DB Daily Fibre: Industry Update

Research evidence excerpt

DB Daily Fibre: Industry Update

Deutsche Bank

Research

Europe Industry Date

18 June 2026

Telecommunications DB Daily Fibre

Wireless Services Industry Update

ORAN TP UP / FRA - SFR STORES /

GERMAN MNVOs / EU DNA

Robert Grindle, Ph.D.

ORANGE (Buy, last close EUR 16.9): Our note this morning takes a detailed look at

Research Analyst

the proposed SFR deal and MasOrange consolidation. We see ORA taking SFR’s +44-20-754-58490

MVNOs a key positive given it can upsell customers, with Iliad taking SFR’s RED

brand this could suggest a premiumisation of Free, recent price moves from ILD and John Karidis

Sosh supportive. The SFR deal is not premised on market repair and we calculate

+44-20-754-54610

net cost synergies worth +EUR 1 per share to Orange, now included in our

valuation. Our note assesses the French tariff portfolio and we show incremental Keval Khiroya, CFA

annual indexation of 2ppt drives c.10% valn upside. MasOrange closing last week Research Analyst

sees group leverage up to 2.3x net debt/EBITDAaL end FY26 from 1.8x FY25, and +44-20-754-18164

we calculate the SFR deal would add a further 0.3x; however, given strong FCFE we Roshan Ranjit, CFA

estimate ORA will delever to 2x in 2-3 years in line with sector av. and mid term Research Analyst

guidance. FY28E DPS floor EUR 0.85, 5% dividend, implies 43% payout ratio on org. +44-20-754-52908

cashflow guidance vs. historic av. c.60%. 60% on FY28E cash flow suggests 50% Vijay Saravanan

upside to cash return but note the balance of distributions vs. delevering. Whilst Research Associate

some near term excitement may be tempered, we see longer-term benefits of a

better domestic market as supportive and ex market repair calculate the deal to be Ankit Sharma

FCFE accretive from year 1. Orange trades on 8.3% EFCF yield vs.