BofA picks European telecoms weathering inflationary storm

Telefonica Deutschland Holding AG

12/01/2022 15:22

** BofA Global Research names its top picks among European
telecoms for 2022, predicting they will be able to create value
despite rising inflation
    ** "Investors should tread carefully to avoid 'value traps'
as inflationary pressures weigh on earnings," it notes of the
year ahead for the sector
    ** It also identifies M&A, ESG and EU recovery funds as key
wider themes for the year
    ** Deutsche Telekom  DTEGn.DE  among BofA's top stocks for
the sector, as the broker sees potential in the monetisation of
its towers this year and considers Germany one of the more
stable markets in Europe in terms of pricing
    ** BT  BT.L  also well-positioned as it offers CPI-based
pricing to customers while Vodafone  VOD.L  should benefit from
monetisation of its Vantage Towers and UK and Germany market
exposure - BofA
    ** Upgrades Telefonica Deutschland  O2Dn.DE  to 'buy' from
'underperform', flagging its gain of momentum in Germany and
saying its "mobile wage and energy cost exposure is the lowest
in the sector"
    ** In the infrastructure space, BofA believes concerns about
Spain-based Cellnex  CLNX.MC  regarding factor rotation,
inflation and M&A bottlenecks are misguided, maintaining a "buy"
rating

 (Reporting by Valentine Baldassari)
 ((Valentine.baldassari@tr.com))