# investing in telecoms and technology



## joe sod (20 Oct 2006)

I read an article a while ago about some telecoms companies now at very attractive levels. They are at very low Price/earnings ratios as low as 10 with robust revunues and low debt. The author reasoned this asset class was still hated by investors after the technology blow out a couple of years ago and that because it is now receding into the past this asset class will become less and less hated. Also the internet and demand for broadband is really exploding now with websites like youtube using up an awful lot of bandwith which previously was unused. He says investors will not return in their droves but will return steadily.


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## whathome (20 Oct 2006)

joe sod said:


> They are at very low Price/earnings ratios as low as 10 with robust revunues and low debt.


 
You can also get excellent dividends, one very large mobile telecoms operator is currently trading with a yield over 5.2%  Buying an unloved sector can work well if you're willing to sit it out and enjoy the yield in the meantime.


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## room305 (20 Oct 2006)

I work in the sector and can definitely see some investment value. I don't like fixed line operators but I can see good times ahead for large carriers. Remember when oil was only $25 a barrel? Barely worth sucking it out of the ground and definitely not worth putting much money into exploration. So oil companies sat on their hands, demand for oil caught and indeed exceeded supply and the price boomed.

It may be several years away but I can foresee similar issues for bandwidth. After the dotcom fiasco, carriers realised they had installed far more fibre than was necessary - there was a fibre glut. Since then, very little investment has been put into extending existing bandwidth capacity but demand is still growing. As more and more video is transmitted over the Internet, we may end up with the actual demand people were dreaming about in the heady days before the dotcom collapse.

Anyway, as whathome says, unloved and undervalued sectors are gold for the longterm "buy and hold" investor.


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