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Are the Telecoms’ Plans Stalling?

Aaron Levitt Jul 05, 2017


There are a group of stocks that investors like to call “widow and orphan” companies. The reason is that these stocks provide steady and dull growth. They also offer plenty of dividends along with that steady revenue generation. Summing up the widows-and-orphans moniker completely had to be the telecoms.

For the most part, as a sector, there isn’t anything particularly exciting about providing telephone, broadband or wireless service, aside from gathering new subscribers to their various networks. All of that has changed over the last few years as several telecoms began reimagining their business models to add a touch of real growth to their bottom lines.

The problem is, this is not exactly moving the needle. And in fact, many of the plans haven’t really worked at all. For investors banking on the sector’s growth potential, you have to ask whether or not; the industry is drifting back to its boring "widow-and-orphan” past?

Searching Anywhere for Growth

When wireless technology took off, and cell phones were in their infancy, the telecommunications sector had plenty of muscle behind it. As the novelty of having a cell phone and then a smartphone wore off and the devices became standard equipment for our modern lives, the big wireless carriers like AT&T (T ) and Verizon (VZ ) were able to add plenty of users under their umbrellas. As such, these additional users provided plenty of growth to their bottom lines.

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