MasMovil eliminates doubts about 5G entry: Buy (O.P. 25 euro/share)

MasMovil has closed a new agreement with Orange which includes both the mobile network (including 5G and extending it to 2028/2033) and Fibre to Home – FTTH – (including an additional 5.2 M UI) and at the same time has updates its estimates (2019/2020) extending them to 2021.

Banc Sabadell analysts evaluate the extension of the agreement with orange positively:

“Not only because of the economic benefits (c40 million euros of savings in OPEX) but because it eliminates the uncertainties about the entrance of 5G and the company´s operations with a much more predictable investment/costs environment. With respect to the improvement in estimates, from our point of view it shows the company´s confidence in the project (they give figures for 2021) and should calm the doubts about the market environment and MasMovil´s ability to sustain its growth (above all with the upward revision for 2019).

The impact of the new guidance on valuation is around +8%, which for now we do not assume as we wait to see the tendencies in results for Q3 (which following the revision we understand will be good). In short, the news should serve to see continuity in the recovery.”