BERLIN -- Apparently telecom executives get spring fever too.
That's one way to explain the renewed spasms gripping Europe's telecommunications sector. It's barely March and yet CEOs all over the Continent are busy courting prospective merger partners as well as announcing new stock-boosting ventures and services.
Sure, some would say telecom shares, many of which are traded in the U.S. as ADRs, haven't ever been out of vogue, but in the coming week investors will likely see the current excitement surrounding the sector helping to drive Europe's equity markets higher. That was certainly the case last week.
was looking for love overseas (potentially with
) pushed Frankfurt's benchmark
index to new highs. And the soaring shares of DT's jilted partner
power ahead in Paris.
did its part for the
Perhaps some of the excitement is warranted -- the stakes for everyone concerned are certainly huge. A deal for Deutsche Telekom, giving it a foothold in the key U.S. market, is crucial for the company's hopes of becoming a global player, and investors see the corresponding potential it would have for Telekom's share price.
"A gigantic influx of investment capital has stimulated the exchange in Germany. A clear preference for
techs and telecoms is unmistakable," says Robert Halver, an equities strategist for
Delbrueck Asset Management
in Frankfurt. "The long-term appeal of the communications segment in the growth sector is clearly high in the market's estimation." Deutsche Telekom remains one of Halver's top picks.
That same excitement was evident in Paris last week. Investors were drawn to France Telecom shares after the company announced it was mulling the possible flotation of its wireless and Internet operations --just as Deutsche Telekom plans to do. Not to be left out of the mergers-and-acquisitions fandango, France Telecom has made clear for the past few weeks they will actively pursue U.K. mobile operator
, which a combined
will likely have to spin off for competition concerns. All the action is bound to keep France Telecom's stock in demand next week as well.
British Telecom wasn't so much soaring as recouping some of its recent losses. News that U.K. Trade and Industry Secretary Stephen Byers has dropped the telecommunications industry from his flagship utilities bill helped push the issue higher, as did speculation that BT could be a potential takeover target. Deutsche Telekom was named as one of the most likely bidders, although the Teuton's latest interest in the U.S. may quell such talk.
Some analysts are still betting on other telcos besides BT that are likely to seek out or be sought out by potential suitors in the coming weeks and months. Spain's
, with its strong European and Latin American presence, likely tops many a CEO's partner wish list.
For the Doubting Thomases of the spring fever/telecoms theory, one need look no further than last year this time. Deutsche Telekom Chairman Ron Sommer was wooing
executives in the hopes of creating a transalpine telco powerhouse.
The ensuing hubbub drew a lot of attention and investors' money into the sector, as many feared they wouldn't get invited to the wedding party. Sommer, in the end, got left at the altar. That the romance ended in tears could prove a cautionary tale for both investors and executives caught up in any euphoria this year.