At Tantalum Capital, we like investing in businesses with leading and defendable market positions. Concentrated industries with few competitors tend to earn good returns, and, given a fair entry price, often make for superior long-term investments. The investment cliché of looking for the widest possible “moat” around the business, defending itself against competitive attack, is obvious. As is the desire to pay a low price, the so-called “margin of safety”. However, opportunities to invest like this are generally only possible opportunistically, when the market has misunderstood (or forgotten) these industries’ strengths and long-term prospects. Intuitively, the telecommunications (“telco”) industry exhibits attractive moat characteristics: a limited number of competitors, technical barriers to entry, high fixed costs and high capital investment. In this newsletter we explore the telco investment proposition in more detail, and explain the thinking behind our underweight telco stance for most of the last two years, together with our reasons for recently investing in Blue Label Telecoms (BLU).