'Solid story, but a pause may be warranted': Citi downgrades KPN

America Movil SAB de CV

14/09/2023 07:49

** Citi cuts KPN  KPN.AS  to "neutral" from "buy", saying it
prefers other telecoms names as expenses may limit the Dutch
group's ability to grow FCF
    ** Interest expenses and taxes may limit KPN's capacity to
improve FCF generation in 2024 compared to this year despite
"solid" EBITDA growth, the broker says
    ** It adds KPN's expected H2 recovery is "well understood by
the market" and thus won't be a surprise
    ** America Movil  AMXB.MX , which has a 16% stake in KPN,
will see its exchangeable bond mature in March 2024, and could
sell the redemption value in KPN shares - Citi
    ** "Obviously it could be settled in cash, though note that
the higher the shares go, the more attractive it may be to
increase the mix of shares," it says
    ** Citi still sees solid medium-term fundamentals including
inflation-linked price increases for mobile that will come into
effect on Oct. 1, and a "reversal" in energy costs
    ** Out of 19 analysts that cover KPN, ten rate the stock
"strong buy"/"buy" and ​nine "hold"

 (Reporting by Olivier Sorgho)
 ((Olivier.Sorgho@thomsonreuters.com))