Several of Australia's ASX-listed tech stocks have seen their share prices hammered over the past year or so.
Telstra Corporation Ltd's (ASX: TLS) share price has dropped 21% in the past 12 months, TPG Telecom Ltd (ASX: TPM) is down more than 53% and Vocus Group Ltd (ASX: VOC) is still down 62%, despite today's 20% gain.
Source: Google Finance
The main reason is the roll-out of the National Broadband Network (NBN) and the charges the likes of Telstra, TPG and Vocus will be forced to pay the NBN Co, which will slash their current retail broadband margins, affecting profits and earnings per share.
But investors may have overestimated the impact on the companies, forgotten about their corporate and institutional customers, as well as their other divisions that won't be impacted. There's also the natural tailwinds blowing where we demand more and more data, both downloading and uploading, and all three companies will continue to benefit from that far into the future.
Now Vocus may have received a takeover offer today, but the bid of $3.50 per share seriously undervalues the company in my view, and as a shareholder, I seriously expect the Vocus board to reject the current bid as inadequate. The company is still in the process of integrating several acquisitions over the past two years and should still be regarded as a 'work in progress'.
TPG Telecom has downgraded its earnings, but I find it hard to justify the share price halving on the back of a small fall in earnings.
Telstra I believe does have issues and has deserved its 21% fall, given the huge earnings hole the NBN is creating for the giant telco. But at the current price of $4.45, the telco is paying a fully franked dividend yield of 7%, which grosses up to 10%.
Two tech stocks that have seen their share prices rise over the same period reflect the 'NBN effect'.
Macquarie Telecom (ASX: MAQ) and MNF Group Ltd (ASX: MNF) ex-MyNetFone, by contrast, have seen their share prices rise 21% and 8% respectively. Both companies have less direct exposure to the NBN, so will be less affected as the NBN completes its rollout.
Foolish takeaway
A basket of Telstra, TPG Telecom and Vocus shares could be a good way to see your portfolio beat the market over the next few years.
