Polar Capital's Davis: Our outlook for the European telecoms sector

Continuing impasse in French market deals

The high-profile regulator rejection of consolidation in the UK and Danish markets and continuing impasse in French market deals should not detract from an improving outlook for the European telecoms sector, writes Nick Davis, manager of the Polar Capital European Income fund.

The sales outlook has been gradually improving over several quarters as pricing in some markets has become more rational and drags from roaming costs start to fade away. After a long period of regulation focusing on a pro-consumer agenda, there is a clear need for a shift to a more pro-investment stance as Europe has fallen behind other regions in the latest network technology roll outs. The introduction of 5G at the end of this decade will be an opportunity for Europe to catch up. The pro-competition regulatory environment has seen returns in the industry fall to cost of capital for ...