FCF decreased in 2010 to 12.5 bln from being 14 bln in the last few years. Capex remains similar at between 6 to 7 bln. FCF is therefore 5 to 6 bln. Dividend was increased in 2010 from 3.7 to 4.3 bln.
Depreciation and capex is similar.
EBITDA margin relatively steady at 33% over the last 6 years. Slight decrease from 36%.
RoE is slightly decreasing over the years. Currently at 16% as 5Y average. Now currenly trading at book.
Dividend yield is 12%. Can be reduced to 8%. But otherwise at that level seems sustainable to me.
Derbi price target of 14.50 with a hold. Trading at 11.48.
Note that Deutsche Telekom has EBITDA margins of 26%. I believe this is because they generally have lower market share than FT in foreign markets (Telefonica is the best in having largest market share in the regions they do business in, hence there better margins and RoE), hence enjoy less economies of scale. Having a sub par network in a region means they dont get access to blockbuster handsets, which means there is a large market sector that will never join them! This requires large investment to offset.
DT is already slightly more leveraged than FT. Otherwise in terms of FCF they are similar, and so are dividend payments. FT is worth 30 bln, DT is worth 38 bln. Fear of new market entrant in its home market likely to be weighing heavily on FT.
Note in Europe the telecom sector has not been its usual defensive play. At current pricing I believe they are likely to better qualify for that role during future macro headwinds.
No comments:
Post a Comment