Telefonica S.A. (ADR) (TEF), AT&T Inc. (T), China Mobile Ltd. (ADR) (CHL): Which Telecom Is Right for You?

China Mobile Ltd. (ADR) (NYSE:CHL) saw its revenue grow at 6.1% over this past year, with data services revenue growing by 29.7% and increasing the company’s net profit margin by 23.1%. Since 2009, China Mobile’s stock has been essentially flat while the company is trying to grow revenue and shrink costs by moving operations to centralized locations to reduce costs. The company will continue to target 43% of earnings to be paid out as a dividend into the foreseeable future, translating to a 4.2% yield.

Going forward, management expects to see a larger percentage of its users upgrading to smartphones and is looking for smartphone penetration of nearly 50% within the next five years. The company is also planning ahead in regard to capital expenditures, increasing its spending by 50% on a year-over-year basis. China Mobile Ltd. (ADR) (NYSE:CHL) now anticipates that its new LTE network and a series of “seamless wireless” networks across China’s cities will draw in and keep customers and business clients.

Foolish bottom line

All three of these telecommunications companies offer a unique flavor of the industry. AT&T offers a steady 5% dividend, 6% growth in earnings, and a beta of 0.46. Telefonica is a bet on a European recovery, as well as income generation with a newly instituted 6.5% dividend. The European giant has a beta of 1.06, which means that investors will be in for a rocky ride. China Mobile Ltd. (ADR) (NYSE:CHL) is the most stable of the three, with a beta of only 0.33. This Chinese company pays out a dividend of 4.2%, though growth projections seem tepid as the Chinese market’s growth rate slows. Capital expenditures are higher than those of the rest of the group as well.

After evaluating these three, I am keeping Telefonica on the top of my watch list. The synergies that it could realize in Germany and growth in Latin America are too good to pass up. However, more conservative investors should migrate to AT&T with its more balanced approach to growth, income and stability.

The article Which Telecom Is Right for You? originally appeared on Fool.com and is written by Wes Patoka.

Wes Patoka owns shares of Telefonica and AT&T. The Motley Fool owns shares of China Mobile.

Wes is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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