reports
- Sarah Shabayek
Reiterate OW: early recovery signs evident in 2Q15
Long-term Overweight call on conviction in 9-15 month transformation program. We maintain our view that 2H15 will remain under pressure from promotions in Algeria targeting market share consolidation and see no short-term catalysts. GT should remain a long-term recovery story starting 2016e. The stock trades at a 17% discount to peers on 2015e EV/EBITDA but at double that on 2016e. Downside risks are higher-than-expected competition and sharper Algerian currency devaluation.
- Sarah Shabayek
Recovery story: 68% upside by early 2016; reiterate OW
A valuation call on long-term data growth. We expect data to drive 80% of revenue growth as 3G penetration rises in GT’s three young markets supported by a huge 2G backlog in Bangladesh and Pakistan. GT currently trades at a 2015e EV/EBITDA of 3.9x (vs. our TP’s 4.9x), a discount of 20% to peers which widens to 33% if we factor in recovery.
- Sarah Shabayek
Back to fundamentals: A cheap play on Djezzy's recovery
Strong recovery, driven by data across all markets and voice at Algeria’s Djezzy, starting 2015e, should lead GT’s consolidated EBITDA to grow at a 2015-18e CAGR of 8%. We expect data to generate 60% of this growth, as a result of the late introduction of 3G in all of GT’s, which has led to pent-up demand for the service. Djezzy should bring in half the data revenue, with the other half coming in as two equal portions from Mobilink and Banglalink. We expect voice recovery for Djezzy to contribut...
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