The telecommunications sector consists of companies that make possible communication on a global scale, whether by phone or Internet, through broadcast or cable, by wire or wirelessly. These companies have created an infrastructure that allows you to transfer data in word, voice, audio or video needs to be sent anywhere in the world. The largest companies in the sector of wireless operators, satellite companies, cable companies and Internet service providers.
Telecommunications evolved from the Telegraph, the first mechanical device; to reduce the communication from days to hours – just like modern mobile technology has reduced the time of sending large volumes of data from hours to seconds. These changes are due to technology, and they have changed the way people live and do business. At the same time, telecommunications required a physical wire that connects home and business. In modern society, technology has gone mobile, digital, Wireless technology has become the main form of communication.
Industry structure also changes from a few major players in a more decentralized system with reduced regulation and barriers to entry. Large state corporations act as service providers, while smaller companies sell and service equipment such as routers, switches, and infrastructure that allow the connection. For investors growth, these companies offer the best opportunities for the stock valuation. In contrast, large companies tend to become a haven for conservative, income-oriented investors.
The development of the telecommunications industry in the United States centers on five main factors. Wireless Internet is quickly becoming the future of the industry, and its popularity increases sales. In addition, the expected expansion of high-speed fibre optic networking is. In addition to these elements, the lack of air caused consolidation in the industry.
The fifth factor is a big potential for growth. In 2018, the Federal communications Commission (FCC) reports that approximately one-fifth of the rural population still do not have access to broadband networks.
However, the final decision for the growth of the Internet. This part of the industry is the expected stepping stone for the continued global expansion of the telecommunications industry. In addition, in this industry there is a shift of emphasis from voice calls to video and data. There is a growing demand for faster data transmission, higher resolution, faster video streaming and a richer multimedia applications.
Segments in the telecommunications sector
The telecommunications sector consists of: telecommunications equipment (the largest), telecommunication services (next largest) and Wireless communication of the three major sub-sectors. The main segments in these industries are:
- communications equipment
- system processing and products
- long distance carriers
- domestic telecommunications services
- foreign telecommunication services
- diversified communication services
The small, but rapidly growing, area in the wireless industry, as more and more communications and computing transition to mobile devices. Looking forward to that the biggest problem of the industry is to keep up with the demand of the people for faster communication as they consume and create content, which requires significant capital expenditures. Companies that can meet these needs flourish.
Investment in telecommunications
The telecommunications company are not uncommon in the stock market, their shares have, at times, exhibit characteristics of both income and growth stocks. For several years, the company can benefits of regulation (as well as other utilities, telecommunications firms are often protected from competition by government mandate), and produce reliable, generous dividend yield (generated high monthly income from its stable customer base).Then, suddenly, technological advances or mergers and acquisitions create uncertainty and leave room for losses and recovery of fresh growth.
This makes the telecommunications sector is an attractive option for investors because it is an integral part of the global economy. The need for telecommunication services is maintained regardless of changes in the business cycle. But if the firm hits the decline due to changes in the industry (e.g. the growing importance of wireless devices), the price investors may snap it, provided that fundamentals remain strong, and it proves adept at adapting to changes. The entry of the telecommunications sector in paying and regularly increasing dividend makes the waiting period for the share price to improve more enjoyable.
However, all three major sectors of telecommunications to pose a greater risk for investors, with stocks registering anywhere from 7% (for services) to 15% (wireless) to 24% (equipment) is more volatile than the overall market. Investors tied to Telecom you can expect stronger than average growth for bullish markets. If a recession or a bear market hits, but losses in this sector can be very serious.
Current industry leaders around the world may change from year to year. Definition of major depends on one looks from the point of view of total sales or, in terms of market capitalization as well.
In 2018, the top five Telecom companies ranked by market capitalization are:
1 – Verizon (VZ), which provides wireless and wired services in addition to broadband and information services, has a current market capitalization of about $200 billion. It remains attractive as a supplier of dividends due to its rock-solid financial position: it is the largest telecommunications company in the United States and operates in 150 countries.
2 – China mobile Ltd (CHL), which has only been in business since 1997, has a market capitalization of about $185 billion in connection with the increasing use of mobile phones and Internet services in China over the last 15 years.
3 – At&T (T), the oldest company in the telecommunications business, has a market value of about $182 billion, China mobile has eclipsed AT&T in just over a decade in the business. Still, the former MA bell is the third of the wireless market share of the US and an impressive 30-year history of increasing dividends.
4 – today it became known that the group (water), the largest telecommunications company in the UK provides voice, broadband Internet access and data services and equipment, and has a market capitalization of about $97 billion.
5 – the Japanese softbank Corp, providing software and wireless and Internet, has a current market capitalization value of over $90 billion.
