Buy Signal on Telenor (TEL-NO)
Telenor is a NOK 220 Bn market cap, and the 1st Norwegian telecommunications group. Revenues break down between 1/ mobile telephony (65%) including operating licenses for mobile networks in Europe and Asia; 2/ Internet access and TV channel transmission services (10%; No. 1 in Norway) and 3/others (25%) including sale of equipment (telephones, computers, etc.), provision of IT services, provision of satellite communication services. The geographic breakdown of sales includes Norway (22%), Thailand (20%), Malaysia (11%), other Asia (18%), Sweden (10%), Denmark (4%), Finland (3%) and others (13%).
The company showed strong resilience in Q2, with limited organic yoy revenues decline (-4%) and higher EBITDA (+1%) despite international roaming revenues decline. A major boost came from last year's acquisition of DNA in Finland, which was unable to contribute to the company's year-ago results. Telenor appears as a safe haven in case of a second wave of Covid-19 and offers a 5.6% dividend yield for 2020 coupled with appealing valuation.
Short term catalyst: Cost cutting, cash flow generation.
This signal looks mainly company specific as the European Telecom sector is in major bearish momentum.