While the AT&T purchase of T-Mobile may be the talk of the town, telecommunications companies in developing countries offer promising stock “buys”.
The first stock to consider is Telefonica (TEF). Frank Constantino (2011) recommends Telefonica because its stock is cheap, but has a lot of potential (p. 1). Telefonica’s attractive price is partially the result of the debt crisis in its home country of Spain (Constantino, 2011, p. 1). While the company’s stock price may partially be the result of events in Europe, the company’s expected growth is predicted to come from its operations in the developing nations of Latin America (Constantino, 2011, p. 1). According to a late composition in Barron’s, out of Telefonica’s 220 million wireless customers, 150 million of those customers are in Latin America (as cited in Constantino, 2011, p. 1). In terms of financial statistics, “the company has grown earnings at an annualized rate of more than 20% over the last five years. Revenues have also been strong, growing at an annualized rate of 10% over the same period” (Constantino, 2011, p. 1).
Information obtained from:
http://seekingalpha.com/article/257421-telefonica-could-ring-up-big-profits-for-investors
Millicom International Cellular SA (MICC) is another European stock investors may want to purchase. John Reese (2011) points out that “Millicom provides prepaid cellular telephone services to more than 30 million customers in 13 emerging markets in Latin America and Africa (Millicom International Cellular SA, para. 1). The strategy behind the success of Millicom is its presence in places where a growing demand for telephone services, caused by economic growth, has proven current telephone services to be insufficient (Reese, 2011, p. 1). The financial statistics for Millicom are attractive with a $10.6 billion market cap, a return on capital close to 70%, and an earnings yield of 17.7% (Millicom International Cellular SA, para. 2).
Information obtained from:
http://seekingalpha.com/article/262646-guru-inspired-picks-for-a-telecom-bounce-back
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