The popularity of the hybrid work culture has fostered greater demand for high-speed connectivity. The accelerated deployment of 5G and the widespread adoption of internet-based technologies are now the major growth drivers for the telecom industry.
The industry is evolving rapidly to stay abreast of heightened market demand for high-speed connectivity. In addition, companies are focusing on the development of AI-backed next-generation applications to strengthen their market positions. The global telecom services market is expected to reach $2.47 trillion by 2028, growing at a 5.4% CAGR of 5.4%.
Given this backdrop, we think quality international telecom stocks, América Móvil, S.A.B. de C.V. (AMX), Mobile TeleSystems Public Joint Stock Company (MBT), and Millicom International Cellular S.A. (TIGO) could be solid additions to one’s portfolio now.
América Móvil, S.A.B. de C.V. (AMX)
AMX provides integrated telecommunications services in Latin America and globally. The company’s offerings include wireless fixed voice services and data services. It is based in Mexico City, Mexico.
On September 15, AMX announced plans to sell 100% interest of its subsidiary Claro Panama, S.A. to Cable & Wireless Panama, S.A., an affiliate of prominent telecom company Liberty Latin America LTD (LILA). The $200 million sales price agreed upon is expected to improve AMX’s cash flow.
In its second fiscal quarter of 2021, AMX’s total revenue increased 0.4% year-over-year to MEX$252.51 billion ($12.55 billion), while its net income increased 119.6% from the same period last year to MEX$42.82 billion ($2.13 billion). The company’s earnings per ADR rose 156% year-over-year to $0.64.
A $0.32 consensus EPS estimate for the current quarter (ending September 2021) indicates a 23.1% year-over-year increase. Likewise, the $12.80 billion consensus revenue estimate for the current quarter reflects an 8.6% year-over-year increase. AMX has gained 46.9% in price over the past year and 23.4% year-to-date to close yesterday’s trading session at $17.94.
AMX’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
AMX has a Growth, Value, Stability, and Quality grade of B. In the 48-stock, A-rated Telecom – Foreign industry, it is ranked #1. Click here to see the additional POWR Ratings for AMX (Momentum and Sentiment).
Mobile TeleSystems Public Joint Stock Company (MBT)
MBT is a telecommunication service provider operating mainly in Russia. It provides transmission of voice and data and internet access. The company is a subsidiary of Sistema Public Joint-Stock Financial Corporation and is based in Moscow.
On September 16, MBT signed a definitive agreement to acquire a 70% equity stake in Sistema Capital LLC. MBT will be a 100% shareholder of Sistema Capital following this acquisition. With this move, the company expects to expand its services portfolio and strengthen its market position.
In July, MBT and venture capital firm Digital Horizon acquired the controlling stake in an innovative blockchain-based platform owner, Factorin LLC, for RUB867 million ($11.84 million). The deal should allow the company to provide enhanced services to its B2B customers and accelerate its long-term growth.
For its second fiscal quarter, ended June 30, MBT’s revenue increased 10.6% year-over-year to RUB128.58 billion ($1.76 billion). Its operating profit rose 15.5% from the prior-year quarter to RUB30.42 billion ($415.34 million). Its profit for the period from continuing operations came in at RUB17.43 billion ($238.04 million), up 52.4% from the prior-year quarter. And its total EPS increased 52.3% year-over-year to RUB10.10.
Analysts expect EPS to increase 6.9% year-over-year to $0.31 in the current quarter (ending September 2021). Likewise, the Street’s $1.86 billion revenue estimate for the current quarter indicates a 10.1% year-over-year increase. The stock has gained 7.8% in price over the past year to close yesterday’s trading session at $9.70.
It’s no surprise that MBT has an overall rating of B, which translates to Buy in our POWR Ratings system.
The stock has a B grade for Value, Stability, and Quality. In addition, it is ranked #9 of 48 stocks in the Telecom – Foreign industry. To see additional POWR Ratings for Growth, Momentum, and Sentiment for MBT, click here.
Millicom International Cellular S.A. (TIGO)
TIGO is a mobile service provider based in Luxembourg. The company supplies a wide range of digital services through its Tigo and Tigo BusinessTM brands.
On July 8, TIGO announced that it would invest $135 million to upgrade its mobile network in Honduras, Paraguay, and Bolivia. In addition, the company took the initiative to partner with Swedish communication infrastructure company Telefonaktiebolaget LM Ericsson (publ) (ERIC). Regarding this venture, Xavier Rocoplan, EVP, Chief Technology and Information Officer at TIGO, said, “Millicom has a strategy to achieve and maintain network leadership in all the markets in which it operates. We want to offer the best mobile experience in the market and connect more people in both urban and rural areas.”
TIGO’s revenue increased 12.3% year-over-year to $1.09 billion in its fiscal second quarter, ended June 30. Its gross profit and operating profit improved 15.5% and 45.7%, respectively, to $777 million and $135 million.
The Street’s EPS estimate of $0.27 for the current quarter (ending September 2021) reflects a 154% year-over-year increase. Likewise, the Street’s $1.66 billion revenue estimate for the current quarter indicates a rise of 7.6% from the same period last year. The stock has gained 16.7% in price over the past year to close yesterday’s trading session at $35.42.
TIGO’s POWR Ratings reflect this promising outlook. It has an overall A rating, which translates to Strong Buy in our POWR Ratings system. The stock also has an A grade for Growth and Stability. It is ranked #6 in the Telecom – Foreign industry.
In addition to the POWR Rating grades we’ve stated above, one can see TIGO ratings for Value, Momentum, Sentiment, and Quality here.
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AMX shares were unchanged in after-hours trading Wednesday. Year-to-date, AMX has gained 26.56%, versus a 18.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
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