The telcos also played "second fiddle" to media stocks which were all the rage after the AOL-Time Warner deal earlier this year, said Deloitte telecommunications partner Peter McIver.
McIver said that the telcos' performance, led by Hutchison, Cable & Wireless Optus, and AAPT, was overshadowed by the media index which rose a massive 91 per cent - in no small part due to Rupert Murdoch's News Corp which has almost doubled in price this year.
For the year from March 1999 to March 2000, the ASX Telco Index gained only 13 per cent, in contrast to a 100 per cent increase in the Nasdaq Telco Index in the US, and a 70 per cent increase in the FTSE Telecom Services Index.
Telstra's heavy weighting (66.85 per cent) on the ASX Telco Index, and its flat share price over the past six months, caused gains made by the ASX index to lag behind the rest of the world, McIver said.
"Australian investors have moved to media companies that own content and are in good shape for convergence," McIver said.
He said the Deloitte index showed all but one of the eight major listed telcos increased in share price in the past six months, led by Hutchison (135 per cent) and Cable & Wireless Optus (96 per cent).
Telstra was the only major telco to decline in share price, with a minor 1 per cent fall despite its record half-year profit, McIver said.
Telco companies that Deloitte has been advising have been using merger and acquisition strategies, new technologies and strategic alliances as tactics to transform themselves into fully integrated service providers (FSPs) to maintain market relevance, McIver said.
Meanwhile, this Monday the ASX will launch three new technology indices in conjunction with ratings company Standard & Poor's. The indices will include the top 100, 200 and 300 companies.
And in the US, Morgan Stanley Dean Witter has formed the Morgan Stanley Internet Index, which was published on the American Stock Exchange this week under the ticker symbol MOX.
Options on the index will begin trading by April 10. Initially, the index will comprise 28 high-market-capitalisation internet stocks drawn from nine sub-sectors, including infrastructure/services, consulting/services, portals, commerce, internet B2B software, B2B commerce and multi-sector net companies. Morgan Stanley said the number and types of companies on the MOX would change as net-related businesses evolve.