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Why these 3 telecom shares might be able to rocket higher

Telecommunication shares have been big winners on the Australian Stock Exchange (ASX).

They have been smashing all records on the ASX. Their businesses have been growing strongly as demand for internet, mobile and data grows rapidly.

As the chart below illustrates, three of the leading telecom companies on the ASX have each seen tremendous growth in their share prices over the last five years.

Three telecom22

Source: Google Finance

TPG Telecom Ltd (ASX: TPM) – is Australia’s second-largest provider of fixed broadband services behind Telstra Corporation Ltd (ASX: TLS). The company is most famous for its $59.99 home bundle plan. Since being founded in 1986, TPG has reached an enviable position with 1.81 million combined (TPG + iiNet) broadband subscribers, over 100,000 NBN subscribers, and $1.27 billion in revenue.

The recent acquisition of iiNet Limited (ASX: IIN) and a further push in the corporate sector will likely bring in more growth for a company which has seen seven consecutive years of strong growth.

Vocus Communications Limited (ASX: VOC) – is an ASX 200 company specialising in providing, fibre, internet, ethernet, data centres and unified communications. Vocus has an extensive infrastructure network with 1600km of fibre network spread across metropolitan cities in Australia and 4300km of New Zealand intercity fibre network, which provides access to international connectivity.

The strong growth at Vocus has seen revenue increase from $45 million in 2012 to $150 million in 2015. In September Vocus announced a merger with another rapidly growing retail focused telecommunications company M2 Group Ltd (ASX: MTU).

The merger will combine Vocus’s telecommunications infrastructure and corporate customer base with M2’s demonstrated experience in retail and the small business segment. The combined entity will have a market capitalisation of $3 billion, and will become the fourth largest integrated telecommunications company in Australia.

Foolish takeaway

All three businesses have seen tremendous growth, and their future is bright as demand for data grows. For any Foolish investor not to include these companies on their watch list could prove to be a missed opportunity.

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Motley Fool contributor Qaiser Malik has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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