Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on TELEFONICA DEUTSCHLAND HOLDI. We currently have 4 research reports from 1 professional analysts.
Frequency of research reports
Research reports on
TELEFONICA DEUTSCHLAND HOLDI
TELEFONICA DEUTSCHLAND HOLDI
Slight upgrade in the synergy target for 2019
22 Feb 17
Q4 revenues showed a slight continued decline with a yoy decrease of 6% to €1,936m (vs a 5.7% yoy decline during the first 9m). Note that, as in the previous quarter, this is mainly a result of the decline in handset revenues. Handset revenues fell by 17.6% yoy, reflecting longer replacement cycles and handset saturation in the German market. The key point is that Mobile service revenues (which represent 75% of the global business) declined by only 2.1% yoy in Q4, as in previous quarters, and by only 0.9% excluding the effects of the mobile termination and roaming rate cuts. As in the previous quarter, the good news is the EBITDA growth of 5.3% yoy (+3.8% for the whole year), thanks to the successful capture of synergies (mainly related to employee restructuring). Management has given its outlook for 2017: absolutely no surprise with slightly negative to flat yoy mobile service revenues and a flat to mid single-digit percentage growth for EBITDA.
Improvement in EBITDA margin but until when?
26 Oct 16
Q3 revenues showed a slightly improving trend with a yoy decline of 5.2% to €1,876m compared to -5.9% yoy in Q2. Note that as in the previous quarter this is mainly a result of the handset revenue declines. Handset revenues fell by 24.5% yoy (-25.5% in Q2) reflecting longer replacement cycles and handset saturation in the German market. The key point is that Mobile service revenues (which represent 75% of the global business) declined by only 1.8% yoy in Q3, as in Q2, and by only 0.9% excluding the effects from mobile termination and roaming rate cuts. Like the previous quarter, the good news is the EBITDA growth of 3% yoy, thanks to the successful capture of synergies (mainly related to employee restructuring). Management has reiterated its full-year outlook for 2016: a slight decline in mobile service revenues and a low to mid single-digit percentage growth for the EBITDA.
Pushing ahead with the integration of E+
01 Aug 16
H1 revenues totalled €3.69bn, lower 4.1% yoy. Handset revenues fell by 15.9% yoy to €493m (-25.5% yoy in Q2), reflecting longer replacement cycles and handset saturation in the German market in line with broader European markets. The key point is that Mobile service revenues (which represent 75% of the global business) declined by 1.7% yoy in Q2 (vs -1.3% in Q1). Like in the previous quarter, the good news is the EBITDA growth of 1.2% yoy, even if it is lower than in Q1 (+6.2%!), thanks to successful synergy capture. The group has reiterated its full-year Mobile service revenues outlook, but has narrowed the range from “slightly negative to broadly stable” yoy to “slightly negative” yoy on the back of increased competition, especially in the non-premium end of the market. Note, however, that data usage and the LTE customer base continue to grow: the group still expects it will drive an inflection point in the revenue trajectory in the future. The narrowing of the revenues outlook range has no impact on the EBITDA outlook, as it continues to benefit from the roll-over effects of the successful integration initiatives in 2015, as well as pushing ahead with employee restructuring, customer migration and network integration efforts in 2016. But the group has also adjusted positively its capex outlook from “percentage growth in the low tens to mid” to “high single-digit growth”. This is largely the result of more efficient capex spend as well as phasing topics related to the network integration.
