Telecoms equity research

Explore the most viewed and latest equity research and media content for companies within the Telecoms sector. Stocks in this sector provide telecoms services & equipment, and mobile services.

Telecoms equity research

Explore the most viewed and latest equity research and media content for companies within the Telecoms sector. Stocks in this sector provide telecoms services & equipment, and mobile services.

  • 15 May 18

A correct H2 but a slightly disappointing new guidance and... Colao's departure

In terms of service revenues, Q4 was quite as expected with organic growth at constant change of 1.4%, slightly better than the +1.1% recorded in Q3 but lower than the 2% recorded in H1. European growth, which had moderated to 0.3% in Q3, was 0.6% (excluding the positive impact of a legal settlement in Germany). Note that, in Europe, the increased drag from roaming regulation was completely offset by an improved global performance in mobile. In parallel, growth in AMAP was still strong at +7.7% during the quarter (vs 6.8% in Q3) but it was completely offset in reported terms by an 1.5ppt adverse impact from FX (particularly with regards to the Turkish lira). Note the group’s revenue for the whole year declined by 2.2% yoy in reported terms, primarily due to the deconsolidation of Vodafone Netherlands following the creation of the JV VodafoneZiggo and FX. Like in H1, the good news came from the EBITDA which was up organically by 10.6% yoy. Excluding the negative impact of net roaming declines in Europe and the benefits in the UK from the introduction of handset financing and regulatory settlements in the period, organic adjusted EBITDA grew by a solid 6.5% (lower, however, than the impressive +9.3% recorded in H1) with a broad-based EBITDA improvement in 20 out of Vodafone’s 25 markets. The group which had raised its full-year guidance to +10% last November (vs +4-8% previously) has eventually exceeded its target with an annual organic EBITDA growth of 11.8%. But the bad surprise was the announcement in parallel of the succession plan for the CEO. Effective from 1 October 2018, Vittorio Colao will be succeeded by Group CFO Nick Read. So it won’t be Colao(who was very much appreciated by investors) who will manage the recent big acquisitions made by the group (see our latest “_A brilliant deal which deserved a high price_”). As for 2018/19, the group expects EBITDA growth of 1-5%, excluding the impact of UK handset financing in both years, and the significant benefit in the prior year from regulatory settlements in the UK and a legal settlement in Germany. It’s a guidance that is a little bit disappointing, corresponding (on guidance FX rates) to an adjusted EBITDA range of €14.15-14.65bn for the year (we have €14.8bn in our model). Finally, note the final dividend per share of €0.1023, up 2%, giving the total dividends per share for the year of €0.1507. The board still intends to increase dividends per share annually.

Companies: Vodafone Group
  • 21 May 18

FY 2018 revenue on track with new regions opened

2017 results are largely as expected after January’s trading update. Affected by a delayed delivery, revenue fell 36% YoY to £1.2m contributing to a cash loss of £10.7m. R&D spend increased during 2017 with development of a new standards based product which is now complete. Cash at the YE was £5.4m after an £11.3m equity injection in the year and we calculate current cash of under £3m but with a further £1.4m due from R&D tax credits. The cash burn will be reduced during 2018, and whilst there is no visibility on the Bangladesh order, new territories have been opened up and a large order for $3.2m in India is announced with the results. The cash should be sufficient through to Q4, when the bulk of the year’s £10m expected revenues are due to be booked. To be prudent, our forecasts do not include anything from Bangladesh and little from Iran; however, delivering them will require additional working capital (our forecasts assume £2m from equity) with a number of sources being considered, including licensing. The uncertainty on timing and funding means this remains a highly speculative holding and we place our TP under review. We do see opportunity in a huge order book and strong IP; also a shift of emphasis from hardware to software with a licence and royalty model for the new product developed during the year.

