In the few days that the UK made a historic decision to withdraw from the EU with the UK referendum, currency markets have gone haywire. The British pound alone was down 12 percent compared to the dollar since its high on June 24. In the same time frame, the euro saw an approximate 4 percent decline vs. the dollar.
While these massive currency fluctuations are sure to have an impact on future earnings reports, analysts at Barclays are predicting Brexit to have limited effects on European telecom stocks.
"We do see European Telcos as fundamentally defensive given the limited sensitivity to GDP changes, especially in fixed line for which we are seeing improving pricing power," analysts said in a note out Monday.
Barclays industry view of the European telecom sector remains positive.
"The net impact is increases to our Vodafone Group Plc (ADR) VOD, Deutsche Telekom AG (ADR) DT, Telecom Italia SpA (ADR) TI and Telefonica S.A. (ADR) TEF revenue/EBITDA forecasts and decreases to ORA and LBTYA," the analysts concluded.
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