2 Telecom Stocks On The Downswing - AYS And SDA

  • Dec 14, 2018 AEDT
  • Team Kalkine
2 Telecom Stocks On The Downswing - AYS And SDA

The financial performance of the below-mentioned telecom stocks has been decent so far. Both the telecom companies have reported positive results lately and have demonstrated growth in revenues and EBITDA. However, in the last one-year period, the stocks have performed poorly on ASX given the general competition related issues in the sector.

Amaysim Australia Limited (ASX: AYS)

Australia’s fourth largest mobile service provider Amaysim Australia Limited (ASX: AYS) made significant investments in FY 2018 to target a new and growing segment of the mobile market. In FY 2018, the company reported a statutory net revenue of $577.6 million which is 77 percent higher than the last year. The EBITDA of Amaysim increased by 11 percent to $37.6 million in FY 2018.  

In FY 2018, the company is trying to leverage its core skills to defend and grow in mobile through the launch of new products. The company is trying to expand its mobile services into the attractive market segment of small business. In the first half of FY 2019, the company has stopped selling multibrand devices and instead it is considering building its relationships with locally distributed major brands. Recently, the company completed the sale of its fixed-line broadband customer base to Southern Phone Company Ltd.

Meanwhile, the share price of Amaysim increased by 31.2 percent in the last six months, but it has gone down by 48.5 percent in the last one year as on 13 December 2018 and traded at a PE ratio of 79.23x. AYS’s shares traded at $1.005 (down 2.4%) with a market capitalization of circa $217.12 million as on 14 December 2018.

Speedcast International Limited (ASX: SDA)

Speedcast International Limited (ASX: SDA) is the largest, most trusted communications and IT solutions provider for the Energy market and recently it has been awarded multi-year contracts in multiple countries to enhance existing global services for Schlumberger, the world’s leading oilfield services provider.

Meanwhile, Speedcast is going to acquire Globecomm Systems for an estimated net purchase consideration of US$135 million. Recently, the Committee on Foreign Investment in the United States (CFIUS) confirmed that there are no unresolved national security concerns with regards to Globecomm acquisition and now the company is expecting to complete the acquisition in December 2018. It is estimated that Speedcast’s acquisition of Globecomm will result in generating more than US$15mn in annual cost synergies within eighteen months of acquisition.

In the first half of FY 2018, the revenue of the company increased by 24% to US$304.9 million and Underlying EBITDA grew 14% to US$60.4 million as compared to the previous corresponding year. For the full year FY 2018, the company is expecting an Underlying EBITDA to be in the range of US$135mn to US$145 million.

In the last one year, the share price of Speedcast decreased by 31.5 percent as on 13 December 2018 and traded at a PE ratio of 57.8x. SDA’s shares traded at $3.47 (down 6.2% intraday) with a market capitalization of circa $885.88 million as on 14 December 2018.


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