Hi. I am hungry since European telecom analyst at Bloomberg Intelligence. I want to talk today to the sectors MNF outlook in
2022 and show results of our poll on the subject matter. Field expectations look heightened with steady flow of everyday
headlines. Already early in the year supporting the sentiments. A key conclusion from our poll also underlines the importance of
MBNA for the sector. An overwhelming majority of respondents. So deal making is a
significant positive catalyst for the sector share price performance this year.
And this comes after the industry's third consecutive year of underperformance last year. Public markets clearly show
dissatisfaction with the sector's cash flow outlook as top line growth looks tepid margin gains limits and network investment
needs elevated. This has driven sector multiples to the lowest in the markets after auto and energy sectors in Europe.
The public market valuation of telecom carriers is in stark contrast to the valuations commanded by the infrastructure
assets that they own such as towers or fiber assets. These typically attract double digit EBITDA multiples while telecom
carriers trade on average at about six to seven times a week to every day multiple.
It is against this backdrop of low valuations coupled with cheap financing. MNF is increasing and making its mark on the sector's
prospects. In 2021 we already saw quite strong belongings on the back of
takeovers by PE firms and asset monetization initiatives by telecom management teams. And this year looks to be even
stronger as we see telecom executives increasingly focusing on emanate create value and improve conditions in the challenging
markets they operate. Given the outlook for an interesting year for sector emanate we
saw great expectations of investment community with a poll that concluded in mid-January with 47 respondents split roughly
equally between South Side and by side professionals. The poll findings first of all echo our expectations on the oil pipeline.
Eighty three percent of respondents see an activity growing with one in three expecting strong growth in 2002 and to. Network
carve outs and consolidation are the most expected type of deals to drive this activity. We already touched base upon the
valuation discrepancy between telecom operators and assets they own. And as this discrepancy passes asset monetization
transactions should continue unabated. The deal activity in this area cannot expand in 2022 to include mega mergers in the target
space. By large telecom carriers such as waterfront or orange as they seek to boost growth opportunities and create more
formidable rivals to independent type of companies. We also see rising for structured competition prompting some operators such
as Telefonica in Spain or Libya to Gutenberg to go global to evaluate monetization opportunities for a broadband networks
potentially driving deal activity this year. Constellation is a key emanate driver is hardly any surprise
after waterfronts public announcement of his Thiel intentions in Europe and a barrage of headlines already hitting the wires. One
of the takeaways from the recent MNF speculation in the press is that it is not only Vodafone but many other management teams
have in their minds on seizing the consolidation. Or fortunately our poll results reflect this.
Markets where Vodafone is key presence Spain the UK and Italy agreed at the top of the list of countries where respondents
expect Conservation Award in 2022. But other European markets hosting more than three mobile
network operators and hence making Constellation more. Why abot such as France Sweden Denmark also feature in the results.
The key to the success of conservation efforts is overcoming the antitrust hurdles and our poll reflects the gruelling
expectation of an improved regulatory stance with the pandemic 86 per cent of participants and space such deals passing with
remedies. Still the narrow of caution permits us 60 percent see deal approvals with remedies as only somewhat lightly. We share
this cautiously optimistic tone while the European Commission's clearance of T-Mobile tell it to deal. In the Netherlands we
doubted remedies in 2018 and a court challenge to the European Commission's unfavorable review of Hutchison's 2016 deal with
Altria in the UK offer an encouraging backdrop. The EU's antitrust track record has largely been strict. We see
relatively high prices in Spain and the potential removal removal of disrupted small rival in Italy calling for
significant remedies to regulatory approvals in potential deals. Leveraged buyout was another focus area of the poll. And here we
see participants expecting a robust deal activity with one in five seeing strong year over year growth.
When it comes to the potential targets for LBO interest we see KP on taking the Crown followed by Beatty.
But the private equity firm KKR has two billion euro and dollar offer for Telecom Italia in late 2021. Appears to have also
emboldened lower leveraged buyout expectations as large carriers such as Waterfront Liberty Global also feature in the list.
While this concludes given the outlook for meager fundamental performance Eminem represents a key opportunity to boost the
sector's prospects. And as we mentioned at the start of our discussion most of respect our respondents think emanate will be
a significant positive catalyst for the sector in 2022. While I will leave it that and I will just briefly highlight that if you
are looking into research and data about the industry please visit the ISE European Telecom Dashboards. The ISE Space TLC.
And if you have any questions please reach out to me or one of our telecom team members.
Thanks for your time.