Europe Telco Report - January 2024

European operators pivot toward asset monetisation and inflation-linked pricing adjustments to sustain 5G investment returns.

Eduardo Fichmann · Factory Capital — Operating Partner30 January 2024Period: January 20244 min read

14%↑

UK mobile and broadband price increase (2023)

29x→

Altice data centre sale EBITDA multiple (2023)

Locked

+1more stats

Companies covered:

Abstract

This report analyses the evolving European telecommunications landscape, focusing on the UK's shift from CPI-indexed price increases to fixed monetary increments. It examines the strategic divestment of non-core assets, such as Cellnex's exit from private networks and Altice's data centre sale to Morgan Stanley. Additionally, the brief highlights KPN's 25% mobile traffic growth and the resulting pressure on Australian and New Zealand operators to consider similar infrastructure recycling strategies to fund ongoing 5G deployments.

Key Takeaways

UK operators are transitioning from CPI-linked percentage hikes to fixed 'pounds and pence' increases following Ofcom regulatory pressure.
Sky Mobile is implementing price increases of £12 to £36 per year for out-of-contract subscribers starting February 2024.
Cellnex's exit from the private networks market suggests limited operational synergies between tower ownership and dedicated enterprise network deployments.

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Frequently Asked Questions

UK operators are abandoning CPI-linked percentage hikes in favor of fixed 'pounds and pence' increases to satisfy Ofcom requirements. Sky Mobile is already executing this strategy by implementing annual price rises between £12 and £36 for out-of-contract subscribers starting February 2024.

Investor appetite for digital infrastructure remains aggressive, evidenced by Altice France securing a 29x EBITDA multiple for its portfolio. This transaction involved the sale of 257 data centres to Morgan Stanley, setting a high valuation benchmark for the sector.

KPN has demonstrated that 25% annual mobile traffic growth can be managed without increasing energy overheads. By decommissioning legacy exchanges and modernizing hardware, operators can decouple rising data demand from operational expenditure.

Cellnex’s exit from the private networks market indicates that tower ownership offers negligible operational synergies with dedicated enterprise deployments. This move suggests a broader industry shift toward divestment of non-core assets to prioritize 5G capital requirements.

Europe Telco Report - January 2024

Abstract

Key Takeaways

Frequently Asked Questions

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