Telecom Argentina: Strong Economics, Little Debt And Undervalued With Catalyst Ahead

Originally published on, May 26, 2015

  • Telecom Argentina has strong economics and financials among very difficult market conditions and should thrive under more positive circumstances.
  • Telecom Argentina is undervalued relative to industry peers and offers an interesting dividend yield.
  • Telecom Argentina is one of the best positioned stocks to benefit from the political/macroeconomic catalyst we expect in Argentina in 2015.

Telecom Argentina (NYSE:TEO), together with America Movil (NYSE:AMX) and Telefonica (NYSE:TEF) dominate Argentina’s telecommunications market. Unlike America Movil and Telefonica, which are present in multiple markets across Latin America and Europe, Telecom Argentina has its main focus in Argentina, with a minor presence in neighboring Paraguay. The stock has been negatively affected by its exposure to Argentina and is largely ignored by investors, but is financially strong with little debt and maintains relatively good margins in a difficult economic environment.

The combination of investor neglect and simplicity makes for a great opportunity to analyze, and potentially profit, from this stock’s situation using its NYSE traded ADR. An initial comparison of publicized metrics with industry and regional peers suggests the stock is undervalued on a relative basis, while paying a handsome dividend.

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