The telecommunications business is highly competitive. Every year, consumers demand higher data caps and speeds at cheaper prices. These network upgrades require vast capital investments, and competition continuously forces companies to drive down prices in hopes of increasing market share.
Therefore, it should not be a surprise that the return of the STOXX Europe 600 Telecommunications Index for the last 5 years has been a disappointing -12.3% or -2.6% annualized.
Telefónica (TEF) has not been immune to this competition. Its enterprise value has also been in a steady downward trend since 2015. At