What Are Financial Advisors Valuing in 2025? Insights from the Diamond Podcast

How the One Big Beautiful Bill Act is Energizing Telecom ETFs

Update The Telecom Sector: Navigating New Tax Landscapes In August 2025, telecommunications-focused ETFs significantly outperformed the S&P 500 Index, showcasing returns of 10.5%, 9.9%, and 17.4% for iShares U.S. Telecommunications ETF (IYZ), SPDR S&P Telecom ETF (XTL), and Fidelity Disruptive Communications ETF (FDCF). These results starkly contrast the iShares Core S&P 500 ETF (IVV), which returned just 6.4% during the same period. This impressive performance can largely be attributed to the recently passed One Big Beautiful Bill Act (OBBBA), which has introduced substantial tax incentives for companies in the telecom sector. Understanding OBBBA and Its Impact The OBBBA's provisions on tax incentive have sparked significant interest and optimism within the telecom industry. The act reinstates 100% bonus depreciation on qualified capital assets. This shift allows firms to deduct the entire cost of eligible investments in the first year, drastically reducing taxable income compared to the phased-out bonuses previously dictated by the 2017 Tax Cuts and Jobs Act. This is particularly advantageous for capital-intensive industries like telecommunications, where upfront investments in infrastructure are crucial. Real-World Implications for Telecom Giants Large telecommunications firms like AT&T, T-Mobile, and Verizon stand to benefit substantially from this legislation. Analysts from CFRA estimate that AT&T could realize cash tax savings between $6.5 billion and $8 billion over the next three years. These savings could be strategically deployed for much-needed fiber buildouts and debt reduction efforts. T-Mobile and Verizon are similarly expected to allocate their estimated $1.5 billion savings to network expansions and shareholder returns like buybacks. This proactive reallocation signals a robust response to the recent legislative environment, furthering competitive positions in the market. Strategizing for Future Growth The return of immediate expensing for domestic R&D is another pivotal change encapsulated in the OBBBA. Previously obligatory amortization of such expenses has now been reversed. This means that not only are direct investments in infrastructure becoming cheaper for these firms, but innovation and development efforts can also be funded more freely. Enhanced R&D budgeting inevitably leads to faster technological advancements for carriers aiming to meet the evolving demands of consumers. A Cautious Outlook: Volatility and Market Reactions While the performance of telecom ETFs sounds promising, the volatility indexes for XTL and FDCF have forecasted annualized volatilities of 26.7% and 23.7%, respectively. Investors should be aware of the inherent risks attached, especially when market conditions fluctuate. However, amidst regulatory changes and company-level initiatives, the telecom industry appears to be moving toward a growth phase not only in profitability but in operational expansion. For wealth advisers and financial planners, the unfolding effects of the OBBBA provide rich insights into market dynamics and investment approaches. As telecom firms upgrade their infrastructures and drive technological innovation, clients may benefit from sustained performance in this sector. Engaging with these developments allows financial professionals to better advise their clients in managing their investment portfolios and navigating potential volatility. Conclusion: Seizing Opportunities Amidst Change The One Big Beautiful Bill Act is reshaping the landscape of the telecommunications industry. As it fuels new growth potentials and encourages substantial capital investment, financial planners and wealth advisers must stay informed about ongoing trends and assess their implications for client portfolios. By keeping an ear to the ground and adapting strategies accordingly, advisors can help their clients leverage the benefits of these industry shifts. Call to action: Stay ahead of the curve by constantly evaluating sector-specific changes like the OBBBA. Consider how these developments can shape investment strategies and client relationships in the rapidly-evolving financial landscape.