A telecoms bubble or a tech bubble?

25 years on

It’s exactly 25 years on from the bursting of the dot com bubble. I was doing TMT equity research at Frank Quattrone’s CS First Boston at the time. There is no doubt that the bubble was owing to the excitement around the emergence of the Internet but most of the memories focus on tech, not telecoms.

The telecoms bubble was big. It was just as big as the tech bubble. It was more global. There may not have been as many IPOs as tech, but the overall fees paid to investment banks in telecoms deals were just as large.

Tech came back. But telecoms never really did.

Let’s dig in.

The US telecoms bubble

As with the Global Financial Crisis a few years later, deregulation played its part in the telecoms bubble of the late nineties. In early 1996, the Telecommunications Act was signed into law in the US. This aimed to reduce barriers to entry and allow more competition between regional telecom operators, local and long-…