Berenberg raises Telefonica Deutschland to 'hold', says hurdles might be overcome

1&1 AG

04/09/2023 09:43

** Berenberg raises Telefonica Deutschland  O2Dn.DE  to
"hold" from "sell", saying the phone network operator may avoid
the worst when it comes to losing the 1&1 business to Vodafone
and the company's reliance on Huawei equipment
    ** The recent national roaming deal between Vodafone  VOD.L 
and 1&1  1U1.DE  increases the chances of delaying a new
spectrum auction to 2028, Berenberg says, meaning Telefonica
could avoid taking on more debt to renew its licences next year
    ** Telefonica may also lease low-band spectrum to 1&1 and
thus claw back some of the revenue it has lost from 1&1's move
to Vodafone, the broker says
    ** Losing 1&1 to Vodafone might have less impact than
expected, Berenberg adds, citing the example of Belgium's
Mobistar who in 2015 successfully dealt with a similar hit to
its revenue
    ** Berenberg's talks with industry experts indicate that a
rip and replace of Huawei equipment "can be avoided provided
Huawei shows willingness" to explore a technical workaround, the
broker says, thus sparing Telefonica an expensive refit
    ** Out of 20 analysts who cover Telefonica Deutschland on
Eikon, one rates it "strong buy", 13 "hold", five "sell" and one
"strong sell"
    
    

 (Reporting by Louis van Boxel-Woolf)
 ((Louis.vanBoxel-Woolf@thomsonreuters.com))