Telenor (Buy, TP: NOK186.00) - Yield with structure-catalyst upside
Telenor’s solid Q2 report was in line with our expectations. With a 6% low-risk base dividend yield, we see three-pronged upside potential: 1) a post-pandemic growth rebound in 2022e, 2) the Nordic ‘wall-of-cash’ story beyond 2022e, and 3) several catalysts (structural M&A for the Asian portfolio, minority-stake Tower divestments, and in-market consolidation in Scandinavia, Pakistan). While we have lowered 2021–2023e EPS by c3–4% on the Myanmar removal, our SOTP has been positively affected. We have raised our target price to NOK186 (185) and reiterate our BUY.Telenor is a holding company. Through its subsidiaries, Co. operates as a telecommunication company. Co. provides mobile communication, fixed line communication, and broadcasting activities. Co.'s mobile communication business includes voice, data, Internet, content services, customer equipment and messaging. Fixed service comprise telephony, Internet and television (TV), leased lines as well as data services and managed services. Broadcast comprises Canal Digital DTH in the Nordics, satellite broadcasting, terrestrial radio and TV transmission in Norway and Belgium and encryption related services for TV distribution.
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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