Telecom Argentina S.A. ($TEO) popped into the Large Cap 1000 screener this week at the top position. With a $3.5 billion market cap, virtually no net debt, and $653 million in operating earnings last year, the company trades on an acquirer’s multiple of just 5.3x. It yields 4 percent and trades at PE of 8.2 at its $17.95 close yesterday. Despite difficult market conditions, the company has maintained good economics and strong financials, and should do well under better conditions.

Long-term foreign companies value investor, and investment advisor Roca Sur Capital likes it for the following reasons:

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:

	Telefonica SA	America Movil SAB de CV	Telefonica Brasil SA (NYSE:VIV)	TIM Participacoes SA (NYSE:TSU)	Telecom Argentina SA
P/E	20.17	22.90	9.91	14.03	9.44
P/B	2.88	4.76	1.10	1.44	2.33
Dividend yield (%)	6.13%	1.77%	0.14%	1.67%	4.48%

Source: finviz.com

It’s survived some tough conditions:

When investing for the long run, you want a Company that will be able to endure the toughest market conditions while remaining profitable and maintaining its earning power. It is hard for us to imagine more adverse market conditions than the ones Telecom Argentina has been exposed to over the last few years and its earning power remains almost intact. We find this very reassuring.As all companies involved in the telco sector, Telecom Argentina’s business model is capital intensive as its network needs to be maintained and expanded constantly. This requires significant capital expenditures. This economic dynamics lead telcos to seek debt financing for capital expenditures, and they often accumulate important debt loads that result in significant drags on earnings due to interest charges. Telecom Argentina, however, has managed to finance most of its capital expenditures using operating cash flow and has maintained an extremely low debt level compared to industry peers.CompanyTelefonica SAAmerica Movil SAB de CVTelefonica Brasil SATim Participacoes SATelecom ArgentinaLT Debt/Equity (Last FY)2.252.250.1230.3780.02During FY14 TEO was involved in several auctions carried out by the Argentinean Government for the acquisition of 3G and 4G spectrum. All of the CAPEX accounted for in FY14 was paid for out of operating cash flow. On 1/28/15, TEO entered into a 27 month bullet loan for an amount of USD 40.8M to finance the remaining 4G spectrum. This is the only significant non-AR$ denominated liability owed by TEO, which is very positive in a scenario of falling emerging market currencies and increasing foreign exchange losses. After taking into account this increase in LT debt, TEO’s LT debt/Equity ratio lies at 0.043, still well below industry peers.

Source: Telecom Argentina: Strong Economics, Little Debt And Undervalued With Catalyst Ahead – Telecom Argentina S.A. (NYSE:TEO) | Seeking Alpha