Telefonica S.A. (TEF)
Telefonica is the largest supplier of telecommunications services in the Spanish and Portuguese speaking world. Telefonica S.A. has a market cap of $76.95 billion; its shares were traded at around $16.89 with a P/E ratio of 3.22 and P/S ratio of 0.91. The dividend yield of Telefonica S.A. stocks is 10.16%. Telefonica S.A. had an annual average earnings growth of 22.7% over the past 10 years. GuruFocus rated Telefonica S.A. the business predictability rank of 4.5-star.
The company’s 2011 revenue increased 3.5%, driven primarily by 13.5% higher revenue from its Latinoamérica division. More than 4% of the growth was due to changes in the consolidation perimeter, which was offset 0.7% by foreign exchange rates. Organic revenue rose 0.1%, due to 842 million euros in mobile termination rate cuts. While growth was strong in Latinoamérica, revenue declined 1.2% in Europe and 3.3% in Spain.
Telefonica’s debt has also been mounting in recent years. It increased from $117 billion in 2009 to $142.4 billion in 2011. The company has about $21.5 billion in cash on its balance sheet.
In February, the company announced that it would have lower profit margins in 2012. In December, it cuts its dividend by 14 percent.
Nippon Telegraph & Telephone ADR (NTT)
NTT Group is a Japanese telecommunications company that provides a variety of telecommunications services, including telephone, telegraph, leased circuits, data communication, terminal equipment sales and other services. Nippon Tele ADR has a market cap of $58.27 billion; its shares were traded at around $22.78 with a P/E ratio of 11.83 and P/S ratio of 0.46. The dividend yield of Nippon Tele Adr stocks is 3.29%. Nippon Tele Adr had an annual average earnings growth of 8.2% over the past five years. It is owned by six gurus.
Nippon is trading at close to its 52-week low of $22.05. Year to date it has declined 10%.
For fiscal year ended March 31, 2011, NTT Group had year-over-year operating revenue and operating income increases for the first time in seven years. This is in spite of the 28.2 billion yen operating expenses it incurred as a result of the Great East Japan Earthquake of March 11, 2011. For fiscal year 2012, the company plans to pay an annual dividend of 140 yen per share, an increase of 20 yen, with a 32% dividend payout. It will also continue its plan to repurchase 125 million government-owned shares by the end of fiscal 2012, and then proceed with the second phrase of its plan. The repurchase will result in an estimated increase in EPIS from 385 yen per share in 2011 to 434 yen per share in 2012.
The Japanese Nikkei 225 Index is up 23% since its low on Nov. 11, 2011.
Chunghwa Telecom (CHT)
Chunghwa Telecom (CHT) is traded at close to 52-week low of $29.76 and is owned by seven gurus. Chunghwa Telecom Co., Ltd. is the largest telecommunications service provider in Taiwan and one of the largest in Asia in terms of revenues. Chunghwa Telecom has a market cap of $23.72 billion; its shares were traded at around $30.3 with a P/E ratio of 14.8 and P/S ratio of 3.2. The dividend yield of Chunghwa Telecom stocks is 4.9%.
Chunghwa’s CEO in the company’s fourth quarter conference call said that its mobile competition is becoming “increasingly fierce.” While revenue was up 5% compared to 2010, it was offset by a decline in revenue due to mobile and VOIP substation, a mandated tariff reduction and the company’s tariff reduction. To broaden its appeal, it plans to expand its strategy to offer both high-end smart phones as well as mid- and low-tier models and to provide value-added services. It forecasts that revenue will continue to grow in 2012, and plans to strengthen its cloud computing infrastructure.
The dividend payout ratio of Chunghwa is 90%, with no plans to change it. In 2011, it paid a dividend of $1.50 per share, increased from $1.25 the previous year.
Looking at 2012, the company expects revenue of $6.2 billion, a 1.9% year-over-year decline, and net income of $1.3 billion, a 16.8% year-over-year decline.
PT Telekomunikasi Indonesia ADR (TLK)
Telekomunikasi Indonesia ADR (TLK) is traded at close to 52-week low of $29.31 and is owned by five gurus. PT Telekomunikasi Indonesia is a state-owned telecommunication and network services company (the government owns 52.85% as of Sept. 31, 2011). Telekomunikasi has a market cap of $14.96 billion; its shares were traded at around $30.11 with a P/E ratio of 10.6 and P/S ratio of 2. The dividend yield of Telekomunikasi stocks is 4%. Telekomunikasi had an annual average earnings growth of 16.3% over the past 10 years. GuruFocus rated Telekomunikasi the business predictability rank of 2-star.
Telekomunikasi has posted higher revenue, earnings and free cash flow from 2008 to 2010, but its gross, operating and net margins have been shrinking in the same amount of time. It also had 762 employees participate in early retirement in September 2011 to reduce expenses.
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