Telecom ETF

Telecom of course has seen an immense growth in recent years since the mobile phone has come to dominate our existence on earth. The real question here is whether this market will be able to keep the pace of growth.

In developed countries the growth must come from more MB’s and speed. The telephone function already is surpassed by the use of the internet. Mobile internet is in fact the second phase of real growth this market sector has seen, after enabling mobile calling.

This in itself is unique for a market sector, to be able to tap into 2 really big growth markets in so short a period of time. The growth in mobile internet applications will continue is my opinion which will pave the way for the telecom industry.

Adding to that there still are numerous people on this planet who do not have access to mobile internet which is an opportunity in itself. And there is still more positive news for the telecom industry.

With the emergence of mobile calling the infrastructure to make it happen was still a bit fragile. Masts had to be build and the investments were enormous but the number of customers was still a bit poor. Nowadays this infrastructure is solid and although more investments are needed, customers are bountiful. 

This means that investments will be carried by a large number of customers, a sound way of investing for the future. The result will be improved profits for most of the companies involved.

At this moment the telecom market is divided among a few very large telecommunication providers (after scooping up some less solid companies with growth problems). This consolidation leads to a market were a few companies both have access to the infrastructure, technical know-how and a large customer base. These players will dictate the price in the coming years.

Lyxor MSCI World Telecommunication Services TR UCITS ETF

This Lyxor Telecom ETF is tracking the MSCI World Telecommunication Services TR index. You will find 42 large telecommunication service companies in this index and subsequent Telecom ETF.

With a 20% share AT&T is the largest company here followed by Verizon with a 17% share and Vodafone with a share of slightly less than 9%.

The US is the largest supplier here with a 40% share, the UK has a share of almost 15% just like Japan has. Then Germany and Spain will follow with a 5% share each.

The TR in this Telecom ETF stand for Total Return which means that no dividends will be paid but reinvested in the ETF driving up the price of this ETF. 

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