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Last week Telefonica announced the launch of an offer for its German subsidiary, released its Q3 numbers and presented its guidance for 2024-26. Regarding TEF Deutschland, we believe that Telefonica has launched a very timely and good offer. The new strategic plan is not that surprising, but the future regular growth in FCF is promising. We believe the current dividend to be secure (it could even be increased from 2024). We maintain our opinion at buy on the stock.
Companies: Telefonica SA
AlphaValue
Telefonica released a solid Q2 with the expected 3.3% revenue growth but a good EBITDA progression of 3.5% despite higher energy costs and personnel expenses. We are confident about the group’s objectives for 2023 and therefore believe the 2023 dividend to be secure. We even think it could be increased from 2024. Our target price is probably too ambitious in the short term and a price of €4.6 is more reasonable (implying a 6.5% dividend yield).
Telefonica released a mixed Q1 with a solid 4.9% yoy organic revenue growth but an EBITDA up by only 1.1% due to higher energy costs and personnel expenses. Capex was however down by 0.7% and EBITDA less Capex was therefore up by 2.1%. Cash flow should grow modestly in 2023 and we are thus comfortable with the dividend for 2023. We maintain our opinion at buy on the stock.
Telefonica released a solid Q3 with 3.8% yoy organic revenue growth and EBITDA up by 3.1% yoy. Telefonica is still a Spanish story, with high potential in the UK and Brazil, plus solid assets in Germany. The dividend yield is 8.5% despite a steady increase in FCF in the future. We maintain our strong Buy on the stock (which lost 25% in Sept-Oct and has recovered by 7.5% in the past week).
A solid Q2 with a 5.2% yoy organic revenue growth and an EBITDA up by 3.4% despite increasing energy costs in Spain. Telefonica is still mostly a Spanish story, with high potential in the UK and Brazil, plus solid assets in Germany. The dividend yield is 6.8% despite a steady increase in FCF in the future. We maintain our Buy. However, in the short term, the recent rotation toward quality growth stocks at the expense of telcos is likely to continue.
Organic Q1 revenue growth was in line with expectations at 3.2% yoy, while EBITDA was up by only 2.1% yoy and lfl due to a significant increase in the cost of energy and the higher growth in lower margin revenue in Spain. EBITDA less capex was however good, up by 6.4% yoy due to a 4.9% decline in capex. The dividend yield is 6.45%, above the 4% for the sector best in class: we maintain our Buy.
Q3 was globally in line with expectations. Things are still tough in Spain but Germany is a very strong asset while Brazil and the UK are deploying fibre networks which should bear juicy fruits in the future. Hispam operates as an autonomous company which could soon be sold as a whole or piecemeal. Our significant upside is commensurate with the incredibly low levels reached one year ago. The stock has partly recovered but is still 35% under its pre-COVID-19 levels.
The Q2 numbers are slightly better than expected. Telefonica has also upgraded its outlook for 2021. The dividend cut of last year, the recent sale of its telecommunications towers division in Europe and in Latin America for €7.7bn to American Tower, the merger with Virgin in the UK, the reduction in net debt and a quite correct H1 performance should indeed help restore market confidence. We maintain our opinion at Buy on the stock.
Q4 numbers were in line with expectations and quite reassuring. Telefonica has, however, preferred to cut its dividend by 25% (at €0.3 vs €0.4 previously) to preserve its cash flow while its investments will remain substantial in the coming years. So after the recent sale of its telecommunications towers division in Europe and in Latin America for €7.7bn to American Tower, this cautious cut could indeed help restore market confidence. We maintain our opinion at Buy on the stock.
Telefonica announced this morning that its subsidiary Telxius has signed an agreement with American Tower for the sale of its towers division in Europe for €7.7bn. It’s indeed an impressive price and TEF succumbed logically to the sirens of American Tower to reduce its debt a little more. We maintain our opinion at Buy on the stock.
Telefónica remains on track to deliver its 2020 outlook of flat EBITDA-capex yoy in organic terms but… at constant currency. The Forex headwind is however a storm in Brazil (-30% yoy). The stock is trading at a 55% discount to its February level. The dividend yield is nearly 15% reflecting the market’s major concern about its sustainability. Even if the group ends up lowering its dividend due to this Forex storm… we maintain our Buy opinion.
A poor Q2 performance for Telefonica although this had been expected given, in particular, the double penalty linked to the South American currency weakness vs the Euro (in particular the Brazilain Real) during the pandemic. For 2020 Telefónica nonetheless remains on track to deliver a slightly negative to flat EBITDA-capex yoy in organic terms but… at constant currency. The key point thus remains that the 2020 dividend is confirmed at €0.40.
The Q1 is in line with our expectations. Telefonica’s revenues could decrease by 5% in 2020, exceeding the top range of our own estimates of the COVID-19 impact on a telco’s account but this is due to the recent steep decline of South American currencies. As capex should decline like EBITDA, cash flows are not in danger and the group confirmed its dividends. The creation of a JV bringing together Virgin and O2 is strategically and fundamentally a good deal.
Telefonica has approved a 5-point plan which is supposed to mark a new era for the company. The key point seems the focus on the four markets which represent today 80% of Telefonica’s business and where the group is a solid leader. In parallel, the operational spin-off of Hispanoamerica seems to show the group’s willingness to disengage at term from these activities. It’s a very interesting perspective on the long term. We maintain our Strong Buy on the stock.
Nothing extraordinary about the Q2 release. Q2 revenues were up by 3.7% yoy and lfl, exactly like in Q1, while the adjusted EBITDA has increased in parallel by 1.6%, a number still a little bit weak compared to the revenue growth. It seems that management was indeed quite right to give a cautious guidance for 2019 with both revenue and EBITDA growth of around 2% (and a dividend unchanged).
