In today's rapidly evolving technological landscape, the telecommunications sector stands at the forefront of innovation, driving connectivity across various industries. Hence, investors could consider quality telecom stocks Koninklijke KPN N.V. (KKPNY), SK Telecom Co., Ltd. (SKM), MTN Group Limited (MTNOY), VEON Ltd. (VEON), and Telefónica, S.A. (TEF).
The telecom sector plays a crucial role in establishing and sustaining the infrastructure for seamless communication in various sectors like education, healthcare, and IT. The rising need for high-speed connectivity to facilitate data transfer and meet public and personal needs is fueling demand in the telecom services market.
Considering the high-speed internet demand, widespread 5G adoption, increased smartphone usage, and expanding digitalization across industries, the global telecom market is forecasted to achieve a 6.2% CAGR until 2030.
Additionally, AI in telecom is driven by the adoption of 5G technologies, increasing demand for efficient network management solutions, and the rise of AI-embedded smartphones. Telecom companies prioritize network maintenance to uphold reliability and avoid financial losses, with AI playing a crucial role in identifying and resolving issues, reducing downtime, and enabling swift maintenance through context-aware technologies and IoT processes.
The global AI in telecommunication market is projected to grow to $14.50 billion by 2033, expanding at a notable CAGR of 28.5%.
With these conducive trends in mind, let's take a look at the fundamentals of the five top Telecom – Foreign stocks, starting with number 5.
Stock #5: Koninklijke KPN N.V. (KKPNY)
Based in the Netherlands, KKPNY provides telecommunications and information technology (IT) services. It operates through Consumer; Business; Wholesale; and Network, Operations & IT segments.
In the fiscal fourth quarter that ended December 31, 2023, KKPNY’s adjusted revenues rose 4.3% year-over-year to EUR1.42 billion ($1.53 billion). Its EBIT and net profit grew 11% and 8.4% from the prior-year value to EUR323 million ($348.09 million) and EUR206 million ($222 million). The company’s free cash flow improved 77% year-over-year to EUR334 million ($359.95 million).
Analysts expect KKPNY’s revenue to rise 2% year-over-year to $1.50 billion in the fiscal first quarter ending March 2024.
Shares of KKPNY have soared 3.4% over the past three months, closing the last trading session at $3.54.
KKPNY’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has a B grade for Stability and Quality. It is ranked #21 among 44 stocks in the A-rated Telecom – Foreign industry.
Click here to access KKPNY’s additional Growth, Value, Momentum, and Sentiment ratings.
Stock #4: SK Telecom Co., Ltd. (SKM)
Headquartered in Seoul, South Korea, SKM provides wireless telecommunication services in South Korea. The company operates through three segments: Cellular Services; Fixed-Line Telecommunications Services; and Other Businesses.
During the fiscal year 2023, SKM’s revenue increased 1.8% year-over-year to KRW17.61 trillion ($13.19 billion). Its operating income rose 8.8% year-over-year to KRW1.75 billion ($1.31 million). Also, its net income rose 20.9% year-over-year to KRW1.15 billion ($86 thousand).
For the fiscal year 2024, SKM’s revenue is expected to increase 44.5% year-over-year to $13.61 billion. Its EPS for the same year is expected to increase 5.5% year-over-year to $2.20.
Over the past year, the stock has gained 12.3% to close the last trading session at $21.69.
SKM’s rosy prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has a B grade for Value and Stability. It is ranked #20 in the same industry.
Beyond what we stated above, we also have given SKM grades for Growth, Momentum, and Quality. Get all SKM ratings here.
Stock #3: MTN Group Limited (MTNOY)
Based in Johannesburg, South Africa, MTNOY is a company operating in the telecommunications industry. It offers data, voice and SMS, digital and fintech, wholesale, interconnect and roaming services, and mobile devices.
In the nine months ended September 30, 2023, MTNOY’s group service revenue increased 9% year-over-year to R156.31 billion ($8.25 billion). Its group EBITDA rose 2.8% year-over-year to R70.31 billion ($3.71 billion), and its group EBITDA margin came in at 42.8%.
Street expects MTNOY’s revenue to rise marginally year-over-year to $11.39 billion in the fiscal year 2023.
The stock declined 1.4% intraday to close the last trading session at $4.88.
It’s no surprise that MTNOY has an overall rating of B, equating to a Buy in our proprietary rating system.
It also has an A grade for Value and a B for Stability and Quality. It is ranked #18 in the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see MTNOY ratings for Growth, Momentum, and Sentiment here.
Stock #2: VEON Ltd. (VEON)
Headquartered in Amsterdam, the Netherlands, VEON is a communications and technology company that provides mobile and fixed-line telecommunications services through a range of traditional and broadband mobile and fixed-line technologies.
VEON’s total revenue rose 6.1% year-over-year to $945 million for the fiscal third quarter that ended on September 30, 2023. Its EBITDA increased 17% from the year-ago quarter to $444 million. Its total customers for the quarter amounted to 157.90 million.
VEON’s EPS and revenue are expected to rise 98% and 5% year-over-year to $6.75 and $3.82 billion in the fiscal year 2024.
VEON’s shares have gained 44.1% over the past six months to close the last trading session at $23.90.
VEON’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
It has a B grade for Value, Sentiment, and Quality. In the same industry, it is ranked #17.
Click here to see the other ratings of VEON for Growth, Momentum, Stability, and.
Stock #1: Telefónica, S.A. (TEF)
Headquartered in Madrid, Spain, TEF provides telecommunications services in Europe and Latin America.
With a four-year average dividend yield of 9.06%, the company pays an annual dividend of $0.33, which yields 8.19% on the prevailing price level.
During the nine months that ended September 30, 2023, TEF’s revenue rose 2.4% year-over-year to EUR30.50 billion ($32.87 billion). Its underlying OIBDA increased 1.3% from the prior-year period to EUR9.65 billion ($10.40 billion).
Its profit for the period stood at EUR1.48 billion ($1.59 billion), and EPS attributable to equity holders of the parent came in at EUR0.19.
The company’s revenue is expected to rise 3.6% year-over-year to $11.20 billion in the fiscal quarter ended December 2023. Also, the company has surpassed the consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has declined 3.5% over the past three months to close the last trading session at $3.86.
TEF’s POWR Ratings reflect this robust outlook. The stock has an overall grade of B, translating to Buy in our proprietary rating system.
TEF has a grade of B for Growth, Value, Sentiment, and Stability. Among the 44 stocks in the same industry, it is ranked #16.
To access the additional POWR Ratings for Momentum and Quality for TEF, click here.
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TEF shares were trading at $3.96 per share on Tuesday afternoon, up $0.10 (+2.59%). Year-to-date, TEF has gained 1.54%, versus a 4.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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