Last week in telecoms: Sky up on Comcast offer, Vodafone and Liberty Global under fire

Monday 5 March 2018 | 07:01 CET | News

It was a tough week for telecoms stocks, but even more so for the market in general. Our telecom index (-1.7%) outperformed the general index (-3.4%). Whereas most telecoms stocks ended the week down, there were a few positive outliers in our index. Sky (+24%) was a major contributor after a takeover offer from Comcast and pulled up other satellite stocks along the way: Intelsat (+19%) and SES (+14%).

Sky bidding war?

A current offer from 21st Century Fox still hasn't been able to get past the regulators and now Comcast is outbidding Fox. In the meantime, Walt Disney launched an offer for 21st Century Fox's entertainment assets. An important question is whether Disney is likely to hold on to Sky after acquiring Fox, or whether it could sell the asset on to Comcast. The Sky share price (GBP 1,374) settled above Comcast's offer (GBP 1,250), suggesting that stockholders are counting on a bidding war.

On its own, Sky reported some good news as well: distribution deals with both Spotify and Netflix. The latter implies a deeper operator integration than Netflix has done with any other operator before, with Netflix actually becoming part of a bundle offer from Sky.

The other takeover target in our basket, TDC (+0.3%), managed to squeeze out a small gain on the publication of the offer document from Macquarie et al and TDC formally recommending it.

Vodafone and Liberty under fire

Vodafone (-2.4%) and Liberty Global (-1.8%) saw Deutsche Telekom (-3.5%) take a tough stance against any German merger of the Vodafone and Liberty (Unitymedia) companies, on competition grounds. Vodafone stated that it is looking primarily for continental deals with Liberty.

Vodafone and Liberty also came under fire in the Netherlands, where the regulator is proposing open access to the Ziggo cable network, on par with access to KPN's (-5.4%) network.

German stocks down

Whatever is about to happen on the German market in terms of consolidation, some of the weakest stocks in our index included German Freenet (-10%), Telefonica Germany (-7.6%) and Drillisch (-6.2%), as well as Telekom Austria (-6.6%).

A number of small companies managed to end the week up, from Siminn (+1.7%) in Iceland to Forthnet (+5.6%) in Greece, from A3 (+7.0%) in Sweden to Ecotel (+4.7%) in Germany and from MasMovil (+9.1%) in Spain to QSC (+6.5%) in Germany.

Troubled TalkTalk (-0.5%) stabilised somewhat on news of an IT outsourcing deal.

YTD: heavyweights down double digit

In the year-to-date view, our index (-5.5%) is not far behind the EuroStoxx 50 Index (-5.1%). There are some major contributors in a positive sense: Intelsat (+40%), MasMovil (+38%), Sky (+36%) and TDC (+30%). Index heavyweights Vodafone (-15%), Orange, BT and Deutsche Telekom (all -13%), as well as Telefonica (-12%) are holding our telecoms index back.

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