If the rumors are to be believed, the telecommunications sector is about to get a lot more competitive. With exchange traded funds (ETFs), you're sitting on an opportunity.
The big news in the telecom sector is that Verizon (NYSE: VZ ) is expected to start providing service to iPhones in January, reports Martin Peers for The Wall Street Journal . Between those frustrated with the AT&T (NYSE: T ) network and Verizon loyalists who don't want to switch networks to get the popular phone, the iPhone could give a serious boost to the company. [ Telecom ETFs: A New Type of Smartphone Industry. ]
However, the impact may not be immediate. The iPhone's subsidy costs will probably cut into Verizon's 2011 earnings, and the sudden drop in new iPhone applications on AT&T (NYSE: T ) will probably boost the company's margins. [ Telecom and Tech ETFs: Working As a Team. ]
One clear winner in the move is likely to be Apple (NASDAQ: AAPL ), which could double its earnings in the United States if Verizon becomes a carrier, says Tech News World .
Will Verizon get flooded with AT&T refugees? Will those AT&T customers still satisfied stay in the network? It's tough to call which way this one will go, so there are three ETFs that give a decent amount of exposure to both:
- Vanguard Telecommunication Services ETF (NYSEArca: VOX). VZ is 23%; T is 22%
- iShares Dow Jones U.S. Telecommunications Sector ETF (NYSEArca: IYZ). VZ is 11.9%; T is 15.6%
- First Trust Morningstar (NYSEArca: FDL): VZ is 10.4%; T is 9.9%
For more information on the telecom sector, visit our telecommunications category .
Max Chen contributed to this article.