European telecoms: UBS sees 'pockets of growth' in Germany and Nordics

Telefonica Deutschland Holding AG

14/01/2022 12:51

** The European telecoms fundamentals remain challenging,
but there are "pockets of growth" in Germany and the Nordics,
UBS says, as it expects M&A and EU recovery funds to make
investors more "constructive"
    ** Consolidation could re-emerge after a long hiatus as the
need for in-market M&A in markets such as Denmark, Italy, Spain,
Sweden and Britain has been vocalised, the brokerage says
    ** It adds EU recovery funds could provide a modest revenue
tailwind in selected markets, which could add up to +3-4% points
to revenue growth per annum in Italy and Spain, with a limited
impact elsewhere
    ** The "buy"-rated beneficiaries of the above include
Telenor  TEL.OL  and Vodafone  VOD.L , UBS says, while its top
picks are Deutsche Telekom  DTEGn.DE  and Tele2  TEL2b.ST  which
offer solid growth and attractive shareholder returns
    ** It also reiterates "buy" on KPN  KPN.AS , Liberty Global
 LBTYA.O  and Telefonica Deutschland  O2Dn.DE  
    ** The broker raises Proximus  PROX.BR  to "buy" from
"neutral" given crystallisation of value for TeleSign and
receding risks of a disruptive fourth mobile operator
    ** UBS upgrades Elisa  ELISA.HE  to "neutral" from "sell"
with growth justifying the valuation premium
    ** Its least preferred names are BT Group  BT.L  and Telia
 TELIA.ST , though it raises the former to "neutral" from "sell"
as M&A is likely to support the stock

 (Reporting by Marie Mannes and Marta Frackowiak)
 ((Marie.mannes@thomsonreuters.com;
marta.frackowiak@thomsonreuters.com))