How to Choose Best Telecom Sector
How To Pick The Best Telecom Stocks
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The telecom industry can quickly change from one year to the next. There can be several years in which it is a safe, reliable investment haven with a dependable customer base and steady, reliable revenue and profit streams; a couple of years later the industry could see an upheaval as it responds to technological innovation, regulatory changes, intensifying competition and merger and acquisition activity. As a result of this industry's tendency to change, it can be tough for investors to make heads or tails of it. To help make sense of things, here is a quick glimpse of some of the industry dynamics and key metrics to judge the performance of companies operating in the telecom space. (Gain some insight on how innovation can affect a company's stock; read Which Is Better: Dominance Or Innovation?) Market Dynamics Blurring Industry Lines Technological changes are transforming the communications market. The lines that once divided telephone companies from cable TV providers, wireless players and internet service providers are now blurred. Any definition of the industry must include all these market players. Cable companies offer broadband internet and phone services over their high-speed video networks. Wireless companies, the same companies eating away at the traditional land line telephony business, also deliver high-speed internet to mobile handsets. In response, traditional telephone companies are expanding their bundles to "triple play" and in some cases "quadruple play" offerings that combine fixed line and mobile telephone, internet and digital TV services. Commoditization and Pricing Pressure Because the companies' services are so similar, they are increasingly competing based on price. Smaller companies will pop up and attempt to compete on a lower cost base. In the mid-2000s, companies such as Skype and other voice-over-internet providers offered services that were almost free. While lower prices
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The telecom industry can quickly change from one year to the next. There can be several years in which it is a safe, reliable investment haven with a dependable customer base and steady, reliable revenue and profit streams; a couple of years later the industry could see an upheaval as it responds to technological innovation, regulatory changes, intensifying competition and merger and acquisition activity. As a result of this industry's tendency to change, it can be tough for investors to make heads or tails of it. To help make sense of things, here is a quick glimpse of some of the industry dynamics and key metrics to judge the performance of companies operating in the telecom space. (Gain some insight on how innovation can affect a company's stock; read Which Is Better: Dominance Or Innovation?) Market Dynamics Blurring Industry Lines Technological changes are transforming the communications market. The lines that once divided telephone companies from cable TV providers, wireless players and internet service providers are now blurred. Any definition of the industry must include all these market players. Cable companies offer broadband internet and phone services over their high-speed video networks. Wireless companies, the same companies eating away at the traditional land line telephony business, also deliver high-speed internet to mobile handsets. In response, traditional telephone companies are expanding their bundles to "triple play" and in some cases "quadruple play" offerings that combine fixed line and mobile telephone, internet and digital TV services. Commoditization and Pricing Pressure Because the companies' services are so similar, they are increasingly competing based on price. Smaller companies will pop up and attempt to compete on a lower cost base. In the mid-2000s, companies such as Skype and other voice-over-internet providers offered services that were almost free. While lower prices