Amcom, iiNet and M2: Dialling up 3 small telco stocks now!

In case investors are in any doubt over who’s been boosting their profits from Australia’s insatiable appetite for mobile calls, wireless connections, internet, broadband and data usage, the chart below paints a pretty clear picture.

Over the past five years, Telstra (ASX: TLS) and the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) have increased by 25% and 33% respectively; meanwhile the following three smaller telecommunication players, by offering keener pricing options to customers and by expanding their networks through acquisitions and build-out of infrastructure, have recorded enormous surges in their share prices.

1. Amcom (ASX: AMM) is a Western Australian-based telco which presented yesterday at the Macquarie Connections WA Forum Conference in Perth. The company didn’t provide a copy of its presentation to the market which suggests there was no new information. However at Amcom’s August full-year results presentation, the telco told the market it was expecting double-digit percentage growth in net profit after tax for the current financial year.

2. iiNet (ASX: IIN) is also headquartered in WA and also presented yesterday at the WA Forum and did provide the market with a copy of its presentation. The presentation included an explanation of why the NBN is so attractive to iiNet. According to iiNet, the firm now has over 20,000 customers on the NBN, with over 60% of customer sign-ups new to iiNet. With the benefits of the Adam Internet acquisition still to flow through, the outlook for 2014 continues to be positive.

3. M2 Telecommunications (ASX: MTU) held its Annual General Meeting this week at which it provided shareholders with a breakdown of expected contributors to revenue for the 2014 financial year. Recent acquisitions have helped the company transition its business towards retail customers which are expected to account for 53% of revenues in 2014. M2 also reaffirmed that following the end of the first quarter the telco is still on track to meet its guidance for a 39% increase in earnings per share.


Source: Google Finance

Foolish takeaway

While there are expectations that the form of the NBN will change under the new Coalition government, which obviously brings uncertainty for telco companies and investors, there are solid grounds for being positive about the outlook for small telco stocks to continue to grow their customer bases and increase both revenues and earnings no matter what the outcome of a renegotiated NBN.

M2 will likely raise its dividend in 2014 which is just what many investors will want. Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

More reading

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked…

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of The Motley Fool’s Top 3 Blue Chip Stocks for 2019.

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in a specially prepared FREE report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

See the 3 blue chip stocks

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.