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Outlook for the Telecom Sector

Deutsche Telekom is a Germany-based provider of telecommunications and information technology services. The company offers fixed-line telephone services, mobile communications services, Internet access, and combined information technology and telecommunications services to customers in Germany, Eastern Europe, and the US

It is hard to avoid the conclusion that size matters in telecom. It is an expensive business; contenders need to be large enough and produce sufficient cash flow to absorb the costs of expanding networks and services that become obsolete seemingly overnight. Transmission systems need to be replaced as frequently as every two years. Big companies that own extensive networks — especially local networks that stretch directly into customers' homes and businesses — are less reliant on interconnecting with other companies to get calls and data to their final destinations. By contrast, smaller players must pay for interconnection more often in order to finish the job. For little operators hoping to grow big one day, the financial challenges of keeping up with rapid technological change and depreciation of equipment can be monumental.

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