The TPG Telecom Ltd (ASX: TPM) share price has been an amazing outperformer in 2020 so far. Since the start of the year, the broader S&P/ASX 200 Index (ASX: XJO) has lost 13.89% of its value. In contrast, the TPG share price has rallied 26.68%, based on today's closing price of $8.50.
This means TPG has outperformed the ASX 200 by over 40%. Not bad!
But investors who may have been watching this extraordinary rally might be wondering if there's still time to buy in.
Why TPG shares have been rocketing higher in 2020
The TPG share price has been benefitting from a number of key events that have gone its way in recent months. Firstly (and most importantly), the proposed merger of TPG and Vodafone Hutchison Australia has been approved by the Federal Court. This comes following attempts by the ACCC to block the merger last year.
Assuming all goes well and the merger proceeds, this will result in a special dividend being paid to TPG shareholders. The dividend has been estimated at up to 67 cents per share (which would be worth a yield of nearly 8%). The merger will also result in TPG finally securing the ticker symbol 'TPG', which is a win for simplicity, if nothing else.
Furthermore, TPG has told investors it plans to spin-off its Singaporean business into a separate company named Tuas Limited. All existing TPG shareholders will then receive shares in Tuas if this spin-off is executed. I believe this move is a positive for the TPG share price, as spin-offs generally deliver benefits for existing investors. We saw this play out with Wesfarmers Ltd (ASX: WES) and its spin-off of Coles Group Ltd (ASX: COL) in 2018.
All of these factors are building a very positive picture for investors and are behind the surge in the TPG share price this year.
Is the TPG share price a buy today?
With all of these changes ahead, it's hard to know exactly what TPG shares are currently worth. After all, this company is set to be altered dramatically when its merger goes ahead. Furthermore, existing TPG shareholders will only own 49.9% of the new entity.
Still, let's have a look at what the TPG share price is telling us today. So on current prices, TPG shares are offering a dividend yield of 0.59% on a price-to-earnings (P/E) ratio of 29.16.
This doesn't really indicate good value from my perspective. TPG's main competitor Telstra Corporation Ltd (ASX: TLS), by contrast, is trading on a P/E ratio of 18.69 and a dividend yield of 3.09%.
As such, I would much rather bet on Telstra shares today than TPG, given Telstra offers better value on current prices and a far heavier investment in 5G technology.