Investment Attractiveness of the Telecommunications Economic Sector During the CoronaVirus Pandemic

Abstract

Investing in the financial market is an effective way to save and increase any free money an investor might have. The success of the investments is based on knowing the fundamentals of the financial and technical analysis of securities. The current uncertainty around the negative effect of the coronavirus COVID-19 on the world economy and its possible negative outcome contribute to their mass sell-out. The situation has been aggravated as well by the price war on the oil market, which has led to a significant drop in oil prices. A number of analysts believe that, despite the current market situation being near a panic, several of the falling stocks present a certain interest for investment, including stocks of metallurgical, energy, and telecommunications companies. In order to answer the question, which securities in which economic sectors free money can be invested in with minimum risk, it is necessary to identify the sectors of the economy which have the biggest investment potential. Many analysts point to the telecommunications sector as one of these economic sectors. Due to the continuous daily demand for telecommunications services, as well as their fairly stable growth, the stocks of telecommunications companies, the main ones of which are VimpelCom, MegaFon, MTS, Rostelecom and T2 RTK Holding, are highly attractive for investment. Furthermore, specialists from the company International Data Corporation (IDC) concluded that the outbreak of the coronavirus in China is able to have a positive impact on the development of the ICT-sector, opening up new opportunities for developing digital platforms and Big Data solutions. As a result of the threat of the coronavirus spreading, an extra push to develop the telecommunications sector of our country’s economy is given by the transition of school-age and university students to distance learning, starting in mid-March 2020, as well as the transition to working from home, when possible. A fundamental analysis of the main companies of the telecommunications economic sector in our country has shown that, starting from 2015, they can be tentatively divided into groups of high performance companies and companies with lower performance. The first group includes MTS and MegaFon, while the second includes VimpelCom and Rostelecom. In this regard, the stocks of the companies from the first group are more attractive in terms of investment when compared to the second. In order to determine which stocks are the most attractive for investments, a fundamental analysis of the shares of the first group should be conducted. The analysis conducted showed a great investment attractiveness for shares of MTS.