Please ensure Javascript is enabled for purposes of website accessibility

Newton drawn to energy
and telecoms

  • Tweet
  • Share on LinkedIn
  • Share via email
  • Print
  • Download

Jim Lydotes

Deputy chief investment officer of equities, head of the global equity income team and portfolio manager at Newton Investment Management, part of BNY Mellon Investment Management – in Boston. Joined Newton in 2021.


Learn More

March 2023

A year after Russia’s invasion of Ukraine, areas of the energy sector remain attractive, says Jim Lydotes, deputy CIO and head of equity income at Newton Investment Management. Elsewhere, the prospect for telecoms is also piquing the team’s interest.


  • War in Ukraine continues to highlight energy sector
  • Inflation-linked income of energy assets has potential to move higher
  • Prospects also looking bright for UK and European telecoms

Newton’s infrastructure income team is becoming increasingly attracted to areas of the energy sector, brought to greater prominence since Russia’s invasion of Ukraine 12 months ago.

According to Newton deputy CIO and head of equity income Jim Lydotes, opportunities can be found particularly in energy infrastructure and midstream energy businesses.

He explains, “Pipelines are operated on very long-term contracts with regulated utilities – an investment-grade counterparty whose creditworthiness is on par with the US government, we would argue – with revenue tied to volumes moving through the pipe rather than the underlying oil or liquified natural gas (LNG) prices.”

Lydotes adds, critically, these contracts are tied to inflation, so once the pipelines are in place the ongoing expenses are relatively low and revenue can move higher with inflation.

The past year since Russia’s invasion of Ukraine has seen growing demand for LNG exports from the US to Europe, he notes. “There’s an opportunity over the next five years for the US to double its LNG exports, we believe, and while the mild winter in Europe has dampened near-term urgency, we expect a ‘normal’ winter next year to usher in a return of heightened demand,” Lydotes says.

Are telecoms the new energy?

Elsewhere, Lydotes thinks the prospects are looking more positive for European and UK telecoms which has been a tough place to invest over the past decade.

Lydotes notes during the past 10 years consumers have been in a sweet spot, using ever increasing amounts of data while their bills have been steadily falling, in real terms at the very least. Pricing power for the telecoms providers has been conspicuous by its absence.

But two things are happening now, he says. “Prices are finally edging higher – the air cover provided by every other sector hiking prices in the current inflationary environment has allowed the telecoms sector to follow suit – which is great when that all flows through to margins,” he explains.

Meanwhile, the sector is slowing down on CAPEX spending. “The 5G story hasn’t necessarily played out fully but there has been a lot of investment and we are now probably on the other side of the bulk of that spend,” says Lydotes. So, for the first time in 10 years or so, the sector is seeing more spend discipline.

“This, combined with rising revenues on the back of price increases, has created something of a goldilocks scenario for the sector and, what’s more, it is about as cheap as you can find anywhere in equity markets at the moment.”

Lydotes believes the telecoms sectors in the UK and Europe have the potential to become the energy sector story of three years ago. “A sector displaying greater discipline, using increased cashflows to pay down balance sheets, and returning more cash to shareholders in the form of higher dividends is suddenly a very attractive prospect, for infrastructure income investors in particular,” he explains. 

Lydotes thinks a further cause for optimism around the European sector is the scope for cross-border consolidation. “A country the size of France with four telecom providers is, frankly, untenable – you would never see California with four separate providers – and we expect to see consolidation over the coming years,” he concludes.


This material should not be considered as investment advice or a recommendation of any investment manager or account arrangement, and should not serve as a primary basis for investment decisions. Any statements and opinions expressed are those of the author as at the date of publication, are subject to change as economic and market conditions dictate, and do not necessarily represent the views of BNY Mellon or any of its affiliates. The information has been provided as a general market commentary only and does not constitute legal, tax, accounting, other professional counsel or investment advice, is not predictive of future performance, and should not be construed as an offer to sell or a solicitation to buy any security or make an offer where otherwise unlawful. The information has been provided without taking into account the investment objective, financial situation or needs of any particular person. BNY Mellon and its affiliates are not responsible for any subsequent investment advice given based on the information supplied. This is not investment research or a research recommendation for regulatory purposes as it does not constitute substantive research or analysis. This information may contain projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Past performance is no guarantee of future results. Information and opinions presented have been obtained or derived from sources which BNY Mellon believed to be reliable, but BNY Mellon makes no representation to its accuracy and completeness. BNY Mellon accepts no liability for loss arising from use of this material. 

All investments involve risk including loss of principal.

Not for distribution to, or use by, any person or entity in any jurisdiction or country in which such distribution or use would be contrary to local law or regulation. This information may not be distributed or used for the purpose of offers or solicitations in any jurisdiction or in any circumstances in which such offers or solicitations are unlawful or not authorized, or where there would be, by virtue of such distribution, new or additional registration requirements. Persons into whose possession this information comes are required to inform themselves about and to observe any restrictions that apply to the distribution of this information in their jurisdiction. 

