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Russell Waller
  • Russell Waller

Altice France Q4 23: Weak guidance and an attempt to strong-arm lender...

Altice has reported a god set of results, but EBITDA is supported by a material amount of content cost support, and ex this, results are in-line.

Russell Waller
  • Russell Waller

Altice France Media sale: Delevering target comes into focus

As part of its delevering plan, Altice France has announced that it has sold 100% of its media division for €1.55bn. This is a very good price (15.1x EV/EBITDA), and will help considerably with reaching the 1x delevering target. We think more deals will follow in the coming weeks/months. In this short piece we run through the implications of the sale.

Russell Waller
  • Russell Waller

Swisscom (Neutral, TP: CHF620, +20%) Swisscom and Vodafone agree bind...

Swisscom and Vodafone have announced a binding agreement for Vodafone Italy: an €8bn EV for 100% of the company, on a debt-free basis. We update our thoughts on the deal in this piece from a Swisscom perspective, and will be following up with a piece looking at the deal from a Vodafone perspective later today.

Russell Waller
  • Russell Waller

Iliad Q4 23: Good revenue growth, but slower EBITDA; positive read a...

Iliad continues to perform very nicely in KPI and SR terms in France, Italy and Poland. Group y/y EBITDA trends are slower sequentially however, but the underlying (ex BTS) change is less than the headline delta, but its hard to know what underlying trends are country by country due to lack of disclosure. All of the French operators have now reported apart from SFR; if we assume similar market SR growth to Q3, then it would appear that SFR has had a marginally better quarter in Q4 (SFR report la...

Russell Waller
  • Russell Waller

Altice International Q4 23: Good numbers, all disposal options seem ...

Altice International reported a solid set of results today. The war in Israel has impacted the Israeli numbers, but broadly as expected. Portugal continues to perform very nicely, and overall the guidance suggests that ATCI, like NOS (read HERE), see minimal impact from Digi in 2024. The guidance looks sensible (conservative), but German construction revenue could be a big delta to numbers, and the impact here remains uncertain.

Russell Waller
  • Russell Waller

eir Q4 23: Solid numbers and good guidance

We recently initiated on eir (read that report HERE). We felt that eir was well positioned to grow FCF thanks to SR led EBITDA growth, and falling capex. Eir is moving toward that outcome, with some solid guidance for 2024 (low single digit EBITDA growth vs c-3% y/y for 2023). Q4 23 was broadly as expected, with good MSR growth, solid fixed growth, and flat-ish EBITDA. All-in-all, we remain of the view that although eir spreads are quite tight, they could be tighter still in our view given the o...

Russell Waller
  • Russell Waller

EIR (initiation of coverage) Another Good investment by Xavier Niel

We recently wrote about whether or not Xavier Niel companies deserved to trade at tight spreads – HERE. We concluded that they do, if they are well run good businesses. Eir is one such business. Its spreads are quite tight, but could be tighter still in our view given the outlook (asset cover) and leverage (possible rating upgrade to come?).

Russell Waller
  • Russell Waller

Billionaires compared Is it right that Xavier Niel businesses have t...

The European Telco landscape is dominated by three high profile billionaires. Patrick Drahi, John Malone, and Xavier Niel. They all have multiple debt silos, and large empires, but the bonds trade at very different spreads. In this note, we look at why that might be the case, and in particular, if the Niel businesses deserve to trade at tighter spreads. We think they do, which means that Xavier Niel should be able to continue to raise funds cheaply (albeit the Iliad spreads widened after the Tel...

Russell Waller
  • Russell Waller

NOS (Neutral, TP: €4.0, +22%) Q4 23: Good EBITDA beat, +26% DPS hike (...

NOS has reported yet another very good set of numbers, with Telco EBITDA +3.0% ahead of consensus expectations and Telco EBITDA growth now at +11.8% y/y. NOS has lifted the ordinary dividend by 26% (100% payout), giving it a 10.6% yield for 2024 (with the chance of exceptional returns as well).

Russell Waller
  • Russell Waller

Digi Q4 23: Good EBITDA progress in Spain, but OpFCF negative still

Digi has reported good Q4 numbers: SR has slowed, but EBITDA has accelerated nicely to +33.1% y/y from +24.1% y/y in Q3 driven by Spain. Management was careful not to give away too much information on the call, but did confirm that it will launch in 2024 in both Portugal and Belgium, and that it will offer both fixed and mobile in both countries, on its own network in both. It remains to be seen how it will actually achieve that.

Russell Waller
  • Russell Waller

Swisscom (Neutral, TP: CHF620, +22%) Swisscom bids for 100% of Vodaf...

