Live Markets: Why an EPS metric would help telecoms

Proximus NV

17/01/2024 10:58

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    WHY AN EPS METRIC WOULD HELP TELECOMS 
    Telecom stocks in Europe  .SXKP  have been a highly
unpopular trade among investors for almost a decade, plagued by
stiff competition, debt and costly network upgrades.
    JPMorgan says even though growth has finally returned to the
industry, portfolio managers remain on the sidelines "sceptical
this marks a sustainable trend change".
    Yet Akhil Dattani, head of European telecoms research at the
US bank, believes telecom executives could woo some investors by
adding EPS metrics to their guidance toolkit, following the
footsteps of Deutsche Telekom  DTEGn.DE .
    He sees several benefits from that:
    * Adj. EPS is a clean and easy to track "all-in" valuation
metric
favoured by generalists who today are structurally UW Telcos
    * Many Telcos now trade on single digit PEs - valuations at
odds
with JPM's now positive EPS growth outlooks
    * Sector EFCF (Equity free cash flow) is weighed down by
record
high fibre spend. EPS offers a more "normalised" measure

    JPM says the EPS metric would highlight attractive
valuations for Proximus  PROX.BR , BT  BT.L , Vodafone  VOD.L ,
Orange  ORAN.PA  and DT.
        
    (Danilo Masoni)
    *****
    
    FOR WEDNESDAY'S OTHER LIVE MARKETS POSTS:
    LOW Q4 EARNINGS EXPECTATIONS BUT LITTLE SCOPE FOR SHARE POPS
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    RISK OFF TRADERS DRIVE STOXX TO 6-WEEK LOW CLICK HERE
    EUROPEAN FUTURES FALL ON CHINA DATA; UK INFLATION RISES
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