Nobody wants anything to do with fixed-line telephony anymore. At least, that's what you might think when you look around the world at companies like Philippine Long Distance (NYSE:PHI), Deutsche Telekom (NYSE:DT), Verizon (NYSE:VZ), and so forth. It's not much different in China, which is why China Netcom (NYSE:CN) has what otherwise looks like such a low valuation.

It's tough to get really fired up about this company's first-half results. Revenue was up a bit more than 2%, and earnings not only missed the analysts' peg, but also dropped nearly 8% from a year ago. Now, results weren't quite so bad if you exclude connection fees from both periods -- EBITDA would be up a bit more than 1%, and net income would be down about 2% -- but they still weren't really "good," either.

The trouble here is familiar to folks who know the fixed-line story. Simply put, the company is hard-pressed to grow high-potential businesses like broadband and IP telephony fast enough to offset mobile operators' effects on the traditional business. For instance, while broadband subscriptions were up nearly 29%, ARPU (average revenue per user) was up only about 3.4%; local telephony service usage was down nearly 2%, and ARPU there fell more than 8%.

All of that said, I'm not inclined to pull the shroud over Netcom's head just yet. While this company admittedly does not produce the most enticing returns on capital, the cash flow valuation is so low that it seems investors expect little to nothing from the company. I realize these stocks aren't especially sexy investing stories, but I've been surprised over the years at just how well you can do with these low-valuation, ultra-low-expectation companies.

I wouldn't say that Netcom is a play on the growth of other Chinese Internet ideas like Baidu (NASDAQ:BIDU). After all, as Time Warner's (NYSE:TWX) AOL unit has clearly demonstrated, Internet access is not necessarily a great foundation for growth. But I would say that fixed-line telephony will never disappear entirely, that broadband is growing rapidly, and that the possibility of Netcom getting a 3G license remains. Put all that together, and Netcom may have enough gas in the tank to appeal to hardcore value investors.

For more Foolish thoughts on global telephony:

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).