Telecommunications Stocks News and Tips on the ASX.

  • Share to buy – APN Outdoor Media (APO)

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    The evolution of Billboards from static to digital has presented significant growth opportunities for APO.

    The company, since IPO (Nov 2014), has secured both existing Static Billboards as well as development options to develop Digital Billboards.

    Given the ability to modify advertising on-demand using sophisticated yield management techniques for digital formats, the potential revenue uplift is significant.

    This can be observed by recent revenue trends whereby revenues have far exceeded the company's and market's expectation.

    Given the scalability of digital formats, this translates strongly for profitability.

    At their most recent update, the company has also upgraded guidance due to acquisitions, increased market share and an increase in penetration of digital formats.

    The company also confirmed the renewal and expansion of key Airport related contracts, in particular with Sydney Airport.

       

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  • Share To Buy Telstra Limited (TLS)

    telstra logoTelstra Corporation Limited (TLS) is a full service domestic and international telecommunications provider and is without question the dominant telco in Australia. The company provides telephone exchange lines to homes and businesses, supplying local, long distance and international telephone calls and supplying mobile telecommunications services. TLS also provides data, internet, on-line services and directory services. TLS has five key business segments:

    >> Telstra Consumer and Country Wide, which is responsible for servicing metropolitan, regional, rural and remote parts of Australia with a full range of products and services.
    >> Telstra Wholesale, which provides a wide range of wholesale products and services to the Australian domestic market.
    >> Telstra Business is responsible for serving the unique needs of Australia’s small to medium enterprises (SMEs).
    >> Telstra Enterprise and Government unit is responsible for providing innovative Information and Communications Technology (ICT) solutions to large corporate and government customers in Australia and New Zealand.
    >> Other, which includes all division that are not covered above and includes; Telstra Operations, Sensis and Telstra International Group.
       
    Key Points FY13 Results:
    >> Revenue over the year grew by 1.9% to $26 billion.
    >> Net profit for the year came in at $3.9 billion a 12.9% increase on the prior year’s result. The profit increase was ahead of consensus estimates of $3.69 billion.
    >> The strong results continue to be driven by a lead mobile growth with revenue rising by six per cent to $9.2 billion.
    >> The mobile division added 1.3 million subscribers for the year, which is likely the result of glitch-plagued Vodafone Australia whose network infrastructure has become overstretched.
    >> Telstra continued to build momentum in its Network Applications and Services (NAS) portfolio, with revenue increasing 17.7% for the year.
    >> The group returned a dividend of 28 cents per share fully franked dividend for FY13.
       
    Outlook The groups FY13 results were solid and showed impressive growth for a company of its size. TLS’s is committed to stabilise its core businesses remains, but we have noted an increase focus on some of its underdeveloped sub divisions, in particular Network Applications and Services. We like the move as the product compliments its other offerings, whilst has relatively lower capital outlay requirements. TLSs current businesses still continued to benefit from previous network upgrades, whilst a new focus on its underdeveloped business will see continued growth for its earnings and its share price. For all of our latest buy share options and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • TPG Telecom LTD Buy Share

    TPG Telecom Limited (TPM) wholesales bandwidth and other telecommunications services. The company also delivers a full range of telecommunications products and services to home and business consumers through its retail operations. Its network infrastructure includes fixed line, fibre and wireless services connecting voice customers with call collection areas throughout Australia and data and internet customers with more than 350 exchange areas. Key Points FY13 Results impress:

    >> Revenue was $725 million a 9% increase on the prior year’s result
    >> Underlying profit grew by 31% over the year to $149 million, this translating to an impressive 340 basis point expansion in the NPAT margin
    >> The strong result was on the back of organic growth in its broadband and mobile subscriber base’s
    >> The group paid total dividends of 7.5 cents a share fully franked, an increase of 36% on FY12
    >> Free cash flow grew to $175 million, a 17% increase over the year. The group used $107 million of this excess cash to pay down its debt
    >> TPM’s net debt is now sits at $16 million, equating to net debt to equity of only 2%
       
