Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

BCE Inc. (USA) (BCE), Telefonica S.A. (ADR) (TEF): Foreign Telecoms for Your Portfolio

Therefore, Telefonica ADRs are suitable for an investor looking long term or with a focus on generating income.

European giant set for a rebound

Vodafone Group Plc (ADR) (NASDAQ:VOD) derives about 46% of its revenue from Northern Europe and Central Europe. Another 23% stems from Southern Europe. The remaining 31% is derived from Africa, the Middle East, and Asia Pacific markets.

The company could be on the cusp of a recovery in financial results, based on several catalysts:

1. Smartphone activations are increasing at a strong rate, again because of low cost availability.

2. New customer plans initiated last year are supporting growth in “integrated plans.”

3. The unified communications business is expanding through acquisition and fibre deployment

4. Vodafone Group Plc (ADR) (NASDAQ:VOD) is extending the reach of its 3G and LTE presences to 80% and 40% of its markets.

As such, operating income is apt to increase in the low- to mid-single-digit range this fiscal year (ends March 2014).

Vodafone Group Plc (ADR) (NASDAQ:VOD) shares are trading at a P/E of 11.6 times forward earnings. They also offer a favorable yield of 7.1%. Also in light of management’s focus on 2015, the stock should be considered as a long-term portfolio holding.

Former France Telecom showing improved results

Orange SA (ADR) (NYSE:ORAN), as of July 1, is now the operator of fixed, mobile, TV and Internet businesses in France and the U.K. Last year, 54% of total revenue was derived from the offering of “personal communications services” (mobile), while the remaining 46% was from home communication services, including voice and broadband.

Looking to 2014, income should begin to improve, given several factors:

1. Increased mobile-service revenue, as low-price offerings have boosted demand for cellphones.

2. Better results in its home country thanks to profitability measures.

3. The impact of a transformation program.

4. Stabilization of personnel costs.

5. Increased contribution from growth investments, including emerging markets and new services.

The shares are trading at a P/E of 6.2 on a forward basis. They have appeal for investors with a long-term view.


BCE Inc. (USA) (NYSE:BCE), along with these and other European telecoms, might be poised to gain ground in tandem with rising smartphone sales and possibly more favorable economic conditions.

Damon Churchwell has no position in any stocks mentioned. The Motley Fool recommends Orange (ADR) and Vodafone. Damon is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Foreign Telecoms for Your Portfolio originally appeared on is written by Damon Churchwell.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.