J.P. Morgan names best positioned European telcos as agentic AI threat emerges

Investing.com -- J.P. Morgan has named four European telecoms operators as best positioned to withstand the threat from agentic AI agents targeting customer bills, arguing that market structure, rather than pricing comparisons, is a better guide to exposure.

The broker identified Bouygues, Orange, KPN and BT as the most resilient operators.

It said the threat stems from Muse and Instinct, two agentic AI agents launched in early September that, after going viral, were upgraded in mid-September to communicate directly with customers’ utility, insurance and telecom providers to negotiate lower bills.

Exposed sectors in the US are already down 13-25%, while Europe is faring far better, and J.P. Morgan notes that fears are being rapidly discounted.

The broker does not dismiss the risk. It describes the agentic AI landscape as nascent but rapidly evolving, which makes it "difficult, and unwise" to wave away the threat. Even so, it sees numerous reasons why the impact on European telcos should be contained.

To gauge exposure, observers typically compare front-book and back-book pricing. J.P. Morgan argues this approach fails to consider reaction functions, and considers market structure a far better predictor.

On that yardstick, it places Bouygues, Orange, KPN and BT at the top of the sector, with Telefonica, DT, Sunrise and Sweden weaker placed.

The broker’s message to the industry goes beyond stock positioning. It urges telcos to accelerate in-market consolidation to crowd out the threat, and considers the sector’s distressed high-yield players ill-equipped to withstand any AI-led pricing pressure.

Agentic AI, it says, further evidences the need for telcos to be far bolder and more offensive in protecting their customer relationships and value chain.

J.P. Morgan also appeals to authorities to "level the playing field" by embracing progressive sector deregulation.

Original Article

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