We resumed coverage of Orange at OW with a PT of €20.5. TDC hosted a CMD and cut its dividend. We see positive short-term catalysts at KPN. Tele2 Q4 results were a miss on clean EBITDA. Iliad was reported to be interested in entering the UK market.
Weekly focus: We resumed coverage of Orange with an Overweight rating
and PT of €20.5. We forecast a recovery in French telcos (Base Case) which
could be strengthened by potential consolidation between Bouygues/Orange
(Bull Case). Better OpFCF dynamics in Spain and growth at Orange MEA will
also help to drive FCF growth and deleveraging.
We believe positive momentum will continue at KPN with solid 4Q15 results
and a positive 2016 outlook, upcoming CMD on March 7th and approval of
BASE disposal. We see 7-10% annual returns for the foreseeable future