    Outlook TPM’s results were solid, with strong organic growth recorded in most segments, however that was not the key takeout of the announcement. TPM announced a new strategy to expand its fibre network to half a million residential and commercial premises in capital cities across the country. This new network should increase its pricing ability, whilst also improving its competitive position. The group has plenty of room on its balance sheet for the expansion, which is not expected to be rolled out until FY15. We think this could be a major driver for the company’s already strongly growing business and this should be a major driver for the company going forward. For all of our latest buy share options and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Share To Buy – Seven West Media (SWM)

    Seven West Media (SWM) is a multi-platform media business based in Australia. The business comprises Seven Television, the Yahoo!7 internet platform, Pacific Magazines and The West Australian newspaper and several  radio stations. The group is divided into four divisions, which include: Television, Newspapers, Magazines and Other activities. Key Points FY 13 Results: Revenue for the year was $1.86 billion, a 3.7% decline on the prior year,  FY13 underling net profit came in at $220.5 million, a 0.8% decline on FY12, but ahead of the 2% to 4% declines it previously guided, Strong EBITDA margins maintained at 26%. The groups operating cash flow impressed, coming in at $342.6 million, a 58.6% jump on the prior year, the group paid back $441.5 million in debt, with no debt maturing until October 2015 and a final dividend of six cents per share was declared bringing total dividend to be paid by the company for the 2012-2013 financial year to 12 cents per share. Outlook SWM’s has been under significant pressure over the last few years, with debt pressures leading to several equity raisings. However the company seems to be turning its fortunes around. It has undertaken several costs and revenue initiatives, with the group achieving $71 million in savings over the past year, ahead of its own target of $60 million. The group is trading on 10.6 times next year’s earnings, while its peers on average trade on close to 16 times. We can see this gap closing if the company keeps on meeting its costs cutting targets and reducing its debt levels. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Seek Limited (SEK) Share To Buy

    seek logoSeek Ltd (SEK) is a provider of online employment services in Australia and New Zealand, but it is also expanding its interest globally. The company’s three main divisions are; Seek Employment, which focuses on the online Australian and New Zealand employment, Seek Education, which incorporates Seek Learning and Think Education and Seek International, which includes significant interests in overseas online employment based websites. The company is the dominant player in the Aussie job ads market. However, with a slowdown in the domestic market, the international and education divisions have become the group’s major drivers. FY13 Results FY13 net profit surges 128% to $300.1 million, whilst on an underlying basis profit rose 8% from FY12. Revenue soared 40% to $620.2 million, with SEK defying weak domestic employment conditions. Seek Employment revenue was down 5% on FY12. SEK has recognised the structural weakness in the employment market, and the investments it has made in its other divisions are paying off. The key takeout was the huge performance in Education, which experienced a 94% increase in EBITDA. Seek International experienced revenue growth of 26% and, along with Seek Education, these two divisions now make up over 60% of overall revenue. Operating cash flow rose 20.5% to $241, fully covering EBITDA and allowing SEK to declare a final dividend of 12 cents, up 33% on-year. Outlook SEK’s FY13 results continue a pattern of strong growth for the company. Over the past 10 years, revenue has risen at a compound annual rate of 36%, with net profit increasing at a 30% rate. The company has significantly reduced its reliance on employment revenue, with this division now making up less than 40% of the overall business. In our view, the key growth drivers remain Seek International, and in particular, Seek Education. The current economic weakness indirectly affects demand for education services as people look to upgrade their skills. The company guided for FY14 net profit to exceed FY13, which we think is easily achievable. Moreover, a continued depreciation in the Aussie dollar, along with a recovery in employment ad volumes is likely to put SEK on track to again exceed market expectations. Seek was listed as a buy share for our members on August 21st. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • M2 Telecommunications Group (MTU)

