UK telecoms vulnerable

By DAILY MAIL REPORTER
Updated:

 

Soaring UK telecom operators face tougher times as American rivals crash the party over here and falling prices cut into profits.

This cautious view comes from broker ABN Amro, which predicts US telecom giants will turn their sights on Europe as the shake-up of the US market ends.

In a wide-ranging study, the broker argues that British Telecom and Colt shares are susceptible to a fall. This hit Colt, off 44p to 1274p, but was brushed off by BT, up 45p to 1086p.

Analyst James Ross says European telecom groups are 30pc pricier than their US peers, despite slower growth. The Europeans are forecast to grow earnings at 8pc to 15pc annually until 2004, well below the 12pc to 18pc growth in the US. Already, upstarts such as MCI WorldCom and Global Crossing have laid a glut of wires in Europe. Prices are sliding, with some tariffs falling as much as 70pc.

Ross says BT shares, which doubled in just over a year, could be hit by hefty over-seas losses and a shrinking UK market share as cable rivals step up their assault. In contrast, BT fans argue that ballooning Internet and data traffic will buoy profits.

Colt is valued by ABN Amro at just 950p, on the basis that competition is heating up. ABN remains keen on mobile groups Vodafone and Orange, and on Cable & Wireless.

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