6 July 2006

FRANKFURT (Reuters) - The ratings outlook for incumbent European telecom companies is stable and new technology, like Internet-based telephone services, poses little threat to the sector, according to a Moody's Investors Service report released on Thursday.

European telecom firms are seeing their traditional fixed-line telephone business shrink as more people switch to mobile phones. They are also under pressure from smaller rivals offering cheaper phone and Internet services.

But Moody's said that while VoIP (Voice over Internet Protocol) would erode revenues, the effect would be small, and any losses would be offset by broadband Internet products and services and mobile telephony.