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I'm sure US investors are familiar with telecommunications companies based in the US. Verizon (NYSE:VZ) and AT&T (NYSE:T) comes to mind, along with other players like Sprint (NYSE:S) and CenturyLink (NYSE:CTL). Telecommunications companies are often favored by the income investment crowd, since they provide steady and often growing dividends, while being able to generate free cash flow after paying for capital expenditures. In fact, many would argue that telecommunications companies play a similar role as utilities companies do, since the service they provide will be needed in both good times and bad.

But are all telecommunications companies around the world the same? Are they all reliable, dividend paying companies worthy of investing? Unfortunately the answer is no. The different political and geographical divisions means that some companies are better suited as investments than others. The growth of smart phone usage and 4G/LTE for a particular country means that each subscriber will end up paying a higher bill, thus growing the top line revenue for the telecoms operating in that country. Moreover, the dividend the investor eventually collects will be subject to a withholding tax, and that tax rate varies for each country.

For investors wishing to look outside of the US for telecoms to invest in, I have summarized the major telecommunications companies from the Asia Pacific listed by country (ordered by the population). From the list below, the investor can see the proliferation of mobile phones for the specific market, as well as the major telecommunications company with their tickers listed.

China

Population:

1,341,000,000

Number of Mobile Phones:

1,010,000,000 or 75.32% of population

Major Telecommunications Companies:

  • China Mobile (NYSE:CHL)
  • China Telecom (NYSE:CHA)
  • China Unicom (NYSE:CHU)

India

Population:

1,210,193,422

Number of Mobile Phones:

919,170,000 or 76.0% of population

Major Telecommunications Companies:

  • Bharti Airtel
  • Reliance Communications
  • Vodafone India (NASDAQ:VOD) (UK)

Indonesia

Population:

237,556,363

Number of Mobile Phones:

250,100,000 or 105.28% of population

Major Telecommunications Companies:

  • PT Telekomunikasi Indonesia (NYSE:TLK)

Japan

Population:

127,628,095

Number of Mobile Phones:

121,246,700 or 95.1% of population

Major Telecommunications Companies:

Philippines

Population:

94,013,200

Number of Mobile Phones:

86,000,000 or 91.5% of population

Major Telecommunications Companies:

  • Smart Communications by Philippine Long Distance Telephone (NYSE:PHI)

South Korea

Population:

48,580,000

Number of Mobile Phones:

52,510,000 or 108.1% of population

Major Telecommunications Companies:

  • SK Telecom (NYSE:SKM)
  • KT (NYSE:KT)

Malaysia

Population:

28,250,000

Number of Mobile Phones:

30,379,000 or 106% of population

Major Telecommunications Companies:

Taiwan

Population:

22,974,347

Number of Mobile Phones:

25,412,000 or 110.6% of population

Major Telecommunications Companies:

  • Chunghwa Telecom (NYSE:CHT)
  • Taiwan Mobile
  • FarEas Tone

Australia

Population:

21,179,211

Number of Mobile Phones:

21,260,000 or 100.4% of population

Major Telecommunications Companies:

Singapore

Population:

5,076,700

Number of Mobile Phones:

7,289,000 or 143.5% of population

Major Telecommunications Companies:

  • SingTel Mobile by Singapore Telecommunications

New Zealand

Population:

4,252,277

Number of Mobile Phones:

4,620,000 or 108.6% of population

Major Telecommunications Companies:

  • Vodafone (UK)
  • Telecom Corp of New Zealand (NZT)

Sources:

The interested investor can refer to my list below to see the dividend yield and the "effective dividend yield" after withholding tax for the companies listed above. It's difficult to find the declared dividends for 2012 since most of these companies have not declared them yet. So the dividend yield you see is based on the current stock price but using the dividends from 2011.

(click to enlarge)

After taking a moment to digest the information provided, we can note the following:

  1. The proliferation of mobile phone usage in China and India are among the lowest in the group (mid 70%). This means that the subscriber base has room to grow, and so does the teleco's revenue.
  2. Several countries listed above have over 100% proliferation. The top line growth you can expect from these countries have to come from higher monthly subscriber fees.
  3. Philippine Long Distance Telephone company pays a whopping 8.64% dividend (again using last years data).
  4. China Unicom has the lowest dividend, at 0.63%.
  5. Withholding taxes are generally between 20~30% for these asian countries, with the exception of Japan, China and Singapore. A UK listed company is in this list, but also has 0% withholding tax.

If the investor is seeking low withholding tax (i.e. in registered account), then I would recommend looking into CHL (low payout ratio and good growth prospect), DCM (decent yield and low payout), SGAPY.PK (above average yield) and VOD (for very high yield).

Source: Foreign Telecommunications Companies Part 1: The Asia Pacific