The beginning of a long, quiet revenue stream

As expected, the Q3 figures were fairly decent for DT in Europe. In parallel TMUS’ FCF is currently exploding. The group will distribute a $3bn dividend in 2023-24 (supposed to grow by c.10% per year). The company has recently bought back $15bn of its own shares and should do the same in 2024. DT should soon own 55% of TMUS and receive €1.5bn in dividends. The recent increase in its own dividend is just the beginning of a long, quiet river.

For once Germany is driving EBITDA growth

A fairly solid set of Q1 numbers for DT in Europe (TMUS having already released its Q1 two weeks ago). We remain impressed, in particular, by Germany which posted 3% revenue growth and, above all, 4% EBITDAaL growth due to a lower headcount and the ongoing implementation of efficiency measures. We maintain our opinion at Add. The TMUS growth driver is however losing momentum and the stock is likely to struggle to break above its late April highs.

Watch out for profit taking after the impressive ytd stock performance

A solid Q3 for Deutsche Telekom however at the lower end of the expected range. We maintain our opinion at Add on the stock. It is however important to remember that the stock is trading at its high while telco stocks in general (which are dividend stocks) have suffered particularly from the rise in rates since mid-August. The DT stock is increasingly driven by TMUS and some profit taking is possible after an impressive ytd performance of +25%.

A solid Q1 as usual

Q1 was solid and in line with expectations (note that TMUS released a slightly better than expected Q1 on 27 April). DT is both a US growth story and something of a bargain in Europe. We remain at Buy. In the event of a rebound in the Nasdaq and high-PE stocks and, inversely, were the telecom sector to suffer a correction after its recent rise, DT remains the stock to hold as it should then be pulled up by TMUS.

Should still be driven by the US in 2022

TMUS had already released an outlook well above consensus for 2022 two weeks ago. Excluding TMUS, DT’s Q4 performance is indeed in line with expectations but quite good for a European telco. The 2022 guidance remains cautious for the European part but, excluding TMUS, DT’s market cap is today only €20bn. This indeed corresponds to a “European” yield of…15%. DT is indeed both a US growth story and quite a bargain in Europe.

It's not just the US that is doing well... Europe too

TMUS had already released better than expected EPS in Q3 a week ago. Excluding TMUS, DT’s Q3 performance is indeed also slightly better than expected and quite good for a European telco. The full-year guidance has therefore been raised and also the dividend for 2021. Excluding TMUS, DT’s market cap is today only €20bn. This indeed corresponds to a “European” yield of… 15%. DT is both a US growth story and quite a bargain in Europe.

A solid Q1 on both sides of the Atlantic

A solid Q1 for Deutsche Telekom. Excluding the US (which had already released better than expected numbers on 4 May, allowing TMUS stock to grow by c.4% last week) the European EBITDAaL was better than expected, up by 4.5% yoy with, in particular, a solid growth in Germany and the Netherlands and in GD towers. We remain at Buy on the stock. One must keep in mind that, looking further into the 2020s, TMUS could allow DT to increase its dividends significantly.

A valuation gap that should eventually be narrowed ?

The new US 5G auction proceeds have eventually slightly exceeded $80bn and Verizon was responsible for more than 55% of the overall spend. There is no doubt that Verizon needed the spectrum but it has to pay quite a huge price of… $45.5bn. This auction is an opportunity to take stock of the value gap between Verizon and Deutsche Telekom.

A good Q4 but TMUs had already announced it

Correct Q4 for DT. It was indeed good but, remember, TMUS had already released its better than expected numbers on 5 February. The European Q4 EBITDAal grew by c.3.5% yoy and lfl with a good resilience in Germany and in the rest of Europe, and a slight slowdown on the Netherlands and towers sides. The dividend yield is now 4% and offers less upside over the short term. But, remember, T-Mobile US doesn’t distribute any dividend for… the moment.

Sprint integration is going very well

A good release for Deutsche Telekom but note T-Mobile US had already released its Q3 numbers a week ago so this is not totally a surprise. We remain at Buy on the stock: the key point to keep in mind is that, if T-Mobile US were to distribute a dividend with its current annual EBITDA less capex of c.€12bn, it could allow Deutsche Telekom to practically double its dividend.

Deutsche Telekom will eventually own 51.5% of T-Mobile US

Softbank has eventually decided to accelerate the disposal of its stake in T-Mobile US. In the transactions, Deutsche Telekom will receive call options over c.8% of the capital of T-Mobile US. The group should invest eventually around €10bn to increase its stake from 43.5% to 51.5%.

Does not deserve to still be 15% down compared to February

A very solid Q1 for Deutsche Telekom whose stock price does not deserve to still be 15% down compared to end February. We remain at Buy on the stock with a 30% upside. The only weak point is that Deutsche Telekom lowered six months ago its dividend for the coming years to €0.6 to invest record amounts in fibre and 5G. The dividend yield is now 4.45% (like Swisscom) and offers less upside.

