The TPG Telecom Ltd (ASX: TPG) share price hasn't been a top performer on the S&P/ASX 200 Index (ASX: XJO) of late. In fact, since its reincarnation as a merged entity with Vodafone last month, the TPG share price has fallen more than 9%, 9.44% to be exact. TPG shares are trading for $8.06, down from the $8.54 level we were seeing just 10 days ago, and well below the ~$8.90 levels we saw at the end of last month. In contrast, TPG's arch-rival Telstra Corporation Ltd (ASX: TLS) shares are up 7.67% over the same period. So it's clearly not a 'telco' problem going on here. As such, is there a buying opportunity for TPG shares today after this slide?
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Why the TPG share price has been dropping out
I think the recent TPG share price performance can be explained by one factor – investors now have nothing to look forward to. For over a year, the battle to merge TPG's and Vodafone's operations raged. The two companies initially proposed the merger way back in 2018. But since then, TPG has had to endure the ACCC rejecting its proposed merger on competition grounds. It was only after a successful appeal to the Federal Court last year that this blockage was removed and TPG was allowed to join forces with Vodafone to produce the combined entity we see today. Any TPG shareholder that held their shares prior to 30 June has benefitted in a couple of ways.
Firstly, the marriage of TPG and Vodafone elicited a hefty special and fully franked dividend of 51.6 cents per share.
Secondly, the merger also saw the spinoff of TPG's Singapore operations into a new company called Tuas Ltd (ASX: TUA). Any shareholders that held TPG shares before 30 June received one Tuas share for every two TPG shares they owned.
Now TPG has completed this reshuffling of capital, I think many ASX investors have cashed out and moved on. This might be why the TPG share price has fallen nearly 10% since 30 June.
Is the TPG share price a buy today?
I'm not very enthused by the current TPG share price, even after the drop over the past month. TPG is a quality company, to be sure. It has built a top-notch business over the past couple of decades on an aggressive pricing model. But I still prefer Telstra to TPG as an ASX telco company today.
Telstra's shares are looking cheaper from a price-to-earnings perspective and offer a larger forward dividend yield, in my view. Additionally, Telstra is way ahead of TPG in terms of investing in the next-generation 5G mobile technology. TPG has been caught up in the ban of Chinese telco supplier Huawei in a way Telstra hasn't. That's left TPG a laggard in the 5G race in my view, leaving me far more excited about Telstra's future than TPG's. Thus, if I was looking to add an ASX telco play to my portfolio, I would choose Telstra over TPG today.
