Morningstar Rating

ETF Research and Analysis

by Robert Goldsborough
Suitability
Investors seeking exposure to a portfolio of global telecommunications companies can consider iShares Global Telecommunications ETF IXP. Given this exchange-traded fund's narrow focus, investors should treat IXP as a tactical   Read more 

Bull Case

Many of the large holdings in this fund have the cash-generating ability to meet their near-term obligations and maintain dividend payments.
This ETF has an attractive dividend yield.
This ETF has had lower historical volatility than a U.S.-only telecom ETF. Read more 

Bear Case

Growth in data services has typically been sufficient to replace most lost phone revenue recently, but the Internet-access business is starting to mature while the pressure on the phone business has continued largely unabated. This has affected profitability, particularly for large carriers with big networks such as Verizon.
During the past few years, cable companies have provided the primary form of fixed-line competition for phone companies, for both phone and Internet-access customers.
It's not clear whether investors can expect rational pricing from telecom firms. Several firms, such as Sprint and T-Mobile, are struggling to retain customers and improve profitability, and that could spark a price war that could harm the profitability of all players. Read more 

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