Zacks Industry Outlook Highlights KDDI, Vodafone Group and Millicom International Cellular

Chicago, IL - August 20, 2025 - Today, Zacks Equity Research discusses KDDI Corp. KDDIY, Vodafone Group Public Ltd. Co. VOD and Millicom International Cellular S.A. TIGO. Industry: Wireless - Non-U.S. Link: https://www.zacks.com/commentary/2734903/3-wireless-non-us-stocks-likely-to-thrive-despite-industry-challenges The Zacks Wireless Non-US industry is grappling with high capital expenditures for infrastructure upgrades, margin erosion, supply-chain disruptions due to geopolitical conflicts, higher tariffs, raging wars and high customer inventory levels. However, healthy demand trends stemming from the increasing propensity to stay connected in this digital age should benefit the industry in the long run. Amid this backdrop, KDDI Corp., Vodafone Group Public Ltd. Co. and Millicom International Cellular S.A. are likely to capitalize on the rising demand for scalable infrastructure for seamless wireless and fiber connectivity, with the wide proliferation of IoT and accelerated 5G deployment. Industry Description The Zacks Wireless Non-US industry comprises mobile telecommunications and broadband service providers based on foreign shores. These companies primarily offer voice services, including local, domestic and international calls, roaming services and prepaid and postpaid. The firms provide value-added services, such as the IoT, comprising logistics and fleet management and automotive and health solutions. They also offer content streaming, interactive applications, wireless security services and mobile payment solutions. Some industry players sell mobile handsets and accessories through dealer networks and offer co-billing services to other telecommunications service providers. The firms provide IT solutions, cable and satellite pay television subscriptions, as well as data services and hosting services to residential and corporate clients. What's Shaping the Future of Wireless Non-US Industry? Depleting Profit Margins: High raw material prices due to the Middle-East tensions, the prolonged Russia-Ukraine war and the consequent economic sanctions against the Putin regime have affected the operation schedule of various firms. The demand-supply imbalance has crippled operations and largely affected profitability due to inflated equipment prices. In addition, a slew of proposed tariffs on imported goods from major trading partners and allies of the United States by President Trump has eroded margins to a large extent and affected the global supply chain mechanism. Wireless operators face challenges due to the disruptive rise of over-the-top service providers in this dynamic industry. Price-sensitive competition for customer retention in the core business is expected to intensify in the coming days. Aggressive competition is likely to limit the ability to attract and retain customers and affect operating and financial results. Network Convergence: The convergence of network technologies requires considerable investments from traditional carriers (telecom and cable) and cloud service providers. With the exponential growth of mobile broadband traffic and home Internet solutions, user demand for coverage speed and quality has increased manifold. This has resulted in a massive demand for advanced networking architecture, forcing service providers to upgrade their networks to support the surge in home data traffic. The industry participants continue to invest in networks to increase coverage and implement new technologies to optimize network capabilities. Further, there is a continuous need for network tuning and optimization to maintain superior performance standards, creating demand for state-of-the-art wireless products and services. Moreover, telecom services show a weak correlation to macroeconomic factors as these are considered necessities. This, in turn, has led the carriers to focus more on network upgrades to cater to the evolving customer needs. Eroding Legacy Services: Increased infrastructure spending for network upgrades has largely compromised short-term margins. Aggressive promotional expenses, lucrative discounts and the adoption of several low-priced service plans to attract and retain customers are eroding profits. A steady decline in linear TV subscribers and legacy services due to a challenging macroeconomic environment and high inflation adds to the margin woes. Consequently, the firms within the industry are increasingly seeking diversification from legacy telecom services to more business, enterprise and wholesale opportunities. The companies are making significant investments to upgrade their network and product portfolio, including considerable advances in software-defined, wide-area network capabilities and a new Cloud Core architecture. Zacks Industry Rank Indicates Bearish Prospects The Zacks Wireless Non-US industry is housed within the broader Zacks Computer and Technology sector. It currently has a Zacks Industry Rank #166, which places it in the bottom 33% of more than 250 Zacks industries. The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Before we present a few non-US wireless stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock market performance and valuation picture. Industry Lags Sector, Outperforms S&P 500 The Zacks Wireless Non-US industry has lagged the broader Zacks Computer and Technology sector but outperformed the S&P 500 composite in the past year. The industry has gained 20.2% over this period compared with the S&P 500's and sector's rise of 16.1% and 21.9%, respectively. Industry's Current Valuation The Price/Book ratio is commonly used for valuing wireless stocks. The industry currently has a trailing 12-month P/B of 1.22X compared with the S&P 500's 8.37X. It is also trading below the sector's trailing 12-month P/B of 9.92X. Over the past five years, the industry has traded as high as 3.66X and as low as 0.32X, with a median of 0.86X. 3 Non-US Wireless Stocks to Watch KDDI: Headquartered in Tokyo, KDDI is one of the leading communication service providers in Japan. The company operates its retail operations through 'au,' 'UQ mobile' and 'povo' brands and 'KDDI BUSINESS' brand for corporate customers. With a focus on 5G communications, data-driven practices and generative AI, KDDI aims to accelerate business growth by providing value-added services in finance, energy and life transformation, which encompasses five areas of future growth (Mobility, Sports/Entertainment, Web3/Metaverse, Healthcare and Space). Boasting a VGM Score of B, the stock has gained 12.6% in the past year. KDDI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Vodafone: Based in the United Kingdom, Vodafone engages in telecommunication services in Europe and internationally. The company operates mobile and fixed networks in 15 countries and partners with mobile networks in 40 more. Vodafone has secured the approval for a merger with Three U.K. from the Competition and Markets Authority, U.K. The merger, which underwent thorough scrutiny for 18 months, was completed in May 2025. The company has about 340 million mobile and broadband customers. It has a long-term earnings growth expectation of 20.1% and a VGM Score of A. It has gained 20.4% in the past year. Vodafone currently carries a Zacks Rank #3 (Hold). Millicom: Headquartered in Luxembourg, Millicom is a leading telecommunications provider in Latin America. Through its TIGO and Tigo Business brands, the company provides a wide range of digital services and products, including TIGO Money for mobile financial services, TIGO Sports for local entertainment and TIGO ONEtv for pay TV, high-speed data, voice and business-to-business solutions such as cloud and security. Millicom provides mobile and fiber-cable services through its digital highways to more than 46 million customers, with a fiber-cable footprint of more than 14 million homes. The stock has gained 74.7% in the past year. Millicom sports a Zacks Rank #1. Why Haven't You Looked at Zacks' Top Stocks? Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year. Today you can access their live picks without cost or obligation. See Stocks Free >> Media Contact Zacks Investment Research 800-767-3771 ext. 9339 support@zacks.com https://www.zacks.com Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release. #1 Semiconductor Stock to Buy (Not NVDA) The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow. One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vodafone Group PLC (VOD) : Free Stock Analysis Report KDDI Corporation Unsponsored ADR (KDDIY) : Free Stock Analysis Report Millicom International Cellular SA (TIGO) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Zacks Industry Outlook Highlights KDDI, Vodafone Group and Millicom International Cellular

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