, you could take out a loan with tax deductible interest repayments to buy Telstra shares, which are tipped to pay a tax-effective dividend of 7.4%.
However, for my money, Vocus shares look good at today's prices — they also pay a potentially tax-effective dividend of 4.3%.
