European Telecoms "Chart of the week" Tang

Research evidence excerpt

European Telecoms "Chart of the week" Tang

Global Research

26 June 2026ab

European Telecoms Equities

Europe including UKChart of the week

Telecommunications

Polo Tang

Figure 1: European Telecoms vs European market - consensus forward PE (x)

Analyst

over time polo.tang@ubs.com

+44-20-7568 1286

ms Ondrej Cabejsek

co Analyst

ondrej.cabejsek@ubs.com

le +44-20-7568 6332

Te Dhruva Kusa Shah

n dhruva-kusa.shah@ubs.com

+44-20-7568 3395

ea

Oba Agboola

op Associate Analyst

obaloluwa.agboola@ubs.com

r +44-20-7568 3969

u Christina Michael

Associate Analyst

E christina.michael@ubs.com

co ( o +44-20-7567 2376

vs Euro pean mar ket - nsen sus forw ard PE x) ver time

Source: UBS, Refinitiv Datastream

Sector at a premium, but offers defensive growth with upside optionality

PE is one of the alternative valuation metrics we look at for the sector, in addition to

dividend yield to bond yield spreads and UBS HOLT Price/Book – most investors focus on

reported EFCF yield. European Telecoms trades at a modest PE premium compared to

the broader European market (Figure 2Consensus12mforwardPE(x)fordiferentEuropeansectors*) – 16.5x for the former on consensus estimates

(or 15.3x on UBSe excluding Nokia/Ericsson) vs <15x for the broader European market.

However, the sector offers defensive double-digit EPS/FCF with around half the growth

underpinned by falling D&A/capex post a once-in-a-generation investment in fibre and

the other half coming from +1% top-line growth. At these levels, we think there is little

priced in for M&A with cost savings that could improve returns (thereby driving a higher

valuation) with optionality around ‘market repair’ and improved top-line growth which

could lift EPS/FCF to mid-teens pa growth (link/link). While we see scope for