CaixaBI: “There is a new war between telecom operators”

CaixaBI believes there is a new war between Altice and NOS, after Altice confirmed negotiations to purchase Media Capital, owner of TVI. And although both media groups’ shares are on the rise with these movements, the investment bank considers these are bad news for the sector.

We consider these are not very good news for the sector, and if it happens, it will possibly imply less future cash-flow and less EBTIDA margins.

“Assuming a scenario in which Altice acquires Media Capital, our opinion is that a new war between telecom operators may be starting, because of NOS’ interest in acquiring an equity in Impresa, which is equally an operator integrated in the Portuguese media”, stated the analyst Artur Amaro.

CaixaBI recalls the “battle for sports contents in 2016” started by NOS, because of Altice’s interest in acquiring Benfica’s sport rights. Amaro’s conclusion is that if Altice purchases Media Capital, the media sector will be harmed. “We consider these are not very good news for the sector, and if it happens, it will possibly imply less future cash flow and less EBTIDA margins”, says CaixaBI.

According to CaixaBI’s assessment, Impresa, owner of SIC, has an Enterprise Value of 230 million euros, “identical to the market’s value”. As for Media Capital, “it is important to mention that a multiple of 10x EBTIDA (assuming the Enterprise Value of 400 million euros) already means an acquisition/control prize, although the same measure may not be attractive enough for Impresa”, highlights Artur Amaro.

^{Note: The information presented is based on an issuance from the investment bank, meaning it is not a recommendation from ECO. Concerning investment decisions, readers should consult the bank’s complete research note and speak to their financial intermediate.}