Companies: Cyanconnode
  • 11 May 18

An unchanged dividend in the next three years

Q4 sales at end March were down by 3% yoy (like in Q3 but they were flat in H1) with still a good performance by EE (+5%) but a continued sharp revenue decrease of 13% in Global Services. Q4 EBITDA was up by 1% yoy, a correct number compared to the 2% decline recorded in Q3 but the annual EBITDA at £7.5bn was towards the low end of the £7.5/7.6 guidance given by the group for the full year. Note, beyond a good 13% increase on the consumer side, that EE’s EBITDA was again up by 5% this quarter and not down by 6% like in Q3 (this was due to higher customer investment costs following the launch of new, premium smartphones and watches). Management has also given an expected poor outlook for 2018/19. Revenue should be down by 2% yoy mainly as a result of significant regulatory price reductions in Openreach (last March, Ofcom issued its final statement on the Wholesale Local Access Market Review). The group also expects an impact from its decision to de-emphasise lower margin products, particularly in the enterprise businesses. In parallel, EBITDA is expected to be in the range £7.3-7.4bn (we had currently £7.4bn in our model) corresponding to a c.2% decrease. Note also that capex should be higher in 2018/19 than what we expected, at around £3.7bn. It should remain at this level in 2019/20 as the business increases network investment through Openreach’s Fibre First programme and further 4G and 5G mobile network build. So, very logically, the Board has decided to hold the dividend unchanged for this year at 15.4p per share. The Board also expects to hold the dividend unchanged in respect of the next two financial years, given the outlook for earnings and cash flow over this period. Not at all enough to make investors dream, while most European telcos are more likely to increase theirs. Even if the free cash flow in 2017/18 was £2,973m (up by almost £200m yoy due to favourable working capital movements), note that for 2018/19 the group expects a free cash flow of £2.3-2.5bn. So there are no worries in the short term about BT’s no longer “progressive” dividend.

Companies: BT Group
  • 09 Nov 17

AIM Journal


Companies: RWS G4M SRC PIM GAN ARTA

  • 22 Mar 18

Growth products drive ongoing performance

Gamma has reported Adjusted EBITDA 2% ahead of our estimate at £41.6 million. Overall, revenue, margins and earnings increased despite the continued decline of the traditional business in the partner channel. While the mobile proposition has been slower to become established in the channel, it is now growing and Gamma’s Cloud PBX and SIP Trunking products continued to grow ahead of the market. Gamma launched its initial fixed/mobile converged offering in December and its new high capacity national optical network project remains on schedule. The direct business announced a number of significant contracts as it produced its best year to date with the Public Sector base securing new wins. The outlook statement states that the Group is ‘in great shape for 2018 and the foreseeable future’. Gamma has also announced the appointment of new CEO Andrew Taylor who will take over from Bob Falconer following May’s AGM. We have upgraded estimates for FY 2018E and FY 2019E to reflect good growth prospects, and we introduce new FY 2020E estimates.

Companies: Gamma Communications
  • 22 Mar 18

Refreshing the buy case

Ethernity (ENET) designs and licenses data processing technology for the Carrier Ethernet market, so far deploying into over 500k systems globally. ENET is now working towards attracting Tier 1 Telcos and OEMs through the launch of its Smart NIC solutions, among various other initiatives. While market delays have resulted in share price volatility, we believe ENET’s market position, strong balance sheet and long-term potential to leverage a US$100bn+ market in network virtualisation are undervalued. Our scenario analysis shows the market is already pricing in a two year delay in commercialisation relative to our forecasts. We believe this is overly cautious and see a compelling balance of risk and reward.

Companies: Ethernity Networks
  • 11 May 18

A brilliant deal which deserved a high price

Vodafone agreed two days ago to acquire Liberty Global’s operations in Germany, the Czech Republic, Hungary and Romania for an EV of €18.4bn. This deal values the acquired operations at 10.9x their current EBITDA before synergies but management expects to generate cost and capex synergies before integration costs of €535m per annum by the fifth year after completion (thus valuing these activities at 8.6x their future EBITDA before integration costs). Vodafone intends to finance the acquisition using existing cash, new debt facilities (including hybrid debt securities) and around €3bn of mandatory convertible bonds.

Companies: Vodafone Group
  • 23 Oct 17

Topcrete immediately accretive

We estimate that SigmaRoc’s recently announced acquisition of pre-cast concrete products business Topcrete should be earnings and margin enhancing to the group this year, with further benefits in 2018. Assuming Topcrete continues to perform at past levels (conservative – SigmaRoc sees scope for better optimising certain commercial aspects of the business), we estimate it will lift group-level EBITDA by 7% compared with our pre-deal estimate for the current year, and by 37% for 2018. EBITDA margins could rise from 20% to 23%. After adjusting for positive working capital within the business, the acquisition price equates to just 6x incremental EBITDA – excellent value given SigmaRoc’s pre-deal market EV/EBITDA multiple of 10x, and illustrating the merits of its niche-asset buy-and-build growth strategy. Adjusting our EV estimate for debt taken on to fund the transaction, SigmaRoc is now trading at just 8.7x our revised 2018 EBITDA estimate for the enlarged group. This represents an attractive valuation relative to the peer-group median of 10.4x, notwithstanding the potential for more earnings growth as the group further rolls out its deal pipeline.

