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
- Chris Hoare
- David Lopes
- 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
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
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
- James Ratzer
- Chris Hoare
- David Lopes
Chinese Telcos Showing the path for the rest of EM
Chinese Telcos have seen growth and return on capital inflect. Shareholder remuneration is improving. Despite a big rally recently, we see the sector doubling in value in coming years, but more importantly for those who cannot invest in the sector, we think Chinese Telcos are leading indicators of what is set to happen in the rest of EM.
- Chris Hoare
- David Lopes
New Street: Chinese Telcos & Towers Outlook 2023: Expect another good...
2022 was a good year for the telcos largely driven by Enterprise. We expect trends to last through 2023 with high single digit revenue growth though some near-term margin pressure is expected. Shareholder remuneration is guided to improve. We remain Buyers of all 3. China Tower should also do well in 2023 we think given more certainty following the new contract.
- Chris Hoare
- David Lopes
New Street: EM Telcos Q3 22 Enterprise review: Onboard the Enterprise...
Enterprise remains as the fastest driver for most EM Telcos and is set to exceed expectations based on our view that Enterprise penetration is following an S-curve. For nascent markets (India, Latam, Thailand), acceleration is the theme; while more mature markets like China are still riding on the double-digit trend. We see China as the leading indicator as to how Enterprise revenue might trend for EM telcos. In this note, we pull together actual Enterprise revenue trends as reported by EM Telco...
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