Game of Phones

Will the phone wars ever stop?

Comcast plans to buy Time-Warner Cable. Vodaphone sold its Verizon Wireless holdings and bought a German cable company. AT&T is close to purchasing DirecTV; Sprint may buy T-Mobil. Tens of billions of dollars are sloshing around. What’s going on?

Increasingly, people expect to watch streaming video wherever and whenever they want on whatever device they have. Providing wireless, cable, landline, and internet in one package reduces billing costs, and increased size means better negotiating power with phone-makers, government officials, and other wireless providers over connections and roaming costs. What’s not to like?

Well, increased concentration can raise antitrust issues. There aren’t a lot of telecom providers. The Justice department blocked a proposed AT&T/T-Mobile deal a few years ago because it would limit competition. If one or two players dominate an industry, innovation suffers and consumers are hurt.

Telecom may be a small part of the economy, but there’s a lot of money at stake in a critical industry. Investors need to be careful: it’s easy for managers to overreach. As Shakespeare said, “Wisely and slow—they stumble that run fast.”

Douglas R. Tengdin, CFA

Chief Investment Officer

By |2014-05-16T09:49:59+00:00May 16th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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