Companies: Sigmaroc
  • 04 Jan 18

Waiting for volume delivery

Delivery on one of the major project orders announced last year has been delayed until H1 2018. Management had been expecting deployment to commence prior to the Y/E but due to external circumstances the customer has yet to call down the modules. However, it has assured CyanConnode that it remains committed to using its technology in this and other major projects. This delay has implications for our FY 2017 sales forecasts which relied on it in H2; we are forced to cut expectations from £2.1m to £1.2m and while this revenue is now set for FY 2018, we anticipate the knock-on delay to push revenue on into FY 2019, so we leave current year sales forecast unchanged at £10.0m. Given the scale, bottom-line impact is relatively small; we increase FY 2017 adj. LBT by 5% to £10.4m and cost control should actually see FY 2018 loss reduced slightly to £7.0m.

Companies: Cyanconnode
  • 01 Feb 18

More moderate growth in Europe

In terms of service revenues, Q3 was a little bit disappointing with organic growth at constant change of 1.1%, slightly lower than that recorded in the previous quarter (1.3% in Q2). European growth moderated to 0.3% or 1.9% excluding the impacts of the roaming regulation and the handset financing in the UK (these growths are indeed 0.5% below the Q2 numbers). Note, however, in parallel, growth in AMAP was still strong at +6.8% during the quarter (vs 6.2% in Q2). Note also that, as usual, reported numbers exclude the results of Vodafone Netherlands following the disposal of its consumer fixed business and subsequent merger into VodafoneZiggo (this has an impact of 5.3% on the European revenues).

Companies: Vodafone Group
  • 02 May 18

Initiation: Push the button

Mobile Tornado (MBT.L) is a leading global provider of Push To Talk over Cellular (PoC) solutions. It has developed an enterprise-grade platform with a broad and deep set of instant communication applications with competitive advantages in availability, performance, capacity, functionality and price. MBT has established relationships with mobile network operators (MNOs) in multiple geographies and secured customers in numerous vertical sectors. Since the arrival of CEO Avi Tooba in May 2016, the company has undergone a substantial overhaul with heavy investment in its technical engineering resources to expand platform functionality and robustness as well as reducing deployment costs and times. Mobile Tornado has sold its software as a subscription to date. Going forward, the service will also be offered as a perpetual bundle with hardware. This should result in an acceleration in revenue while operational gearing will also contribute to MBT’s expected move into profitability in FY19.

Companies: Mobile Tornado Group
  • 18 May 18

The CEO confirms the strategic plan

Q1 revenues were up by 2.7% yoy and lfl, confirming the reassuring Q4 performance (+2.8%) after a weaker Q3 (revenue was up by only 1.8% when it had grown by 3.2% in H1), while EBITDA (excluding non-recurring charges) was up by 1.8% yoy excluding non-recurring charges (€95m primarily due to provisions made against the financial penalty of €74.3m imposed for the alleged breach of article 2 of legislative decree 21 of 15/3/2012 (the “Golden Power” law), in an order issued on 8 May 2018). Note that domestic’s organic EBITDA was negatively impacted by the ongoing negotiations with the unions to renew the Personnel Solidarity Agreement which expired at the end of 2017. Net of one-offs, domestic’s underlying EBITDA trend shows a +1.3% yoy progression in line with Domestic’s organic revenue 2% growth. In Brazil, the recovery is well on track with a solid step up in cash flow generation, shown by an impressive +40% yoy growth in EBITDA less capex. The business unit posted a positive +4.8% yoy increase in total revenues while the EBITDA grew by 16.8%.

