3 headwinds Hong Kong Telecom Services must watch out for

4G competition could get tougher.

According to Barclays, they like the improving competitive dynamics and growing cash flows in broadband, while wireless revenue growth momentum is slowing.

Moderately higher competition in 4G means operating leverage into higher margins is likely to be more challenged, and spectrum worries do not help.

Here's more from Barclays:

Prefer fixed to wireless on three counts: 1) Fixed-line businesses are structurally better positioned, with leaders gaining share amidst the pricing upticks; we see wireless revenue momentum as challenged; 2) generally more stable cash flow profiles support higher dividend yields; and 3) wireless comes with more regulatory risks given the questions around spectrum ahead of licenses expiring.

Watch factors into 2013: 1) Does slowing revenue momentum arrest operating leverage and, hence, curtail further margin expansion for wireless? We think this likely. 2) Decisions on 3G spectrum reallocation due in Oct 2013 – we expect further payments for spectrum without any additional revenue prospects, and higher competition. 3) To what extent does PCCW improve Now TV's leadership and profits in pay-TV in Hong Kong having secured BPL broadcasting rights for the next three years?