Shaping up?

The turnaround of KPN has been the key to turning around sentiment towards the European telecoms sector as a whole. But although the sector is in better shape, further downgrades are looming, with Deutsche Telekom and France Télécom in the firing line. The spectre of sub-investment-grade ratings, however, appears to have been banished from the sector once and for all. David Watts reports.

After the shocks and surprises that investors in European telecom bonds were subjected to last year, many were hoping for a little more peace and quiet in 2002. Until the end of January their prayers seemed to have been answered, but instead investors were once again reaching for their stress balls.

Throughout January, Europe’s investment-grade telecom companies enjoyed a rare absence from the front pages of the financial papers. Any news that did emerge was hardly the kind to cause panic in the