German FTTH deep-dive

Communications

New Street Research

While German broadband volume growth is slowing, New Street argues this is outweighed by a more rational market structure taking shape. Fibre overbuild looks set to remain far lower than in most other markets, supporting sustainable pricing and derisking the payback on high levels of FTTH capex per premise. Their report highlights the growing number of wholesale deals emerging; how the MDU market structure is likely to play out given the new draft law amendment; and evolving thoughts on the SDU fibre overbuilder market where they have more visibility on the longer-term wholesale dynamics. New Street also examines the implications for key players including Deutsche Telekom, Tele Columbus and Deutsche Glasfaser.

- 22 August, 2025

Telcos: More selective stock picking required

Communications

New Street Research

European telecom stocks have outperformed YTD, adding to 2024’s gains and validating New Street’s long-term thesis of regulatory improvement. However, with sector upside narrowing to 17% (vs. 31% at the start of the year), returns are likely to become more stock-specific and increasingly dependent on M&A. They highlight French names and Telecom Italia as most geared to deal-making. New Street’s top picks are BT (strong FCF growth); DT (German and US upside); Bouygues (undervalued FCF growth and M&A upside); and Vodafone (special sit. with value to be unlocked). They also recently upgraded Telia to Buy seeing good cost control and the possibility for extraordinary cash returns.

- 25 July, 2025

Telcos: Q4 first time ever all EU markets are in positive growth

Communications

New Street Research

Service revenue growth remains at record highs (+2.2% Y/Y in Q4, the highest growth rate the sector has achieved over the last 10+ years) and for the first time all markets have positive growth (between +1-5% Y/Y). EBITDA growth also improved, while capex appears to have peaked. OpFCF was +17.5% Y/Y in Q4 and +5.2% for the full year. This was the second quarter in a row of ROCE growth (it is now back above 8% for the first time in 2 years). New Street strongly believes the good service revenue growth will filter through to permanently better FCF and higher ROCE thanks to the improving regulatory environment. Their current top picks are BT, DT, Orange, Telenor, Telia and Vodafone.

- 19 April, 2024

Telecoms: Happier times ahead

Communications

New Street Research

After many years of headwinds, New Street is bullish on the outlook for the European telecoms sector as we head into 2024, with a continued reduction in risk perception helping to support a multiple re-rating driven by the following themes: 1) Ongoing regulatory tailwinds, 2) Declining energy costs, 3) Capex going past its peak driving above inflation OpFCF growth, 4) Copper shutdown, 5) Further sector consolidation. Their top picks are BT, Deutsche Telekom, Telefonica, Telenor, Telia and Vodafone.

- 22 December, 2023

Implications from German TV / FTTH changes

Communications

New Street Research

New Street looks at the impact of the Telecoms Law on German apartment buildings - a market of 21m premises - one of the largest “single” markets in Europe. Specifically, they focus on 1) the impact of the break-up of the bulk contracting for TV, 2) the way FTTH could be deployed to these buildings, 3) how in-home wiring could be shared to reduce capex costs. The battle for ultra-fast broadband access into these premises is just beginning. Relevant stocks include Vodafone and Deutsche Telekom, while New Street believes Tele Columbus could be one of the most interesting high-yield names in Europe.

- 12 May, 2023