Traditionally defensively viewed slow and steady telco sector is headed for the proverbial iceberg. We've seen cracks emerging with
multiple pronouncements of new players wanting to enter markets, price cutting and data allowance escalation resulting in reduced monetization. These would be damaging to the industry, which investors typically hold for defensive reasons and yield, which could be under threat if earnings collapse. Moreover, growth in the industry is slowing given saturation and OTT substitution and this creates further challenges for the telcos which face rising expenses alongside inflation.
Darwinian rules will apply and the fittest will survive the best. This fitness is best encapsulated by the efficiency levels of the company. The efficient company should have a relatively lower cost base versus peers and should be able to generate more for its asset invested.
