It may be only a slight exaggeration to say that the EC single-handedly pushed up the European telecoms sector in week 48, according Telecompaper. Its decision to allow the Dutch merger of T-Mobile and Tele2 to continue without conditions helped our index to move up by 4.0 percent, strongly outperforming the EuroStoxx 50 index (+1.1%). The year-to-date performances of both indices is now almost identical at -9.4 percent.
The EC's approval for the numbers three and four on the Dutch mobile market to merge echoed throughout Europe. The parent companies, Deutsche Telekom (+1.7%) and Tele2 (+8.9%), were the first obvious beneficiaries. More generally, operators with mobile units in countries including the UK and Denmark may have felt the positive impact from the EC's decision, after similar consolidation was blocked in the past. In fact, we recorded the week's best performances for a long list of operators that could have an interest in mobile market consolidation. They included Vodafone (+8.9%), MasMovil (+8.8%) and Telefonica (+8.2%).
KPN and fibre
In other Dutch news, KPN's (+9.7%) new CEO presented his strategy for the next few years. Cost savings, investments in fibre and 5G as well as convergence were on the top of his to-do list. Investors welcomed his plans and made KPN last week's best performing incumbent. Its year-to-date loss shrank to 10 percent.
Fibre investments weren't central to KPN's plans alone. Its new-and-strengthened rival T-Mobile Netherlands followed up on the EC's merger approval with plans for laying fibre in its home town of The Hague. Altice Europe (+37%) took fibre investments one step further by calling in help from three pension funds, who will buy into Altice's French subsidiary SFR's fibre-to-the-home business. The co-investment plans made Altice last week's best performing telecoms stock and wiped out the previous week's dramatic loss. Second best was Tele Columbus (+29%), after its Q3 report.
Market research and auction terms
Positive news for the sector as a whole came from Cisco and Ericsson. Cisco's annual Visual Networking Index painted a picture of ongoing strong data traffic growth up to 2022. Ericsson's semi-annual mobility report made projections for 5G network growth up to 2024. Regulators working on auction terms were not aligned. Whereas the German BNA was heavily criticised over conditions favouring a new entrant, the Dutch regulator appeared not inclined to reserve spectrum for a newcomer.
Two conspicuous losers last week were Finnish DNA (-5.8%) and Elisa (-4.7%), that had so far been safe havens for telecoms investors in Europe. Elisa updated its targets, but the good news from elsewhere in Europe apparently drove investors to other countries. DNA's and Elisa's year-to-date gains were reduced to +4.2 percent and +8.3 percent, respectively, from +10.7 percent and +13.6 percent one week ago.