Companies: Telecom Italia
  • 01 May 18

Adept (ADT) presentation at Mello Derby 2018

adept-adt-presentation-at-mello-derby-2018-01-05-2018
  • 21 May 18

CyanConnode - 2017 Full Year Results

cyanconnode-2017-full-year-results-21-05-2018
  • 17 Jan 17

SigmaRoc - An overview

sigmaroc-an-overview-17-01-2017
  • 20 Sep 17

CyanConnode - $29m new purchase order for smart metering in the Ukraine

cyanconnode-29m-new-purchase-order-for-smart-metering-in-the-ukraine-20-09-2017
  • 30 Jan 18

Filtronic - Company Overview

filtronic-company-overview-30-01-2018
  • 15 Sep 17

CyanConnode – Fundraise and Shareholder Update

cyanconnode-fundraise-and-shareholder-update-15-09-2017
  • 01 Dec 17

Capital Network's Ed Stacey on Gamma Communications Plc

capital-network-s-ed-stacey-on-gamma-communications-plc-01-12-2017
  • 06 Jul 17

CyanConnode Holdings PLC - New $1.1m purchase order from India

cyanconnode-holdings-plc-new-1-1m-purchase-order-from-india-06-07-2017
  • 10 Apr 18

CyanConnode - Sylvian Vittecoq - An introduction

cyanconnode-sylvian-vittecoq-an-introduction-10-04-2018
  • 30 Jun 17

UK Oil & Gas Investments - Summary of Broadford Bridge Conventional Oil Opportunity

uk-oil-gas-investments-summary-of-broadford-bridge-conventional-oil-opportunity-30-06-2017
  • 17 Mar 17

CyanConnode - New funding round announced

cyanconnode-new-funding-round-announced-17-03-2017
  • 15 Jun 17

CyanConnode - Smart metering order in Bangladesh

cyanconnode-smart-metering-order-in-bangladesh-15-06-2017
  • 13 Jul 17

CyanConnode - Trading Update

cyanconnode-trading-update-13-07-2017
  • 06 Feb 17

CyanConnode Holdings - New purchase order from HM Power

cyanconnode-holdings-new-purchase-order-from-hm-power-06-02-2017
  • 16 May 17

CyanConnode - Final Results

cyanconnode-final-results-16-05-2017

Latest Content

Cyanconnode

CyanConnode - Significant Order

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cyanconnode-significant-order-21-05-2018
  • 21 May 18

Cyanconnode

CyanConnode - 2017 Full Year Results

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cyanconnode-2017-full-year-results-21-05-2018
  • 21 May 18

Cyanconnode

FY 2018 revenue on track with new regions opened

2017 results are largely as expected after January’s trading update. Affected by a delayed delivery, revenue fell 36% YoY to £1.2m contributing to a cash loss of £10.7m. R&D spend increased during 2017 with development of a new standards based product which is now complete. Cash at the YE was £5.4m after an £11.3m equity injection in the year and we calculate current cash of under £3m but with a further £1.4m due from R&D tax credits. The cash burn will be reduced during 2018, and whilst there is no visibility on the Bangladesh order, new territories have been opened up and a large order for $3.2m in India is announced with the results. The cash should be sufficient through to Q4, when the bulk of the year’s £10m expected revenues are due to be booked. To be prudent, our forecasts do not include anything from Bangladesh and little from Iran; however, delivering them will require additional working capital (our forecasts assume £2m from equity) with a number of sources being considered, including licensing. The uncertainty on timing and funding means this remains a highly speculative holding and we place our TP under review. We do see opportunity in a huge order book and strong IP; also a shift of emphasis from hardware to software with a licence and royalty model for the new product developed during the year.

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  • 21 May 18
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AGY CYAN ODX

Morning Note

Allergy Therapeutics (AGY): Corp Positive Phase II PQ data – significant value inflection | CyanConnode (CYAN): Corp FY 2018 revenue on track with new regions opened | Omega Diagnostics (ODX): Corp VISITEC CD4 update

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  • 21 May 18
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AFHP AOR GTLY ARE UVEN GAN PGD CNC TOOP

