Magyar Telekom: fastest-growing EMEA telecom (stays BUY)

We reiterate our BUY rating on Magyar Telekom (MTELEKOM) and raise our price target (PT) to HUF 969/share (from HUF 546), implying 61% upside potential. We see MTELEKOM as an outstanding growth story in the telecoms space, with an expected 2022-25E EBITDA CAGR of 15%, the highest growth in EMEA, apart from Turkey, which is facing hyperinflation. In our view, the growth generated by MTELEKOM should be driven by: 1) CPI-linked price hikes; 2) customer base expansion; and 3) the abolition of the special taxes, which have been harming Hungarian telecoms. The latter, on our estimates, should add 3-11ppts to the 2024-25E EBITDA growth rates. Considering the strong FCF outlook and the clear investor remuneration policy in place, we expect MTELEKOM to deliver attractive dividend yields of 12-17% in 2024-25E. On our forecasts, MTELEKOM is trading at 2023-24E EV/EBITDAs of 3.7-3.1x, at 30-41% discounts vs. its peers. We believe MTELEKOM’s multiples deserve to converge towards its peers’ medians, considering its superior growth outlook, with an EBITDA 2022-25E CAGR of 15%, on our estimates, vs. the 3% peers’ median.