Many investors see telecom companies locally as the most sturdy dividend stocks, that will never collapse. Well here is a glimpse of some dark events that would hit telcos:
- During deep unemployment
- Removal of subsidies (coming to Singtel, Starhub and M1)
- Competition from cheaper sources (Viewquest and MyRepublic anyone?)
Gigaom have a good article here titled Has Europe Fallen Out of Love with the Mobile Phone?
I am invested in Vodafone but not Telefonica but what I do know is that Telefonica’s earnings are really falling drastically. No matter how strong a utility, consumer still ranks them in the order they need to survive.
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Dividends Warrior
Saturday 23rd of June 2012
Hi Drizzt,
Thanks for the info. I believe another reason is that Europeans still tend to make contact the "traditional" way. E.g. sipping coffee or tea with frens at the cafes on a lazy afternoon. Even if the economy is booming, I doubt they will be overly obsessed with their smartphones.
Singaporeans on the other hand, cannot get enough of smartphones. It is part of their lives, especially among the youngsters due to peer pressure. I believe the older generation (our parents) can live without smartphones, but not our generation and my children's generation. Even primary school students have handphones nowadays!
Of course, like what you said, during an extremely severe downturn, earnings will drop. If the economy is so bad that people have to sacrifice their handphones and internet, Singapore is in a pretty bad shape oredi.