Telefónica dances alone: Moody's leaves her out of the imminent dance of mergers between 'telecos'
Every time there is more voices announcing imminent mergers in the telecommunications sector. Even his own President of Telefónica, José María Álvarez-Pallete, considers that the current "market structure in Europe is unsustainable", as there are hundreds of different operators. However, the Spanish company does not have any signs of being a protagonist in this phase of corporate operations that is coming, according to assures Bolsamanía, Carlos Winzer, Moody's Analyst.
"Telephone it cannot be a participant in the consolidation, it does not have financial capacity and Competition would not let it, ”he assures. The reason, Winzer indicates, is that "the Spanish market is convergent." In other words, operators seek to have as wide a commercial offer as possible. "The optimal point is to achieve a balance in terms of presence and market share in mobile and fiber, with structure in both. Telefónica is the most balanced in that mix, to offer convergence; and the ones that have to make the most effort are Euskaltel Y MoreMobile”.
Precisely, the owner of Yoigo always plays in the pools of future corporate operations. There, the Moody's analyst recalls that the three funds that have just taken control of the operator (KKR, Cinven and Providence) "They have a commitment to stay for at least one year. They cannot sell but they can consolidate," he indicates and recalls that "this type of shareholder has a more aggressive policy, via acquisitions."
In this context, the other two European multinationals present in Spain also play, Vodafone Y Orange. As for the British group's subsidiary, Carlos Winzer points out that "it has been one of the companies that has suffered in recent years, due to the loss of market share, by abandoning football in its offer; and it is in the process of recovering its positioning in the market, and Orange is also in a process of consolidation and positioning improvement, it has more muscle and the ability to digest ”.
FIRST, MERGERS BY COUNTRIES
As for the next steps, first there will be mergers by markets, before crossing borders. "We see consolidation within countries, it is where there are more synergies. Not on a European scale. It is what can benefit the operators the most in each market. An intra-country operation would favor any company, because they would be more rational operators, in the medium term; and with less vocation to lower prices, in the short term. It would lead to a repair of the market, ”assures the representative of Moody's.
And there, Spain is one of the countries where the movements seem clearer. "We're seeing markets, such as Spain, Italy or the United Kingdom, where pressure means that companies do not reach the optimum to give a greater profit and ‘cash flow".
“The catalyst for a structural change is going to be consolidation in the European market. We believe that in 2021 there will be important operations. The sectoral dynamics will change. As long as they do not occur, the income pressure in the sector will persist, among other things, due to the competitive intensity ”, concludes the analyst.
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