Fibre investments, 5G spectrum and network sharing largely determined the fate of the European telecoms sector last week, along with earnings and two shock announcements implying offers for two leading telcos, Iliad and BT. Iliad led the winners in week 46, with a gain of 19 percent, followed by Telekom Slovenije (+5.6%) and Turkcell (+4.8%) on positive earnings reports. BT ended the week up 3.1 percent. Intelsat’s US 5G spectrum could prove less valuable than earlier expected, causing the stock to lose 44 percent of its value. SES was down 13 percent. Liberty Global was among the biggest losers as well, down 8.8 percent.
The Telecompaper European Telecom Services index fell 0.6 percent in week 46, versus a gain of 0.3 percent for the EuroStoxx 50 index.
FTTP: Labour plans BT nationalisation
Fibre investments were central to telecoms business developments in week 46. The UK Labour Party launched an audacious plan to nationalise large parts of BT (not mobile) in order to roll out nationwide FTTP and provide free broadband services by 2030. The plan is dependent on winning the elections of 12 December, for which the prospects aren’t positive for Labour, being behind the Conservatives in the polls.
TalkTalk had postponed its Q2 reporting, pending the sale of its FTTP business FibreNation. According to rumours, a deal with CityFibre (controlled by Goldman Sachs) was close, but with the news from Labour any deal was on hold. It allowed the company to put out its Q2 report after all.
Meanwhile in Italy, Telecom Italia/TIM was still pursuing an arrangement to merge its network with the state-owned Open Fiber venture. The company further stated that it intended to reduce its Inwit stake, which will be adding the Italian tower assets from Vodafone. The latter released its Q2 report.
Altice Europe reported its Q3 earnings and said it had received several offers for its Portuguese fibre network.
Other M&A news: Niel to raise Iliad stake at a premium
- Iliad made a rather startling announcement, together with its founder Xavier Niel. The company intends to launch an offer for almost 20 percent of the shares outstanding at EUR 120 per share, a 26 percent premium. The shares will be cancelled and the offer is being guaranteed by Xavier Niel, which may see him spend up to EUR 1.4 billion on new shares. This will raise his stake to a maximum of 72 percent in a vote of confidence of the company and its strategy. The company also released its Q3 report, and so did its unlisted Irish unit Eir.
- Sunrise formally called off the UPC Switzerland takeover, triggering a CHF 50 million break-up fee payable to Liberty Global. Other costs of the failed merger were estimated at CHF 70-75 million. The company also reported Q3 earnings. Liberty Global stated that it somehow hoped that the deal could be resurrected.
- Rocket Internet acquired a minority stake in United Internet, which controls 1&1 Drillisch. Both United and Drillisch reported on Q3.
- Rostelecom is acquiring the remaining 55% of Tele2 Russia.
Other earnings news
- Incumbents: Telekom Slovenije.
- Mobile operators: Turkcell, Ice Group, Play.
- Challengers: Bouygues, Digi.
- Business services: QSC.
- Infrastructure: Cellnex.
US 5G spectrum and network sharing in Germany and Belgium
The satellite sector responded fiercely to worries over the timing and proceeds of any spectrum auction that would see Intelsat, SES, Eutelsat and Telesat give up spectrum for 5G services in the US. On news of contributing some of the proceeds to the US treasury, the worries somewhat subsided.
The German mobile operators (Deutsche Telekom, Vodafone Germany, Telefonica Deutschland) came to an agreement to jointly add 6,000 base stations in order to improve coverage, especially in rural areas and along transport routes. Mobile newcomer 1&1 Drillisch may join the initiative.
In Belgium, Telenet apparently couldn’t find terms with Proximus and Orange Belgium to join their proposed network sharing agreement. Instead, Telenet filed a complaint in order to halt the creation of the Proximus/Orange joint venture.―Telecompaper