Hold the phone, how are the telcos?

Founder and Chief Investment Officer of Montgomery Investment Management
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The telecommunications sector endured a horrible year in 2016 with slumping share prices reflecting the uncertainty of the viability of various business models ahead of the completion of the NBN rollout. Downgrades, writedowns and capital raisings are just some of the events shareholders themselves have had to endure.

So how should investors think about a complex and extremely dynamic sector and what are some of the considerations before deciding whether valuations have become attractive since the sell off?

Fifteen years ago, life was simpler, a residence enjoyed dial-up Internet access, with speeds 100 times slower than today, shopping catalogues clogged mailboxes, CDs and DVDs clogged shelves and drawers, and teens argued about who could use the phone next. Smart phones didn’t exist and the only wireless device was the TV and roller door remote control. Back then it took less time to walk to the ‘video’ store, come home with a dvd, watch the movie and return it, than it did to download one.

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