    m2 telecommunicationsM2 Telecommunications Group Ltd (MTU) is Australia's largest network independent telecommunications provider. The group offer a range of services specifically tailored towards small-to-medium businesses in Australia and New Zealand. MTU encompasses the following brands: >> Commander - offers a wide range of bundled telecommunications services with telecommunications equipment through a national exclusive dealer network. >> iPrimus –  offers broadband, phone, mobile and data services to consumers. >> M2 Wholesale - is the exclusively endorsed wholesale aggregator of Optus third generation (3G) mobile services, and wholesale supplier of choice for fixed-line and data services. >> Black + White - is a retail and wholesale provider of the full suite of telecommunications services to small-to-medium sized businesses and reseller telcos in New Zealand 1H13 Results MTU’s 1H13 results were impressive with the company on track to deliver its 8th straight year of earnings growth. The group’s 1H13 results showed spectacular growth when compared to 1H12, with the period benefiting from the acquisition of iPrimus. A few of the key highlights of the results were: >> Revenue was up 65%, to $305.2 million >> EBITDA grew by a staggering 99%, to $55.1 million >> Underlying NPAT rose by 67%, to $31.7 million >> Underlying EPS increased by 32%, to 20.2 cents per share The group was also able to expand its EBITDA margin from 14.9% in 1H12 to 18% in the 1H13. We were particularly impressed by MTU’s ability to expand its margins, as it shows management’s competency and ability to successfully integrate and deliver on synergies benefits. Acquisition based growth MTU first-half growth was driven by the acquisition of iPrimus, with the acquisition still expected to show benefits in the second half. As well as iPrimus the company in March announced the acquisition of Dodo Australia. Dodo is a retail focused of essential services to residential customers that include: >> Broadband >> Mobile >> Home phones >> Wireless broadband >> Power and Gas >> Car, home building and contents insurance The group has a customer base of over 400,000 clients, with 660,000 active services. We think the acquisition is good move as Dodo’s business is a profitable and organically growing business, which is highly complementary to M2’s existing consumer division. Outlook As mentioned, MTU is on track to record its 8th straight year of annual EPS growth and we think the recent acquisitions will see this record continue for many years to come. The group’s has a solid record of successfully integrating new businesses to its current infrastructure. This is evident in the recent results in which iPrimus synergy benefits helped contribute to expanding margins. This gives us high hopes that the Dodo acquisition will be a success, with current estimates expecting the acquisition to result in underlying FY14 EPS accretion of approximately 20%. Overall, we see expect MTU’s FY13 results (due to be released on 28 August) to show solid growth and with think the share price will rise in anticipation of this outcome. M2 Telecommunications was listed as a buy share for our members on August 2nd. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • IInet Limited (IIN) – Share To Buy

    iinet company logoiiNet (IIN) is the second largest Internet Service Provider (ISP) in Australia. IIN has built its own network (the iiNetwork), boasts the largest Voice over IP network in the country, abolished monthly phone line rental with Naked DSL and has released wireless modem-and-phone-in-one BoB to the world. The firm was included in the ASX 200 in 1999 and employs about 2,000 people at present. The group’s strategy to increase its value is to grow organically and inorganically. IIN recently acquired TransACT in 2011 and Internode in 2012. These acquisitions are expected to deliver considerable synergies to the firm in the coming years. Recent Results In its 1H13 report, the firm’s NPAT increased to $31.9 million, 122% higher compared to the prior corresponding period. Aside from the aforementioned, one of the main highlights of the recent report is the significant 73% increase in the firm’s EBITDA compared to the 1H12. This translates to a 35% improvement in the firm’s EBITDA margin from the prior corresponding period. The solid results were primarily due to the strong organic growth and synergies realized from its acquisitions. Below are charts of the firm’s reported EBITDA and reported NPAT performance in its 1H13 results. One can easily see the vast improvement from the 1H13 results compared to the 1H12.

    Peer Comparison Despite the recent rally IIN’ share price, the company stacks up rather well when compared to its peers. IIN is trading on a forward P/E of 16.8x. This compare to peers Amcom (AMM) and TPG Telcom (TPM) which are trading 22.1x and 19.6x next year’s earnings. IIN’s forecast dividend yield is around 3.8% more or less in line with AMM’s and higher than the 2.5% forecast for TPM. Outlook As previously mentioned, the firm’s recent acquisitions are expected to deliver synergies to the firm. More importantly, both TransACT and Internode has a solid customer base, which will translate to higher potential earnings growth in the coming financial years. Some of the benefits from the acquisitions have already manifested in the firm’s recent 1H13 results. We expect the firm to realize the full benefits from the aforementioned in the medium to long term. Moreover, the firm has been successful with increasing its market share on the back of competitive rates, attractive combination of services, and its acquisitions. Iinet was listed in the traders report as a buy share for our members on May 13th. For all of our latest share tips and trading ideas sign up for FREE 7 Day Trial and gain full access our research files.

