Increased telecom spending sets up the lagging sector for growth, AlphaOne Capital Partners CIO Dan Niles said Tuesday on CNBC.
On "Fast Money," Niles pointed to the failed merger between AT&T and T-Mobile in the fourth quarter of 2011 as a low point for the sector.
But increased spending by the likes of T-Mobile parent company Deutsche Telekom and Sprint bodes well for telecom and will ramp up competition, he said.
"You're really starting an arms race in the United States where it used to be just AT&T, Verizon just hanging out," he said. "Now you've got a lot of deep-pocketed competitors, and the spending levels are starting to rise, and these stocks have been terrible for the last two years."
Niles said that his top picks in the sector included Cisco and Juniper Networks, companies that would benefit directly from the increased spending.
Stephen Weiss of Short Hills Capital made the bull case for two stocks he owned: AT&T and Verizon.
"I like the yields, but also they're getting rational in terms of their data plans. They're making more money off of them," he said. "They've changed pricing and the subsidies for phones. They're cutting back the subsidies in terms of making you spend more to get the phones, so I think they're very well positioned."
Trader disclosure: On Feb. 12, 2013, the following stocks and commodities mentioned or intended to be mentioned on CNBC's "Fast Money" were owned by the "Fast Money" traders: Dan Niles has positions in FB; Dan Niles has positions in INTC; Dan Niles has positions in MSFT; Dan Niles has positions in AAPL; Dan Niles has positions in QCOM; Dan Niles has positions in EBAY; Dan Niles has positions in CSCO; Dan Niles has positions in JNPR; Dan Niles has positions in CIEN; Dan Niles has positions in FNSR; Dan Niles has positions in AMZN; Dan Niles has positions in ONNN; Dan Niles has positions in NXPI; Pete Najarian is long AAPL; Pete Najarian is long AAPL CALLS; Pete Najarian is long JPM CALLS; Pete Najarian is long BAC CALLS; Pete Najarian is long MS CALLS; Pete Najarian is long XLF CALLS; Pete Najarian is long YHOO CALLS; Pete Najarian is long BBRY; Pete Najarian is long BBRY CALLS; Pete Najarian is long SBUX; Pete Najarian is long FB; Pete Najarian is long MSFT; Pete Najarian is long DELL; Stephen Weiss is long BAC; Stephen Weiss is long C; Stephen Weiss is long QCOM; Stephen Weiss is long TBF; Mike Murphy is long AAPL; Mike Murphy is long GS; Mike Murphy is long FB.
