Barclays equity strategists raise their stance on the European telecomssector to "neutral" from "negative", saying the sector should benefit next yearfrom ongoing sector consolidation and regulation aimed at boosting industrygrowth.
"Proposed changes to European Union regulation and mergers and acquisition(M&A) could potentially slow, or maybe one day reverse, the pace of years ofstructural declines," write the Barclays strategists.
"This clearly drove sector outperformance in H2 2013 and we believe willremain a focus into 2014," they add.
Merger and takeover deals this year have helped lift telecoms stocks.
U.S. cable group Liberty Global this month said it was in talks tobuy Dutch operator Ziggo. Telefonica has proposed to buyKPN's German unit and there has been persistent market speculation thatAT&T may be eyeing a possible bid for Vodafone.
The STOXX Europe 600 Telecoms sector has risen by around 25 percentsince the start of 2013, outperforming an 11 percent gain on the broaderpan-European STOXX 600 index.
Reuters messaging rm://sudip.kargupta.thomsonreuters.com@reuters.net