Telecom was supposed to be a business that time had passed by. VoIP, cable, and wireless internet technology like city-wide WiFi was going to bury the phone companies.
But, last week AT&T (T), Verizon (VZ), China Telecom (CHA), China Mobile (CHL), Vodafone (VOD), Deutsch Telekcom (DT), and France Telecom (FTE) all high 52-week highs.
It turns out that talking on a phone may still drive a lot of revenue. For several years, the assumption was that VoIP would take away tens of millions of subscribers. But, the revenue for Skype still appears to be modest and cable companies are taking customers, but telecom companies are replacing those with wireless subscribers. Cable can’t offer that. While landline customers may be falling, cellular business is moving up sharply.
It also appears that using phone lines for broadband may be a better business than Wall St. realized. DSL still has as many customers as cable broadband in many countries, and there is belief that fiber connections to the home will win more subscribers. That may explain why Comcast (CMCSA) is at a 52-week low.
The telecommunications business was supposed to be in trouble, but, that’s why they call a guess a forecast.
Douglas A. McIntyre
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