Tele2 (Buy, TP: SEK122.00) - Clarity on financial structure
The main take following the Q1 report was that Tele2 raised its net debt to EBITDA target from 2.5 to 2.5–3x and that it aims to gear up to remain within this range. This would lead to more than 100% equity free cash flow payout ratio. With EBITDA growth and after reaching full synergies, Tele2 could pay out SEK9 in shareholder remuneration. We reiterate our BUY and have raised our target price to SEK122 (115) based on a combination of DCF, SOTP, and peer valuation.
DNB Markets is the investment banking arm of DNB Bank ASA and is focused primarily on the Nordic region, as well as internationally on niches such as global shipping, energy and related services, and seafood. DNB Markets offers services in FICC, Equities and Investment Banking advisory from offices in Oslo, Stockholm, London, Singapore and New York. Equity research coverage is offered on c250 Nordic companies. DNB was ranked no.2 in Extel Nordic Research 2017. The DNB Markets’ Credit and FICC Macro & FX Research teams are repeatedly highly rated by Prospera Nordic Institutional Investor Surveys.
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