Telstra shares near $5 mark

Telstra shares finished within a breadth of breaking the $5 barrier on Tuesday, the highest level in almost eight years. It is one of the best-performing blue-chip stocks on the ASX so far this year.

The telco's shares have surged 11 per cent since the Coalition announced its plan to build a cheaper version of the national broadband network. Most important for Telstra investors, the Coalition promised Telstra was still in line to receive an $11 billion windfall for disconnecting its copper network.

The telco's performance looks even stronger over nearly two years. Its shares hit a historic low of $2.56 in mid-November 2010, but closed at $4.98 on Tuesday - an increase of 94 per cent for those who caught the stock at the bottom.

The surge comes as Telstra is expected to unveil its much-anticipated 4G subscribers number on Wednesday. In a flat mobile market, Telstra is the only carrier making headway in signing up new subscribers.

Investors are flocking to Telstra shares as a safe haven given recent volatility in equity markets and especially after the dramatic collapse of the gold price. Some analysts say many are buying Telstra shares as a proxy high-yielding bond.

Indeed, shareholders are attracted to Telstra's steady flow of dividends, now 28¢ a share.

However, brokerage UBS has questioned whether Telstra shares can increase further. "We believe further share price appreciation is limited. A more rational pricing environment, market share momentum, cost out and 4G upside are now priced in," UBS analyst Richard Eary said.

Telstra is outpacing rivals in rolling out 4G and is expected to cover 66 per cent of the population by June. The telco is set to take advantage of an explosion in data traffic.