Are there any investment opportunities in the mobile telecommunications sector?
Sector Spotlight: Mobile Telecommunications
The mobile telecommunications sector is dominated by one very large company. Here, in addition to Vodafone, I look at all companies worth more than £50 million in the sector.
Pre-tax profits at Gamma Communications have doubled over the last five years. It also boasts a strong balance sheet with assets worth almost three times liabilities and current assets more than double current liabilities. From an investor's point of view, however, the promising track record for growth and balance sheet strength is tempered by a high P/E ratio.
The company, was founded in 2001 and describes itself as a leading supplier of Unified Communications as a Service (UCaaS). It provides cloud-based services. It focuses on UK, Dutch, Spanish and German business markets.
Its growth rate is impressive, but then the cloud is a growing sector. The Covid-19 crisis may, if anything, accelerate the adoption of cloud-based technologies.
|Five year high (2020)||1,755p|
|Change last 12 months||21%|
|Change last five years||280%|
|Market cap £m||1,565|
|Revenue growth since 2015||53.7%|
|Pre-tax profits growth since 2015||104.5%|
|Total assets/total liabilities||2.8%|
|net assets £m||152|
Helios Towers Ord
The company operates telecommunications towers and passive infrastructure in five high-growth African markets.
The company was first listed in October 2019, and so there is a limited track record for us to consider.
In the nine months to 30th September 2020, EBITDA increased 10 per cent year on year to US$165.5m.
Kash Pandya, Chief Executive Officer, said:
"We are delighted to report in September we raised an additional US$225m through a tap of our 2025 bond, further reducing our overall cost of capital."
Net debt stands at US$662.2m.
|Five year high (2020)||205p|
|Change last 12 months||8%|
|Change last five years||28%|
|Market cap £m||1,572|
The company is an AIM quoted Virtual Reality company, and owns a music platform that allows users to experience music performances in Virtual Reality. The MelodyVR music platform is available to fans in North America, the UK & Ireland, Germany, France, Sweden, Switzerland, Spain, Italy, Portugal, The Netherlands, Austria, Greece and Belgium.
It is tempting to suggest the company's product is precisely the type of product that should come into its own during these social distancing times. The company says: "Consumers are able to experience events that were otherwise inaccessible to them due to geographical, physical, age-related or financial restrictions."
The company's inaugural VR event, featuring Liam Payne formerly of One Direction to 36 countries on both the MelodyVR platform and Facebook 360 occurred a year ago.
|Five year high (2018)||17p|
|Change last 12 months||-27%|
|Change last five years||227%|
|Market cap £m||93|
|Total assets/total liabilities||9.4%|
|net assets £m||13|
Vodafone, one of the largest companies listed on the FTSE 100, has traditionally been a big dividend payer. Although dividends offer a tempting six per cent plus yield today, they have been much higher in the past.
Revenue growth has been relatively flat over the last half a decade, but profits have followed a yo-yo trajectory. In the year to 31st March 2018, pre-tax profits were 3.8 billion euros, the following year it made a 2.6 billion euro loss and last year profits were just shy of 800 billion euros.
|Five year high (2016)||239p|
|Change last 12 months||-12%|
|Change last five years||-42%|
|Market cap £m||34,734|
|Revenue growth since 2015||-9.7%|
|Pre-tax profits growth since 2015||-518.4%|
|Total assets/total liabilities||1.6%|
|net assets £m||152|
All prices are approximate figures taken from 8 January 2021.
These views are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees.