German Telecoms "Fibre competition in MDUs drawing nearer" Tang

研报英文原文证据摘录

German Telecoms "Fibre competition in MDUs drawing nearer" Tang

significant market power. We note that the obligation for open access is different

from proposals laid out in the Digital Networks Act at the EC level where there is

no requirement to allow wholesale access. If the latter prevails, this could favour

the operators that move quickly.

Implications for the different players

We think the new legislation could help DT reach its target of 1m fibre net adds pa by

2028 (current run-rate is 0.5m pa). We estimate penetration for DT in the MDU areas is

low at <10% (vs >30% for SDU areas) given challenges in accessing the apartment

blocks and deploying fibre. Near-term, DT is in the process of landing +4-5% price rises

on part of its German broadband base. While this may result in moderate broadband

losses in Q2, it should underpin steady growth in German financials. Other areas of

upside optionality for DT include a €3bn capex tailwind once German fibre rollout is

complete post 2030 and being an indirect beneficiary should there be mobile

consolidation. We see DT as too cheap on <13x PE for 2026E and offering 11% pa

constant currency EPS growth but uncertainties over the impact of satellites on the US

telecoms market and a potential simplification of the DT/TMUS are currently weighing

on the shares (link), but we think these could clear.

For Vodafone, we expect German service revenues to return to negative territory as the

unit laps the uplift of the 1&1 NRA and continued broadband trends may revive the

debate over whether Vodafone needs to upgrade its entire cable footprint to fibre. We

think proposed legislation puts pressure on the OXG fibre JV to deploy faster (while the

JV has a €4.6bn secured credit line, access to this facility will likely be subject to equity