Whether in our personal or professional life, technology is changing the way we conduct ourselves. For better and for worse. However one thing which isn't changing quite so fast is the internet itself. Although many new applications are built to use it, the world's largest computer network remains largely the same.
For an investor that means telecommunications companies will be in demand for many years ahead. Along with transmission speeds, data usage is skyrocketing and the only real change will be how we access it.
Currently we're seeing consumers opt for fast wireless connections. For example mobile devices on 4G and WiFi rather than fixed internet connections like DSL. In Australia, Telstra's (ASX: TLS) dominating mobile network and presence in fixed internet make it a tough stock to go past.
Although it has competitors, such as TPG Telecom (ASX: TPM), who are looking to undercut the market heavyweight by bringing 'innovative' wireless hubs to customers in densely populated areas, Telstra's balance sheets, product offering, reputation and reliable network make it a powerhouse for years to come.
In rapidly growing Asian markets Telstra has made sensible investments, including its data centres, submarine cable and Cloud infrastructure. These form part of the company's International division and include assets in China and Hong Kong. Among Telstra's Chinese assets, Autohome (NYSE: ATHM) is an exciting prospect for growth and has received huge amounts of investor attention since listing on the New York Stock Exchange.
Although Telstra has recently agreed to sell its CSL business in Hong Kong (for a profit of around $600 million), it will have no impact on the group's profit guidance for the current financial year but will increase free cash flow. Management are expected to either reinvest in Asia or return it to shareholders.
Foolish takeaway
Telstra's commanding strength in Australian markets has provided the perfect platform to leverage regional growth. So although the stock is trading on earnings of around 15, the safety and long term-prospects make it deserving of its moderately high price tag. Furthermore, while interest rates remain low, high-yielding stocks will continue to be in demand.