Research Tree provides access to ongoing research coverage, media content and regulatory news on Telefonica SA. We currently have 0 research reports from 2 professional analysts.
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Companies: EPIC DARK TIDE IGP IOM NCC CHRT CNS CLCO TERN SWG CCS SYS BVC
Hybridan
CyanConnode exceeded FY24 revenue expectations and has high visibility into FY25, supported by strong deliveries and a growing backlog respectively.
Companies: CyanConnode Holdings plc
Zeus Capital
Companies: BATM Advanced Communications Ltd.
Shore Capital
FY23 revenues and EBITDA were in line with expectations. The major news was that BT plans to shed more than 40% of staff. At the end of the decade the EBITDA could reach £11bn with the massive restructuring announced and capex could return to €3.5bn per year. EBITDA less capex could be multiplied by 2.5 and therefore also the dividend. This could value BT at 385 pence at that time. We maintain our opinion at Add on the stock.
Companies: BT Group plc
A decent Q1 performance despite the expected headwinds from cost-of-living pressure and cost inflation. The group is clearly a fairly safe long-term buy and hold. BT plans to shed more than 40% of staff by the end of the decade. In parallel it is further accelerating its FTTP deployment with high capex. But at the end of this phase EBITDA-capex could be multiplied by 2.5. Speculation could also again reignite as Drahi’s empire (owning 24.5% of BT) is being shaken by corruption cases.
Calnex has released a pre-close trading update for the year to March 2024, indicating that revenue would be £16.3m, c£0.7m below our forecast, partly due to the timing of orders at the end of the period. Group trading has been impacted by the well-documented, continuing challenges in the Telecoms sector which have seen delayed project timings leading to corresponding delays in customer spending. Administrative costs are being controlled and are focussed on maintaining R&D. Calnex remains confide
Companies: Calnex Solutions Plc
Cavendish
Q4 revenues were only up by 1.3% yoy (excluding the inclusion of EE for two months). A better performance than might be thought at first sight given the 8% decline recorded by the wholesale division (due to the benefit of ladder pricing revenue recognised last year). BT’s Fixed consumer revenues, 25% of BT’s business (excluding EE and Openreach) corresponding to BT’s own retail business, were up by 8% yoy with a 20% increase in broadband and TV revenue. Openreach revenue (28% of BT’s revenue not
Q1 16 revenues declined by 2.6% yoy (excluding the contact centre business SNT Deutschland which was sold in Q1). Once again growing Consumer revenues were offset by the impact of the ongoing decline in size of the business market and lower revenues at iBasis. The EBITDA decreased by 4.5% yoy but this is due to temporarily higher IT-related costs in network and operations in the run-up to IT rationalisation. Note also an impairment charge related to iBasis for €45m. KPN intends to pay a regul
Companies: Royal KPN NV
Q4 2015 revenues declined by 5.9% yoy (adjusted with a tax settlement benefit of €44m in Q4 2014). Growing Consumer revenues were offset by the impact of the ongoing decline of the business market size and lower revenues at iBasis. The EBITDA decreased however by only 0.7% yoy in Q4 2015 (without the tax settlement benefit in Q4 2014). These results are quite disappointing compared to the previous Q3 where revenues were down by only 2.6% yoy (vs -3.5% in H1) thanks to 3.7% growth on the co
Q3 revenues and EBITDA were up by 3% yoy. Quite a good set of results for the new telco king of England (following the completion of EE’s acquisition). BT Fixed consumer revenues (25% of BT’s business not including Openreach sales corresponding to BT’s own retail business) were up by 11% yoy with a 23% increase in broadband and TV revenue. Openreach revenue (28% of BT’s revenue not including EE) was up by 3% yoy with record net fibre broadband additions of 494k, 32% higher than last year. There
Although Q1 revenues had decreased by 2.6% yoy while the EBITDA had declined slightly more by 4.5%, it was the opposite in Q2 with revenues down more than expected by 4.3% yoy but a better EBITDA down by only 1.7%. Once again, growing Consumer revenues were offset by the impact of the ongoing decline in the size of the business market. So, as in the two previous quarters, a mixed release.
BT group has released its Q1 numbers. But note, in parallel, another key point: two days ago Ofcom announced a half-step towards a separation between BT and Openreach (BT’s division which operates the fibre network). Q1 revenues were only up by 0.4% yoy (excluding EE). Like in the previous quarter, it is a better performance than might be thought at first sight given the 6% decline recorded by the wholesale division (due to the benefit of ladder pricing revenue recognised last year). BT’s Fixed
Quite a good Q3 for KPN: even if revenues, down by 3% yoy, are still suffering from the decline in the business market size (consumer revenues grew by 1.5% yoy), the EBITDA was good (growing by 3.4% yoy as it was down by 4.5% in Q1 and by 1.7% in Q2) driven by customer base growth and the positive impact of cost savings.
Q2 revenues were up by 1.1% yoy excluding EE (vs +0.4% in Q1). Like in the previous quarter, this is a better performance than might be thought at first sight given the 5% decline recorded by the wholesale division (due to Partial Private Circuits customers continuing to migrate to newer Internet Protocol-based technologies). BT’s Fixed consumer revenues, 20% of BT’s business corresponding to BT’s own retail business, were up by 11% yoy with a 17% increase in broadband and TV revenue. Openreach’
BT previously announced on 27 October 2016 that an initial internal investigation of accounting practices in its Italian business had identified certain historical accounting errors and areas of management judgement requiring reassessment. At that time, they announced the write-down of items on the balance sheet by £145m, being the then best estimate of the financial impact of these issues. Since then, BT has progressed with the investigation, which has included an independent review by KPMG of
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