2024 could be 'break out year' for European telecoms, JPM says
04/12/2023 11:23
** J.P.Morgan says 2024 could be the "break out year" for
European telecom operators driven by higher prices and growth in
capex and earnings
** It notes that after a wave of retail price hikes, the
sector's revenue growth rose from 0% in H1 2022 to +2% in Q3
2023, a momentum JPM says could be sustained
** The broker sees 2024 EBITDA growth of 3% for the sector
as energy and other inflationary pressures roll-over through the
year
** The sector offers best-in-class EPS growth for the first
time in 15 years, it adds
** It expects free cash flow to equity to increase by a
double-digit percentage as fibre spend rolls off
** While rising cost of debt is unhelpful for deleveraging,
it also means industry "disrupters" will continue to compete
rationally, JPM says
** Its top stocks are Deutsche Telekom DTEGn.DE , BT
BT.L , Cellnex CLNX.MC , Telenor TEL.OL , INWIT INWT.MI ,
KPN KPN.AS (all "overweight")
** Another top pick is Proximus PROX.BR , which JPM
upgrades to "overweight" from "neutral", seeing "strong results
twinned with ongoing price rises"
** Shares in Proximus PROX.BR are up 2.5%, among top
performers on Belgium's blue-chip BEL 20 index .BFX
(Reporting by Marta Frackowiak and Nathan Vifflin)
((marta.frackowiak@thomsonreuters.com))