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Fisher Investments on Telecom by Andrew S. Teufel, Dan Sinton, Fisher Investments

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Chapter 3

TELECOM SECTOR COMPOSITION

You should now understand Telecom basics and have reviewed the sector’s historical development. In this chapter, we’ll examine how the Telecom sector fits into the global stock market, review the different industries that make up the sector, and take a peek at some of the sector’s biggest companies. Establishing the sector’s composition will provide a structure we can build upon. It lays the foundation for business drivers in Part II and is a blueprint for portfolio construction in Part III.

GLOBAL INDUSTRY CLASSIFICATION STANDARD (GICS)

We’ve talked a lot about sectors and a little about industries thus far, so before we go any further, let’s define exactly what we mean. The Global Industry Classification Standard (GICS) is a widely accepted framework for classifying companies into groups based on similarities. The GICS structure consists of 10 sectors, 24 industry groups, 68 industries, and 154 sub-industries. This structure offers four levels of hierarchy:

  • Sector
  • Industry group
  • Industry
  • Sub-industry

The Telecom sector is narrowly focused on communication services and has a much simpler hierarchy than most sectors, with just one industry group, two industries, and three sub-industries. Telecom’s industries and corresponding sub-industries are:

Industry: Diversified Telecommunication Services

  • Sub-industry: Integrated Telecommunication Services
  • Sub-industry: Alternative Carriers

Industry: Wireless Telecommunication Services

  • Sub-industry: ...

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