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3 hot telecom stocks you need to know

The telecom market is always shifting and new market entrants can shake up the status quo with new technology. There are now various internet service providers and telecoms which offer home and mobile phone services, as well as high-speed broadband, while always looking to expand their networks.

That’s why investors who want an edge on the market need to keep up-to-date with these players.

Here are three telecom companies that are making news now and could be causing the next round of business expansion and industry consolidation at the same time.

Potential combination

In late October, Vocus Communications Limited (ASX: VOC) had talks with Amcom Telecommunications Limited (ASX: AMM) about a possible merger of equals. Separately, they have telecom networks in different parts of the country.

Perth-based Amcom and Sydney-based Vocus could combine their fibre cable networks to stretch widely across Australia.

Vocus already owns about a 10% stake in Amcom. Combined, they could make a $1 billion entity and become a major telephony and data service provider.

Over the past year, Amcom and Vocus shares have risen 18% and 99%, respectively. This new move has attracted more investor attention.

Enter TPG Telecom

The third company investors need to know has been watching closely as well. TPG Telecom Ltd (ASX: TPM) quickly made a move onto Amcom’s share registry with substantial share buying last week. Not stopping there, it more recently increased its holding to 6.7%. It may not want to buy out Amcom, but this strategic move may be to block Vocus.  A 10% or more holding in Amcom could stop shareholder approval of the buyout deal.

TPG Telecom has its own extensive internet and communications network that could stand as a competitor to the NBN, especially in urban areas. If it can increase its network infrastructure footprint, it can possibly extend its service coverage under NBN guidelines. Having infrastructure in Perth and WA would be attractive to TPG.

Although Amcom and Vocus have roughly the same market capitalisation ($629M and $605M), Amcom is the centre of attention.

This is one story that investors should keep up with. I prefer TPG Telecom because it is a more established player that wants to put together a powerful network to keep future earnings growth strong.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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