Download - Telco Valuations
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UBS Investment Research
13 January 2010
European Telecoms Valuation
European Telecoms Team
Laura Janssens, Analyst +44-20-7568 2312 Marcus Baeumer, Analyst +49 69 1369 8244
Nick Lyall, Analyst +44-20-7568 6332 Bosco Ojeda, Analyst +34-91-436 9078
Argiro Papadopoulou, Analyst +44-20-2567 6190 Alex Wright, Analyst +44 20 7568 3240
Keval Khiroya, Analyst +44-207568 6005 Zoltan Palfi, Analyst +44 20 7567 1682
Violeta Katzova, Analyst +44-20-7568 3264
This material was prepared by UBS Limited
Analyst Cert if ication and Required Disc losu res can be found on the Disclaimers and Disclosures page
UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a
conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
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Price Performance - One-week
Incumbents EMEA
Others Indices
Indices
-15.0% -10.0% -5.0% 0.0% 5.0%
S&P 500DJ Stoxx 600
DJS TelecomsBTTA
KPNPT
TI (Saving)SCOM
FTOTE
BELGTELIA
DTVOD
TITNOR
TEF
-10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
S&P 500DJ Stoxx 600
DJS TelecomsTurk Telekom
OrascomTE
MillicomTurkcellMagyar
Zain KSATPSAQ-Tel
TEF O2Stel
WataniyaZain
VCOMMTS
MobilyMobiNilCellcomPartner
BZQTelkom
DJ Stoxx 600
DJS Telecoms
ZON Multimedia
Cable & Wireless
Telenet
Iliad
Sonaecom
United Internet
Freenet
Tele2
Elisa
Inmarsat
Fastweb
Mobistar
Virgin Media
S&P500
CAC 40
FTSE 100
DJ Stoxx 600
MSCI Europe
SMI (Swiss Market)
Euronext 100
BEL 20
DAX 30
MADX (Madrid)
DJS Telecoms
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Price Performance - YTD
Incumbents EMEA
Others Indices
Note: The charts show price movements
Source: UBS and Bloomberg
-30.0% 0.0% 30.0% 60.0% 90.0%
S&P 500
DJ Stoxx 600
DJS Telecoms
TNOR
PT
TELIA
TEF
KPN
SCOM
BT
VOD
TI (Saving)
TA
BELG
DT
TI
FT
OTE
-60.0% 0.0% 60.0% 120.0% 180.0% 240.0%
S&P 500DJ Stoxx 600
DJS TelecomsVCOM
MTSMobiNil
MillicomBZQ
MobilyCellcom
Turk TelekomMagyar
Q-TelTurkcellPartner
TEZain
TEF O2Zain KSAOrascom
StelTPSA
WataniyaTelkom
-15.0% 20.0% 55.0% 90.0%
S&P 500DJ Stoxx 600
DJS TelecomsVirgin
FreenetSonae
TelenetTele2
UIISATIliadElisaZONC&W
MobistarFastweb
0.0% 10.0% 20.0% 30.0% 40.0%
BEL 20
DJ Stoxx 600
MSCI Europe
MADX (Madrid)
Euronext 100
S&P 500
FTSE100
DAX 30
CAC 40
SMI (Swiss Market)
DJS Telecoms
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Telecoms Earnings Momentum
Source: UBS European Equity Strategy Team; IBES, Thomson Financial Datastream
-20
-10
0
10
20
30
Feb-00
May-00
Aug-00
Nov-00
Feb-01
May-01
Aug-01
Nov-01
Feb-02
May-02
Aug-02
Nov-02
Feb-03
May-03
Aug-03
Nov-03
Feb-04
May-04
Aug-04
Nov-04
Feb-05
May-05
Aug-05
Nov-05
Feb-06
May-06
Aug-06
Nov-06
Feb-07
May-07
Aug-07
Nov-07
Feb-08
May-08
Aug-08
Nov-08
Feb-09
May-09
Aug-09
Nov-09
0
10
20
30
40
50
60
70
80
90
100
110
120
3-MONTH Relative Earnings Momentum Relative Performance (rhs)
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Calendar
Date Company Event Region
January
22-J an Bharti Airtel Q3 10 results Asia
26-J an KPN Q3 10 results Europe
26-J an Verizon Q4 09 results US
28-J an AT&T Q4 09 results US
28-J an Time Warner Cable Q4 09 results US
28-J an Taiwan Mobile Q4 09 results Asia
February
02-Feb Vodacom Q3 10 results EMEA
03-Feb Vodafone Q3 10 results Europe03-Feb Comcast Q4 09 results US
04-Feb Portugal Telecom Q4 09 results Europe
04-Feb TPSA Q4 09 results Europe
04-Feb Starhub Q4 09 results Asia
09-Feb Tele2 Q4 09 results Europe
09-Feb Singtel Q3 10 results Asia
10-Feb Telenor Q4 09 results Europe
10-Feb Sprint Q4 09 results US
10-Feb Millicom Q4 09 results Europe
11-Feb TeliaSonera Q4 09 results Europe11-Feb BT Group Q3 10 results Europe
11-Feb Mobistar Q4 09 results Europe
11-Feb Telstra Q2 10 results Asia
12-Feb Elisa Q4 09 results Europe
16-Feb Qwest Q4 09 results US
17-Feb Rogers Communications Q4 09 results Canada
17-Feb Qwest Q4 09 results US
18-Feb Swisscom Q4 09 results Europe
24-Feb Telekom Austria Q4 09 results Europe
24-Feb American Tower Q4 09 results US24-Feb Frontier Q4 09 results US
