Belgian Telco: the biggest winner will likely be the end consumer
The Belgian telco market is experiencing a though time with Proximus & Telenet losing respectively 50% and 54% of their market value since Jan 2022, hereby significantly underperforming our peer group average (-21%). This steep decline is driven by a heavy but much needed fiber capex plan of € 11.5bn, inflationary headwinds and likelihood of increased competition beyond 2024. In this note, we take a closer look at the implications of the fiber rollout while also making a scenario analysis on how the competitive landscape could evolve beyond 2025. Although we acknowledge Telenet and Proximus' cheap valuations compared to the sector, we don't expect a rerating to happen in the short term. We lower our TP for Proximus from € 18.0 to € 9.1 ps and reiterate our Hold rating and lower our TP for Telenet from € 40.0 ps to € 16.0 ps while also reducing our rating from Buy to Accumulate.Proximus supplies integrated telecommunications services on the Belgian market. Co.'s activities are divided into four segments: Consumer Business Unit (CBU), which sells voice products and services, internet and television, on fixed and mobile networks, to residential customers; Enterprise Business Unit (EBU), which caters to professional customers; Service Delivery Engine and Wholesale, which centralizes all the network and IT services and costs, provides services to CBU and EBU and sells these services to other telecom and cable operators; and International Carrier Services, which focuses on international carrier activities.
Telenet Group Holding is a holding company. Through its subsdiairies and its broadband network, Co. is engaged in the provision of cable television, including television services, broadband internet and telephony services to residential subscribers in Flanders and certain communes in Brussels as well as broadband internet, data and voice services in the business market throughout Belgium and parts of Luxembourg. In addition, Co. is engaged in the provision of mobile telephony services through a mobile virtual network operator partnership with Mobistar NV.
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