There have been brief periods over the past couple of decades when it might have seemed possible some parts of the telecom business might escape the utility characterization (slow growth dividend stocks). In some part, the burgeoning growth of the mobility business in developing parts of the world produced revenue growth fast enough to fuel that belief.
Some specialized providers might claim to have done so (they grow faster and do not pay dividends), and innovation in new technologies and services will continue.
But many tier-one service providers--most clearly in the developed countries--have not escaped their slow-growth roots. The changes have largely been for the worse.
While some providers might have chafed at their regulated roles, and a few considered themselves lucky enough to operate as unregulated monopolies, the main service providers in developed nations continue to operate in tough markets that produce flattish to negative revenue growth rates.
The four largest European markets--United Kingdom, Italy, France and Germany--are shrinking, as are the U.S. market and India. China continues to show higher growth rates, according to STL Partners.
Keep in mind that telecom revenue tends to grow at about the rate of growth for the economy. So we should never be too surprised when industry revenue growth anywhere hovers at or just below the overall rate of economic growth.
In fact, it must be noted that the telecom industry now faces an arguably-worse environment than it did in the highly-regulated markets it once faced. Rate of return regulation produced slow innovation and slow growth, but highly-predictable revenue and profit.
Exposure to competition produces none of those advantages, but also increases risk and uncertainty. The unexpected rise of the internet, in addition to service provider competition, has not helped, either. But it is what it is.
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