reports
- Chris Hoare
Chinese Telcos Q3 24 review: Macro continues to impact the top line
Service revenue trend kept steady relative to Q2, albeit being slower than before due to macro headwinds. Yet earnings momentum continued to trend in the mid-single digits overall as we saw good cost control by China Telecom again (acceleration in EBITDA) while peers were cushioned by lower D&A costs (back by easing capex).
- Chris Hoare
Chinese Telcos Q2 24 review: Strong earnings despite softer topline; ...
Despite the slowdown in service revenue trend from softer macro, Chinese operators still delivered a strong earnings growth. Interim dividends rose by 7-22% YoY as all three raised payout ratios. Despite the share prices already roughly doubling, we remain bullish on exposure to China’s structural enterprise theme, improving capital intensity and improved shareholder remuneration.
- Chris Hoare
- Chris Hoare
Chinese Telcos Q4 23 review: Outperformance by China Telecom; bullish...
China Telecom was the clear outperformer for service revenue growth this quarter and for the full year too, driven by an acceleration in Enterprise. Industry EBITDA trend was less upbeat in Q4 as China Mobile and Unicom declined. Both capex and dividend guidance were bullish; industry capex expected to lower by 5% while payout is expected to trend above 75% over the next three years (by 2026) for China Mobile and China Telecom.
- Chris Hoare
Chinese Telcos & Towers Outlook 2024 – Expect another good year for t...
2023 was another decent year for the telcos largely driven by Enterprise. Stocks (especially China Mobile and Telecom) outperformed the weak local index. We expect trends to last through 2024 with good revenue growth and reducing margin pressure and the potential for shareholder remuneration to surprise
- Chris Hoare
- David Lopes
- Chris Hoare
China Tower (Buy, TP: HKD 1.7, +136%) Q3 23 Quick Take: Better overal...
China Tower reported another robust set of figures with good bottom-line growth, supported by an improvement in topline and EBITDA. YTD net profit has grown 14.8% YoY, against consensus’ 8.9% growth for the full year. Despite the recent margin pressure associated with its higher-growth Two Wings business, net profit growth has remained strong on lower depreciation and finance costs.
- Chris Hoare
- David Lopes
EM Tower Trends Faster quarter in Africa and Indonesia; IHS’ MTN Nige...
Amongst our EM Tower coverage, African TowerCos like IHS continue to trend well on topline and EBITDA; Indonesian towers reported faster EBITDA growth ahead of topline again; China Tower slowed again as Towers revenue were impacted by MSA renegotiation effective from 2023; its Two Wings business continue to show healthy growth, however. Indian towers reported better numbers, supported by Indus performance as the lower bad debt costs helped offset its higher energy costs.
- Chris Hoare
EM Telcos Q2 23: Slightly slower driven by China
EM Telcos top line growth slowed somewhat in Q2 again driven by a slower quarter in China. However, other markets stayed strong and simple average revenue growth was 8.5%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates, as they have been now for 3 years. With the rates cycle seemingly peaking, macro headwinds may also start to improve, and we continue to believe that EM Telcos are still not in our view priced for mid-term GDP+ growth, and rising returns.
- Chris Hoare
Chinese Telcos Q2 23 review: Better EBITDA; Enterprise continue to dr...
Chinese operators slowed to 5% service revenue growth, with the slowdown in mobile and broadband only partially offset by enterprise growth. Importantly, shareholder remuneration were encouraging as interim dividends grew 10%/19%/23% YoY for CM, CT and CU respectively.
- Chris Hoare
GEM Telcos Are the price wars finally over?
For 15 years, EM Telcos were engaged in a war for market share, with price the primary weapon. But peace is now breaking out globally. Mobile prices are rising across global EM (India, Brazil, Indonesia, Thailand among others). In this note, we analyze which markets have the greatest potential for recovery, based on 3 criteria: affordability, market structure and challenger returns.
- Chris Hoare
- Chris Hoare
EM Tower Trends Africa outperforming; Q1 CY2023 review
Amongst our EM Tower coverage, African TowerCos continue to outperform. At this stage, we prefer IHS as it offers the best EBITDA growth profile, coupled with its Project Green and considering that diesel prices in Nigeria are falling, we should see meaningful pull through for the year, despite the recent devaluation of the Naira.
- Chris Hoare
EM Telcos Q1 23: Slowdown in India, elsewhere strong
EM Telcos top line growth slowed somewhat in Q1 driven by price increases in India lapping. However, other markets stayed strong and simple average revenue growth was 9%. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates.
- Chris Hoare
Chinese Telcos Q1 23 review: Growth sustained by better mobile and co...
Chinese operators sustained another round of 7-8% service revenue growth, supported by improvements in mobile and continued strength in Enterprise. Given the growth in absolute incremental Enterprise revenue, Enterprise service revenue contribution has now exceeded fixed line.
- Chris Hoare
China Tower (Buy, TP: HK$1.7, +70%) Q1 23: Decent start to the year,...
China Tower has reported a decent set of Q1 results. Core trends slowed, impacted by the new commercial pricing agreements and service agreements, but the fact that total revenue continued to post positive growth is encouraging in our view. Even more encouraging is the improvement in EBITDA trends and net profit up 15% YoY this quarter despite the MSR renegotiation
- Chris Hoare
Asian Telcos 5G capex has peaked in Asian Mobile Leaders
We analyse the capex outlook for Asian Mobile Leaders (Japan, Korea, China, Singapore). Conclusions are bullish: Capital intensity has improved materially and this alongside margin stability and better revenue growth completes the positive picture. ROIC, cash flow, and shareholder returns are all upgraded. From a stock perspective, we think China is the canary in the coal mine. Telcos there are surging having been in this environment for 2 years.
- Chris Hoare
- David Lopes
- Chris Hoare
EM Telcos Q4 22: Double digit growth persists
EM Telcos continue to grow ahead of expectations as a group, and remain resilient to inflationary cost pressures on consumers, with growth in Q4 remaining strong for the leading telcos we track. Our thesis remains that EM telcos are set to grow sustainably at GDP+ rates.
- Chris Hoare
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