TELECOM OPERATORS : SFR talks deadline extended to 5th June; may be small negative for shares today but does not change our view on deal likelihood (still high)

Research evidence excerpt

TELECOM OPERATORS : SFR talks deadline extended to 5th June; may be small negative for shares today but does not change our view on deal likelihood (still high)

Refinitiv

Investment case, valuation and risks

Bouygues (Outperform, Target Price EUR58)

Investment case

Bouygues shares have risen materially since the start of 2025, mainly driven by

consolidation hopes. But we think there is more to go for - both uncaptured upside if a

SFR deal is announced, and underappreciated value in the Energies & Services (E&S)

and Construction businesses (which together account for nearly two-thirds of group

value). Our analysis suggests that the shares could see further upside if a SFR deal is

confirmed (with scope for material FCF accretion at Bouygues while keeping post-deal

leverage at manageable levels), that targets for growth turnaround and margin

expansion at Equans look credible, and that despite a reputation for operating in a

"volatile" sector the constructions assets have performed in-line with best-in-class

peers in terms of resilience and stability. With attractive upside to our SOTP-based TP,

we rate the shares at Outperform.

Valuation methodology

The diversified nature of Bouygues group lends itself to a SOTP valuation approach. Our

EUR55 TP is based on peer multiples (EV/EBIT) for the Construction (7.5x FY26E) and

E&S (12x FY26E) assets, DCF for Telecoms (7.6% WACC, +0.5% TGR, which ends up

valuing the asset at 5.3x EV/EBITDAaL and 13.3x EV/OpFCF, both FY26E) and a 10%

holding company discount. We value the stake in TF1 at market value.

Risks

To the upside:

Confirmation of a SFR deal. Stronger than expected growth and/or margins in Equans,

helped by exposure to sector tailwinds such as electrification, digitalisation, etc. Stronger