Inmarsat plc vs Vodafone Group plc: which telecoms titan should you buy after today’s news?

Satellite communications specialist Inmarsat (LSE: ISAT) has seen its share price lift off during Thursday trading, the stock last 10% higher following the release of brilliant trading numbers.

Inmarsat announced that revenues leapt 5.8% between July and September, to $341.9m, driven by healthy demand growth at its Aviation and Government divisions. Turnover in these units rose 10.1% and 9.8% respectively during the period.

Today’s update isn’t the only good bit of news the communications giant has released this week. Just yesterday Inmarsat announced that International Consolidated Airlines (IAG) had agreed to use its European Aviation Network (EAN) high-speed broadband service on 341 of its narrow body aircraft, with the first installation due to take place next summer.

This is a particularly exciting area for Inmarsat, the satellite giant commenting today that “customer interest in the Inmarsat cabin connectivity offering continued to firm up [in Q3], with IAG, Air New Zealand and another major European airline all recently confirming that they would be using Inmarsat GX and/or EAN connectivity services.”

And it’s is looking forward to sales of its EAN service ticking higher following the launch of its S-band satellite, and its ground network scheduled for the middle of next year.

Connecting the dots

Inmarsat is clearly a company on the up, and I expect an increasingly-connected, tech-reliant world to keep demand for its services strolling skywards.

But the business isn’t the only hot stock for those seeking to get in on the telecommunications sector, in my opinion.

Indeed, Vodafone (LSE: VOD) is also in a great position to shell out splendid returns in the years ahead, particularly as the company has been dedicating vast swathes of capital to harnessing surging voice and data demand.

The company has spent £19bn to build its 3G and 4G services across Europe, Asia, the Middle East and Africa through its Project Spring organic investment programme. And just last month Vodafone spent $2.74bn at the latest Indian spectrum auction to bolster its 4G services.

But this isn’t Vodafone’s only focus, with recent M&A activity centred at the rapidly-growing quad-play entertainment sector. And acquisitions like that of Kabel Deutschland in 2014 also provide great cross-selling opportunities for the mobile operator’s traditional products.

So which is best?

Well, current earnings and dividend forecasts don’t create a clear winner, certainly when looking at conventional metrics.

A predicted 3% earnings rise for Inmarsat in 2017 trails an estimated 15% lift at Vodafone for the fiscal period to March 2018. Still, this figure creates a P/E rating of 18.7 times, some way below the cellphone giant’s comparable ratio of 28.8 times.

But on the other hand, while Inmarsat carries a gargantuan 5.5% yield for that period, this figure falls below Vodafone’s yield of 5.8% for the upcoming financial period.

So while you may have a personal favourite looking at these forecasts, I believe that both Inmarsat and Vodafone are great picks with sound growth — and consequently income — potential for those seeking resplendent long-term returns.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.