The European telecoms sector underperformed the general market in week 36. Iliad and Play suffered double digit losses and not all M&A related news pushed the market towards consolidation. The Italian market remains the embodiment of competition, with all mobile operators beating the promotion drum. Our European Telecoms Services index was up 0.5 percent for the week as a result of a few steep gains, at 1&1 Drillisch, United Internet and Gamma Communications. The EuroStoxx 50 index was up 2.0 percent.
Results
Iliad (-15% for the week ) reported its Q2 results and found an investment partner for extending fibre-to-the-home networks to rural areas. In similar news, Sky (owned by Comcast) was rumoured to be an investment partner for Virgin Media's (a unit of Liberty Global) rural fibre joint venture. Gamma Communications (+13%) also reported its results and Veon (-4.3%) organised a capital markets day, where it formulated a growth strategy and a new pay-out ratio.
M&A
Sunrise (+0.3%), struggling with its shareholder Freenet (+1.2%) over the purchase price of UPC Switzerland, received a fairness opinion to support the price it is paying Liberty Global (+2.0%). DNA (-0.3%) provided its own and other fairness opinions to support its recommendation to shareholders to accept Telenor's (-4.3%) offer for the remaining shares still in free float.
In other M&A news deals were, in a way, reversing the international trend towards consolidation. Deutsche Telekom (-0.6%), through its controlled subsidiary OTE (+1.6%), is looking to get out of Romania, with Orange (-0.8%) a possible buyer. BT (+1.2%) is nearing a deal to sell its Spanish unit and MasMovil (+0.5%) could be acquiring it. Telefonica (+4.4%), according to market reports, is selling its Ecuador unit. Telia (unchanged) is having a tough time getting its acquisition of Bonnier Broadcasting approved, and in Italy the regulator is taking a look at TIM's (+2.5%) sale of its Persidera unit.
A number of deals from the past are showing that fixed-mobile convergence is a fact of life in the telecoms sector. Vodafone (+0.3%), having previously acquired a German cable firm, was wasting no time to integrate its latest takeover, Unitymedia. Tele2 (+2.8%) launched business services over its Com Hem cable network, and Telenet (-3.8%) launched another innovative multiplay service, this time combining an OTT television service with a mobile 4G service.
Other news
More news in the very dynamic European telecoms sector:
- Play (-16%) shareholders sold a 9 percent stake.
- Proximus (-4.2%) is losing its CEO to KPN (-2.2%).
- Deutsche Telekom (-0.6%) introduced its own smart speaker, under the Magenta brand.
- Eutelsat (+5.5%) withdrew from the C-Band Alliance.
- Siminn (+2.6%) was buying back shares.
Finally, the Italian mobile market has been hot since the launch of Iliad as the number four MNO. Last week was no different, with CK Hutchison's (+3.1%) Wind Tre, TIM, Iliad, Vodafone and several MVNOs running promotions. Prices were going as low as EUR 6/month for 50 GB (TIM).
