Back to top

Analyst Blog

Zacks Equity Research

Telefonica to Invest in UK Spectrum

TEF VOD

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Spanish telecom giant Telefonica S.A. (TEF - Analyst Report) intends to spend €1.5 billion ($1.86 billion) to acquire spectrum in the forthcoming UK auction, likely to be conducted by the year-end.

The auction plans were announced last month by the UK regulator Ofcom. The regulator will put two airwave bands —800 MHz and 2.6 GHz — on sale. The lower frequency band will be part of the digital world and suitable for widespread coverage while the higher frequency band will help in delivering higher speeds.

UK mobile operators getting the 800 MHz band will have to deploy broadband to at least 98% of the domestic population by 2017. Ofcom would try to balance the sale of airwaves between the largest and small operators in order to keep prices low and ensure better coverage.

The regulator said that the largest share would be received by the three major operators — Vodafone Plc (VOD - Analyst Report), Everything Everywhere (a joint venture between France Telecom’s Orange and T-Mobile) and Telefonica (O2 unit). The remaining portion will be reserved for the small operators or new entrants to increase competition.

The spectrum auction, considered the biggest so far in the UK, will have 80% more spectrum than the 3G auction conducted in 2000.

Telefonica generated 11% of its revenue from the U.K. market in the first half of 2012 despite intense competitive pressures. The acquisition of the UK licenses would be long-term growth drivers for Telefonica. The transaction will provide the company more capacity to enhance its LTE networks to new markets. Currently, Telefonica is deploying LTE services in Germany using the 800 MHz and 2.6 GHz frequency bands acquired in the German 2010 auction.

Further, the company plans to double its revenue from the Telefonica Digital division to €5 billion by 2015 from the current €2.4 billion.

We are maintaining our long-term Neutral rating on Telefonica. For the short term (1–3 months), the stock retains a Zacks #3 (Hold) Rank.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
BITAUTO HOLD BITA 35.33 +14.82%
ANI PHARMACE ANIP 24.79 +14.66%
E HOUSECHINA EJ 10.99 +9.24%
CANADIAN SOL CSIQ 26.97 +7.15%
INTERNATIONA ICAGY 33.30 +5.38%