Internet optimism replaces depression

INTERNET OPTIMISM REPLACES DEPRESSION
[SOURCE: Financial Times, AUTHOR: Aline van Duyn]
People’s willingness to pay more than the absolute minimum needed for a basic Internet connection has surprised stock market investors. So much so that last year’s fears of an all-out price war that would erode profits ­ which hit cable and telecoms stocks ­ have all but disappeared. Many investors now think data distribution via the Internet is not the commodity it was feared to be. This switch has led to an increase of more than 50 per cent this year in the shares of Comcast, the biggest US cable operator, and sharp rises in cable and telecoms stocks in the US, Europe and elsewhere. Other factors that have contributed to the share rally include a switch of focus by investors from the potential for competition for subscribers to television, Internet and phone services, and a realization that there are other business lines. For telecoms groups, the growth of mobile services ­ as well as cost savings after huge mergers in the US and a reduction of price falls for business customers ­ has underpinned share prices. The potential for gains from mergers and acquisitions has fuelled shares of US satellite groups Echostar and DirecTV in particular. For telecoms companies, the progress of the mergers will be closely watched, particularly following US government changes last week. Competition between cable and telecoms companies for both video and high-speed Internet customers may come back into focus. Whether DirecTV and Echostar merge or are acquired could become clearer too.
http://www.ft.com/cms/s/834a5be6-727d-11db-a5f5-0000779e2340.html
(requires subscription)