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雷达卡
Growing market. Broadband penetration is mature, but
still growing. Pricing is improving as a cable/telco
duopoly emerges out of ULL-driven price cuts.
Furthermore, there are opportunities to charge more for
speed and at the margin to increase/differentiate pay
services. Growth in telecoms has been hard to find, but
fixed line is the likeliest place to find it, in our view.
“Interpenetration”, but not price competition.
Telcos are entering TV, some with success (PT,
Belgacom) while cable continues its foray into
broadband and voice. We do not see price as being the
key competitive strategy on the overall package: rather
operators will seek to differentiate, e.g. “thin”
payTV/VoD versus “all you can eat” premium content;
upstream versus downstream speeds; home-only or
portable/mobile services.
Cable has key advantages. Cable enjoys a cheaper
upgrade path to very high speeds vs. telcos, offers
higher speed capability, and can leverage a
differentiating core capability, TV. Cable operators also
tend to be more efficient, with higher margins and lower
ongoing restructuring charges giving greater cash
conversion. Telcos benefit from trusted brands, and
significantly deeper pockets, but, we think, need to build
TV franchises and ensure networks remain competitive.
What are the risks? The key risk to both cable and
telco is FTTH build. In our view, FTTH is a political
question, as the economics do not look attractive.
Indeed, some FTTH developments are already failing.
At present European regulators and politicians do not
appear willing to pay the subsidy required. Investing in
premium content and mobile networks do not appear
attractive strategies.
Stock conclusions. BT, Telenet, Iliad and PT have the
highest exposure to the broadband theme. We see the
greatest risk for unbundlers (declining business model),
DT (new growth in cable broadband) and KPN (low level
of VDSL investment).
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