Believe it or not, working from home isn't the only way to profit from a super-fast internet connection. Just ask shareholders in TPG Telecom Ltd (ASX: TPM) who have tripled their money since 2012.
But they're not the only lucky ones. There are more than a handful of internet providers taking advantage of our reliance on super-fast internet connections for our mobiles and PCs to make massive profits.
There are two companies which I believe are still trading at very enticing prices and have a substantial growth headway. The first of which is Telstra Corporation Ltd (ASX: TLS). Telstra keeps making fools of analysts who are predicting a share price correction. This is due to its dividend yield and, more recently, its growth potential.
Telstra's dividend is a proxy for bond yields and coupled with an expansion into Asia and growing revenues from its Network and Application Services (NAS) division, its share price will likely go higher. As Australia's most dominant telco, it has the best mobile network and fixed-line offerings. These offer the perfect base from which it can leverage its regional growth plans.
In China, Telstra owns the country's number one online automotive listing site, Autohome.com.cn. It recently listed on the New York Stock Exchange as Autohome (NYSE: ATHM). Just last week it announced a joint partnership in Indonesia to supply cloud capability to the country's biggest telecommunications provider, Telkom. Strong single-digit dividends and modest earnings growth can be expected from Telstra in comings years.
M2 Telecommunications Group Limited (ASX: MTU) is a telco which is significantly undervalued given its track record and expected earnings growth. It owns the brands Dodo, Primus and Commander. Recently, investors have rebuffed management's plan to shift the company towards an organic growth model and its share price has drifted sideways.
However, according to Morningstar's analyst consensus, earnings per share is expected to grow to 51.3 cents in 2014. That puts the stock on a forward price-earnings ratio of just 12. With a 3.8% dividend yield, it won't last long at current prices.
Foolish takeaway
The telecommunications industry here in Australia is currently experiencing huge tailwinds as more and more people become dependent upon fixed and mobile technologies. In this Fool's (capital 'F') opinion, with good cash flows and dividends both Telstra and M2 Group hold great long-term value for shareholders at current prices.