A fairly good week for Deutsche Telekom

A ruling in favour of the merger of T-Mobile US and Sprint and solid Q4 results have raised DT’s stock price in these last two weeks. We remain at Add on the stock but note that the dividend for 2019 will be €0.6 (vs €0.7 for 2018), the group investing record amounts in fibre and 5G. The dividend yield is now at 3.65%, well below the average of its peers at 5.15% and does not offer a real upside.

A good return to normalcy in Q1

A good return to normalcy in Q1 after the last impressive Q4. Organic revenue growth stood at 3.5% yoy while EBITDA grew by 3.9% (excluding FX, the consolidation of Tele2 Netherlands and the IFRS16 impact). This is in the top end of the range given by management for 2019 (EBITDA should grow by 2-4% yoy). We maintain our opinion at Buy on the stock while still waiting for the approval of the merger between T-Mobile US and Sprint.

Will dividend growth be maintained in 2019?

Quite a good set of results in Q4 with organic revenue growth (adjusted from FX) of 5.7% yoy (vs. +4.7% in Q3 and 2.2% in H1) and EBITDA growth of 12.6% yoy (vs. +8.5% in Q3 and +5.2% in H1). A clear and slightly better than expected growth acceleration compared to the previous quarters. But this performance was once again essentially due to the American growth driver, T Mobile US, which recorded (in US$) 7.2% yoy revenue growth and an impressive 22.6% yoy EBITDA growth. In Germany, revenues de

CyanConnode (CYAN LN) - FY24 update: revenue materially ahead

CyanConnode exceeded FY24 revenue expectations and has high visibility into FY25, supported by strong deliveries and a growing backlog respectively.

CyanConnode (CYAN LN) - The smart choice

CyanConnode provides end-to-end communications platforms that connect Internet of Things (IoT) devices such as smart meters to a utility's billing system. The company is a global player and a market leader in India, where a new government scheme, as set out below, has mandated the procurement of 250m meters by March 2025, a significant market opportunity for CyanConnode.

CyanConnode (CYAN LN) - Large Letter of Award for Omnimesh Cellular Modules

CyanConnode has received a large Letter of Award (LOA) for Omnimesh Cellular Modules (CNICs) from a Thai customer.

BATM+ (BVC, House Stock at 19p) - Cyber, a quantum perspective - Cyber, a quantum perspective

Morning Note – 21 December 2023

Hybridan Small Cap Feast - 18 Mar 24

18th March 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment object

CyanConnode (CYAN LN) - FY23 results: Solid outlook

Revenue grew 23% in FY23 with limited contribution from Indian RDSS contracts

CyanConnode (CYAN LN) - H1 FY24: On track

CyanConnode’s H1 results position the company to meet our full year forecasts. The company does not need to grow revenue yoy in H2 in order to meet full year estimates. The Indian smart metering programme appears on track, with 98m smart meters already awarded to prime bidders and these orders should soon filter down to competitively well positioned subcontractors such as CyanConnode. These market drivers position the company well to grow revenue 39% in FY24 and 111% in FY25 and for a £1.9m of o

PROGRESSIVE: Gamma Communications: More happy returns

Gamma’s results for the year ended 31 December are in line with the expectations confirmed in the January trading update. Revenue of £521.7m is 8% ahead of FY22, with gross profit at £267.2m showing the same progress. Adjusted EBITDA grew by 9% and PBT by 10%, although the impact of higher tax rates was seen in the 5% increase in adjusted EPS. Cash generation was strong once again, with 108% adjusted cash conversion. Year-end cash of £134.8m is £42.3m above the year before, even after the £30.5m

MTI Wireless Edge+ (MWE, House Stock at 46p) - US$1.2m antenna contract win

The Joy of Techs - Cavendish Technology quarterly sector note

£23.3bn in enterprise value has been returned to AIM technology shareholders over the past six years in the form of 51 public to private takeouts, including 10 in 2023 alone with the takeovers of Smoove* and Tribal announced in early October. With UK valuations appearing cheap and looking more attractive to potential acquirers, we take a moment to reflect on the trends of corporate and private equity bidders targeting AIM-listed technology companies going back to 2017, through the uncertainties

Cyanconnode (CYAN): Smart meter breadth and depth

CyanConnode has steadily been making progress in India, where the national smart meter programme has been gathering pace. In July 2022, the company crossed the one million mark for meters connected to its RF network across nine Indian states. This is the aggregate RF device number in India connected since 2014 and represents market share of 22%. The latest update from the company states an order book of 2.6m RF nodes for India. Performance of smart meters is a critical aspect of the Indian progr

Hybridan Small Cap Feast - 10 Oct 23

10th October 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment obje

CyanConnode (CYAN LN) - FY23 update

The company has delivered FY23 growth broadly in line with expectations and has had a strong start to FY24. The company ended FY23 with a solid cash balance and has experienced strong cash collections year to date in FY24. We make no changes to our forecasts until full results are released. We believe the market is not recognising CyanConnode’s strong market position in the high potential Indian smart metering market. Shares trade at only 5.5x EBIT 2024.

CyanConnode (CYAN LN) - Contract win

CyanConnode has announced another contract win for 300k modules.