EUR 150.00 For Business Accounts Only

MasMovil: No change in course

MásMóvil’s (MM) Q3 performance was in our view a demonstration of the strength of its commercial model as it was able to deliver another quarter of strong customer growth despite the spike in promotional activity from leading operators. On top of that, the guidance upgrade for both service revenues and EBITDA underlines the confidence in execution of the last part of the year. We think these indications suggest that the majority of Spanish clients remain much more sensitive to price than more expensive and richer convergent offers, thus fitting perfectly with MM’s positioning. This is a trend we do not expect to change. While MM’s customer growth will naturally slow down, that should not prevent its EBITDA growth from exceeding +20% YoY for both 2019E-20E, which together with the progressive drop in CAPEX, as the most intense phase of expansion ends, should lead to a major upswing in the cash flow cycle. On our estimates 2018E FCFE should reach €-245m while for 2020E it should jump to €259m. Fine-tuning our estimates post Q3 numbers and a valuation roll over lead our FV to rise from €141 to €150 and we reiterate our SILVER BULLET BUY recommendation.