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TELEFÓNICA: TEF GERMANY STRATEGIC UPDATE (ANÁLISIS BANCO SABADELL)

The main guidelines of the Strategic Update (in the framework of its triennial growth plan under way over the 2020-22 period) on TEF Germany (11.5% of TEF’s total EV, as its debt is consolidated within the group) are as follows:
 P&L statement performance: The company expects at least +5% sales growth over the 2020-22 period (vs. +2.9% BS(e)) and an adjusted EBITDA level that should benefit this sales growth and the efficiency plans (foreseeing higher margins, without further details) vs. +4.7% growth BS(e)) over the 2020-22 period with an increase in margins of 40bps through 2022.
 Network agreements: The group has signed a new network agreement with Deutsche Telekom and Vodafone to share mobile network asset sites to strengthen its coverage in grey areas with a target of at least 1,200 sites. This follows the existing agreements to share passive infrastructures in white areas (6,000 sites) and the recent agreement for fibre deployment through Fibero along with Allianz and TEF Infra (TEF Germany controls10%).
 CAPEX: It expects a CAPEX peak in 2021 (around 17%/18% sales vs. 15% BS(e)) to later normalise from 2022. In 2020, it foresees CAPEX/Sales will stand at around 17%/18% sales (vs. 13.2% in 9M’20 and 15.1% BS(e)).
 Dividend/Debt: The company raises the dividend by +5.8%, from € 0.17/sh. to € 0.18/sh. (7.7% yield), setting a floor dividend of € 0.18/sh. through 2023 (vs. 2022 previously). As for debt, the company feels comfortable at the current levels (1.6x NFD/EBITDA as of 9M’20), which stand below its limit of