Telecoms - the start of something good

Further evidence that telecoms is beginning to climb back up again came from a chat with Alternative Networks this morning.

First of all, price erosion seems to have stabilised. Mobile prices in the past year fell around 5 to 15 percent, while fixed line declines have stabilised at about 5 percent. Consolidation in the industry appears to have limited the major suppliers' appetite for further price cuts.

Secondly, the CEO believes we're about to see upwards movement in ARPU. Currently, data devices such as the Blackberry have relatively low ARPU. But two things are happening;

1 - bandwidth is getting higher, and web site versioning for mobile devices (eg 'Ocado lite') are permitting more, quicker data access. What happened to video on the web once broadband arrived is going to happen to mobile internet use.

2 - new, converged devices such as the BlackBerry Pearl are becoming popular, and will lead to a market where dedicated data access is no longer the privilege of the executive classes (and/or the nerds).

That's a good story. I'm not sure I believe managing a telecoms company has yet become a soft option - Alternative Networks has had to do some really hard work, for instance, to reduce its churn - but it does look as if the worst is over.

And for those who're interested, Alternative Networks (AN.) is trading on about 11 times earnings, with a 2.2% forecast dividend yield. Hmm, it might as well be a housebuilder.... (see post below!)