Telecoms and Investing Long-Term

I have so much time on my hands(it is the holiday season after all), its given me more than enough time to think about what else I'd like to talk about.

I'd like to share a little about three of the more popular telecom-based companies that are being traded in the PSE

TEL - Philippine Long Distance Telephone Company, the largest company being traded in the Philippine Stock Exchange. It accounts for, more or less, 15 percent of the weight of the local index. It also has internet and wireless communication services, more popularly known as SMART.

PLDT is one of the favorite picks for new investors and you can't blame them. It has a consistent uninterrupted dividend policy and it has to a lesser degree emulated the index in its up and downs. PE ratio based on 2009 is around 12-ish and 2010 with flat growth is expected to be the same. Dividend yield has consistently been around the 6-9 percent range. This is a true blue defensive stock that Benjamin Graham has consistently advocated to be purchased by people who don't have enough time to monitor stock market action, more commonly known as defensive investors. Although I would not discourage people from purchasing shares of this company, I wouldn't buy it myself. My reason is simple; I don't feel like I'm in a position to be a defensive investor and that there are a lot of other companies out there that may have better potential. I won't discourage anyone from buying the share simply for the dividends, if you don't have the time I can't blame you. But if you do, I believe it would be prudent to re-examine your strategy.

GLO - Globe Telecom, the Philippine's leading postpaid wireless provider. It has arguably the largest post-paid subscription base (being contested by Sun Cellular). This Ayala-led company is one of the Philippines' more successful cellular service provider that has recently branched out to internet services. Globe has been expecting a slower 2010 with growth being negative for 2010. Some foreign brokers have even put Globe as either a HOLD or SELL. Another one of Benjamin Graham's true blue defensive stocks; globe has a strong dividend policy that can sometimes exceed ten percent dividend yield. This stock, however, does not seem like it has much of an upside in the near future.

Can I also just say that service in their "convenient outlets" in Cebu is horrible. I was inquiring about internet services and much to my dismay the attending clerk gave me attitude. He actually made me feel like I've been living in the stone age forever. But then that's besides the point, an intangible factor in considering a stock pick

DGTL - Digitel Telecommunications Philippines, Inc.; the fastest growing cellular service provider in the Philippines. This Gokongwei-led company is known as Sun Cellular and has grabbed a huge chunk of the market previously owned by Globe and to a lesser extent Smart. The company's strategy is based on "unlimited" text and calls and has garnered a huge following with mid to low income households, and some high income as well. This company does not belong to the 30-company PSE index and has been widely viewed by some traders and fund managers as a speculative stock worth speculating on.

It has been trading between the 1.4-1.8 range for some time and has unnerved plenty of investors who have purchased at its peak. Without a dividend policy and with a 2009 PE ratio base of 36-ish this company is long believed to be a speculative play. It has recently encroached on Globe's post-paid subscription base and has claimed to be the leader as well. However, earnings for 2010 and expected earnings for 2011 have made DGTL a stock that is considerably cheap simply basing it on its PE ratio. I wouldn't mind owning shares of this company, my only hesitation would be its current price @ 1.47 being a bit too high for my taste and that its a player in an already very mature industry.

FYI, I have a Globe and a Sun post-paid subscription service.