Barclays warns AI and satellites form 'material overhang' for European telcos

Zegona Communications

Tue 11:47

** European telecom firms face new threats from agentic AI and satellite broadband that put sector cash flows at risk, Barclays says
** The broker notes AI agents could help consumers find promotional discounts, "providing a fertile ground for optimising spend" and hurting revenues across the sector
** Satellite broadband adds further competition, with the brokerage warning these combined technological headwinds are set to remain a "material overhang" for valuations
** It downgrades Vodafone VOD.L, Proximus PROX.BR and Telefonica TEF.MC to "underweight" from "equal weight", and OTE OTEr.AT to "underweight" from "overweight", citing equity valuation risk that is amplified by high leverage for some
** Conversely, Barclays upgrades Dutch telecom KPN KPN.AS and Sweden's Telia TELIA.ST to "overweight" from "equal weight", viewing them as the least vulnerable
     
      
COMPANY
RATING
OLD RATING
Bouygues BOUY.PA
equal weight
no change
BT Group BT.L
underweight
no change
Deutsche Telekom DTEGn.DE
overweight
no change
Elisa ELISA.HE
equal weight
no change
KPN
overweight
equal weight 
Liberty Global LBTYA.O
equal weight
no change
Orange ORAN.PA
equal weight
no change
OTE
underweight
overweight
Proximus
underweight
equal weight 
Sunrise Communications SUNN.S
underweight
no change
Swisscom SCMN.S
underweight
no change
Tele2 TEL2b.ST
overweight
no change
Telefonica
underweight
equal weight 
Telenor TEL.OL
equal weight
no change
Telia
overweight
equal weight 
Vodafone
underweight
equal weight
Zegona Communications ZEG.L
overweight
no change
     

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