In April 2023, the UK Government announced its Wireless Infrastructure Strategy: a strategy designed to evolve the UK’s future telecoms. Amongst other things, the plans include covering all populated areas with 5G by 2030, as well as delivering high-speed broadband connectivity to up to 35,000 of the most remote properties in the UK.
But is the UK telecoms sector worth investing in? Experts have cited a number of pros and cons to focusing on this industry, which we’ve outlined below.
Why some choose to invest in telecoms
One of the main reasons investors appear to choose the telecoms sector to invest in is because it is an essential service. Telecoms are always required: for social connections, for work, for entertainment, for education. No matter the economic climate, there will always be some kind of demand for telecoms, which leads some investors to believe it to be a safe haven.
Many services in this sector are subscription-based, meaning that providers both lock customers in and have a steady stream of incoming revenue. However, there are also risks involved in this sector.
What are the risks of investing in telecoms?
Telecoms businesses can be heavily laden with debt, which may put some investors off – especially with interest rates still high. Furthermore, the telecoms industry is heavily regulated which makes genuine differentiation between service providers difficult. In order to compete, many will bundle their products or continue to reduce prices, which in turn affects their profit margins.
In addition, growth in this sector can be slow. With 5G becoming adopted more widely, though, and the Government now focusing more on this sector, could this change in the future?
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