The Telecom sector was the best performing sector yesterday with TLS rising 1.7% and TEL 1%. Warrant Traders took advantage to take profits in the short dated TLSIOD APR $4.50 Instalment. The performance of TLS appears to be of more interest than the performance of TEL as there are reasons to justify TEL's move. TEL management delivered what the market had been talking with cap ex guided lower over the next few years thus underwriting the lift in dividend which investors have begun to price in. Additional positive commentary on growth opportunities in the mobile and broadband businesses served to increase investor appetite.. TLS's gain appeared to be as a result of a short squeeze. The Wednesday’s dominant seller, turned aggressive buyer midway through the day yesterday. The resultant effect of their buying (net buyer of 5.4mln shares) bringing further trading activity - short covering? The weak employment data was also seen as supportive of TLS in that investors who are still favouring a defensive tilt are now looking for those names that not only provide yield, but those which have failed to appreciate. TLS looks to be trapped in a narrow trading range $4.70-4.90 with really little catalyst for any move beyond the upper level. The $4.70/5.5% yield support level continues to look strong.
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