Picks, shovels and calculators

Not long ago I made the claim that the best way to make money in the telecom melee was through those companies in ancillary industries most likely to benefit from telco folly. Advertisers WPP Group (Samsung reportedly handed them $200m last week) and Havas are not doing too badly out of the new telco bubble, the lawyers are going to be tied up for ages, and now the accountants are raking it in. PwC's annual results show 10% annual revenue growth in the North American market, which it attributes to "new regulatory requirements." Of the Eurotelcos with ADRs, PwC audits BT Group, Deutsche Telekom, KPN, mmO2, Swisscom, TDC, and TeliaSonera - in short, they must be "minting it."

Cut to today's feature on BT Chairman Sir Christopher Bland in the Financial Times, where he expresses frustration at the GBP10m in annual compliance costs generated by Sarbanes-Oxley, and goes so far as to say that BT would de-list from the NYSE if it could. This echoes recent developments in Germany, where a number of SEC-registered companies are reportedly examining their options. The interesting question is, should frustration with the cost and distraction of S-O compliance lead to a withdrawal of Eurotelcos (and others) from their ADR programs, what are the implications for sector liquidity out of the US institutional investor base? How many European telecom analysts will we need under this scenario?