Swisscom has announced that it has agreed a preliminary purchase price with Vodafone for Vodafone Italy: an €8bn EV for 100% of the company, on a debt-free basis. We give our thoughts on the deal in this piece from a Swisscom perspective, and we will be following up with a piece looking at the deal from a Vodafone perspective later today.

Russell Waller
  • Russell Waller

Bouygues Telecom Q4 23: Good Q4 results, but slightly downbeat guidan...

Bouygues has reported a good Q4 set of numbers, SR is a touch lower at +3.4% y/y from +3.6% y/y, but EBITDAaL is better at +11.4% y/y from +9.4% y/y in Q3 23. Bouygues and Orange have now both reported, and so we can begin to think about a possible read-across for SFR and Iliad. In addition, the Bouygues guidance gives some clues as to outlook. We also provide feedback from the Bouygues call in this report.

Russell Waller
  • Russell Waller

Tele2 (Neutral, TP: SEK110, +17%) Iliad Iliad/NJJ buys Kinnevik stak...

Iliad has announced that it is buying Kinnevik’s 19.8% stake in Tele2. In this report, we look at the implications for Iliad and the Swedish market ,drawing on our knowledge of other Iliad/NJJ owned-assets (Salt/eir/Play etc).

Russell Waller
  • Russell Waller

Proximus (Neutral, TP: €10.5, +20%) Q4 23: EBITDA growth remains lac...

Proximus has reported a solid set of numbers, with domestic EBITDA +0.3% ahead of consensus. Domestic 2024 guidance implies slightly higher EBITDA as well (growth of “up to 1%“ vs consensus at +0.2%), but this is offset by a slightly weaker than expected guide for International. SR trends are very good (c+6% y/y), but are nearly wholly offset by higher costs. EBITDA will return to growth in 2024, but only just.

Russell Waller
  • Russell Waller

Altice France: La Poste MVNO stake sale - a good price, but doesn't he...

Bouygues has announced that it has signed an exclusivity agreement with La Poste group, with the aim of acquiring 100% of the MVNO La Poste Telecom, which is 49% owned by SFR.

Russell Waller
  • Russell Waller

OTE (Neutral, TP: €21, +52%) Q4 23: Much better SR trends but weak F...

OTE has reported a slightly mixed set of results; revenue is c3% ahead of consensus expectations ex an ICT one-off in Romania, and SR trends have rebounded strongly in Greece, but EBITDAaL is only in-line and 2024 FCF guidance is a bit weak. Revenue trends should continue to be impressive in 2024, but implied EBITDA guidance suggests that won’t drop through to EBITDA.

James Ratzer ... (+2)
  • James Ratzer
  • Russell Waller

Orange Masmovil approval: A good outcome. A compliant EC? More M&A to ...

The EC has approved the Orange Masmovil merger (HERE) with remedies unchanged from the announcement in early December (HERE). We continue to be of the view that the remedy package is a good one for the operators in Spain, and indeed for the likelihood of further M&A in Europe.

Russell Waller
  • Russell Waller

Altice France Does Teads hold the key to delevering?

A break-up of Altice International, is, we are told, option A for delevering at Altice France. According to press reports however, there is a gap between the offers made for Altice Portugal and the amount that Patrick Drahi wants (€7bn of proceeds wanted vs €5bn-€6bn offered); because Altice International debt will have to be repaid in the event of a sale of Portugal, €5bn of proceeds might not be enough to persuade Drahi to sell, as the amount of cash that could be up-streamed might be too smal...

Russell Waller
  • Russell Waller

Altice France Does Teads hold the key to delevering?

A break-up of Altice International, is, we are told, option A for delevering at Altice France. According to press reports however, there is a gap between the offers made for Altice Portugal and the amount that Patrick Drahi wants (€7bn of proceeds wanted vs €5bn-€6bn offered); because Altice International debt will have to be repaid in the event of a sale of Portugal, €5bn of proceeds might not be enough to persuade Drahi to sell, as the amount of cash that could be up-streamed might be too smal...

Russell Waller
  • Russell Waller

Orange (Buy, TP: €14, +30%) Q4 23: Good results and guidance; positi...

Orange has reported a very solid set of results, with EBITDA c1.5% ahead of consensus for Q4. France guidance for 2024 EBITDA has been lifted, and overall Group guidance is in-line at EBITDA and 3% ahead at OCF. Ex energy, Group EBITDA is growing at >4%. Comments on the call about the Digi remedy package are very positive for European in-market consolidation in our view.

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