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THE TOP 10: Mature markets display their defensive value

Date: 01 Sep 2008

Phone companies in saturated markets are doing better than peers in developing countries. They have less competition, which means fewer price wars and more earnings stability. Leigh Powell examines the region's top 10 telecom firms in terms of forecast 2008 return on equity.

The outlook for Asia's telecommunications sector has become clouded of late. Saturated markets such as Singapore, Hong Kong, Taiwan and Malaysia have proved more resilient to prevailing uncertainty over the global economic slowdown than developing markets, namely China, India and Indonesia.

This is partly reflected in Asiamoney's Top 10 this month, which ranks the region's telecoms companies (excluding Japan and Australia) by forecast return on equity (ROE). The first four firms on our list all hail from developed markets. Although India has the strongest representation with three companies, mainland China has just one, China Mobile.

Industry revenue growth in China for both mobile and fixed-line communications slumped to a five-year low of 7.7% in the second quarter this year. While it rebounded to 8.5% in July, it is still uncomfortably below the 10.8% growth rate of the first quarter and the 13.7% of 2007. Although the nation's mobile traffic grew...

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