While domestic phone companies battle for market share, non-US firms are building dominant positions in markets considered by many to offer higher growth potential, such as Latin America. And despite their foreign operations, several of these stocks are traded through ADRs on the New York exchange.
John Christy III, editor of the is a fan of America Movil (NYSE: AMX), the dominant mobile phone company in Mexico, with operations in a dozen other Latin American countries.
The company is controlled by billionaire Carlos Slim Helu, the world's third-richest man (following Bill Gates and Warren Buffett).
Says Christy, "American Movil has had a stellar record of growth and profitability over the past five years. With cellular penetration rates in Latin America hovering in the 40% range (versus 90%+ in Europe), there is a lot more room for growth.
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The shares have risen 15% since he first added it to his portfolio two months ago, and he cautions that they might pull back. However, he says, "Use dips as an opportunity to scoop up more shares. AMX is trading at less than 15 times next year's consensus earnings forecast of $2.
90. With estimated earnings growth running at a 35%+ clip, AMX still looks extremely attractive."
Nick Vardy, London-based money manager and editor of , is also bullish on American Movil, which he notes is also the leading wireless player in Colombia, Ecuador, and Guatemala, the second-largest cellular operator in Brazil and the third-biggest cell phone company in Chile.
He also notes that Verizon is being "squeezed out of Venezuela by Hugo Chavez's anti-American campaign." As a result, he expects Carlos Slim to pay around $3.7 billion for several of Verizon's assets, which he calls "a bargain by almost any measure.
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Vardy is also bullish on Telef o nica (NYSE: TEF), Spain's dominant domestic telecom, a leading player in Latin America and with "global footprint extends across three continents and 19 countries, with a total population of 670 million."
He notes that the firm is "expanding its profits at a breathtaking rate" with net profits up by 40% in the first six months of this year. He adds, "The stock has turned very strong technically in recent weeks," and recommends purchase.
Carla Pasternak, editor of , looks to Brazil for her latest income idea - Telecomunicacoes de Sao Paulo (TSP NYSE), commonly referred to as Telesp.
According to Pasternak, "The company holds a virtual monopoly over the traditional fixed-line phone market in Sao Paulo - the country's wealthiest and most densely populated state, accounting for over 20% of Brazil's population."
Meanwhile, she expects future growth as its bundles its fixed-line operations with satellite TV and high-speed Internet access.
Spain's Telefonica also happens to hold a controlling interest in the company, which she points out, "provides strong financial backing and political clout."
Telsp usually declares two dividend payments each year - one in the first half of the year and one in the second half. And while it has not yet declared its dividend payments for the second half of 2006, Pasternak notes that based on 2005's distributions, the stock offers "a gigantic yield of 12.
4% at the current share price."
She cautions that investors should consider tax consequences, as Telsp's distributions are subject to a foreign withholding tax of about 15%, which can be recaptured via a foreign tax credit if the stock is held in a taxable account.
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