IBERIAN DAILY 23 JUNE (ANÃLISIS BANCO SABADELL)
NEWS SUMMARY: AMADEUS, APPLUS, BBVA, IBERDROLA, MÃSMÓVIL, SANTANDER, SIEMENS GAMESA, TELEFÓNICA.MARKETS YESTERDAY AND TODAY
Fears of Covid-19 and the second wave grow
It was a session of losses reaching around -1% in most European stock markets in view of the rise in coronavirus cases. For today, Trump’s comments denying those made by his advisor, P. Navarro, and ensuring that the phase I trade agreement with China remains valid, should generate some alleviation (despite growing trade tensions with Canada regarding aluminium). In the Euro STOXX, all the sectors except Travel & Leisure and Autos closed with losses, with Telecoms and Food being the worst performers. On the macro side, in the euro zone June’s consumer confidence improved more than expected, although still in negative numbers. The German Govt. expects a resolution soon through its intermediation on the dilemma on how to respond to the Constitutional Court on the ECB’s purchase programme without compromising the independence of the Monetary body. In the US, the Chicago Fed national activity index rose to 2.61 from the previous -17.89, and second-hand home sales fell more than expected.
What we expect for today
The markets would open with slight gains. Currently, S&P futures are up +0.12% (the S&P 500 closed unchanged vs. its price at the closing bell in Europe). Volatility in the US fell (VIX 31.77%). Asian markets are rising (Japan +0.89% and Hong Kong +0.97%).
Today we will learn in the Euro zone, the Services, Manufacturing and Composite PMIs, in Germany the Services and Manufacturing PMIs, in the US, the new home sales figures and the Richmond Fed Manufacturing index. In debt actions: the Netherlands (€ 1.5 Bn in bonds due 2040) and Germany (€ 5 Bn in bonds due 2022).
COMPANY NEWS
TELEFÓNICA, MÃSMÓVIL, BOTH BUY
MAS has signed an agreement with TEF modifying some aspects of the mobile network usage agreement (NRA) that includes:
(i) Migration of Lyca’s mobile lines to MAS’s network (allowing 85% of the synergies from the acquisition to be confirmed, expected for 2021, which we recall were €~30 M, 4% of EBITDA’21e post-Lyca);
(ii) Reduction of per-GB cost (this will allow MAS to absorb future the increase in data consumption);
(iii) Increase to size of mobile data buckets.
Additionally, they companies have also extended the wholesale bitstream access agreement in TEF’s FttH network:
(i) Reduction of wholesale prices linked to minimum pledged volumes (MAS reduces its risk on margins from a potential increase in its penetration in TEF’s network);
(ii) MAS can increase its FttH footprint in the short term by 500,000 homes and will have access to future deployments of TEF’s fibre network;
(iii) Extension of the circuit provision agreement (mobile and fixed-line backhaul): lower unit prices in exchange for minimum volumes.
Positive news for both companies, although to a greater extent for MAS due to its smaller relative size and the savings obtained. MAS lowers its wholesale contracts with TEF, obtaining unit price cuts, and it expects pro-forma annual savings of €~28 M (~4.0% of EBITDA’21e), whereas TEF ensures minimum wholesale billing revenues of € 100 M (~0.8% of sales’20 and ~2% of EBITDA’20) for the next 5 years.
Amadeus is a transaction processor for the global travel and tourism industry. Co. provides transaction processing power and technology solutions to both travel providers (including full service carriers and low-cost airlines, hotels, rail operators, cruise and ferry operators, car rental companies and tour operators) and travel agencies (both online and offline). Co. acts both as a worldwide network connecting travel providers and travel agencies through a processing platform for the distribution of travel products and services (through the Distribution business), and as a provider of a portfolio of IT solutions which automate certain business processes (through the IT solutions business).
Applus Services SA is a Spain-based company that provides inspection, testing and quality assurance services. The Company's activities are divided into five segments: Applus+ RTD, which provides non-destructive testing services mainly to the oil industry; Applus+ Velosi-Norcontrol, which offers solutions for technical assistance, supervision, inspection, quality control testing, certification and consulting services mainly to industrial, electrical, oil and telecommunications facilities; Applus+ Laboratories, which focuses on laboratory testing, system certification and product development services within aerospace, industrial and consumer goods sectors, among others; Applus+ Automotive, which is responsible for the vehicle roadworthiness testing services, and Applus+ IDIADA, which delivers design, engineering, testing and certification services mainly to car manufacturers. The Company operates in Europe, Africa, Asia and the Americas.
Banco Bilbao Vizcaya Argentaria is an international financial group, engaged primarily on providing banking services and consumer finance to private individuals and businesses in Spain and Portugal; providing real estate activity in Spain; providing services to international companies and investment banking, capital markets and treasury management services to clients; and providing the banking, insurance and pension businesses in Mexico and the U.S., as well as in South America.
Banco Santander is a holding company, providing a range of financial products. Co.'s products and services include: retail banking business that covers all customer banking businesses; wholesale banking business; as well as asset management and insurance business. Co.'s principal operations are in Spain, the U.K., Portugal, Germany, Italy and Latin America. As of Dec 31 2014, Co.'s total assets amounted to Euro1,266,296,000,000 and total customer deposits amounted to Euro647,627,000,000.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Masmovil Ibercom SA, formerly World Wide Web Ibercom SA, is a Spain-based company primarily engaged in the telecommunication sector. The Company focuses on the sale and distribution services for Internet, Data Center and Telecommunications. The Company's product and services portfolio comprises Internet access through Asymmetric Digital Subscriber Line (ADSL) and Symmetric Digital Subscriber Line (SDSL) technologies, Internet domains and Domains Management and Registration Service through IberDNS application, Web hosting, virtual servers, dedicated servers, telephony services and routers. The Company also offers collocation services through two Internet Data Centers located in Madrid and San Sebastian. It operates through subsidiaries, such as Embou Nuevas Tecnologias SL and Ebesis Sistemas SL, among others. The Company owns a number of brand names, such as Pepephone, Yoigo and Llamaya.
Telefonica is engaged in the provision of public or private telecommunications services, including ancillary or complementary telecommunications services or related services. Co.'s fixed business includes: traditional fixed telecommunication services, Internet and broadband multimedia services, data and business-aplications services, and wholesale services for telecommunication operators. Co. also provides a range of mobile and related services and products to consumer and business customers, including mobile voice services, value added services, mobile data and Internet services, wholesale services, corporate services, roaming, fixed wireless, and, trunking and paging.
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