Telecoms are the best-performing European equity sector on Monday, astraders latch onto signs of bid interest in Spain's Telefonica to snapup other telecom stocks which could benefit from any sector consolidation.
Telefonica says it has not received any indication of interest from AT&T after a Spanish newspaper report that the Spanish government had halted a70 billion euro ($93.38 billion) offer from the U.S. company.
However, the AT&T bid speculation nevertheless drives up Telefonica sharesby 2.6 percent, while the STOXX Europe 600 Telecoms Index rises 1.8 percent,outperforming a 0.9 percent rise on the broader pan-European STOXX 600 index and FTSEurofirst 300 index.
Clarinvest fund manager Ion-Marc Valahu is uncertain over whether or notAT&T would bid for Telefonica, but welcomes the boost to the stock from themerger speculation.
"Whatever news that props up the stock is good. I own Telefonica for otherreasons, namely the fact that it generates 80 percent of its revenues outsideSpain, in Latin America. It's a good play on Latin America," he says.
British telecoms group Vodafone, which has also witnessedspeculation that U.S. peer Verizon may look to buy full control of theirVerizon Wireless venture, also rises 1.7 percent.
"Any talk of European telco M&A will always put the concept of the Vodafonestub back in play. Telefonica exhibits many of the same structural challengesacross Europe as Vodafone is allegedly trying to fix at present - although theformer clearly brings a material exposure to LatAm, which would likely be thecore strategic rationale for such a move," writes Simon Maughan, head of sectorstrategy at Olivetree Financial Group.
The STOXX Europe 600 Telecoms Index has risen by around 6 percent since thestart of 2013, roughly in line with a 5 percent gain on the STOXX 600 index.
($1 = 0.7496 euros)
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Vodafone (VOD)