Orange SA (ORAN-N)

Probably the number one reason why it's down is currency. The Euro used to be at 1.60-1.65 and at the moment it's a 1.45-1.46. If you were to buy European stocks at this time you are getting a sizable discount. The second thing is that on a relative basis Orange dividend is quite slim, in the similar ranges to Canadian stocks. A good company. If you want a good yield he would look in AT&T.

Hold or sell? In line with Euro GDP, so not getting above average growth. Everyone’s discounting, so margins are under stress. OK in Africa, Middle East, France, Spain. But inflation is wiping out any growth in the dividend. Capital’s not growing. This is a blanket commentary for most of the European telecoms.

This is a decent company. He has owned it but does not now because he doesn’t see much upside at this time. Cost containment would improve their margins and would therefore improve their value. He doesn’t see room for a lot of growth of this company in Europe. The dividend will probably be safe but only modest growth. (Analysts’ price target is 17€, the stock trades at 14€)

A lot of investors and managers are getting out of telcos and chasing more growthier names, because they are slow dividend growing stories with no revenue growth. However, that isn’t the case in Europe. The fibre to the home strategy in Europe, from a regulatory point of view, is about 15 years behind. Regulators are now allowing higher and higher mobile phone bills, which is allowing the carriers to put in fibre to the home and fibre to the curb. Europe is one of the few markets where telcos are actually growing revenues and earnings. He can see quite a bit of upside in the European telco market. This one is just fine.

Like any of the European telecoms for the most part, price competition discounting has been going on for the longest time, and this one is down 5% year to date. They are not growing, because Europe is pretty much already wired. Revenue growth is 1.7%, so you are barely keeping up with inflation.

Has done very well on this. Pays a nice dividend. The biggest telco player in France, but also plays in many other countries too. He never averages up on a stock, so wouldn’t do so on this one either. Thinks the stock can go a lot further.

Orange (ORAN-N) or Vodafone (VOD-Q)? Effectively the Bell Canada of France. The driver for European operations, which is going to be important for both, is that they are now backing “fibre to the home” strategy. For a very long period of time, European operations did not have a revenue growth. Now that “fibre to the home” is moving forward, regulators have allowed them to charge more profitability. Top line revenues are growing for all the European telecoms and they are performing very well. Between these 2, you will get more of a pure play from this one, but equally, Vodafone looks cheap because of the BREXIT risk. He feels both are good here.

A European telephone company headquartered in France. Like telephone companies here, they are facing disintermediation of their traditional wire line businesses, and there is a lot of competition. Governments are working hard to get cell phone prices down. 4% dividend yield, which is a decent return, but expects that is what your return is going to be. Not a stock you are going to buy and make a lot of money on through capital appreciation.

Orange (ORAN-N) or Vodafone (VOD-Q)? It had a decent quarter in Europe, but it is very competitive. The marketing and advertising going on there is very cutthroat. That is going to hurt the margins. If you want to be in the European market, because the GDP is growing there, this would be the pick. If you are a long-term investor and believe in the long-term play of India, then then you go with Vodafone.

He still likes it. It has upside and pays a nice dividend.

Orange (ORAN-N) or Banco Santander (SAN-N)? A telecom leader in France and many other countries. He likes the company and thinks it can double from here. Pays a good dividend. The French market is very, very competitive. If he were buying either, it would be Banco Santander.