Skip to Content
Stock Strategist Industry Reports

Convergence to Quad Play Reshapes Telecom

Europe leads the way in combining fixed-line and wireless telephony, broadband, and pay TV.

Mentioned: , , , , , , , , ,

The European telecommunications market has been focused on triple-play services of fixed-line telephony, broadband, and pay television for some time. Now the convergence of those services with wireless into a quad play is increasing. We think this will strengthen operators' moats and be a big driver of margin improvement for the next couple of years. Given the small quad-play subscriber base in most countries, convergence represents a robust opportunity for the firms best positioned to capitalize on this trend.

Our favorite European telecom stocks are  Millicom International Cellular (MIICF),  Telefonica (TEF)/(TEF), and  Orange (ORAN)/(ORA). Telefonica has been a leader in converged services in Spain and Brazil and is also benefiting from traditional in-country consolidation in Germany and the United Kingdom. Orange is leading the buildout of fibre in France, which is helping its convergence strategy. Millicom is benefiting from convergence in Latin America and has the fastest organic growth rate yet the lowest ratio of enterprise value to 2015 estimated EBITDA in our European telecom coverage.

Allan C. Nichols does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.