Telekom Austria raised to BUY, TP EUR 8.40 - Decent trends to persist
We raise our TP for Telekom Austria shares to EUR 8.40 from EUR 7.70 and consequently hike the recommendation to BUY from HOLD. The uplift of the fair value calculation is triggered by 1) the effects from the intended cut of the Austrian corporate tax rate by the new government from 25% to 21% (in our model assumed for FY 22e), 2) the reduction of the minimum offer for the multi-spectrum auction scheduled for spring this year by EUR 55 mn to EUR 239 mn resulting in a decrease in our capex assumptions (we include EUR 150 mn for the multi-spectrum auction in Austria for 700 MHz, 1,500 MHz and the renewal of 2,100 MHz frequency as well as EUR 60 mn for CEE spectrum auctions scheduled for this year) and 3) a reduction of our long-term cost of debt assumptions (Telekom Austria is going to refinance EUR 747 mn each in FY 21 and FY 22).Telekom Austria is engaged as full service telecommunications providers of long distance, local and wireless services, corporate data communications services as well as internet services and television broadcasting. Co. generates revenues from fixed line services and mobile communication services to individuals, commercial and noncommercial organizations and other national and foreign carriers. To a lesser extent, Co. generates revenue from the sale of mobile communications handsets. Co. also supplies telephones and technical equipment for telephone communications. These activities are conducted primarily in Austria, Croatia, Slovenia, Bulgaria, Serbia, Macedonia and Belarus.
The Institutional Equity Research team of Raiffeisen Bank International AG covers 85 stocks from Austria, Central & Eastern Europe with sell-side research and thus levers our local broker status with excellent company relationships. For corporates in Austria, CEE and Western Europe, we offer co-sponsored research, which includes research coverage and marketing activities to investors. Additionally, through our Spotlight Research product we also shed light on leading European small and micro-caps, seeking greater visibility with investors.
The Institutional Equity Research team consists of roughly 15 analysts, both in Vienna and the CEE countries. Our analysts provide long-standing sector expertise in tandem with profound local market know how and a sectoral approach across the entire region.
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