Silver Linings Euro TMT Weekly: EU TMT Sector Specialist Commentary

Research evidence excerpt

Silver Linings Euro TMT Weekly: EU TMT Sector Specialist Commentary

ted in the shares. We continue to believe the probability of Deutsche Telekom actively

pursuing a transaction is relatively high, with European investors generally assigning a greater likelihood than theU.S. that remain

sceptical. Akhil outlined his thoughts back in April, arguing that the current ownership structure is ultimately unsustainable,

given TMUS now represents roughly two-thirds of DT’s EBITDA and an even larger proportion over time. Ultimately, the market

reaction will depend on deal structure, the premium offered to TMUS minorities, management’s ability to articulate the strategic

rationale, and investors’ confidence in execution and regulatory approval. While political and antitrust hurdles in both Germany

and the U.S. are clearly significant, we believe Deutsche would be unlikely to proceed without a high degree of conviction around

the path to completion. More broadly, the strategic logic behind a combination has strengthened as growth concerns in U.S.

wireless have emerged and the need to reinforce TMUS’s competitive position and long-term growth profile has increased. Telco

flow over the last two weeks have been characterised by notable selling. BT has been under pressure, potentially reflecting UK

political concerns, while Deutsche Telekom has seen long-only selling and Nordic names such as Telia have faced hedge fund

trimming. This has all occurred against a backdrop of a more hawkish rates environment and a broader risk-on macro tape. See

Akhil’s thoughts on the deal from back in April HERE: https://www.jpmm.com/research/content/GPS-5273470-0

EU INTERNET

EU CLASSIFIEDS: Feedback on Marcus Diebel’s latest European classifieds deep dive was broadly constructive, with investors