Telecom Talk

11/28/2003 12:00 am EST


Roger Conrad

Founder and Chief Editor, Capitalist Times

Roger Conrad, is among the nation's leading financial authorities on utility stocks.  Richard Band is a long-standing expert on value investing and a noted contrarian investor, Here, both advisors offer their favorites among foreign telecom plays.

"Singapore Telecom (SGTJY NASDAQ) has a growing Asia-Pacific network of 37 million wireless customers in six countries," says Roger Conrad, editor of The Utility Forecaster.  "Sales in markets like Australia and rapid growth of low-penetration markets like India ensure at least 10% growth going forward. The sale of its 12% stake in Belgacom adds $1.8 billion to coffers for acquisitions, debt/stock buybacks, and dividends. Buy up to 9. Spain's Telefonica (TEF NYSE) dominates Spanish and Portuguese realms. After all it will generate some $27 billion (Euro) of cash flow through 2006 to buy back stock, cut debt, and resume common stock dividends. Telefonica's consistent growth is in wireless, where it serves 47.8 million customers. Buy up to 40. Growth Portfolio Aggressive Holding Vodafone (VOD NYSE) built its 120 million wireless customer, 28-country network with acquisitions, holding debt low by selling off non-wireless assets. Skeptics remain legion and the stock is off its bubble highs. But its niche ensures profit growth in coming years, which stockholders will share. Buy up to 22."

Richard Band, editor of Profitable Investing, also has some favorites: "Telefonos de Mexico (TMX NYSE) surprised analysts with a robust 15% bounce in third-quarter profits. Cost cutting and lower interest rates turbocharged the Mexican phone company's results. I'm more confident than ever that TMX will beat the market averages in the year ahead, possibly rolling up a total return (dividends plus price gain) of 30% or more. We note that Mexico has abolished withholding on dividends paid to US shareholders. Thus, TMX is suitable for any type of account, including retirement plans. Pay up to $33. Nokia (NOK NYSE), the Finnish telecom firm, continues to amaze. Despite sickly pricing for handsets, the cellphone maker posted a handsome 35% increase in 3Q earnings. Unit sales of handsets shot up 23%, while cost controls helped fatten profit margins by 40%. This is truly heroic management. Don't listen to the con artists who are trashing Nokia. At 18 times next year's projected earnings, NOK is the rare bargain in techland. Buy below $17 for a gallop to the $21–$24 region in 2004."

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