Several hedge funds have been sniffing around telcos recently, with a view to major investment or outright purchase. Ask why and you would get several answers.
Telco share prices are in the doldrums and there is an obvious argument that says that communications is now a ‘must-have’ for the vast majority of the population. So, as a fundamental ‘utility’ a network will always have an inherent value. Buy now and you must make a profit at some point.
There might also be more to it than meets the eye. Hedge funds are proactive and staffed by clever people, some of whom came out of the telco world.
Could it be that hedge fund managers look at telcos and they see the real opportunities, the opportunities that we as an industry (or at least industry observers) have seen and discussed for decades? And maybe they look at 5G and see the emergence of profitable ecosystems that will transform the way we live and work.
It could even be that hedge funds look at the level of customer service provided by telcos and put their heads in their hands and know that they can do things so much better.
It could also be, if you were a touch cynical, that the hedge funds add up the share price and compare it to assets and realise that the assets are worth more than the companies themselves. Several years ago the price of copper went through the roof and someone worked out that the value of the copper in BT’s network was worth more than BT. Ah, said an observer, but you would never get it out and sell it. Ho ho, said another, there is a pub in Dublin. Just go in there and say that out loud and BT will without copper by the morning.
It is quite exciting to think that hedge funds seem to see so much in telcos and their networks. It is also true that the catalyst for real change has to come from outside (whatever people say about changing the system and the culture from the inside).
Maybe, if politicians allow it, we will get fresh thinking from the hedge funds. Maybe we will see proper agile platforms emerge that genuinely support innovation and forward-thinking. Maybe we will finally get excellent customer service.
Let us hope that is not wishful thinking.