Last week in telecoms: bond deals for Digital Realty, Altice Europe, Cellnex and a look back at 2019


It has been quiet so far on the telecoms front in 2020. A number of companies turned to the debt markets, but not much else happened. We use the opportunity to take a closer look back at 2019. It was generally a terrific year for equity investors, with the S&P 500 index up 24.8 percent for the year. Alas, not so for telecoms investors in Europe. The Telecompaper European Telecoms Services index was up just 7.5 percent, seriously trailing the S&P 500.

As to the start of 2020, we have seen Digital Realty, Altice Europe and Cellnex do a number of debt deals. Digital Realty is paying the lowest rates: just 0.125 percent on a 2022 note and 1.5 percent on a 2030 note. Altice Europe is paying 2.25 percent on a 2025 series. Contrast this with Cellnex’s 1.0 percent on a 7-year bond.

Forthnet and Altice Europe biggest winners

Back to 2019. Forthnet, a financially troubled Greek ISP, took the top spot, gaining 263 percent on takeover speculation. It was closely followed by (highly leveraged) Altice Europe, up 238 percent. The worst stock in our basket was Intelsat, down 68 percent on a deteriorating perspective on the value of its US spectrum holdings. SES fell 25 percent for the same reason. 

The other major underperformers were three German companies, suffering from the outcome of the nation’s 5G spectrum auction. The auction upgraded 1&1 Drillisch to MNO (mobile network operator) status, but the stock was down 49 percent. Telefonica Deutschland lost 24 percent and United Internet 23 percent.

Infrastructure was rerated in 2019

The largest holdings in our index contributed unfavorably to it. Deutsche Telekom ended 2019 down 1.7 percent and Vodafone Group lost 4.0 percent. Just a single segment contributed unambiguously in a positive sense: the infrastructure operators (fibre, towers and data centres). Digital Realty (+12%), Retelit (+16%), Inwit (+46%), Zayo (+52%), InterXion (+55%), Equinix (+66%), Cellnex (+71%) and Intred (+81%). It is safe to say that this section of the market underwent a big rerating in 2019.

A final word about potential takeover candidates, the companies that have been the subject of rumors and speculation to that end, and the ones that were actually the subject of an offer. We have already mentioned Forthnet (+263%). Others include Italian Go Internet (+2.7%), KPN (+2.8%), Tele Columbus (-3.6%) and Zayo (+52%). Manx Telecom (May), NextGenTel (June), KCom (August) and DNA (December) were taken off the stock exchange in private deals.

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