Following similar efforts in Europe and LatAm we are launching coverage on the HY Telcos & Towers in EMEA & Africa. New names under coverage include Helios (also initiated on equity, pt GBp140), Axian Telecom and Liquid Intelligent. We also address IHS Towers (pt cut to US$ 6), VEON and Helios’ bonds.
Short Shots is a collection of technically vulnerable charts culled from the Negative Inflecting and Toppy columns within our Weekly Compass report or from various technical screening processes. The charts contained in this report have developed concerning technical patterns that suggest further price deterioration is likely. For these reasons Short Shots can also be a great source of ideas for investors interested in short-selling candidates.
This is the 3rd in a series of notes looking at FWA (see HERE and HERE). Like us, the market appears to be getting more bullish on FWA in EM, and a series of events such as Jio’s launch suggest FWA could be a significant use case for 5G in Emerging Markets.
Vodacom reported a mixed set of results, service revenue came in in line with consensus but EBITDA and HEPS missed. Revenue trends in SA slightly improved in Q2 vs. Q1 but trends in International slowed. EBITDA trends (on a normalised basis) slowed in H1 24 vs. H2 23 but EBITDA performance is expected to be better next semester.
The environment remained tough for the South African operators in the first half of 2023. Loadshedding was high and impacted revenue (especially voice) and increased opex. Market service revenue was sequentially stable (up 1.6% YoY in H1 23), but EBITDA growth and margins deteriorated as telcos turned to backup batteries and power generators, and additional security solutions.
Sub-Saharan African (SSA) operators continue to benefit from strong fundamentals. There was a small slowdown in market service revenue growth in Q4 but EBITDA trends were stable and a small reduction in capex intensity translated into an improvement in OpFCF.
Bloomberg reports that Vodafone is “exploring its options” with regard to its 65% stake in Vodacom. We see Vodacom as somewhat (although not hugely) undervalued, with the main obstacle to taking a more positive view being the SA macro situation. There has been much speculation that e& (Etisalat) is interested in this stake. In an earlier note, we also ran through the financial implications for Vodafone of a potential sale.
There are c. 1bn homes that lack broadband globally, the vast majority of which are in Emerging Markets. Broadband today reminds us of mobile in 2000 ahead of the 2G EM bonanza, with penetration high in DM & low in EM and most analysts predicting this to remain the case for many years. But 5G FWA dramatically improves cost to serve, and will likely therefore significantly upscale demand for broadband in EM.
After many false starts, the 5G spectrum auction in South Africa has finally started this week. The first stage (reserved for the four smallest players) completed on Tuesday (at low prices, as it was structured to) and we are waiting for the results of the main auction which started yesterday. This auction has been long awaited by the South African telcos and is key given i) telcos have been spectrum constrained for many years, and ii) data volume growth has structurally accelerated post pandemi...
The drumbeat on Vodafone gets ever louder. It has been reported that another activist investor has taken a stake in Vodafone, and then it has been reported that Iliad has made an offer to the Vodafone Board to buy Vodafone Italy. In this Quick Take note, we examine the implications of this move by Iliad and what it could be worth to Vodafone.
Vodafone's H1 earnings call has just wrapped up. When combined with the pre-prepared presentation, they both set out a clear message with more focus on M&A options than in the past. We also heard more detail around the cable upgrade roadmap - a topic where we have seen a lot of investor interest. In this note, we run through the key points from the call & presentation and our reaction to them.
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