In the rankings significantly change when measured in terms of total revenue from sales. While Verizon, China Mobile and AT&T are still in the top five, Verizon drops to #2 behind Nippon Telegraph and telephone company (NTT) of Japan, which is the largest manufacturer of telecommunications equipment in addition to providing extensive landline, cellphone and Internet. Spain company telefonica (tef) and completes the top five rankings based on revenue.
Some Telecom stocks stuck in penny stock territory, trading less than $5 per share, for many reasons. Existing at that level, what you sow promises include:
1- Alaska communications systems group (ALSK). With the long distance to the USA, Alaska makes complex infrastructure. Communications Alaska is the largest broadband provider in the state. The stock is trading in a narrow range of $1.51 to $2.58 for the last 52 weeks. Although some of its debt maturing in 2018, penny stocks can be a great bet, if he can keep the momentum going into the broadband category.
2 – Cincinnati bell (Ticker NYSE: NBR) reported on more than 220 000 residential voice lines, Business lines 307,000 281,000 and Internet subscribers. Cincinnati bell continues to increase the scope and strength of future growth in fioptics and it services. It helps to build the company for long-term success – may traded higher penny stocks, as it was in 2013 and allows you to connect corporate customers throughout Ohio.
3 – borders of communication of the CFAA). Border offers telecommunication services in 28 States and has been around since 1927. It has more than 3.1 million private customers and 300,000 business customers. The company is likely to rise in the near future as the company continues to integrate major acquisitions such as Verizon and at&T. in the border people, who as a leader in the field of wired communications across the country and is also increasing its broadband base in the new territories to increase revenue. Stocks often trade for $5 level for years, and historically also paid big dividends.
4 –free (VG) connects clients with its cloud-based business communications. Consumers and businesses to use this technology to connect mobile phones and landlines all over the world. The company has 98 patents and 245 applications, and vonage is constantly working to monetize them. The business is also actively buying back shares of its own stock. The company bought its shares 148 million dollars in 2012. Vonage shares to trade close to the border of the penny stock range: from $4.17 and $7.42 for the last 52 weeks.
Two other small firms, which mainly serve rural markets, Windstream (win) in the South and consolidated communications holding (CNSL) in the Midwest. As traditionally pay high dividends.
Several exchange traded funds (etfs) are an alternative to direct investment in private telecommunications companies. Telecom etfs have different focal points in geography or industry specialization. Some of the most popular include:
- Vanguard telecommunication services in real time (VOKS) consists of 98% of U.S. stocks, ranging from small, regional telecommunications companies of the big three, Verizon, at&T And Sprint.
- In the Commission on securities and the Dow Jones U.S. telecommunications sector Index Fund (the data), similar to the holdings in the Vanguard telecommunication services in real time, and also keeps track of the largest telecommunications companies in the US – Sprint, AT&T and Verizon – along with a handful of smaller regional providers.
- In the Commission on securities s&P global Telecom Fund (IXP) is focused on the international level, with 70% of its assets in companies with headquarters outside the United States notable stocks include the five leading telecommunications companies in place by market capitalization: Verizon, at&T, China mobile operator Vodafone and softbank Corp. in
Telecom other popular indexes include the Index of fidelity Telecom services MSCI (fcom) and the spdr s&P Telecom in real-time (CEP).
Forecast for the telecommunications sector
Analysts predict that the innovation of the product and the increase in mergers and acquisitions will only contribute to further growth and success of the telecommunications industry. There are many opportunities for investors and increase investors will only serve to benefit the industry.
Long-term historical growth rates of the telecommunications sector on average, a fairly stable rate of about 3% per year. The steady growth of the sector even in times of recession means that it is considered a solid defensive investment, while maintaining its attractiveness to investors of growth. Even in uncertain and unstable economic situation, strong demand for voice services and data transmission, along with the extensive subscription plans, provides a stable source of revenue for major Telecom companies.
Telecommunications is becoming increasingly important basic industries, which bodes well for the prospects and future growth. Continued progress in high-speed mobile services and Internet connectivity between devices, supports innovation and competition in the sector. A significant focus of the industry for the provision of faster data transfer, especially in high resolution videos. In fact, the driving force towards faster and more services, extensive connectivity and Multi-application use.
Emerging market economies continue to be a boon for the industry, the growth rate of the mobile phone industry in countries such as China and India are pushing the ability of hardware manufacturers to keep up with the demand.
In the US, analysts are playing close attention to issues related to net neutrality, as the demand for these services and they continue to increase in the future. There is still a strong demand for wireless spectrum rights, as indicated by the FCC’s incentive auction, which took place in April 2017, not to mention a growing trend toward consolidation through mergers and acquisitions.
Telecommunication companies, like other forms of communication, often working with a stable customer base, protected from competition by government mandate. These pseudo-monopolies allow for substantial dividends. However, the dynamic nature of communication has led to mobile and Internet telephone systems, undermining the demand for traditional landlines. When this happens, the Telecom companies either suffer or adapt, implement new technologies and to grow rapidly as consumers buy the latest equipment.