DB X-Connect: (WK 27-52): KPN Q2s could provide an entry point; C the SES light

Research evidence excerpt

DB X-Connect: (WK 27-52): KPN Q2s could provide an entry point; C the SES light

6) to execute the same business model that in the last 3+

years did not achieve the goals of TEP's new plan (for example, despite targeted

financial inducements from TEP and major macro pressures, its partners recruited

relatively few higher-value multi-service customers). Thus, and also because we

see reasons to be concerned about TEP's (not just its partners') ability to execute,

we have cut our forecasts materially. Our new FCFE estimates for FY27-FY29 are on

average -49%, and due to this and TEP's cash return policy, we expect net leverage

to remain c.1.4x until YE31. Link to note.

FREENET (Buy): Q2/26 preview - A comparable situation to Q1/26. freenet is due

to report its Q2/26 results on 13 August, but we expect it will do so after market close

on 12 August. Benefitting from the mobilezone Deutschland’s consolidation as well

as the IPTV division, we forecast group revenue to be up 26% yoy, while adjusted

EBITDA could be down 9% yoy, with Mobile Communication (continuously

burdened by negative earnings impact of a network operator agreement) being the

drag. FCF could be down 11% yoy. freenet continuously forecasts adjusted FY26

EBITDA of EUR 500-530m (flat yoy @ midpoint / DBe EUR 512m) and FCF of EUR

270-300m (DBe EUR 283m, -3% yoy). Link to note.

The sector has a total return potential of 32.1%

The sector offers a potential of 32.1% total return opportunity to our targets. The

sector on average trades at a 2026E EV/EBITDAaL of 6.2x, P/E of 11.9x, dividend

yield of 4.6%, and EFCF yield of 8.4% (see Figure 1). The key risks we see for the

sector include a weak macro environment and regulatory/competitive pressures.

Page 2 Deutsche Bank AG