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Justin Reid
President and CEO | Troilus Gold Corp.
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27. October 2020 | 09:50 CET

Deutsche Telekom, Freenet, Upco International: Where telecommunications creates returns

  • Telecommunications
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If investors were looking for high returns a little more than twenty years ago, they often found them in telecommunications stocks. In addition to the big network operators, such as Deutsche Telekom and Vodafone, the mobile phone stocks of the first hour, such as Nokia and Ericsson, also caused euphoria among investors. The telecommunications sector has become uninteresting for investors. This does not mean telecommunication shares do not play a vital role in the portfolios of investors or that they can even increase the yield noticeably as a speculative addition.

time to read: 3 minutes by Nico Popp
ISIN: CA9152971052 , DE0005557508 , DE000A0Z2ZZ5



Nico Popp

At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

About the author

Deutsche Telekom: Solid, without surprises

A stock that is more of a conservative investment is the stock of Deutsche Telekom. Germany remains the core market for the telecommunication giant. Still, the Company also is active in the rest of Europe and the USA. Deutsche Telekom's current valuation is more than EUR 70 billion. The U.S. business, in particular, has been developing well and was further strengthened some time ago by the acquisition of Sprint. Deutsche Telekom has long recognised that size is everything in the telecommunications market and is acting accordingly. Meanwhile, there are always problems with organic growth and weak figures.

But given the setbacks in many other industries, Deutsche Telekom is considered stable. The latest quarterly figures are positive and have been received well by the market. The pandemic has hardly affected the Company at all. The share has been moving sideways for many months but offers a stable dividend yield of around 4%. As the Company is on a positive path in the USA and should even benefit from the pandemic, the share is an alternative for conservative investors. However, investors should not expect big surprises.

Freenet: Don't be dazzled by the dividend

The Freenet share is also a timeless dividend investment. The Company focuses more on mobile communications and mobile Internet and currently promises investors a dividend yield of around 9%. Freenet shows that such payout levels often have a catch: The figures for the first half of 2020 were slightly mixed. That in itself would not be a problem, but the Company is said to be in debt.

Only recently, the Swiss subsidiary Sunrise was sold, and Freenet put part of the proceeds into its balance sheet - unrestricted growth looks different. Although the stock is undervalued, Freenet gives the impression of a value trap. The competition is fierce, and Freenet itself has little to offer that is suitable as a unique selling point.

Consolidation as the key to a billion-dollar market

The young Canadian Company Upco International is taking a completely different path from the thick ships of the industry. The Company is competing to profit from the increasing competition and price war in the mobile phone market. Over the past 15 years, data services have ensured that sales of traditional telecommunications services have been steadily declining. Today, for example, many people communicate via WhatsApp and no longer write text messages (SMS). The use of classic telephony is less and less common. This development is becoming a burden for smaller telecommunications providers: Costs are rising and getting relevant, especially for these small Companies. Upco has set itself the goal of offering these small providers a platform for outsourcing certain telecommunications services. Synergies are created when the volumes of several smaller Companies come together, says Upco International. The providers can then concentrate on their core business.

In addition to the wholesale telecom business, which is benefiting from the growing cost pressure in the industry, Upco also offers digital services. These include a payment service that works with existing bank accounts and is designed to enable real-time payments. Compared to existing competitors, Upco sees cost advantages as well as an exceptionally high level of security.

Over the next three years, the Company plans to continue its growth path and to achieve substantial growth in both wholesale telecom and digital services. The Company sees excellent opportunities in the former area in particular, as the shrinking market for classic telecommunications services remains essential for providers with continued high market volume. The platform offered by Upco International is expected to gain market share rapidly.

Upco International: Telecom visionary stands at the very beginning

While classic telecommunication shares are rather conservative investments, Upco International's shares are the opposite: the market capitalisation is currently only EUR 2 million. Given this valuation, the share must be considered highly speculative. With the management team's experience in the telecom sector and Upco International's clear vision, investors can keep an eye on the stock. There is no doubt that the Company is at the beginning of its development.


Nico Popp

At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

About the author

Conflict of interest & risk note

In accordance with §34b WpHG we would like to point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH may hold long or short positions in the aforementioned companies and that there may therefore be a conflict of interest. Apaton Finance GmbH may have a paid contractual relationship with the company, which is reported on in the context of the Apaton Finance GmbH Internet offer as well as in the social media, on partner sites or in e-mail messages. Further details can be found in our Conflict of Interest & Risk Disclosure.

Related comments:

06. January 2021 | 08:33 CET | by André Will-Laudien

UPCO International, Netflix, Tencent: Unchecked Mobile & Internet Boom!

  • Telecommunications

The lockdown is extended once again in Europe. One does not want to give the virus a chance to change hosts. As a result, the inner cities' streets are emptying again, and the front seats on the home streaming device and life in the online world are more in demand than ever. Good for the companies that have already fully digitized their business model a few years ago and can maintain a large presence on the Internet. Here, revenues are rising by themselves; the scaling so often mentioned in management letters is now taking place. Communication service providers, payment providers, and mobile platforms have been in the ascendancy for months now. We take a closer look at a few industry players.


07. December 2020 | 09:27 CET | by Nico Popp

Telekom Austria, Upco International, PayPal: Pioneering spirit pays off in the long term

  • Telecommunications

Industries are changing, and this change can be extremely lucrative for investors. Just think of the boring automotive sector and the success of Tesla and Co. Digital payment service providers, such as PayPal, are also much better off today than traditional banks. One industry that could benefit from a similar transformation by new players is telecommunications. Many small service providers or telephone companies have a scale problem despite ever-increasing networking—the reason: the classic business with telephony or SMS is eroding and shifting to the network. However, to be a full-fledged provider, telephone companies must continue to offer traditional solutions. That creates problems - even for the big players in the industry.


26. November 2020 | 08:42 CET | by André Will-Laudien

Deutsche Telekom, Tencent, Upco International – it used to roar!

  • Telecommunications

We are currently in the early stages of 5G rollout, with a focus on developing new features and increasing network performance. It's easy to get caught up in the 5G hype, and rightly so: the benefits that 5G can offer to several technology sectors are enormous. The industry speaks in this context of the age 4.0 or IOT, meaning "internet of things" - i.e. the total networking of production with all its suppliers and customers in real-time categories. Everything is traceable, controlled and validated online - accounting is entirely automatic. However, there are still unanswered questions about the health effects of high-performance networks on people, which nobody really knows how to answer. Until we have reached a nationwide expansion stage in Germany, LTE users will continue to make up the vast majority of the operators' subscriber base and continue to generate substantial revenues. The last mile of digitization is still to come, a clear sign of a misguided industry policy.