The rally of the past few days now puts the title at a level that does not leave a lot of upside potential (+6%) to justify our opinion Buy . We therefore turn to Neutral .
* The soaring title yesterday ( 11.1 % or € 21 ) after the announcement of an agreement in principle on the mobile network and frequencies Bouygues in merger - SFR Bouygues , we seem to have been somewhat exaggerated compared to what is now a possibility, and that this agreement could relate to Free ( € 5, in first approach). Today we value Iliad 223 € without this perspective , ( against € 197 before) , the upside potential is limited ( 6.2 % ), and therefore we adopt a Neutral recommendation .
* However , it seems difficult to consider today this scenario incorporating the remains of Bouygues since Vivendi may well choose not to opt for a merger with Bouygues Telecom, and most importantly, the competition authorities may well oppose consolidation in the mobile, as they have elsewhere suggested in the past.
* To simply simulate what would , all things being equal , the purchase of Bouygues network and frequencies for € 1.8 billion , we simply simulated absence of Capex (over network to build) , and roaming costs over the period 2015/2020 , which would generate savings for Free Mobile approximately € 1.2 billion . For frequencies , it seems mandatory that we Bouygues sold at minimum , its 800 MHz spectrum , bought for € 683 million. If we assume then that Free Mobile recovers in addition , the spectrum in other bands ( 1800 and 2100 MHz ) for a value of approximately € 200 million impact for Free Mobile would be , roughly, a profit of € 2.1 billion at a cost of € 1.8 billion , representing a profit of around € 300 million (approximately € 5 per share) .
* EBITDA published S2 was slightly better than expected by the consensus in both the fixed and in the mobile . The group that were to achieve a 50% margin in the fixed ( against 44 % today) , we mainly revised upward earnings capacity fixed . For the consolidated group , the goal is now over 40 %. In our sum of the parts , these revisions have pushed our target price to € 223 ( vs € 197 ) . In the fixed , the group said they had not suffered from the DSL offering discount launched by B & You in early November , which seems reassuring face to the new offensive launched by Bouygues there fifteen days.