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While cell-phone carriers in the U.S. cannibalize each other’s customers, telcos in the developing world don’t have that problem.
Verizon [VZ
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], AT&T [T
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] and Sprint [S
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] are all fighting for a foothold in the same oversaturated market. But Asia, Africa and South America are still remarkably underpenetrated. That means companies like Telkom Indonesia [TLK
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] have plenty of room to grow.
TLK’s the biggest telco in – you guessed it – Indonesia, controlling more than half of both the wireless and wireline businesses there. Wireless is the profit driver, though, and that’s with only 40% penetration. Cramer said he sees “a huge opportunity” for TLK as more and more people in Indonesia go mobile.
And the growth won’t just come from more users, it looks like. It will come from more use. Indonesians are notoriously thrifty with their cell-phone minutes because TLK charges so much. But growing competition could send those prices lower. And where some analysts might see losses in revenue as a result, Cramer sees the potential for increased revenue per customer, a key metric in the mobile business.
Click for the rest of Tuesday's show |
TLK’s cheap, trading at 13 times earnings with a growth rate of 21%. And the company pays a dividend that’s equal to 55% of profits. As Cramer puts it, “the stock is a steal.”
At least until Indonesian telcos end up with the same sharp elbows as their American counterparts.
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