Deutsche Telekom AG (DTEGY-OTC)

Share performance recently lagging, however performance strong all year.
Slowly growing with stable dividend.
Concerns for competition from the USA not a big worry.
CAPEX expected to come down which will help cash flow.
Expecting more increased dividends & more share buy backs. 

The difficulty with all European telecoms is competition. Costs are high and profits are low. This one is down about 9% this year. It has a yield of about 4%, but revenue growth has only been 1%-1.5%.

(A Top Pick June 17/16. Up 21%.) He likes Europe, which he thought was undervalued for quite some time. He likes the telecom business there because it is consolidating, and this company in particular, because it is the largest shareholder of T Mobile in the US.

The biggest telecom provider in Germany, as well as the biggest shareholder in the US in T-Mobile (TMUS-Q). He expects that sometime in 2017 they will be trying to sell their ownership of T-Mobile. The stock is highly profitable. Raises its dividend regularly. Dividend yield of 3.87%.

(A Top Pick May 24/13. Up 41.63%.) Owns T Mobile in the US which they are trying to sell. Thinks the noise is a little early and we are going to see a year or 2 before this plays out. A little rich at this point so wouldn’t buy at this time.

(A Top Pick Jan 31/13. Up 39.34%.) This company is the largest owner of T Mobile in the US. That is the real spur to the company.

(Top Pick Dec 18/12, Up 55%) They own T-mobile in the US and people expect them to get taken out. Thinks there is further upside.

These were very, very cheap stocks from a European context and have been running up. A big issue is that there are way too many telecoms in Europe. Because they are big companies and viewed as important, mergers are not allowed very easily. Lack of consolidation has been the difficult part. Stocks are very cheap and they pay very good yield.

One of the world’s largest telecom companies. The issue with the European telecom space is that competition has gotten very, very intense. Historically they have been great growth vehicles, high margin, highly cash generative (CapX).

The conventional wisdom on telephone stocks is that they are dividend stocks and are interest sensitive and if interest rates start to go up, they are going to fall back. However, what he likes about this one is its holding of T Mobile in the US. Recently purchased a smaller competitor, Metro PCS Put the 2 together greatly enhances the value. He still believes they want to monetize T Mobile and sell it. 7.7% dividend yield should be safe since they cut the dividend earlier this year.

Acquired Metro PCS. Increase coverage in US. Dividend is very safe. Best economy in Europe.

It is the German telecom player. They own a big asset in the US. The telecom sector in Europe has had a very difficult time with too many players. There is an issue with how they price data and in how they get LTE licenses. They have to do a lot of capital expenditure. It looks cheap but there are a few things that have to happen for prices to go up. About 8% yield.

Vodafone (VOD-Q) or Deutsche Telekom (DTE-FSE)? This one’s asset is the US asset which is currently looking to buy MetroPCS which should be announced fairly shortly. If they make the acquisition they will have a public vehicle because it is going to be a reverse takeover. Ultimately a special dividend will be paid. Reasonable dividend and great balance sheet. If they don’t get this, they will ultimately sell their T-Mobile holdings. Both are interesting and both could offer good upside.

Valuation is better than North American Telecoms. Own T-Mobile. Merging with Metro PCS which will give them a bigger footprint in US. Cutting their dividend, which he thinks they should.