European telecoms stocks generally made a recovery during week 42. Our index was up 0.5 percent, still lagging the EuroStoxx 50 index (+2.4%). Earnings season kicked off, creating both winners and losers. Intelsat improved its year-to-date gain to more than 900 percent.
Last week’s (42) winner was Euskaltel (+16%) the Spanish cable company, on news of Zegona doubling its stake to 29.9 percent. The investment company cleverly took advantage of Euskaltel setting an all-time low just a week earlier. Intelsat (+9.1%) reached a new high and extended its year-to-date performance to +912 percent. Companies making big recoveries included Telefonica Deutschland (+8.4%), KPN (+7.9%), Freenet (+7.5%) and TalkTalk (+7.0%).
Tele2 (+5.1%) and its merger partner Com Hem (+4.0%) kicked off the earnings season with positive reports. Telekom Austria (+3.0%) also benefitted from the Q3 performance. The Nordic incumbents Telia (+0.1%), Elisa (-2.3%) and DNA (-3.6%) faired less well in Q3. Bouygues (-9.6%) was unfortunate to have to issue a profit warning over its construction business, the division that only very recently was the centre of the company’s capital markets day. Still, Bouygues Telecom’s business apparently is doing well. The conglomerate ended up at the bottom of last week’s performance ranking.
CK Hutchison and more
The other conglomerate in our index, CK Hutchison (-1.1%), appears to be considering the sale of its Italian tower assets and was also mentioned as a possible partner for Swisscom’s (+4.7%) Italian FastWeb business. The company’s Italian Wind Tre subsidiary was the latest to launch a low-price offering in the battle for market share, kicked off by new entrant Iliad (+2.8%), and also announced a converged offering.
In other news, Telefonica (+0.3%) announced a smart home hub, the Movistar Home, which will be in direct competition with similar devices from Amazon, Google and Facebook. Altice Europe’s Portuguese business is considering a move into financial services. And BT seems to be close to appointing a new CEO. Freenet said it could sell its stake in Swiss mobile operator Sunrise (+5.4%), giving rise to speculation of a merger of Liberty Global’s (+3.1%) UPC Switzerland and Sunrise.