Citi cuts Telenet to 'neutral' after Liberty Global's buyout offer

Orange Belgium NV

04/04/2023 09:58

** Citi downgrades Belgian telecom operator Telenet
 TNET.BR  to "neutral" from "buy" following Liberty Global's
 LBTYA.O  March offer to buy out all minority shareholders at 22
euros per share
    ** The broker recognises the "opportunistic" nature of the
bid but says the substantial premium to pre-offer share price
and uncertainties over Telenet's future make the buyout likely
to succeed
    ** Citi maintains target price at 21 euros vs 20.78 euros at
Monday's close
    ** The broker expects Telenet to post a 0.8% decline in Q1
EBITDAaL and a negative free cash flow due to lasting inflation
impact on salaries and energy
    ** But these headwinds are consistent with those faced by
other Belgian telecom operators and shouldn't affect Telenet's
position relative to its competitors, Citi adds
    ** Telenet is also expected to raise subscription prices in
early summer, following Proximus  PROX.BR , Orange  OBEL.BR  and
Voo, the broker says

 (Reporting by Victor Goury-Laffont)
 ((Victor.goury-laffont@tr.com))