The new German mobile leader
19 Feb 16
h1.Business After the acquisition of E+ from KPN, Telefonica Deutschland has become the largest mobile operator in Germany with c.43m customers. Its two main competitors are Deutsche Telekom and Vodafone with respectively 39-40m and 31m mobile subscribers (at end 2015). The mobile market in Germany is perfectly mature and we don’t expect any major changes in the respective market shares of the three main competitors in the near future. There is no real mobile price war in Germany (Deutsche Telekom is not required to offer the latest wireless technologies, such as LTE, to cut-rate MVNOs, which undermines the competitiveness of discounters) and the mobile bundles are quite similar. The main issue for a pure mobile telco like Telefonica Deutschland is the strategy on Fixed as in some European countries the quadruple play (which links mobile with broadband fixed services) is the only way to move the lines and win new customers thanks to attractive bundles. TEF Deutschland is the German mobile player which is not really present on Fixed while its two main competitors could be more aggressive with attractive bundles thanks to the comfortable margin they generate on their Fixed activities (ultra-fast broadband networks need perhaps huge capex but they generate impressive EBITDA margins above 45%). In a mature mobile country like Germany, TEF Deutschland should maintain its market share at 35-40% and record slight growth over the next three years thanks to an ARPU which is relatively stable with the wide use of 4G. Note 5G should be deployed from the end of the decade and will allow the rise of the IoT (Internet of Things). h1.Recommendation and upside We are initiating coverage of Telefonica Deutschland (with a market cap of €13.5bn and a float of c.23%) with a add recommendation and 15% upside. h1.Slowly but surely improve the EBITDA margin With market shares which are unlikely to move in the short term and stable prices, the only way for the group to improve its margins is to increase productivity. The EBITDA margin of the new group should be 22.5% in 2015 and the objective is clearly to raise this quickly towards the 25% level thanks to the productivity gains due to the merger. It will probably be difficult to go beyond 25% if the group is still present only on the mobile side in Germany and can not rely on stronger margins on Fixed to develop profitable quadruple play offers. Note that at the end of the decade with the emergence of the IoT (Internet of Things), growth could be higher and margins could improve further. h1.Need to know Telefónica controls 62% of the group and a third of the supervisory board is made up of managers of Telefonica not working in its German subsidiary. Telefonica is a quite heavily-indebted group; its net debt before the approval of the sale of its UK subsidiary (O2 UK) was more than 3x its EBITDA. The listing of its German subsidiary (which represents 15% of its overall turnover) is aimed primarily to allow it to raise funds in case of an external growth transaction. Thus the acquisition of E+ has brought KPN to hold a 20% stake in Telefonica Deutschland (15% at end 2015). This may allow the latter to mix paper and cash in the case of a large scale operation with a Fixed operator in Germany (the group could be interested in a partnership with United Internet or Unitymedia, the two Fixed players which are not really present on the mobile side). Meanwhile, Telefonica should impose on its subsidiary to pay a substantial annual dividend.
20 Apr 17
TEP’s trading update for the year to March 2017 highlights modest growth as expected, with a total dividend of 48p (25p final dividend) in line (49pE). FY18 forecasts are trimmed 3% at adjusted PBT level, to remain in line with FY17, with better quality customers taking all possible services – at a higher cost of acquisition but better prospective year 2 margins. With the positive outlook that a narrowing of the gap between standard variable energy tariffs and aggressively priced introductory deals has led to an encouraging upward trend in Q4 to March, prospects for restored growth in revenue (FY18) and profit (FY19) are strong. Improved incentivisation of the self employed salesforce, after a few years of lower growth, is complemented by the imminent addition of Home Insurance, adding sales momentum and increased customer interest as utility prices rise. With the double upside to the £70m tender offer in summer, and the June release of FY19 forecasts illustrating growth following greater detail available at prelims, the future is brighter for TEP. Target 1360p reiterated.
Northland Capital Morning Report
02 Dec 15
Divergence looks set to dominate the final month of 2015 and set the tone for 2016. The European Central Bank is widely expected to extend its QE economic stimulus programme and could reduce its overnight deposit rate further in an attempt to boost inflation, and more stimulus could come from Japan and China. Meanwhile the Federal Reserve is now expected to lift rates from historic lows. Higher US rates will impact not only the cost of capital in the US but also emerging markets where growth remains much weaker and leverage high. The move by the ECB is unlikely to have a major impact, however, as it is an extension rather than a new tool and the headlines continue to be dominated by politics rather than financial markets (Isis, the refugee/migrant crisis, tensions between Russia and Turkey etc). The respective moves are likely to further weaken the euro in 2016. The UK sits somewhere in the middle. November’s Autumn Statement saw the Chancellor drop his tax credit reduction plans and benefit from a surprise £27bn improvement in the Office for Budget Responsibility’s five year public finances forecast, based on higher tax revenue and lower debt interest. The general shift away from austerity, the protection of tax credits and increased minimum wage should ensure further economic growth.
Strong performance in the non-legacy business
20 Apr 17
TomTom reported Q1 revenues of €212.7m, down 2% yoy and 19.9% sequentially. Consumer decreased by 16% yoy to €98m, representing the main down-mover. The three other businesses combined grew by 14.1% to €114.7m, with in decreasing order Automotive (€41.1m, +38.4% yoy), Telematics (€40.6m, +9.4%) and Licensing (€33m, -2.1%). The gross margin came in at 62.2%, up 540bp yoy, while the EBIT margin lost 30bp to -2.3% (-€4.8m). EPS came in at €-0.02 and adjusted EPS at €0.03. The company re-iterated its guidance for FY17 with adjusted EPS of around €0.25 and revenues of between €1,025 and €1,050m.
31 Jan 17
Alumasc (ALU): Interims show strong sales growth but some margin pressure (BUY) | Joules Group (JOU): Marginal increase to FY17E forecast (BUY) | CityFibre* (CITY): Prospects shine (CORP) | Nasstar* (NASA): Trading update (CORP) | SCS Group (SCS): LFL order intake slowed during Q2 (BUY)