Last week the Telstra Corporation Ltd (ASX: TLS) share price was amongst the worst performers on the ASX 200 with a decline of approximately 6%.
This decline means that the telco giant's shares have now fallen 21% since the start of the year.
Why is the Telstra share price down 21% this year?
Investors have been heading to the exits in their droves this year due to intense competition in the telco market and concerns that Telstra may struggle to maintain its dividend in FY 2019.
One potential saving grace was the planned merger between TPG Telecom Ltd (ASX: TPM) and Vodafone Australia.
There were hopes that this merger would lessen competition and lead to improving margins in the industry, but the ACCC cast doubt on this last week when it released its statement of issues.
ACCC chair, Rod Sims, said: "Our preliminary view is that TPG is currently on track to become the fourth mobile network operator in Australia, and as such it's likely to be an aggressive competitor."
Before adding: "We therefore have preliminary concerns that removing TPG as a new independent competitor with its own network, in what is a concentrated market for mobile services, would be likely to result in a substantial lessening of competition. If TPG remains separate from Vodafone, it appears likely to need to continue to adopt an aggressive pricing strategy, offering cheap mobile plans with large data allowances."
Should you buy the dip?
This statement certainly was a blow for Telstra and telco peers such as Amaysim Australia Ltd (ASX: AYS) and Vocus Group Ltd (ASX: VOC).
Though, it is worth noting that TPG Telecom remains confident that the merger will complete in the first half of next year. In addition to this, the ACCC said similar things about the TPG Telecom acquisition of iiNet before ultimately allowing the acquisition to go ahead unopposed, so all is not lost just yet.
But until the ACCC makes its final decision I would suggest investors stay clear of the telco industry and focus on other areas of the market with better growth prospects.
