Building a telecom company is expensive. There's a lot of equipment involved. In the old days, you had to string thousands of miles of phone lines. Nowadays, you have to build and maintain cell towers...and maybe more wires for that side cable business.
These companies need a lot of money. That's the point. (See: Capital Expenditure. See: WACC.) One way to raise that cash is to issue debt. The term "telephone bonds" is the nickname for the debt securities issued by telecom companies.
It may seem kind of silly that bonds issued by this specific industry get their own nickname. But the high levels of debt involved in building a telecom network make them frequent issuers of bonds.
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Finance: What is the Maturity of a Bond?95 Views
finance a la shmoop what is the maturity of a bond ?oh come on.
doorbell bash, and prank phone calls whoopee cushions for the teacher? like how mature [person rings door bell]
is that ? right well a bond matures when it comes due. that is a company borrows a
hundred million bucks in 2019 for ten years paying five percent interest or
five million dollars a year to rent that money along the way, and then 2029 comes
around and well the bond matures. and lenders have that hundred million [bond is stamped]
dollars to the company get how much well if the company pays off its bond like it
promised then that last year 2029 the lenders get a hundred five million
dollars in that final year -that is they get the five million bucks in interest
or rent on the money that year and then they get their original principal back.
just like the person who borrowed it promised what happened that is the bond
will have matured. so goodbye whoopee cushions, and late night parties in hello
NPR in a responsible bedtime. [girl snores ]
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