Richard Hemming says beware the telco sector, warning that stock prices (are) liable to halve if negative sentiment emerges. This sector is where some of the greatest uncertainty exists, leveraged as its earnings are to the will of government and to the timing of the National Broadband Network. Once it arrives we imagine investors will take another look at these companies, given that prices for access to infrastructure should be much higher, and infrastructure outside of the NBN valued lower. Nick Harris, the tech analyst at RBS Morgans, says that TPG is among the most vulnerable because its gross profit margin - double those of its competitors - is vulnerable once the NBN gets going. I think TPG is definitely trading too high, but the market loves it. Under the NBN that infrastructure advantage declines and so does its (profit) margin. Beware the telcos. (Subscribers link) (VIEW LINK)