Citi raises German telcos after network agency extends frequency usage rights

Telefonica Deutschland Holding AG

14/09/2023 08:30

** Citi group upgrades German telecom companies Telefonica
Deutschland  O2Dn.DE , United Internet  UTDI.DE  and 1&1
 1U1.DE  to "buy" from "neutral" after Germany's Federal Network
Agency's decision on Wednesday to extend some low-/mid-band
licenses by five years
    ** "A prolongation of the licenses is good news for German
telcos, as it renders an expensive auction in 2030 unlikely
given the probable pooling of multiple low-bands," the broker
says
    ** Citi believes the biggest beneficiaries of the network
agency's decision are Telefonica Deutschland and 1&1/United
Internet due to their high exposure to the Germany market, while
Deutsche Telekom  DTEGn.DE , Vodafone  VOD.L  and Telefonica
 TEF.MC  (via Telefonica Deutschland) "also benefit, of course"
    ** For Telefonica Deutschland threats of losing 1&1’s
wholesale contract and an expensive auction are now gone and
strong retail fundamentals should return to focus, the brokerage
notes 
    ** Citi also sees "a window of opportunity" for 1&1/United
Internet as concerns regarding the network are mainly mid-term
and "the narrative has started to swing in its favour", after
the 5G wholesale deal with Vodafone
    

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