Small Cap Breakfast

Block Energy— UK based oil exploration and production company whose main country of operation is the Republic of Georgia. Raising £4m. Mkt cap £9.3m. Due early June. Codemasters Group— video game developer and publisher, specialising in high quality racing games. Offer TBA. Seeking £15m in primary. Due 1 June. Strongbow Exploration (TSX:SBW) intends to dual list on AIM. Holds rights to the South Crofty underground tin mine, a former producing tin mine located in the towns of Pool and Camborne, Cornwall . The project is estimated to require the Company to raise £25 million over the next 18 months to progress to a production decision. Offer TBS. Due June. Maestrano Group, a software company with operations in Australia (main country of operation), the UK, US and the UAE, is looking to join AIM. Offer TBC, expected late May. Yew Grove REIT—newly formed Company will pursue its investment objective by investing in a diversified portfolio of Irish commercial property. Offer TBA. Due Late May Team17 Group -video games label and creative partner for independent developers. 2017 revenues of £29.6m and Adjusted EBITDA of £12.9m. Raising £45.1m primary and £62.5m secondary at 165p. Mkt Cap £216.6m. Expected 23 May 2018 Serinus Energy -international upstream oil and gas exploration and production company. Its principal assets are located in Romania (development phase) and Tunisia (production phase). Raising c.£10m at 15p. Due 18 May. Mkt cap £32.6m

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  • 21 May 18
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Telecom Italia

The CEO confirms the strategic plan

Q1 revenues were up by 2.7% yoy and lfl, confirming the reassuring Q4 performance (+2.8%) after a weaker Q3 (revenue was up by only 1.8% when it had grown by 3.2% in H1), while EBITDA (excluding non-recurring charges) was up by 1.8% yoy excluding non-recurring charges (€95m primarily due to provisions made against the financial penalty of €74.3m imposed for the alleged breach of article 2 of legislative decree 21 of 15/3/2012 (the “Golden Power” law), in an order issued on 8 May 2018). Note that domestic’s organic EBITDA was negatively impacted by the ongoing negotiations with the unions to renew the Personnel Solidarity Agreement which expired at the end of 2017. Net of one-offs, domestic’s underlying EBITDA trend shows a +1.3% yoy progression in line with Domestic’s organic revenue 2% growth. In Brazil, the recovery is well on track with a solid step up in cash flow generation, shown by an impressive +40% yoy growth in EBITDA less capex. The business unit posted a positive +4.8% yoy increase in total revenues while the EBITDA grew by 16.8%.

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  • 18 May 18
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Altice

Winning back fixed customers in France

Q1 revenues were flat yoy at constant currency, a slightly better performance than the 0.5% decline recorded in the previous quarter. A correct number which indeed confirms the improving performance of the French activities whose revenues declined by only 1% yoy (remember also that the French revenues, which had disappointed the market in Q3, were finally not so bad in Q4 with a decline of 1.6% yoy, exactly like in Q3). As for EBITDA, it declined by 0.5% yoy but the French Q1 EBITDA rose by 0.7% with margins expanding by 0.6ppts still thanks to the cost savings realised from the voluntary plan. The group has confirmed its non-core asset disposal programme to strengthen its balance sheet with a closing for the sale of the French and Portuguese towers (c.€3bn) and for its business in the Dominican Republic (at least €2bn given an 2017 EBITDA of €350m) targeted in H2. The announced separation of Altice USA from Altice NV is expected to be effective in early June. As for 2018, the guidance is unchanged: Altice Europe (post-split) is expected to generate an operating free cash flow of €2.3-2.5bn (of which €1.6-1.7bn for Altice France), excluding the Altice TV segment.

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  • 17 May 18
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Deutsche Telekom

The end of a never-ending story

The Toll Collect consortium has reached an agreement to end the road arbitration proceedings after 14 years Q2 18 results will be negatively impacted by around €450m net due to €100m provisions already accounted for Net profit will remain positive but drop by around 60% Guidance will not be changed because all figures are based on adjusted and not real numbers

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  • 17 May 18
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Deutsche Telekom

A strong euro prevented a better performance

Revenues declined 3.9% to €17.92bn EBITDA declined 11.6% to €5.27bn and the EBITDA margin from 32% to 29.4% T-Mobile US contributed 47.2% to total revenues and 52.5% to total EBIT Adjusted T-Mobile US EBITDA declined 2.3% in euros but increased 12.8% in US dollar terms The T-Mobile US Sprint deal awaiting regulatory approvals; closing is expected in H1 19

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  • 16 May 18
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AMO ITE LOOK NTG ZYT

Morning Song

Amino Technologies (AMO LN) Contract win with T-2 in Slovenia | ITE Group (ITE LN) Acquisition & Rights Issue | Lookers (LOOK LN) Continued outperformance with growing confidence in forecasts | Northgate (NTG LN) In line year end update; VOH growing, but margins still under pressure | Zytronic (ZYT LN) Financial sector holds back progress elsewhere

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  • 15 May 18
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