Despite widespread concern about stalling global growth, analysts remain relatively optimistic about the prospects for the Nordic telecommunications sector.

Nordic stocks have been among the worst hit by the escalating worry over the U.S. credit downgrade and the eurozone debt situation. Market observers are warning that escalating uncertainty will subdue global growth, leading to analysts slashing company earnings estimates, in particular for cyclical industrial firms that are highly dependent on global demand.

But while there is an established correlation between economic output and financial results of industrial companies, Nordic telecom operators and wireless netgear vendors like Sweden's Telefon AB L.M. Ericsson (ERIC), won't see an immediate impact from a weaker global economy, said Martin Nilsson, Nordic telecom and IT analyst at Handelsbanken.

"Of course, in the long run all companies are hit by a recession, especially if financing would dry up again. But for the telecommunications business the relationship between results and the broader economy is more implicit," Nilsson said.

Alandsbanken analyst Lars Soderfjell said he sees "no reason to make any major adjustments of estimates, with regards to the market uncertainty," adding that Nordic telecommunications companies have been actively building up strong balance sheets and securing refinancing needs by extending debt maturities following the financial downturn of 2008, so the sector is better equipped to handle financing constraints. Sweden's TeliaSonera AB (TLSN.SK) is one company which has actively evened out its debt maturity schedule to stabilise its financing needs since Chief Financial Officer Per-Arne Blomquist joined the company in 2008.

"Even though we have seen interbank rate spreads moving upwards in recent time, they haven't reached alarming levels," Soderfjell noted.

But he said Nordic telecommunications and netgear stocks are not immune from further losses. The Nordic index for telecommunications services has fallen 14% in the last three months, while the index for technology hardware and equipment is down 31% against a 23% drop in the OMX Nordic 40 Index.

"The overall risk premium for equities has increased and that hits all shares on the stock market," Soderfjell said.

He added that if the current bearish market environment prevails, investors will become increasingly focused on dividend yield rather than stock performance.

"One would assume that the risk for dividend cuts is higher in cyclical sectors such as engineering, forestry and base metals, at least compared to operators and utilities."

-By Sven Grundberg, Dow Jones Newswires; +46-8-5451-3098; sven.grundberg@dowjones.com