Telecoms: Cost pressure in H1, energy tailwinds from 2024 - Citi

Telefonica Deutschland Holding AG

17/03/2023 11:16

** During 2023, telecoms will still see cost pressure from energy and salary
inflation, particularly during the first half, with 2024 seeing potential
support from energy tailwinds, Citi says
    ** The pressure from energy now looks less than previously feared, the
broker says, adding that there could be more energy tailwinds from end-2023,
with those with lower energy hedging likely to benefit more
    ** When looking at the companies' completed discussions on 2023 salary
increases, the level of the increases seems slightly below the inflation, it
says 
    ** Despite some companies still experiencing peak capex on 5G and fibre, in
the medium-term, the indication is for capex to trend down, with low spectrum
costs, Citi says 
    ** As Orange  ORAN.PA  and MasMovil's $19 billion Spanish telecom merger
remains the 'test case' for the sector, the companies' view on consolidation to
improve returns seems further improved, it adds
    ** The brokerage maintains "buy" on BT Group  BT.L , Cellnex Telecom
 CLNX.MC , Deutsche Telekom  DTEGn.DE , Freenet  FNTGn.DE , KPN  KPN.AS ,
Proximus  PROX.BR  and Telenet  TNET.BR 
    ** It keeps a "neutral" rating on Elisa  ELISA.HE , INWIT  INWT.MI ,
Swisscom  SCMN.S , Telefonica  TEF.MC , Telefónica Deutschland  O2Dn.DE , and
"sell" on Telia  TELIA.ST 

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))