When the news of the Trump tariffs first hit the tapes, we didn’t write anything initially as a) we didn’t think we had much of value to add to the thousands of column inches already written on the topic, and b) the direct impact from the tariffs to the EU telecoms sector is minimal – resulting in relative outperformance for the group over the past few days.
Last week, we reviewed the UK altnet market. So this week, we turn our attention to Germany and how the fibre challengers are developing in that market. We have done a lot of work over the past few months on the MDU market in Germany for TeleColumbus and OXG. So now, we specifically focus on Deutsche Glasfaser and the recent UGG/ Infrafibre deal, as these players mount their challenge against DT in the SDU market.
2024 is very much a transition year for TeleColumbus in their TV base, but importantly the core Internet franchise growth remains very strong – and well ahead of Vodafone’s growth rates. This, alongside developments on NetCo/ OpCo we think can be further upside for the bonds, but in the near-term, the cost of managing this transition in 2024 will be slightly more expensive than initially assumed.
BNetzA’s latest proposal for the German spectrum auction might well now be close to the final outcome, and delays the uncertainty of an auction and potential large cash outflows until 2030 for all German operators. This seems a further example of pragmatic regulation in the European telecoms sector.
We published our Global High Yield Quarterly this week – HERE. For a European perspective, we provide a summary of our thoughts and ideas on the European HY issuers in this piece, which takes excerpts from the Global HYQ and adds to it, including asset cover and a summary of our most preferred and least preferred names.
We apologise for sending this out over the weekend, but following yesterday's results and call, we wanted to fully update our model before publishing. In this note, we run through why TeleColumbus’s strong Q4 Internet net adds figures could be doubly good news for creditors, and we publish our updated forecasts, with an updated valuation showing different scenarios for creditors. Their comments on TV and Internet adds are also highly relevant for Vodafone investors.
Morgan Stanley (but not United Internet) is coming to the (temporary) rescue with a €300m equity injection. However, this doesn’t look to be enough to us, and using our top-line/ EBITDA forecasts, but the company’s new capex forecasts, they will still run out of money in 2025.
Tele Columbus reported Q2 results this morning and held a call with analysts. The company continues to lose cable TV subscriber to the new bulk-contract restrictions, but still expects migration rates in the range of 50-60%. Whilst there was no news on the refinancing, the company is about to start talks with lenders and a small (€15m) shareholder loan from Morgan Stanley suggests that the main equity holders are still prepared to contribute additional capital.
As part of our increasing coverage of the High Yield universe, we include new estimates and coverage for seven new names: Digi, Nuuday, Masmovil, Rakuten, Salt, TalkTalk, and Tele Columbus, taking total coverage to 18. As a result, we are now able to benchmark each company against each other, in terms of growth, risk, and asset cover.
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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