Telecom companies provide the technology that ties together our increasingly connected world. Companies in this sector provide phone, internet, and television services and the infrastructure to support them.
The sector is often attractive to more conservative investors looking for dividend-yielding shares, but it’s also full of companies with good potential for capital appreciation.
Here’s the top 5 ASX telecom shares that have performed particularly well in 2020.
1-year share price performance
Current share price
|1. Macquarie Telecom Group Ltd (ASX: MAQ)||123%||$52.29||$1.13 billion|
|2. Vocus Group Ltd (ASX: VOC)||40%||$4.14||$2.5 billion|
|3. Chorus Ltd (ASX: CNU)||22%||$7.35||$3.27 billion|
|4. Uniti Group Ltd (ASX: UWL)||13%||$1.71||$1.05 billion|
|5. Vonex Ltd (ASX: VN8)||104%||$0.22||$41.2 million|
Macquarie Telecom share price is the clear winner in the battle for top spot, returning more than 130% for shareholders over the year.
The company has had a strong FY20, delivering an 8% increase in revenue to $266.2 million. It’s also been growing steadily for the last 3 years, returning a compound annual growth rate (CAGR) of 6.8%.
Macquarie Telecom has benefited from the boom in cloud computing, generating most of its revenue from hosting and data centre business. Its customers include Fortune 500 companies as well as the Australian Federal Government.
Analysts believe that Macquarie Telecom is set to benefit further over the next few years as the move towards cloud computing gathers pace globally.
Vocus share price returned 40% for investors over the course of the year. The company was founded in 2008 by famed entrepreneur and venture capitalist James Spenceley.
Its core growth engine is the Vocus Network Services (VNS) – a fibre network that encompasses all of Australia, the Pacific rim to Hong Kong and the east coast of the United States, as well as New Zealand.
The company’s retail offering, meanwhile, includes brands like Dodo and iPrimus.
FY20 was the first year in the company’s 3-year turnaround plan, where it delivered total recurring revenues of $1.75 billion, a 1% decline on the prior year.
The company is predicting an even brighter FY21, and expects earnings to grown between 8% to 12% in its VNS business.
New Zealand-based Chorus share price returned an enviable 22% in one year.
This company is a juggernaut back home, owning the majority of telephone lines and exchange equipment in New Zealand. It’s also responsible for building 70% of the new fibre optic Ultra-Fast Broadband (UFB) network in the country.By law, the company cannot sell UFB bandwidth directly to consumers, instead it provides wholesale services to retailers.
Chorus reported a little-changed profit of NZ$52 million for the year to June. The company has been facing a few regulatory hurdles in New Zealand recently, the latest one being the proposal to impose levies totalling NZ$15 million a year on the telecommunication sector to fund the regulation of the industry.
Uniti share price is up by a respectable 13% for the year. After crashing 53% during the February and March COVID-19 market panic, the Uniti share price came charging back, up 115% from its 19 March lows.
The company provides internet and telecommunication services, and was formerly called Uniti Wireless Limited.
Uniti is aggressively making a play into the fibre network business, acquiring Telstra Corporation Ltd (ASX: TLS) high broadband Velocity assets just last week. That acquisition represents Australia’s second largest private FTTP (fibre to the premises) network, with 65,000 connected premises of which 50,000 are active.
For the full year FY20, the company reported a 306% increase in year-on-year revenue, from $14.3 million to $58.2 million.
I’ve put this share last on the list despite a superior return, as it’s an outlier being a small cap. The Vonex share price however has doubled, returning 104% for its shareholders in one year.
Vonex is a company on the move, acquiring various companies this year, while delivering solid revenues. In March, the company acquired 2SG Wholesale, bringing 150+ new wholesale customers and expanding its SME (small to medium enterprise) product offerings.
Last week, the company announced its intention to acquire Nextel, which it said would add $1 million to its recurring revenue stream.
Vonex posted healthy results for the September quarter, adding $1.64 million in new retail and wholesale business, and recording a 25% quarter-on-quarter increase.
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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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