From Morningstar: 2025-04-02 08:13:00

European telecommunication stocks saw a strong performance in Q1 2025, pushing valuations closer to fair value and lowering average dividend yields from 6.7% to 5.5%. Some firms face dividend sustainability issues, while others like Orange, Tele2, and BT Group offer more resilient 5%-6% yields. Operators with disciplined capital management are outperforming conglomerates.

Key issues in the European telecoms industry include fragmentation, regulation, varying network development stages, government equity stakes, and lack of cross-border efficiencies. Aggressive price competition and high churn in markets like Spain and Italy continue to undermine profitability.

BT Group is managing to maintain revenue growth and show operating leverage despite cost pressures. The company plans significant cost-cutting measures, aiming to reduce headcount by 2030. BT’s dividend is seen as maintainable, with potential for growth in the future.

Orange has exceeded expectations with EBITDAaL growth and free cash flow targets. The company’s cost-cutting efforts have been successful, contrasting with peers like Vodafone. Management aims to maintain a dividend floor in 2025, with the possibility of a slight increase if performance continues to improve. 1. The stock market surged today, with the S&P 500 hitting a new record high. The index closed at 4,358.69, up 1.6% from the previous day. Tech stocks led the way, with Apple and Microsoft both posting gains of over 2%.

2. In other news, the unemployment rate fell to 5.9% in June, down from 6.1% in May. This marks the lowest level since the start of the pandemic. The economy added 850,000 jobs last month, beating expectations of 700,000.

3. The price of Bitcoin reached a two-week high of $34,000 today, following news that El Salvador will officially adopt the cryptocurrency as legal tender. This move is seen as a major milestone for Bitcoin and could lead to more countries following suit.

4. On the international front, tensions between the US and China are escalating over cybersecurity concerns. The US has accused China of hacking into Microsoft’s Exchange email server, affecting tens of thousands of organizations worldwide. This comes as the two countries continue to clash on various issues.



Read more at Morningstar: 2 Top Stocks in the European Telecoms Sector