Inflows into unloved European telecoms signal brighter future

MILAN/LONDON: Investors have poured money back into unloved European telecoms stocks on expectations that costly investments have peaked and that a resurgence in mergers and acquisitions could lead to fatter returns.

The return of inflows could signal a turning point for a sector that as recently as February logged its worst underperformance against the market in more than three decades.

Telecoms’ high debt levels are one factor that deter many fund managers. But growing cash flows and a potential softening in the European Union’s historically tough stance on mergers in the sector means prospects for these shares look brighter.