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

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Chapter 5

CONSUMER DEMAND

The progression of this book has mimicked the top-down method of investing (detailed in Chapter 7). We began with the big picture (basics, history, and sector composition) and then moved on to drivers. The material so far should help investors decide whether to overweight or underweight the Telecom sector versus a benchmark for the next 12 to 18 months.

The purpose of the next two chapters is to facilitate both industry and stock-specific decisions. With economic, political, and sentiment drivers anchoring sector knowledge, you can sharpen your analysis by examining consumer demand trends in this chapter and the challenges and opportunities for Telecom firms in the next.

But this chapter isn’t a static template! The drivers for consumer demand are changing rapidly, so a good investor should regularly reassess the trends. Here, we’ll review some of today’s most influential developments to demonstrate how to identify new ones going forward.

EMERGING MARKETS

The industrialization and urbanization taking place in emerging markets (EMs) like China are driving enormous economic growth and wealth creation. And there are still large rural populations that cell phone towers have yet to reach. Due to their growing economies and low user penetration rates, emerging markets represent a big growth opportunity for Telecom.

Disposable Income

Consumer demand for Telecom services can be heavily influenced by increases in disposable income—particularly in emerging markets. ...

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