'Black swan event': Telefonica Deutschland extends losses on lost Vodafone deal

Telefonica Deutschland Holding AG

03/08/2023 09:52

** Shares in the German telecommunications provider
Telefonica Deutschland  O2Dn.DE  extend Wednesday's losses by
about 3% after rival 1&1  1U1.DE  ousted it from a 5G deal with
Vodafone  VOD.L 
    ** Telefonica's shares closed almost 18% lower on Wednesday
    ** Berenberg estimates that Telefonica Deutschland achieved
yearly about EUR 600 mln in revenues, EUR 450 mln in EBITDA and
EUR 220 mln in operating FCF from cooperation with 1&1
    ** It notes the news became a "black swan event" for the
company, although until mid 2025, 1&1 has contractual
obligations under the existing MBA MVNO/4G national roaming
agreement, which guarantees ongoing revenue streams
    ** In medium and long term, financial consequences for
Telefonica Deutschland are huge as about 40% of the company's
FCF will disappear, Berenberg says, adding it will be "left with
spare capacity in the network over the medium to long term"
    ** Shares in Telefonica Deutschland touch their lowest price
since mid-March 2020
    ** 1&1 and its parent company United Internet  UTDI.DE 
extend gains after Wednesday's, rising 4.8% and 3.4%
respectively
    ** Following the announcement, Telefonica Deutschland
confirmed its 2023 outlook and dividend commitment on Wednesday


 (Reporting by Amir Orusov)
 ((Amir.orusov@thomsonreuters.com))