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Growing demand for digital services

With the explosion in sales of smart phones and tablets, the demand for content is rising at a phenomenal pace. Several companies look set to reap the rewards for being in the right place at the right time.

The provision of wireless and broadband services and fast data services suggests that internet service providers (ISP) and mobile telecommunications carriers, as well as companies operating at the periphery of that sector, such as microwave wireless communications, and phone and plan resellers could be the best sector to be invested in over the short, medium and long-term.

Related: iiNet – Number 2 in DSL broadband

Telstra Corporation (ASX: TLS) has turned around its business, and is currently the only real provider of 4G network services across Australia. The company is also set to receive compensation totally around $11 billion from the government to switch its fixed line users over to the new National Broadband Network (NBN).

We have Optus – owned by Singapore Telecommunications (ASX: SGT) as the ‘informal’ number two, with TPG Telecom (ASX: TPM) and iiNet Limited (ASX: IIN) as the third and fourth largest telecommunications/ISP companies in Australia, respectively.

We also have small players such as Amcom Telecommunications (ASX: AMM), NEXTDC Limited (ASX: NXT) and BigAir Group Limited (ASX: BGL), all of which offer digital products and services that other telcos/ISPs and corporates may need in future.

There are plenty more companies in that sector, but be aware that not all are high quality.

Foolish takeaway

With demand for data rising, the massive uptake of smart phones, and the roll out of various digital TV services, the telecommunications sector looks to have a bright future ahead. For Foolish investors willing to do some research, there appear to plenty of opportunities to invest in quality companies, with many paying decent fully franked dividends as a bonus.

If you only invest in one company this year, make it our “Top Stock for 2012-13.” Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

More reading

Motley Fool writer/analyst Mike King owns shares in Amcom and BigAir. The Motley Fool’s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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