Wednesday, January 28, 2009

Banking Crisis: May force Governments to invest in Telco infrastructure

I spend a lot of time with Telcos, ISPs and equipment vendors in the UK and EMEA and their is a constant stream of; Headcount cuts, projects put off, scaled back, '08/'09 capex suspended and no clear visibility into this years budgets.

Problem, inability to raise debt to fund infrastructure. Banks won't/can't lend for all the reasons we hear in the press. Confidence in a banks is linked to their stock price & their market capitalisation, they can't value their assets properly and that effects the amount they can lend, blah, blah, blah... and, that impacts on their attitude towards lending money to Telco, which lost it's low-risk utility status many years ago.

I wondered how bad was it for Banking last year? Well take a look at this...
Not a pretty picture, but interesting.

I wonder how European many countries will follow President Obama down the Keynesian route of the US government investing directly in telecommunications infrastructure, the same way they invested in physical infrastructure in the 1930's. we heard today that the Canadian government will start a programme of investment this year. The question is whether the European governments have the guts to ignore EU rules and directly subsidise the telecoms industry in their home countries - I doubt it, but we live in hope.

1 comment:

Rob Kenny said...

Does the scale look right to you on this chart? For instance, does the UBS green circle look to be roughly one third the size of the UBS blue circle? (35 vs 116)

I do hope JP Morgan aren't having trouble with their math ...