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  • Amcom Telecommunications Limited (AMM) Buy Stock

    amcom logoAmcom Telecommunications Limited (AMM) is a fiber-based telecommunication service provider. AMM has three key business segments; Fibre, Business Services and Amnet. The Fibre division provides a comprehensive range of high speed products to blue chip corporate clients, government agencies and other telecommunication providers through its own extensive fibre network in all main capital cities across Australia. Business services offers voice services, data centre management and managed IT services. The Amnet division supplies a variety of communication products with the principal focus being broadband services. 1H13 Results AMM has an extremely good track record when it comes to growing its earnings, and its 1H13 result was no different. The company recorded an underlying net profit of $10 million, a 20% increase on 1H12. The Revenue over the year jumped 43% to $136 million, with the November 2011 acquisition of L7 solutions contributing $36.5 million. The uplift in earnings was due to strong organic sales growth from the group’s core data networks and expanded hosted and cloud services offerings. The group is also showing the ability to increase its recurring revenue base, with the annuity streams of the business at $97 million at 31 December 2012, up from $90 million at June 2012. AMM also paid an interim dividend of 2 cents a share, a 11% jump on the previous interim payment. L7 Solutions and the Fibre business The group acquired L7 Solutions in November of 2011, but is still unlocking many of the synergy benefits that it promised upon acquiring. FY13 will mark the first full year of L7 being integrated within the AMM business, and we expect further opportunities to emerge, especially as group moves into the cloud services space. The group is expanding its Fibre network, and as it grows, economies of scale will seep through, as shown below by the decreasing capital expenditure per $1 of revenue created. Outlook At the release of its 1H results, the company reiterated its FY13 underlying earnings guidance of at least 20% growth. We believe this forecast is achievable considering the company’s history of growing earnings by well over 20% year-on-year over the last 10 years. As the company grows, its economies of scale benefits will begin to show in all areas, as it has already in the fibre division. Given the group’s relatively small market share we believe that a combination of organic growth and acquisition based growth (L7 Solutions) will hold the company in good stead in the coming years. Amcom Limited was issued as a share to buy to our members on March 11th, if you would like further information you can sign up for FREE share recommendations and access all our research files on not only AMM but all our current trading ideas. Simply click here and starting trading today, free for 7 days.

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  • Share Tip Telstra Tracking Higher (TLS)

    Telstra Corporation Limited (TLS) is a full service domestic and international telecommunications provider and is without question the dominant telco in Australia. The company provides telephone exchange lines to homes and businesses, supplying local, long distance and international telephone calls and supplying mobile telecommunications services. TLS also provides data, internet, on-line services and directory services. TLS has five key business segments:

