Credit Crunch - Silver Lining for Telcos? (Part 2)

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Two weeks is an awfully long time in today’s markets, and while it hardly gives us pleasure to acknowledge that much of what we previously envisaged is now playing out before our eyes, it probably makes sense to revisit the topic. The cost of refinancing telco debt maturities (€76.8bn combined for AT&T, BT, DT, FT, KPN, TI, Vodafone, Telefonica, Verizon, and Vodafone) might pose headwinds in de-leveraging, but telco stocks may prove highly attractive in an era of rampant risk-aversion. We examine how telcos can take advantage of current market conditions.

Unless you’ve been hiding in a cave in Afghanistan, you have probably noticed the fitful attempts in the US to pass an economic stabilization package, to the tune of $700bn, with a lot of enhanced corporate governance provisions and regulation attached. The independent investment banks once known as the “Bulge Bracket" no longer exist, and the stagnation of the credit markets is now resulting in a wave of nationalisations, quasi-nationalisations, and government-orchestrated private sector bailouts in Europe, as well as in the US. Business confidence in Europe is at its lowest ebb since the shock and awe of 9/11, and investor concern over the health of commercial banks, as reflected in a flight of capital into Treasuries, is at its greatest point since the Great Depression.

Members of the Telco 2.0 Executive Briefing Service can here to read more.