The outliers last week were Inmarsat and Turk Telekom. Combined with Deutsche Telekom (+1.2%) and Vodafone (+0.5%), both ending week 12 in positive territory, the Telecompaper Stock Index European Telecoms was able to produce a gain of 0.6 percent, outperforming the EuroStoxx 50 (-2.4%). Italy was particularly heavy with news. Infrastructure investment plans were topical in the UK and Germany and 5G was in the spotlights in Germany and the Netherlands. Major takeover news came from Germany, Switzerland and France, according Telecompaper.
Inmarsat (+13%) received a takeover offer from Apax Partners and others worth GBP 5.43 per share. The stock closed the week at GBP 5.06. Turk Telekom (-10%) was confronted with a probe from the Turkish competition authority, claiming the company abused its dominant position on the wholesale broadband market.
Earnings season was nearing its end with reports from Retelit (-1.6%), Iliad (-3.5%), 3 Group owner CK Hutchison (+3.6%), Intred (+8.0%), MTS (-0.5%) and Cyfrowy Polsat (-3.6%).
Italy, UK, Germany
The battle for control of TIM (-2.5%) continued. State lender CDP increased its stake to 9.8 percent, while minority owner Vivendi urged the regulator to investigate governance issues. Fibre network owner Intred reported a network expansion, while Iliad's Q4 report revealed that it had grown to 2.8 million customers in Italy. The newcomer caused a decline at CK Hutchison's Wind Tre. Meanwhile, Vodafone Italia, TIM and Kena Mobile (TIM's sub-brand) presented new plans.
In the UK, BT (+0.3%) rejected a call for cooperation in rolling out mobile infrastructure in rural areas. At the same time, BT infrastructure unit Openreach consulted a proposal for actively migrating customers from copper to fibre networks.
In Germany, QSC (-0.5%) subsidiary Plusnet partnered with utility company Maingau Energie for the latter to provide broadband services. Deutsche Telekom's German Telekom unit established a joint venture with energy company Ewe to roll out FTTH networks.
M&A, 5G
Reports surfaced about the EU objecting to the Vodafone deal with Liberty Global (unchanged) to take over four subsidiaries. Two of these, in Germany and the Czech Republic, could be problematic from a regulatory point of view. Sunrise (-2.5%), also working on the acquisition of a Liberty Global unit, appeared confident that its takeover of UPC Schweiz will be backed by its shareholders. These include Freenet (-1.0%), holder of almost 25 percent.
Cellnex partnered with Swiss Fibre Net to provide backhaul for mobile networks. The company also closed a ER 1.2 billion capital hike. Rumours pointed to Cellnex possibly eyeing French infrastructure company TDF, currently owned by private equity companies Brookfield and Arcus, as well as Dutch pension fund APG and others.
An auction of 5G spectrum kicked off in Germany, leading to bids totalling EUR 332 million after the first day. In the Netherlands, a large contingent of the telecoms sector presented a charter to the government, pleading for coordinated support for the roll-out of 5G networks. And in the US, the FCC said it would address concerns around the C-band spectrum, owned by satellite operators including Intelsat (-8.3%), SES (-8.3%) and Eutelsat (-2.4%), that needs to be partially vacated for 5G.
Year-to-date, our TPSI European Telecoms is up 6.4 percent, lagging the EuroStoxx 50 index (+10.1%). Of 79 constituents currently, 33 are up double digit, led by Iridium (+43%), Gamma Communications (+40%) and micro cap Go Internet (+40%). The laggards include Tele Columbus (-39%), Iliad (-28%) and Intelsat (-27%).