UBS: Fast Take: Spanish Telecoms "Expansion reports MasOrange protests 1..."

Research evidence excerpt

UBS: Fast Take: Spanish Telecoms "Expansion reports MasOrange protests 1..."

Valuation Method and Risk Statement

Orange:

We value Orange using a SOTP model with DCF analyses driving the majority of the parts. We

use a blended 8.2% WACC and a blended 1.6% TGR. The key risks to our thesis include the

deterioration of competitive dynamics in both of the two key markets, France and Spain,

capital allocation, regulation, trends in France wholesale, FX/macro risks in MEA.

Telefonica:

We value Telefonica using SOTP model with a combination of DCF analyses and EV/OIBDA

multiples. The key downside risks for Telefoncia include: 1) competitive dynamics in Spain

following several deals in the market; 2) loss of wholesale revenues in Germany and Spain; 3)

high leverage; 4) macro volatility in its emerging/frontier market exposure. Upside risks

include: 1) market repair in Spain on the back of consolidation; 2) infrastructure consolidation

in Spain/UK; 3) consolidation in other markets including UK/Germany/Brazil.

Vodafone Group:

Vodafone is subject to a range of competitive, regulatory and technological risks.

Competition in a number of markets remains intense, particularly in Italy and Spain.

Regulation, notably on termination and roaming, continues to weigh on sector revenues.

Technological change remains a core characteristic of the industry, with disruptive

technologies offering potential for further substitution and/or price pressure. A notable

proportion of the Group is present in emerging markets meaning Vodafone is inherently

exposed to macroeconomic risk. Our Price Target is derived from a SOTP based on DCFs for

the major units with WACCs of 8-10% and terminal growth rates ranging from 0% to 2%.

Spanish Telecoms 26 June 2026 ab 2