The wireless telecommunications industry is changing in Europe by leveraging network-sharing deals, which is effectively consolidation, due to companies’ lack of cash and the added pressure from ratings agencies to clean up balance sheets, says Robin Bienenstock, Senior Analyst for European and Latin American telecommunications at Sanford C. Bernstein & Co., LLC.
“You don’t have consolidation of the retail brands on top, but you have consolidation of everything else, and that has big implications for what will happen to prices, what will happen to marketing,” she said. “The other reason that I think you’re going to see a lot more in the way of network-sharing deals is so that they can accelerate LTE.”
Bienenstock favors Vodafone Group Public Limited Company (VOD) in the European market because she believes the upside of the wireless telecommunications industry change is still at the early stages, and is not yet focused, so when Vodafone announced it U.K. network-sharing deal, the stock didn’t recognize that shift.
“Again, it has a very limited downside, but the reality is every time Vodafone starts to look cheap, U.K. investors to start to speculate about whether or not Verizon is going to buy it to get back full ownership of Verizon Wireless, so I think limited downside and a 7% dividend growth is a very good combination,” Bienenstock said.
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