The telecom sector of tomorrow will look nothing like the sector of the past. Competition is far greater throughout the industry and economic moats exceedingly difficult to come by. The future of the industry will be shaped by regulatory and technological changes, which means that financial strength and flexibility are likely to be what separate successful firms from unsuccessful ones over the next few years.
Investor's Checklist: Telecom
Shifting regulations and new technologies have made the telecom industry far more competitive. Though some areas are more stable than others, look for a wide margin of safety to any estimate of value before investing.
Telecom is a capital-intensive business. Having the resources to maintain
and improve the network is critical to success.
Telecom is high fixed-cost business. Keeping an eye on margins is very important.
Watching debt is also important. Firms can easily overextend themselves
as they build networks.
The price of wireless airtime is plummeting. Carriers continue to com
pete primarily on price.
