Stock Opportunities In Data Sector Of Telecom By Number One Earnings Estimator

• On 9:36 pm EST, Monday November 9, 2009

67 WALL STREET, New York - November 9, 2009 - The Wall Street Transcript has just published its Telecommunications Services & Equipment Report offering a timely review of the sector to serious investors and industry executives. This 20 page feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Telecom Carriers VS. Telecom Equipment Vendors - Increased Competition Hurts Profitability Among Telecom Carriers - Net Neutrality Battle - New Telecom Players Apple & Google - High-Growth Opportunity In Latin American Market - Rural Local Exchange Carriers - Fierce Wireless Competition - Significant Deceleration In Wireless Subscriber Growth - Upgrade To 4G - Secular Decline In RLEC Sector - Regulatory Environment - Unlimited Pay-In-Advance Segment Is Fastest-Growing In Wireless

Companies include: Ciena Corporation (CIEN); AT&T (T); Alcatel (ALU); Apple (AAPL); CenturyLink (CTL); Clearwire (CLWR); Comcast (CMCSK); Consolidated Communications (CNSL); ERF Wireless (ERFW.OB); Frontier Communications (FTR); Google (GOOG); Intel (INTC); Iowa Telecom (IWA); Knology (KNOL); Leap Wireless (LEAP); Liberty Global (LBTYA); MetroPCS (PCS); Millicom (MICC); NII Holdings (NIHD); Nortel (NTL); Sprint (S); T-Mobile (DT); Telefonica (TEF); Tellabs (TLAB); Time Warner Cable (TWC); Time Warner Cable (TWX); TracFone (AMX); Verizon (VZ); Wal-Mart (WMT); Windstream (WIN).

In the following brief excerpt from just one of the in depth interviews in the Special Report, an industry expert discusses the outlook for the sector and for investors.

MICHAEL NELSON, a telecom services Analyst at Soleil Securities, has over 20 years' experience in the financial industry. Prior to forming Nelson Alpha Research, Inc., in 2009, he was at Stanford Group Company as a Senior Vice President covering the telecommunications services sector. Mr. Nelson was recognized by Financial Times/StarMine as the number one earnings estimator in the wireless telecommunications services industry in 2008. He was a member of the Institutional Investor magazine ranked telecommunications team at Citigroup Investment Research from 2002 to 2005. Mr. Nelson began his career in 1988 as a fixed income derivatives trader at Banque Indosuez. He earned his Bachelor of Science in economics from Cornell University and his MBA from Vanderbilt University's Owen Graduate School of Management.

TWST: What is your coverage within in the telecom sector?

Mr. Nelson: My coverage is broken down into two sub-sectors - wireless and the RLECs, the rural local exchange carriers. Within wireless I cover Sprint (S), MetroPCS (PCS), Leap Wireless (LEAP), NII Holdings (NIHD) and Clearwire (RLWR); and in the RLECs, CenturyLink (CTL); formerly known as CenturyTel, Windstream (WIN), Frontier Communications (FTR), Consolidated Communications (CNSL) and Iowa Telecom (IWA).

TWST: What is the status of each of those sub-sectors?

Mr. Nelson: Let's start with wireless. There has been a lot of activity in wireless, and overall I'm cautious on the wireless industry. We've seen competition intensify across the industry, subscriber growth significantly decelerate as penetration is now roughly around 90%, and companies start to fiercely battle against each other on both lower rate plans as well as lower handsets, in turn decreasing acquisition costs in handset subsidies. So the wireless industry is fiercely competitive right now, and it's making it increasingly more difficult for the carriers to differentiate themselves.Right now we are seeing a bifurcated market with AT&T (T) and Verizon (VZ) dominating the postpaid contract segment, while Sprint, TracFone (AMX), MetroPCS, Leap, and T-Mobile (DT) fiercely battle for incremental prepaid share. It's great for consumers. Consumers are paying less and less for monthly service as well as lower prices for the higher-end phones. But I expect competition to continue to intensify across the sector as overall subscriber growth significantly decelerates and the competitive landscape intensifies.

TWST: Is everything going wireless?

Mr. Nelson: It is, and the opportunity for the carriers is that there are new opportunities above and beyond traditional voice calling. And one of the bright spots that we are seeing in the industry is on data usage and data revenue. That's something that was led by the iPhone - you're seeing higher-end smart phones, and the usage of smart phones leads to an extreme uptake in data applications and data usage, which is helping increase data revenue to slightly offset the erosion in voice revenue. I do think that there is an opportunity for carriers to further benefit from this. They are trying to differentiate themselves on the speed of the networks and it's causing them to upgrade their networks to now 4G. We recently went to 3G, and we're already moving to 4G led by Clearwire, which is 51% owned by Sprint and partnering with cable companies like Comcast (CMCSK) and Time Warner Cable (TWX), as well as Intel (INTC) and Google (GOOG). Clearwire is being very closely followed by Verizon, which is launching their own 4G technology, LTE, which is going to be followed quickly by AT&T with an LTE network as well. I'd say one of the risks, however, associated with the increase in data usage is the unintended consequences of heavy data usage and the increased capacity utilization, which could lead to network deterioration and increasing capital investment. And I do think that that is a risk for several of the carriers.

The Wall Street Transcript is a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs and research analysts. This 20 page special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online .

The Wall Street Transcript does not endorse the views of any interviewees nor does it make stock recommendations.

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