This content is only available within our institutional offering.
29 Mar 2023
The 1, 3 and 5-Year View: A shock to the system
Bouygues (EN:EPA), 0 | Bouygues SA (EN:PAR), 0 | Swisscom AG (SCMN:SWX), 0 | Telecom Italia (TIT:BIT), 0 | Telecom Italia S.p.A. (TIT:MIL), 0 | BT Group plc (BT.A:LON), 109 | Telefonica SA (TEF:MCE), 0 | Royal KPN NV (KPN:AMS), 0 | Vodafone Group Plc (VOD:LON), 70.6 | Deutsche Telekom AG (DTE:ETR), 0 | Orange (ORA:EPA), 0 | Orange SA (ORA:PAR), 0 | Tele2 (TEL2-B:STO), 0 | Tele2 AB Class B (TEL2.B:OME), 0 | Orange Belgium SA (OBEL:BRU), 0 | Elisa Oyj Class A (ELISA:HEL), 0 | COMCAST CORP-CLASS A (CMCSA:NYSE), 0 | Comcast Corporation Class A (CMCSA:NAS), 0 | Telia Company (TELIA:STO), 0 | Telia Company AB (TELIA:OME), 0 | TELENOR (TEL:STO), 0 | Telenor ASA (TEL:OSL), 0 | United Internet AG (UTDI:ETR), 0 | Proximus (PROX:EBR), 0 | Proximus SA (PROX:BRU), 0 | LIBERTY GLOBAL PLC-A (LBTYA:NYSE), 0 | Liberty Global Ltd. Class A (LBTYA:NAS), 0 | Telenet Group Holding (TNET:EBR), 0 | freenet AG (FNTN:ETR), 0 | 1&1 AG (1U1:ETR), 0 | T-MOBILE US (TMUS:NYSE), 0 | T-Mobile US, Inc. (TMUS:NAS), 0 | Charter Communications Inc (CHTR:NYSE), 0 | Charter Communications, Inc. Class A (CHTR:NAS), 0 | Telefonica Deutschland Holding AG (O2D:ETR), 0 | Cellnex Telecom (CLNX:BME), 0 | Cellnex Telecom S.A. (CLNX:MCE), 0 | Infrastrutture Wireless Italiane (INW:BIT), 0 | Infrastrutture Wireless Italiane S.p.A. (INW:MIL), 0 | Altice USA Inc (ATUS:NYSE), 0 | Altice USA, Inc. Class A (ATUS:NYS), 0 | Vantage Towers AG (VTWR:HAM), 0
Sign in
This content is only available to commercial clients. Sign in if you have access or contact support@research-tree.com to set up a commercial account
This content is only available to commercial clients. Sign in if you have access or contact support@research-tree.com to set up a commercial account
The 1, 3 and 5-Year View: A shock to the system
Bouygues (EN:EPA), 0 | Bouygues SA (EN:PAR), 0 | Swisscom AG (SCMN:SWX), 0 | Telecom Italia (TIT:BIT), 0 | Telecom Italia S.p.A. (TIT:MIL), 0 | BT Group plc (BT.A:LON), 109 | Telefonica SA (TEF:MCE), 0 | Royal KPN NV (KPN:AMS), 0 | Vodafone Group Plc (VOD:LON), 70.6 | Deutsche Telekom AG (DTE:ETR), 0 | Orange (ORA:EPA), 0 | Orange SA (ORA:PAR), 0 | Tele2 (TEL2-B:STO), 0 | Tele2 AB Class B (TEL2.B:OME), 0 | Orange Belgium SA (OBEL:BRU), 0 | Elisa Oyj Class A (ELISA:HEL), 0 | COMCAST CORP-CLASS A (CMCSA:NYSE), 0 | Comcast Corporation Class A (CMCSA:NAS), 0 | Telia Company (TELIA:STO), 0 | Telia Company AB (TELIA:OME), 0 | TELENOR (TEL:STO), 0 | Telenor ASA (TEL:OSL), 0 | United Internet AG (UTDI:ETR), 0 | Proximus (PROX:EBR), 0 | Proximus SA (PROX:BRU), 0 | LIBERTY GLOBAL PLC-A (LBTYA:NYSE), 0 | Liberty Global Ltd. Class A (LBTYA:NAS), 0 | Telenet Group Holding (TNET:EBR), 0 | freenet AG (FNTN:ETR), 0 | 1&1 AG (1U1:ETR), 0 | T-MOBILE US (TMUS:NYSE), 0 | T-Mobile US, Inc. (TMUS:NAS), 0 | Charter Communications Inc (CHTR:NYSE), 0 | Charter Communications, Inc. Class A (CHTR:NAS), 0 | Telefonica Deutschland Holding AG (O2D:ETR), 0 | Cellnex Telecom (CLNX:BME), 0 | Cellnex Telecom S.A. (CLNX:MCE), 0 | Infrastrutture Wireless Italiane (INW:BIT), 0 | Infrastrutture Wireless Italiane S.p.A. (INW:MIL), 0 | Altice USA Inc (ATUS:NYSE), 0 | Altice USA, Inc. Class A (ATUS:NYS), 0 | Vantage Towers AG (VTWR:HAM), 0
- Published:
29 Mar 2023 -
Author:
Mills Joshua JM | Paramaguru Kohulan KP | McHugh Sam SM | Schild Francesca FS | Mansoor Ayesha AM -
Pages:
133
Telcos respond to the shock of inflation and rates - will 2023 be their year?
Our work on inflation and refinancing risk for telcos meant that by Sep ''22 we had never been more bearish on EU Telco estimates vs consensus. The street has duly cut sector FCFE numbers (-11.4% in 6 months). Positively the shock has woken telcos up from their slumber and a bout of price discipline has struck the sector, giving rise to new optimism that ''23 will finally be telcos'' year.
The 1 Year View - an equal measure of good news and bad news
Today we publish our 8th annual STAMP survey that offers further hope; customer satisfaction with telcos has never been higher and churn intentions are falling as prices are finally rising. But before we get carried away, we also see rising price sensitivity and lower inclination to pay for faster broadband. We modestly raise sector estimates (1-2% FCF) but in our new STAMP Company Score we see a wide range of fortunes across our coverage and caution our FCFE estimates are 14% below cons by ''24.
The 3 Year View: cash is king, we continue to use our ''fully loaded'' capacity FCF yield
On headline consensus FCFE yields the sector continues to look cheap (10-11%) and a return to modest EBITDA growth and stabilising FCF should support valuation. But again, headline consensus numbers can be misleading, and on our fully loaded ''capacity FCF'' metric the sector offers a 7% yield (vs. 6% last year) a modest improvement and there is clearly some value to be found here.
The 5 Year View: The ideal Telecom is...
We update and rebalance our thematic scorecard to incorporate new work on interest rate risk; Elisa, TMUS and Bouygues screen best whilst BT, ATUS and TI come bottom of the pack.
The Telecom ''All-stars'', other rating changes and conviction ideas
This year TMUS, Elisa, Tele2 (upgraded to OP) and DT qualify as ''All-Stars''. We also double upgrade TEF to Outperform, upgrade Proximus to Neutral, downgrade KPN to Neutral, and downgrade...