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Telecoms rise in Europe
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April 6, 1999: 8:47 a.m. ET
Sector surges amid corporate activity, soaring subscriber numbers
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LONDON (CNNfn) - It took only a whiff of takeover speculation and a dash of subscriber numbers for European investors to jump back into the telecom sector Tuesday.
Telecom stocks have been the hottest investments in Europe over the past 18 months, in a region starved of high-flying Internet stocks.
Investors' enthusiasm waned in recent weeks though, as portfolios shifted toward more cyclical sectors.
But telecom companies were propelled back into favor Tuesday as soaring subscriber numbers from the U.K.'s major cellular companies highlighted the sector's strong growth prospects.
Merger talk concerning a possible $7 billion combination of the cable assets of Cable & Wireless (CW.) and Telewest (TWT) also caused a stir, although a deal remains mere speculation at the moment. Telewest stock soared more than 6 percent in London.
A report Tuesday that MCI Worldcom (WCOM) is talking to Nextel (NXTL) about a possible $11 billion deal highlighted the fancy valuations given to high-growth telecom stocks.
Over the weekend, Germany's Mannesmann (FMMN) announced a $1.2 billion deal to buy more fixed line assets, highlighting the likelihood of more deals ahead. In Frankfurt Tuesday, Mannesmann stock jumped more than 4 percent to 129.2 euros.
More on mobiles
Britons are doing more of their talking on the move, sending cellular connections sky-high. First-quarter numbers from Orange (ORA), Vodafone (VOD) and Cellnet were even better than analysts' expectations. Shares of Vodafone and Orange both moved more than 3 percent higher. British Telecom (BT.A), which owns a 60 percent stake in Cellnet, rose almost 5 percent to 1,072 pence.
"The latest quarter showed three times the rate of growth of the year-earlier period," said analyst Jo Oliver of Merrill Lynch
Oliver believes "extremely attractive fundamentals, and the prospect of more corporate activity" has got the sector flying.
"There was a lot of sector rotation in portfolios during the first quarter," according to Oliver, "and there was a degree of banking profits in the telecom sector. But people never completely abandoned the sector."
Continental stocks moved in sympathy with their British rivals, and Deutsche Telekom (FDTE) and France Telecom (PFTE) both rose more than 2 percent. 
-- by staff writer Rod Cant
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Orange
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