There was major news concerning the largest incumbents of Europe, Deutsche Telekom, Orange and Telefonica, in week 48. Infrastructure dealings and a number of unlisted companies demanded some attention as well. The Telecompaper European Telecom Services index ended the week up 0.7%. The EuroStoxx 50 index was up 0.4 percent. As a result, the year-to-date underperformance of the telecoms sector was almost stable at around 14 points. There were two double digit winners, Tele Columbus (+28%) and Syn (Vodafone Iceland, +14%).

A merger of DT and Orange in the works?

Several incumbents were active rearranging their assets, possibly leading to a major merger in due course.

• It was reported that Deutsche Telekom (+0.9% for the week) was exploring a merger with Orange (+1.2%). The latter denied, the former abstained from any commentary as it supposedly awaited a message from the German government.
• Telefonica (+2.8%) decided to focus on four countries: Spain, the UK, Germany and Brazil. The other Latin American operators will be spun off. Its new action plan further contained plans to create two new divisions, one for technology and one for infrastructure. The former will focus on developing B2B services, underpinning the company's growth trajectory for the next few years.
• The Proximus (-0.2%) board approved its transformation strategy, involving some 1,300 job cuts. This is, especially in Belgium, traditionally a difficult message for the trade unions. From within its ranks a new CEO was appointed.

Incumbents spinning off infrastructure

• Deutsche Telekom created T-Infra in the Netherlands, containing T-Mobile NL's towers that were extracted from the unit when it merger with Tele2 NL.
• Telefonica's Telxius unit acquired a portfolio of towers from its Brazilian sister company, Vivo.
• Proximus and Orange Belgium finalised their mobile network sharing agreement, resulting in a 50/50 joint venture company.
• Orange Spain, according to reports, is working on the sale of a tower portfolio.
• Altice Europe's (+3.8%) French fibre joint venture acquired a competitor, Covage.

Uncertainty remains on US 5G spectrum

• The FCC said that the major potential US 5G spectrum holders would be compensated for giving it up. This however couldn't prevent Intelsat (-14%) from continuing its downward movement. SES (-3.3%) was down as well, whereas Eutelsat (-0.7%) limited its loss as it reaffirmed its financial targets.
• The Inmarsat (-1.2%) takeover was delayed.

Unlisted companies taking spotlight

A remarkable number of major deals involving unlisted telcos, and a US company expanding in Europe, occured last week.

• GTT (listed in the US) hired an adviser to assist in the spin-off of infrastructure.
• Eurofiber (controlled by Antin) moved into France through a trio of takeovers.
• PPF (Petr Kellner) and the United Group (BC Partners) are candidates for taking over OTE's (-1.7%) Telekom Romania.
• Belgium's Destiny (Apax Partners) appeared to continue its acquisition strategy.
• Switzerland's Salt (Xavier Niel's NJJ Capital) published its Q3 results.

Other news

• Tele Columbus (+28%) reported its Q3 results.
• Gamma Communications (+5.5%) acquired Telsis.
• QSC (+0.8%) unveiled a new growth strategy.