Consolidation - THE theme driving improved trends for EM Telcos
Communications
New Street expects many markets to consolidate further to just two operators, and in smaller, poorer countries, possibly a single network. Consolidation underpins much of the sector's improvement - most notably through reduced capex, as seen in Brazil, where industry capex dropped from $7bn to $4bn. Countries where further consolidation is likely include Colombia, Peru, Chile, Malaysia and many in sub-Saharan Africa. Key beneficiaries include Millicom, Airtel Africa, MTN, VEON and Entel. EM Telcos remain substantially undervalued on double digit equity FCF yields. Top regional picks include Singtel and KT (Asia), IHS Towers and Vodacom (Africa), and Liberty Latin America and TIM Brasil (LatAm).
Edition: 212
- 30 May, 2025
Another strong month for EM Telcos
Communications
The EM Telco industry has been transformed, with ROIC rising and real revenue growth for the better managed companies in good markets. This has resulted in a strong performance from New Street’s top picks, which are now up 15% on average YTD. IHS Towers and Airtel Africa have been the stand-out performers, up 25% and 24%, respectively. New Street’s report includes a run through of the key news items that investors in this space should be aware of. When viewed in aggregate they think competition, regulation and execution are coming together at the moment to drive good returns for investors.
Edition: 206
- 07 March, 2025
Telcos or Towers
Communications
With so many EM Tower IPOs happening (Mitratel, IHS Towers, Sitio LatinoAmerica), investors need to ask should they participate in the Tower IPOs, or just buy the parents? New Street believes there are much higher equity returns available in EM Telcos (50-100% over the next few years). Most investors are negative on the space, but consolidation, diversification into Fintech and Broadband, and a new demand curve from Enterprise all coming together means the current environment is looking much more positive.
Edition: 123
- 12 November, 2021