Daiwa Capital Markets gave CITIC Telecom International Telecom (1883.HK) a purchase rating on the grounds that its Macau subsidiary can contribute stable cash flow and may acquire a telecommunications network company in mainland China.
According to Daiwa Capital Markets, Companhia de Telecomunicacoes de Macau, a subsidiary of CITIC Telecom holding 90% of its shares, dominates the Macau Telecom market and is a cash cow. It brought in HK$1.5 billion in interest, taxes, depreciation, and earnings before amortization (Ebitda) in 2014. In addition, CITIC Telecom also holds a call option to buy China's Pentium Network, which has basic telecommunications licenses and a 32,000-kilometer national backbone fiber-optic network in mainland China. Daiwa Capital Markets said that if the acquisition deal comes true, then CITIC Telecom International will be the fourth (and probably the last) company qualified to provide network bandwidth in mainland China.