The European telecoms sector managed last week to outperform the broader market. The Telecompaper sector index ended the week up 0.7 percent, versus a 1.5 percent loss for the EuroStoxx 50 index. Vodafone and Deutsche Telekom, our index's heaviest contributors, ended the week with gains of 6.6 and 3.0 percent, respectively. Two microcaps delivered the best results: Tiscali (+20%) and Forthnet (+9.8%). Gamma Communications, without significant news, lost 12 percent, erasing a large part of this year's gain.
First of all, a number of companies had quarterly earnings to report:
Cable operators: Digi (-4.5%)
Mobile operators: Vodafone (+6.6%), Play (-3.6%), Bouygues (-1.7%)
Challengers: QSC (-5.%), United Internet (+3.2%), Ecotel (-3.7%), Iliad (+7.5%)
Regulation
Regulation made a few headlines. First of all, the European Parliament approved the new European Electronic Communications Code. One important element is that it is designed to stimulate investment in infrastructure, both fibre and 5G. Further, VodafoneZiggo (the Vodafone/Liberty Global joint venture) took the EC to court for allowing open cable regulation to take effect in the Netherlands.
In related news, the German challenger association Buglas called on the EC to block the takeover by Vodafone of Liberty Global's (-3.2%) German business Unitymedia. Meanwhile, Deutsche Telekom's (+3.0%) Dutch branch T-Mobile appeared to be aiming for the approval of its planned Tele2 (+3.4%) Netherlands takeover based solely on a set of promises to safeguard competition, rather than a formal remedy.
BT, Telenet and Italy
According to market rumours, BT (+0.3%) aims to sell its fleet management division. BT Global is to focus on the largest customer segment, implying that it needs to reduce its customer base by 80 percent. Telenet (-1.6%) was taken to court over its corporate governance. The same shareholder also called for increased share buy-backs. In other news, Telenet extended its Premier League football rights.
Governance issues were also at work at TIM, where the CEO was ousted. The company was rumoured to plan a 5G network sharing deal with Vodafone Italia, while joining the appeal against 5G spectrum license extensions for a number of smaller operators. Tiscali (+20%) managed to increase the value of its spectrum deal with Swisscom's (-0.3%) Fastweb.
