European Telecom Services: ROCE watch: Still moving in the right direction

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European Telecom Services: ROCE watch: Still moving in the right direction

Equity Research

21 July 2026

European Telecom Services

ROCE watch: Still moving in the

right direction

The sector's ROCE continues to improve: in 2025 we estimate European Telecom Services

it reached 7.0%, up from its 5.7% trough in 2021. While the NEUTRAL

sector's ROCE remains below its WACC, we see further European Telecom Services

Mathieu Robilliard

improvements ahead – although we still expect the sector's +44 (0)20 3134 3288

ROCE to lag the market average. M&A could accelerate the mathieu.robilliard@barclays.com

BBI, Paris

recovery. Maurice Patrick

+44 (0)20 3134 3622

After a long period of erosion, the ROCE of the European Telecoms industry continues its maurice.patrick@barclays.com

recovery path, reaching 7.0% in 2025, on our estimates. This has been driven by lower Barclays, UK

capital intensity (capex has started to decline post peak FTTH roll-out) and Ganesha Nagesha

improving profitability (cost efficiencies). This trend is set to continue, in our view: by 2026 +91 (0)22 6175 1712

we expect the sector ROCE (incl. goodwill) to have increased to 7.5%. If we exclude ganesha.nagesha@barclays.com

goodwill, we estimate the sector has already reached its cost of capital and will reach a Barclays, UK

9.6% ROCE in 2026. Still, this remains below the market average. We see in-market M&A as Maxime Delaugerre

one potential route to a faster and sustainable recovery. +44 (0)20 3555 5672

maxime.delaugerre@barclays.com

ROCE continues to improve: Since 2022, ROCE (Adj. EBIT) has been improving and reached Barclays, UK

7.0% in 2025, on our estimates, in line with our expectations last year (see ROCE watch –

Continued improvements- 6 June 2025). While capital intensity continues to decline, NOPAT