Roger that! Investment Perspective on the Integrated Telecomm Services Industry – NEC

Firms that are primarily engaged in providing communication services other than through wireless and firms related to such primary activities are said to form the integrated telecommunication services industry. Such firms exist to provide high-intensity data transmission solutions to other firms and industries. In recent times the growth in pure Internet based service providers has put the integrated telecommunications industry under stress, as they cannot compete with the prior in terms of price nor in terms of efficiency with which the internet-based firms operate. The pressure has further increased with the recession and the industry has only now started to re-stabilize. The seasonality index of the industry shows that it had negative growth till the mid of October last year, after which positive growth has been achieved, reaching up to +6% by the end of the year.
The biggest players in the integrated telecommunications market globally are AT&T with a US market share of 31.9%, Verizon Communications (31.1%), Chunghwa Telecom Ltd. and Bell Canada Enterprises (BCE). Recent developments in the industry include Tata Communications, an Indian industrial powerhouse, selling its share of the African telecom company Neotel to Vodacom, a subsidiary of the British Vodafone Group. Meanwhile, the global bandwidth provider Zayo Group has acquired London-based fiber optic firm Geo Networks.
AT&T stocks currently sell at $36.39 with a P/E ratio of 10.6 and a dividend yield of 5.06%. Its stock price has steadily risen in the last 3 years. Verizon Communication’s stocks are priced at $49.38 with a P/E ratio of 11.04 and a dividend yield of 4.29%. Its stock price has been greatly volatile as compared to that of AT&T, but has risen overall over the last 3 years. Chunghwa Telecom Ltd.’s shares are priced currently at $31.51 with a P/E ratio of 17.79 and a dividend yield of 4.88%. Its value has grown over the last 3 years but has been more volatile than that of AT&T but lesser than that for Verizon Communications. You can investment analysis on other firms on
When compared by the dividend payout rate of 3.065, Alteva Inc. has the highest dividend payout rate for any firm in the industry at 15.473, while CenturyLink Inc. with a payout of 5.657 is the next highest paying firm. In the US market, the highest growth in sales over the last 3 years has been achieved by Myweb Inc.Com at 295% while CG Systems has achieved a similarly high rate of 245%. The strongest EPS growth rate over the last 3 years has been experienced by Verizon Communications at 64.43, compared to a market average rate of only 2.49%. This firm also has the 3rd highest net profit margin on sales in the integrated telecommunications market at 20.24%. With respect to stability, the industry has a low average beta value of 0.54.
The median Price to Earnings ratio in this market is about 13.9 while the Price to Cash flow ratio is 5.2. Compared to firms in the S&P 500, the P/E ratio is around the same at 0.99 while the Price to Cash flow ratio lags considerably more being at 0.5. More comparative information is available on with detailed analysis about the different dynamics of the industry.


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