The telecommunications sector is not a large one. It only makes up ~3% of the S&P 500. However, in emerging market stocks, it has a considerably larger share of market capitalization making up nearly 8% of the MSCI Emerging Markets index.
I thought I would take a look at a few emerging market telecoms trading at reasonable valuations.
Vivo Participacoes (VIV)
Vivo Participacoes S.A. (Vivo) is a provider of cellular telecommunication services in Brazil, through its wholly owned subsidiary, Vivo S.A. Vivo S.A. is a cellular operator in the states of Acre, Alagoas, Amapa, Amazonas, Bahia, Ceara, Espirito, Santo, Goias, Maranhao, Mato Grosso, Mato Grosso do Sul, Para Parana, Pernambuco, Piaui, Rio de Janeiro, Rio Grande do Norte, Rio Grande do Sul, Rondonia, Roraima, Santa Catarina, Sao Paulo, Sergipe, Tocantins and Minas Gerais, through its subsidiary Telemig Celular. On December 31, 2009, Vivo S.A. had 15.7 million cellular lines in service in the areas.
- 5 Year Sales Growth Rate: 17.39%
- Total Debt to Equity: 44.27%
- Return on Investment: 8.43%
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VimpelCom Ltd., formerly New Spring Company Ltd., consists of telecommunications operators providing voice and data services through a range of wireless, fixed and broadband technologies. The company has operations in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikistan, Georgia, Armenia, Kyrgyzstan, Vietnam and Cambodia, covering territory with a total population of about 345 million. VimpelCom Ltd. operating companies provide services under the Beeline, Kyivstar and Djuice brands. VimpelCom Ltd.'s license portfolio covers a territory with a population of about 345 million. It covers the whole territory of Russia, as well as the entire territories of Kazakhstan, Ukraine, Uzbekistan, Tajikistan, Georgia, Armenia, Kyrgyzstan, as well as Vietnam and Cambodia.
- 5 Year Sales Growth Rate: N/A
- Total Debt to Equity: 59.78%
- Return on Investment: N/A
Telecom Argentina (TEO)
Telecom Argentina S.A. (Telecom Argentina) is engaged in providing fixed-line telecommunications services in Argentina. Telecom Argentina also provides other telephone-related services, such as international long-distance service, data transmission, information technology (IT) solutions outsourcing and internet services, and through its subsidiaries provides wireless telecommunications services and international wholesale services.
- 5 Year Sales Growth Rate: 22.16%
- Total Debt to Equity:14.83%
- Return on Investment: 25.77
Millicom International Cellular (MICC)
Millicom International Cellular S.A. (Millicom) is a global mobile telecommunications operator. The company also operates fixed telephony, cable and broadband businesses in five countries in Central America. As of December 31, 2009, the company had 14 mobile operations in 14 countries focusing on emerging markets in Central America, South America, Africa and Asia. Millicom operates its mobile businesses in El Salvador, Guatemala and Honduras in Central America; in Bolivia, Colombia and Paraguay in South America; in Chad, the Democratic Republic of Congo, Ghana, Mauritius, Rwanda, Senegal and Tanzania in Africa; and in Laos in Asia.
- 5 Year Sales Growth Rate: 38.24%
- Total Debt to Equity: 95.17%
- Return on Investment: 33.48%
China Unicom (CHU)
China Unicom (Hong Kong) Limited (China Unicom) is an integrated telecommunications operator in China providing mobile voice and value-added, fixed-line voice and value-added, fixed-line broadband, data communications and other telecommunications services to its customers through two business segments comprised of mobile services and fixed-line services.
- 5 Year Sales Growth Rate: 14.25%
- Total Debt to Equity: 36.77%
- Return on Investment: 1.54%