OTE has reported a solid set of Greek results. Romania has missed expectations, but we expect it to be either sold or shut down. We recently upgraded OTE to Buy – HERE – because we thought growth would return to Greece, and this would lead to upgrades. This is not yet fully happening, but we would expect more to come in Q4 once the Voucher scheme is fully operational, and the latest VRS kicks in – the new wholesale deal with NOVA could help as well.
When was the last time we could write that the EU Telecoms sector has been the second best performing sector in the market YTD? As a result, this raises the question of whether the outperformance can continue. We believe regulation will ultimately determine the answer to this question.
OTE has reported a good set of Greek results. Romania has missed expectations, but we expect it to be either sold or shut down in H2 of this year. We recently upgraded OTE to Buy – HERE – because we thought growth would return to Greece, and this would lead to upgrades.
European Telecoms has had a reasonable first half of 2024 – up 7% vs. the market up 9% - and is up 15% since January 2022 – bang in line with the EU market. The sector trades in line with the market on P/E for similar earnings growth, but we still see two major structural levers of upside:
OTE has reported a weak set of results; revenue is c8% ahead of consensus expectations, but the beat is thanks to low margin ICT revenue, and EBITDAaL is c-2% light. Cost control in Greece has been poor, and SR trends are slower in Greece.
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.
OTE has reported a slightly weak set of results vs consensus EBITDA expectations, with Greek EBITDA -1.6% light vs expectations. Revenue is also light, but the miss here is mainly due to low margin ICT and transit). Retail y/y SR trends are better, but this is not dropping through to EBITDA as expected (Greek EBITDA trends ex-energy are actually worse), and FCF guidance has not been lifted despite a €20m cut to capex guidance.
OTE has reported a better set of results vs consensus after the weak Q3s, but revenue trends in Greece are still weak and still a concern, and FCF guidance for 2023 is below expectations, as is the total shareholder return pot (divi + buyback).
OTE has reported a disappointing set of results: adjusting for two provisions EBITDA is c-1% light vs consensus, and Greek fixed retail trends are materially worse (albeit offset by lower margin ICT revenue), as is mobile SR growth ex roaming.
We recently published a deep dive into inflationary cost pressures, focusing specifically on energy and wages, looking at how the sector might mitigate some of the risk – read that report HERE. In this piece, we update our thoughts given the fall in electricity wholesale prices, and the announcement of several Governmental support packages.
One of the most common questions we have received over the past few months is how the European telcos will be able to cope with rising energy prices. This deep-dive note sets out our answer to this; the broader impact of inflation on their businesses and which companies are best & worst positioned.
Most people will say European Telecoms hasn’t had a good 2021 – underperforming the market by 8%. However, it had its best absolute performance since 2015; outperformed the US telcos; seen more guidance upgrades vs. downgrades, record high M&A volumes and improving service revenue growth.
Private Equity has a long and good track record in the sector, with an average unlevered return of 21% per annum compared to the sector at 2% over the same comparable periods. We think that they will continue to do deals – the most recent rumour being a Telefonica fibre deal. We think that there are still opportunities for them to make a good return, be it buying whole businesses, TowerCos or FibreCos. However, given the lower number of direct takeovers now available following recent deals (only...
Full Article at IIR has reaffirmed its Recommended rating for PIA after undertaking a review post the appointment of a new Portfolio Manager, Harding Loevner. The full report can be found on the IIR website. On 26 July 2021, Pengana International Equities Limited (PIA) announced a fully franked dividend of 1.35 cents per share for the June quarter. This represents an 8% increase on the March quarter dividend and takes the total dividends declared for FY21 of 5.1 cents per share, fully franked....
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