    > Telstra Consumer and Country Wide, which is responsible for servicing metropolitan, regional, rural and remote parts of Australia with a full range of products and services.
    > Telstra Wholesale, which provides a wide range of wholesale products and services to the Australian domestic market.
    > Telstra Business is responsible for serving the unique needs of Australia’s small to medium enterprises (SMEs).
    > Telstra Enterprise and Government unit is responsible for providing innovative Information and Communications Technology (ICT) solutions to large corporate and government customers in Australia and New Zealand.
    > Other, which includes all division that are not covered above and includes; Telstra Operations, Sensis and Telstra International Group.
      FY12 Results The groups’ FY12 results revealed low, but stable growth. EBITDA was $10.2 billion, a 2.1% increase on the prior year’s result on a guidance basis. Revenue over the year climbed 1.3%, to $25.4 billion. TLS’s mobile division, which accounted for over 30% of entire group’s EBITDA, continues to be one of the company’s strongest contributors. The Mobile division reported an EBITDA of $3.12 billion, an 18.4% increase on the prior year’s result. The group’s margins in this division also grew over the year from 33%, to an impressive 36% in FY12. Investor day – strategy The group’s investor day focused on the medium/long-term strategy and positioning of TLS. A few of the key points we gleamed from the presentation in regards to th core/mature business’s fixed lines, mobiles and internet:
    > The focus will be on defence more so than attack. What we mean by that is TLS will focus on customer retention rather than an aggressive price war to maintain market dominance.
    > Cost control will be used to protect margins and to a lesser extent grow earnings.
    > The mobile division is going through a consolidation phase, with the 4G network’s expected two thirds coverage of Australia by June 2013 only expected to provide low growth.
      The group plans to extract growth out of the less mature segments such as the Network Applications and Storage, Mobile Broadband or Foxtel. Investor day – Decrease in Capex A real positive announcement to come out of the investor day was the targeting of a lower capex/sales ratio. TLS set it will target a capex/sales ratio of 14% in the medium-term, down from the 15% it has forecasts for FY13. This is most likely a result of the group’s involvement in the NBN, which is likely to be less capital intensive than its current network. Looking ahead TLS’s FY12 results showed the type of consistent growth we have come to expect. The investor update was a realistic approach to the business, with TLS understanding that it needs to protect its mature business rather than strive for unrealistic growth. TLS is currently trading on a forecast yield (28c for FY13) of over 6.1%, fully franked, or 8.7% on a pre-tax basis. This yield, while not as attractive as before, is still likely to be enticing to investors given the low interest rate environment. The aim of a lower capex/sales ratio is also good news as the high capital intensive nature of the business has always been a concern to market pundits. Overall we expect a solid result from TLS for the 1H13 and this should translate to further share price growth. This article was distributed to our members on January 24th, if you would like further information you can sign up for FREE 7day recommendations and access all our research files on not only TLS but all our current trading ideas. Simply click here and starting trading today.

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  • TPG Telecom Limited (TPM) Stock To Watch

    TPG Telecom Limited (TPM) wholesales bandwidth and other telecommunications services. The company also delivers a full range of telecommunications products and services to home and business consumers through its retail operations. Its network infrastructure includes fixed line, fibre and wireless services connecting voice customers with call collection areas throughout Australia and data and internet customers with more than 350 exchange areas. FY12 results Last week TPM reported their FY12 results, which showed an EBITDA of $261.4 million, a 12% growth on the prior year. The result was slightly ahead of its upgraded EBITDA guidance of between $250 million and $260 million. TPM posted a net profit of $91.0 million, a 16% rise on prior corresponding period. The result was hurt by a pre-flagged $23 million one-off tax expense relating to a change in taxation legislation. Normalised NPAT (which excludes one-off expenses) jumped 46% to $114.2 million. Total revenue over the period lifted 15% to $663.1 million. Nextgen Late last month Leighton Holdings announced that it is exploring the sale of its telecom assets, in an effort to reduce balance sheet pressures. It is believed that Nextgen Networks, which specialises in high performance, premium data services for corporate, government and carrier markets, is on the chopping block. TPM is reportedly interested in the assets which are expected to fetch anywhere between $500 million and $800 million. We think that the business would be a perfect strategic fit for TPM and could provide some synergy benefits with its current infrastructure. Given that Nextgen has forecasted for a CY13 EBITDA of $125 million we believe that TPG would be able to acquire the asset completely through debt, given earnings would more than cover the extra debt liabilities. A capital raising is also a possibility, but given the likely earnings accretive nature of the purchase we can’t see a raising being completed at a steep discount. Outlook TPM has been a consistent performer over the last few years, growing earnings in what could only be described as a weak consumer environment. The group has forecasted EBITDA growth of over 6% for FY13, which we feel is conservative. TPM has a history of conservative estimates with only 6% EBITDA growth forecasted for FY12 and 12% achieved. The possibility of the purchase of Nextgen is also appealing, given the likely favorable terms TPM would be able to achieve due to Leighton’s need to relieve balance sheet pressures. Overall we think TPM has the capacity for continued growth and this is likely to be reflected in its share price.

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Our short-term focused Trading Report returned 30.03%, outperforming the ASX/200 Accumulation Index by 23.58%*

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*Performance is derived from recommendations provided by Australian Stock Report’s Trading Report, opened on or after date of acquisition in Nov 2014
*Return figures are gross returns and do not take into account fees or brokerage costs.
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*ASX 200 Accumulation Index Return is calculated based upon the price of the index at the start of the session on the day the first ASX 200 trade was placed, i.e. 24.11.2015

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