If the rumors are to be believed, the telecommunications sector is about to get a lot more competitive. With Telecom ETFs, you’re sitting on an opportunity.
The big news in the telecom sector is that Verizon (NYSE: VZ) is expected to start providing service to iPhones in January, reports Martin Peers for The Wall Street Journal. Between those frustrated with the AT&T (NYSE: T) network and Verizon loyalists who don’t want to switch networks to get the popular phone, the iPhone could give a serious boost to the company.
However, the impact may not be immediate. The iPhone’s subsidy costs will probably cut into Verizon’s 2011 earnings, and the sudden drop in new iPhone applications on AT&T will probably boost the company’s margins.
Will Verizon get flooded with AT&T refugees? Will those AT&T customers still satisfied stay in the network? It’s tough to call which way this one will go, so there are three ETFs that give a decent amount of exposure to both:
- Vanguard Telecommunication Services ETF (NYSEArca: VOX). VZ is 23%; T is 22%
- iShares Dow Jones U.S. Telecommunications Sector ETF (NYSEArca: IYZ). VZ is 11.9%; T is 15.6%
- First Trust Morningstar (NYSEArca: FDL): VZ is 10.4%; T is 9.9%
Max Chen contributed to this article.