European telcos: mixed signals

Credit of the month

Sarah Martin
Lehman Brothers

Modestly overweight (underweight DT & FT)
The one thing that is certain about the telco sector is that it will remain volatile, with sentiment swinging 180 degrees in short order. Currently, sentiment is against the sector for the following reasons: firstly, generally poor Q1 results and earnings downgrades, particularly for wireless operations; next, sharply declining equity prices, resulting largely from the weakened earnings outlook; thirdly, contagion f