25-Feb France Telecom Q4 09 results Europe
25-Feb Deutsche Telekom Q4 09 results Europe
25-Feb Telecom Italia Q4 09 results Europe
25-Feb Telefonica O2 CR Q4 09 results Europe
26-Feb Telefonica Q4 09 results Europe
26-Feb Belgacom Q4 09 results Europe
March
03-Mar Bouygues Q4 09 results Europe03-Mar Turkcell Q4 09 results EMEA
09-Mar Inmarsat Q4 09 results Europe
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Definitions
Valuation Highlights:
EV =Market Cap +Net Debt +Minorities +Other liabilities Non-core assets Dividend payments
Operating free cash fl ows (OpFCF) =EBITDA adj Capex
Free cash flows (FCF) =OpFCF x (1 normalised tax rate)
Equity f ree cash flow (EFCF): =EBITDA adj - Cash Capex - Cash Interest - Minorities +Associates - normalised Tax
Market cap is adjusted for the resulting tax credits/liabilities
adj. P/E excludes pre- and post-tax exceptional items such as write downs, goodwill amortisation, discontinued operations, etc.
adj. P/E (pre licence amortisation) as above, but adj. net income excludes licence amortisation
Dividend yield =Gross DPS / price
Total shareholder return (TSR) =(Dividend +Share buyback) / Market cap adj. for forecast number of shares
Sector averages are based on aggregated values translated in euros at current FX rates and as such are affected by movements in exchange rates.
Sector "EPS" and "DPS" growth is earnings and dividend growth in .
Historic valuation is based on historic market cap.
Earnings momentum definitions:
1-month Absolute Earnings Momentum (%)=(#of upgrades of the 12-month forecasts - #of downgrades) / total number of estimates
3-month Absolute Earnings Momentum (%)=3-month average of the 1-month Absolute Earnings Momentum
Relative Earnings Momentum =Sector (Absolute momentum) Market (Absolute momentum)
Enterprise value (EV) is stripped of non-core assets and is based on forecast year-end values; the market cap, included in the calculation, is based on
our forecasts of the future number of shares outstanding and is reduced by the expected dividend payments
Earnings momentum chart compares the MSCI Europe Telecoms index vs. the broader MSCI Europe index. The earnings momentum is a three-month
average of the one-month earnings momentum estimates. I/B/E/S data
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Contacts in the EMEA region
Analyst 's name Locat ion Phone Emai l Stock coverage
Laura J anssens London +44-20-7568 2312 [email protected]
Nick Lyall London +44-20-7568 6332 [email protected]
Argiro Papadopoulou London +44-20-7567 6190 [email protected]
Keval Khiroya London +44-20-7568 6005 [email protected]
Violeta Katzova London +44-20-7568 3264 [email protected]
Marcus Baeumer Frankfurt +49-69-1369 8244 [email protected]
Bosco Ojeda Madrid +34-91-436 9078 [email protected]
Valentina Romitelli Milan +39-02-7210 0257 [email protected]
Alexander Wright London +44-20-7568 3240 [email protected]
Zoltan Palfi London +44 20 7567 168'2 [email protected]
Igor Goncharov Moscow +7-495-648 2364 [email protected]
J ohn Slettevold J ohannesburg +27-11-322 7317 [email protected]
We would like to thank Pratyush Kumar for his assistance.*
Footnote: *Pratyush Kumar is not employed by UBS.
Golden Telecom, Rostelecom, Comstar,
Uralsvyazinform, Volga Telecom, Siberia Telecom,
South Telecom, Northwest Telecom, Far East
Telecom, Center Telecom, MGTS, Sistema
MTN, Telcom
Fastweb
Belgacom, Mobistar, Telenet
Orascom Telecom, Turkcell, Bezeq, Partner
Comms., Cellcom, VimpelCom, MTS, Saudi
Telecom, Watnaiya, Qatar Telecom, Turk
Telekom, Zain KSA
Freenet, Iliad, QSC, Tiscali, United Internet,
Mobilcom, Millicom, Thus, KCOM
TPSA, Magyar Telekom, Telefonica O2 Czech
Republic, Cyfrowy Polsat, Telecom Egypt,
Multimedia Polska, Mobinil
Vodafone, Deutsche Telekom, KPN, Belgacom,
Mobistar, Telenet
France Telecom, Telecom Italia, BT, Cable &
Wireless, Virgin Media
Sonaecom, Zon Multimedia
Telenor, TeliaSonera, Tele2, Elisa, Swisscom
Telefonica, OTE, Portugal Telecom, Telekom
Austria
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