(MONEY Magazine) – Based in one of the smallest industrial nations, Telecom Corp. of New Zealand (recently traded as an American Depositary Receipt on the New York Stock Exchange at $48; symbol: nzt) is no small company. With $1.4 billion in revenues, it is the country's biggest telecommunications provider. "This company is like AT&T before the breakup," says Jeff Sadler, an analyst at Josephthal Lyon & Ross. Like American phone companies, Telecom New Zealand pays a hefty dividend; it recently yielded 4.1%, compared with 4.5% for the regional Bells. But analysts expect Telecom to increase its dividend by 15% to 20% annually for the next five years -- compared with a projected rise of less than 2% a year for its U.S. counterparts -- and predict a 25% increase in the share price over that time. Reasons: The company is cutting costs drastically, with plans to eliminate 35% of its work force by 1997. Meanwhile, its cellular, Yellow Pages and other services will be "an engine of growth," says Paul Richardson, an analyst at S.G. Warburg in Auckland, New Zealand.

As they would with any foreign stock, American investors in Telecom face the risk that the U.S. dollar will strengthen relative to the local currency. However, the New Zealand dollar tends to be fairly stable, thanks largely to the country's minuscule 0.5% inflation and healthy 2.5% economic growth rate. -- V. O'C.