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Telco Shares Plunge Surprisingly Despite Booming Internet Sector

As lockdowns worldwide drive a surge in internet use, boosting online sales for companies as varied as gaming and food delivery, the shares of internet providers are an unlikely laggard on global markets.

Telco Shares Plunge Surprisingly Despite Booming Internet Sector

In Asia, Africa, Europe, and the Americas, a combination of high mounted costs, debt, and market disruption has left telcos significantly underperforming the data-hungry companies their networks carry.

Worldwide, a 13% drop in the MSCI world telecommunications services index pales in comparison to healthcare down 6%, technology down 8%, or consumer staples down 10%.

The poor displaying illustrates the difficult dynamics facing carriers, even when their providers are more essential than ever.

Around the world, hundreds of thousands of people are confined to their homes, and companies closed as governments restrict movement to halt the spread of the coronavirus, which has led to more than 113,000 deaths.

That has driven enterprise and entertainment online; however, it left telcos spending to service surging demand, and, with fixed pricing structures, no fast way to monetize the investment.

At the similar time, roaming revenue has dried up as people travel less, and telcos are preparing for a slump in new contracts accompanying tide of unemployment as businesses shut.

The outlook has pushed stock plunges as investors worried about dividends that have been under strain for years.

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