At a time when the COVID-19 pandemic has brought many sections of the global economy to a grinding halt, telecom operators are proving to be a reliable economic engine, helping a range of essential and non-essential businesses, institutions and individual consumers to continue to function, offer critical services, and, in many cases, survive.
Legacy telecommunications companies on both sides of the U.S.-Canada border have weathered the coronavirus crisis with relative ease. The fact that their stocks haven’t taken a beating as severe as those in other sectors, is an undeniable evidence of their safe-haven characteristics. Reliable phone and internet services are essential to modern life and business. For this reason, telecom companies enjoy a relative immunity from the vagaries of economic and natural forces.
Leading operators both in the U.S. and Canada have adapted their operations and services to help mitigate the impact of the virus both on their bottom line and their consumers’ lives. Beyond the short-term consequences of the pandemic, these carriers are well placed on a long-term growth runway paved with a conspiracy of factors – 5G roll out, subscriber growth, remote working trend – as well as strong fundamentals. Their stocks are also trading at a sizeable discount to their fair value estimates, which makes them attractive investment prospects.
