Continuing our exploration on where to invest in 2012, we turn to the broadband sector — one of three sectors that should grow in 2012.
In the battle of the Chinese telecom giants, China Mobile may have a small upper hand. At least, analysts think this stock has slightly more upside to deliver than its rivals.
The number of wireless data subscriptions in the emerging world will probably double in the next 4 or 5 years. We talked about it a little on CNBC today and will go into more depth tonight on Trading the Globe at 7:30EST on CNBC.
Watch the video here:
Growth in wireless data penetration throughout Asia and Latin America is really spectacular and looks likely to remain so as we move into the middle of the decade.
On the Pacific Rim side, names you can trade with exposure to this story include SK Telecom (SKM, quote), which operates out of Korea and may even be expanding into the United States, as well as Chunghwa Telecom (CHT, quote) in Taiwan and wireless media developer NetEase (NTES, quote) on the mainland.
While some traders out there may still be a little edgy about investing in the Internet space, these are not your older brother’s dot-com stocks. Most evolved out of existing telecom or cable companies, and most are profitable.
NTES, the most “virtual” in the above group, trades at about 15 times next year’s earnings and is growing fast.
Generally, companies like these are exactly why you buy the emerging consumer. They are profitable, they are strategically placed and they are already growing fast.
Competition for broadband customers in Mexico is heating up, but do not expect to see world-class mogul Carlos Slim or his flagship America Movil run for cover.
In one corner, local television broadcaster Televisa (TV, quote) and Spain’s Telefonica (TEF, quote) are gearing up to sell separate broadband data packages in Slim’s native Mexico. They will each use a combination of public cable and wireless spectrum to support their offerings.
In the other, weighing in at 71% of the local phone market, Slim’s AMX (quote) has a distinct first mover advantage in the space.
It also has a hidden trump card in the form of control over fixed-line carrier Telmex (TMX, quote), which owns the cable along which TEF and TV data will theoretically travel.
Although TMX legally cannot refuse TEF or TV traffic, Slim will probably have a better sense of its network architecture and even be able to guide its evolution to suit AMX interests.
Ultimately, this is going to be a war over how media content will be delivered in Mexico and throughout Latin America. The field is wide open, and we expect it to go on for awhile.
This looks exciting for TV and exhilarating for AMX, which needed a threat to get its corporate blood pumping.
TEF may not ultimately be a winner here, but it has deep pockets and a strong desire to build out in growth markets like Mexico.
Anatel, Brazil’s telecommunications regulator, has blocked Telecomunicacoes de Sao Paulo (TSP) from selling broadband services until it takes specific measures mandated by the government to fix quality problems it has presented over past few months. Otherwise, it will be fined 15 million Brazilian reals ($7.6 million) and BRL1,000 for every unit sold.
TSP is Net Servicos de Comunicacao’s (NETC) biggest competitor in the Brazil’s biggest broadband market, so this measure may help NETC’s net additions in the next few weeks and/or months.
Buying access to long term growth in the Brazillian broadband market is very interesting and these two companies are core players along with the fixed line and cellular players.