It was a week of recovery, both in the general market and in the European telecoms sector. Our index gained 1.7 percent, versus +3.0 percent for the Eurostoxx 50 Index. One common theme in the recent quarterly results seems to be capex budgets increasing. Also, investors are still grappling with the consequences of satellite companies offering spectrum for 5G usage in the US. And TDC benefited one last time from Macquarie's offer, leaving the share price just below the value of the offer. Year-to-date our basket is lagging the general market.
Intelsat gains on 5G, TDC on Macquarie offer
Very few of the shares in our basket closed the week (#7) in the red. Equinix (-5.3%) was among them, on quarterly results and a big takeover in the US. SES (-8.3%) was the biggest loser, especially when taking competitors Eutelsat (+11.3%) and Intelsat (+35.7%) into account. Investors still seem to be weighing the relevance of their spectrum holdings for the US 5G market. SES may also have been hit by the replacement of its CEO and its CFO, whereas Eutelsat's quarterly results were welcomed in a positive way.
The TDC share (+12.9%) probably made its final run after the company supported the offer from the Macquarie consortium. It also abandoned its groundbreaking merger plans with media group MTG (Modern Times Group). The TDC share price, now just below the level of the Macquarie offer, suggests that investors are assuming the takeover will indeed happen. As a result, we will have to say goodbye to the TDC share as a constituent of our European Telecoms Stock Index.
Telefonica (+1.6%) couldn't really benefit from rumours about selling a minority stake in its Latin America (ex Brazil) market. OTE (+4.2%) on the other hand wasn't hurt by the Greek government plans to halve its stake to 5 percent.
Q4 comes with increased capex budgets
Liberty Global (-4.9%) and Telenet (-6.4%) were down on quarterly results and increased capex budgets. The renewal of English Premier League content left BT (-1.1%) and Sky (+5.2%) in different directions, the latter actually reducing the cost of football for the three seasons after 2019.
In the CHAT region (Switzerland/Austria), Telekom Austria (-1.6%) reported Q4 results and raised its capex budget. In Switzerland, alternative operators including Sunrise (+8.1%) responded positively to plans for an overhaul of the regulatory system, which had no negative impact on the Swisscom share (+5.0%).
Year-to-date: UK down
Year to date the European telecoms sector dropped further behind the general market, as our basket is now down 5.1 percent against -2.2 percent for the Eurostoxx 50 Index. The weakest shares can be found in the UK: TalkTalk (-30.0%), CityFibre (-22.9%), BT (-15.9%) and Vodafone (-12.9%). Other double digit losses are found at Orange BE (-13.9%), KPN and Equinix (both -11.0%) and Deutsche Telekom (-10.7%).
There are just three shares advancing in double digits in the year to date: Danish TDC (+29.2%), Russian MTS (+17.5%) and Finnish DNA (+12.6%).
