The European telecoms sector, as per the Telecompaper stock index, started to outperform the broader market in week 49. Our index is down 11.5 percent year-to-date, versus -12.7 percent for the EuroStoxx 50 index. Poland's Play (+18%) scored the week's highest gain, while Greek Forthnet (-41%) was the weakest share. Apart from these two outliers, last week's performances moved within a relatively narrow band, ranging from +8 percent (Gamma Communications) to -14 percent (Intelsat).
Year-to-date, Intelsat (+536%) is still ahead, followed by Iridium (+84%), Altice Europe (+63%), SES (+39%) and Gamma (+35%). The weakest shares YTD are Tele Columbus (-63%), Forthnet (-59%), Tiscali (-52%), Freenet (-44%) and Play (-44%).
Iliad makes waves in France and Italy
The week's biggest news came from Iliad (+4.1%), that introduced two new boxes for the French market in a move to revive growth. Investors were convinced, since not only did Iliad make a nice gain, all its competitors were down for the week: Bouygues (-2.9%), Orange (-3.3%) and Altice Europe (-1.3%). Iliad further stated that it didn't need consolidation on the mobile market in France. The company also scored a distribution agreement in Italy with retail chain Coin. Meanwhile, the situation on the Italian market remained tense, with new promotions from Vodafone (-3.6%) Italy and Tiscali (-1.7%). Vodafone Italy went into a new direction by offering users of its loyalty scheme a discount on petrol at Eni gas stations.
Products and services
More product and service related news came from Liberty Global (-4.4%), that selected a platform for enabling targeted advertising. It couldn't prevent the Liberty Global share from hitting a low for the year. Vodafone's 2019 Global Trends Report put some focus on the business market. Kcom (+3.2%) refreshed its fibre broadband plans, drastically reducing prices. Swiss service provider Mobilezone, through its brand TalkTalk, launched a data-only plan on the mobile market, and Turkcell was registered as an insurance company, allowing it to expand into the insurance market.
Outlook
Telenet, during its Capital Markets Day, focused firmly on growing its free cash flow in order to sustain a 50-70 percent pay-out ratio. Syn (-11%), formerly Fjarspkipti (branded Vodafone Iceland), was forced to lower its guidance.
M&A hitting roadblocks
Forthnet is still struggling financially, with Vodafone Greece and Wind on the sidelines for a takeover. Last week, Forthnet suffered from one of its shareholders (Alpha Bank) writing off the entire value of its stake. In other M&A news, Vodafone and Liberty Global (-4.4%) suffered a setback when the EU was reported to plan an in-depth investigation of the planned sale of Eastern European assets by Liberty. Telia (-0.7%) successfully sold its Uzbekistan holding. Altice Europe's Israeli operator Hot (a cable company) was reported to consider a split of its services and infrastructure units in order to attract a co-investor for the latter. It would imply Hot mimicking its French sister company SFR, which recently made a similar fibre move.
Regulatory
On the regulatory front, a number of unrelated issues came to our attention. First, the auction of the 700 MHz band in Sweden kicked off. In Germany, United Internet stated that it will decide on whether or not to participate in Germany's 5G auction by January 2019. The EU Council approved the European Electronic Communications Code. National regulators will now have two years to implement the new rules into national telecoms laws. In the UK, Ofcom proposed BT (-3.6%) and Kcom for Universal Broadband Service.
Stock split
A final word goes to MasMovil, that will perform a 5:1 stock split on 13 December.
