GS bets on digital infrastructure for European telecoms into 2023

Telefonica Deutschland Holding AG

14/12/2022 09:16

** Goldman Sachs expects easing fibre regulation to drive
ramping growth and returns in the digital infrastructure sector,
which it sees as key to European telecoms' investing outlook for
2023
    ** "The rising tide doesn't lift all boats: network
competitors rather than regulators are now the key hurdle to
returns upside, in our view," the brokerage writes in a note
    ** It raises Elisa  ELISA.HE  and Telefonica  TEF.MC  to
"buy" from "neutral" on structural quality, with cost inflation
advantages of the former and upside to consensus for the latter
    ** GS reiterates "buy" on BT Group  BT.L  and KPN  KPN.AS 
as the best-positioned digital infrastructure fibre operators;
also retains "buy" on Cellnex  CLNX.MC 
    ** "We argue the risk to incumbents from alternative network
builders is eroding as debt financing wanes and labour shortages
bite", the brokerage adds, with BT, KPN and Deutsche Telekom
 DTEGn.DE  as benefitters
    ** It cuts Telia  TELIA.ST  to "neutral" from "buy" on
outsized rate risks to FCF and keeps "sell" on "structurally
challenged" Orange  ORAN.PA , O2De  O2Dn.DE , Proximus  PROX.BR 
and Swisscom  SCMN.S 
    ** "We note sustained M&A demand for digital infrastructure
from private investors," GS adds
 (Reporting by Juliette Portala)
 ((juliette.portala@tr.com))