Issuing entities

This material is only for distribution in those countries and to those recipients listed, subject to the noted conditions and limitations: For Institutional, Professional, Qualified Investors and Qualified Clients. For General Public Distribution in the U.S. Only. • United States: by BNY Mellon Securities Corporation (BNYMSC), 240 Greenwich Street, New York, NY 10286. BNYMSC, a registered broker-dealer and FINRA member, and subsidiary of BNY Mellon, has entered into agreements to offer securities in the U.S. on behalf of certain BNY Mellon Investment Management firms. • Europe (excluding Switzerland): BNY Mellon Fund Management (Luxembourg) S.A., 2-4 Rue EugèneRuppertL-2453 Luxembourg. • UK, Africa and Latin America (ex-Brazil): BNY Mellon Investment Management EMEA Limited, BNY Mellon Centre, 160 Queen Victoria Street, London EC4V 4LA. Registered in England No. 1118580. Authorised and regulated by the Financial Conduct Authority. • South Africa: BNY Mellon Investment Management EMEA Limited is an authorised financial services provider. • Switzerland: BNY Mellon Investments Switzerland GmbH, Bärengasse 29, CH-8001 Zürich, Switzerland. • Middle East: DIFC branch of The Bank of New York Mellon. Regulated by the Dubai Financial Services Authority. • Singapore: BNY Mellon Investment Management Singapore Pte. Limited Co. Reg. 201230427E. Regulated by the Monetary Authority of Singapore. • Hong Kong: BNY Mellon Investment Management Hong Kong Limited. Regulated by the Hong Kong Securities and Futures Commission. • Japan: BNY Mellon Investment Management Japan Limited. BNY Mellon Investment Management Japan Limited is a Financial Instruments Business Operator with license no 406 (Kinsho) at the Commissioner of Kanto Local Finance Bureau and is a Member of the Investment Trusts Association, Japan and Japan Investment Advisers Association and Type II Financial Instruments Firms Association. •. • Brazil: ARX Investimentos Ltda., Av. Borges de Medeiros, 633, 4th floor, Rio de Janeiro, RJ, Brazil, CEP 22430-041. Authorized and regulated by the Brazilian Securities and Exchange Commission (CVM). • Canada: BNY Mellon Asset Management Canada Ltd. is registered in all provinces and territories of Canada as a Portfolio Manager and Exempt Market Dealer, and as a Commodity Trading Manager in Ontario.


BNY Mellon Investment Management is one of the world’s leading investment management organizations, encompassing BNY Mellon’s affiliated investment management firms and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally. • Mellon Investments Corporation (MIC) is a registered investment advisor and subsidiary of The Bank of New York Mellon Corporation. MIC is composed of two divisions: Mellon, which specializes in index management, and Dreyfus, which specializes in cash management and short duration strategies. Dreyfus is also a division of BNY Mellon Investment Adviser, Inc. (BNYMIA), a registered investment adviser. • Insight Investments - Investment advisory services in North America are provided through two different investment advisers registered with the Securities and Exchange Commission (SEC) using the brand Insight Investment: Insight North America LLC (INA) and Insight Investment International Limited (IIIL). The North American investment advisers are associated with other global investment managers that also (individually and collectively) use the corporate brand Insight. Insight is a subsidiary of BNY Mellon. • Newton Investment Management - “Newton” and/or the “Newton Investment Management” brand refers to the following group of affiliated companies: Newton Investment Management Limited (NIM) and Newton Investment Management North America LLC (NIMNA). NIM is incorporated in the United Kingdom (Registered in England no. 1371973) and is authorized and regulated by the Financial Conduct Authority in the conduct of investment business. Both Newton firms are registered with the Securities and Exchange Commission (SEC) in the United States of America as an investment adviser under the Investment Advisers Act of 1940. Newton is a subsidiary of The Bank of New York Mellon Corporation. • ARX is the brand used to describe the Brazilian investment capabilities of BNY Mellon ARX Investimentos Ltda. ARX is a subsidiary of BNY Mellon. • Walter Scott & Partners Limited (Walter Scott) is an investment management firm authorized and regulated by the Financial Conduct Authority, and a subsidiary of BNY Mellon. • Siguler Guff - BNY Mellon owns a 20% interest in Siguler Guff & Company, LP and certain related entities (including Siguler Guff Advisers LLC). • BNY Mellon Investor Solutions, LLC is an investment adviser registered as such with the U.S. Securities and Exchange Commission (“SEC”) pursuant to the Investment Advisers Act of 1940, as amended. BNY Mellon Investor Solutions, LLC is a subsidiary of The Bank of New York Mellon Corporation.

No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. All information contained herein is proprietary and is protected under copyright law. 




GU-390 3 March 2024