Morningstar Advisor - December 2012/January 2013 - (Page 30)
Sector Rap
Risks Loom Over Telecom Industry
By Philip Guziec
Apple’s growing market power, intensifying competition challenge sector.
Investors are fond of telecom stocks for their stability and dividends, but it’s a very competitive industry with one player looming large over the market: Apple APPL. The iPhone is still a must-have for telecom carriers, who pay heavy subsidies to Apple to offer the phone to customers. On the heels of the iPhone 5 release and the rollout of a new generation of wireless technology, we invited Morningstar equity analysts Michael Hodel, Imari Love, and Allan Nichols to discuss the current state of the telecom sector. (This discussion took place Oct. 8, two weeks before SoftBank
announced that it will take a 70% stake in number-three wireless carrier Sprint Nextel S, a transaction that Hodel likes. “The deal with SoftBank will provide much-needed capital to bolster Sprint’s financial flexibility while dramatically reducing the risks facing Sprint shareholders,” Hodel says.)
Philip Guziec: Get us up to speed on the dynamics of the telecom value chain. Michael Hodel: In the United States, AT&T T
industry on the wireless side. Combined, they have 75% of the post-paid market of the wireless market. The rest of the industry has been battling to keep pace. Scale is an important attribute in this business, because you have to continually invest in your networks, invest in additional wireless spectrum, invest in marketing, and keep your customer service and your handset-device lineup fresh. If you’re not AT&T and Verizon Wireless, it’s difficult to make the necessary investments to keep pace.
and Verizon Wireless dominate the telecom
30 Morningstar Advisor December/January 2013
Table of Contents for the Digital Edition of Morningstar Advisor - December 2012/January 2013
Morningstar Advisor - December2012/January 2013
Contents
Contributors
Letter From the Editor
What Stands Between Me and Stupid
Why Do You Use Dynamic Funds of Funds?
Serving Clients and Community
How to Pick an ETF Managed Portfolio Strategy
Tactical View of Risk
Investments á la Carte
Investment Briefs
Unbundling ETF Managed Portfolios
Risks Loom Over Telecom Industry
Outsourcing Asset Allocation
ETF Managed Portfolios on the Rise
Age-Based Options Take Over 529 Industry
How the Landscape for Advisors Is Changing
Mark Egan Embraces Volatility
Alpha, Beta, and Now … Gamma
Performance Gaps
Gains in Momentum
Companies Where Management Teams Add Value
Our Favorite Mutual Funds
50 Most-Popular Equity ETFs
Undervalued Stocks With Wide Moats
The Once and Future King
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