Saturday, October 1

Telefónica faints: not even football raises the action

Telefónica shares closed on Wednesday with a timid advance of 0.3 percent, compared to the 0.8 percent recorded by the IBEX 35. The stock has been trying to recover the psychological level of 4 euros for a month without success. As is customary this year, it takes a world for action to discount positive environments.

Not even the news that LaLiga awarded the multinational the audiovisual rights of Spanish football a few days ago, for 4.95 billion euros for five seasons, managed to raise the price to the extent that the group needs to resume the upward path.

It is true that Telefónica rises 4.5 percent since the auction of the rights was known, but the sources consulted by they consider that it would need, at least, increases of 15 percent to turn around its stagnant stock market situation.

Among the experts who follow Telefónica there is little doubt that LaLiga rights are important. Much noise had been generated about the entry of other operators or possible price inflation, which ultimately did not occur.

But the price of the group, which already started December with very cloudy prospects, did not finish collecting all the benefits of the news, among other things because there are still some questions to be answered.

The doubts of the agreement for Telefónica

From the outset, as explained in Sabadell Bank, “Soccer is about unprofitable content”, although “it does serve as the main claim to retain higher value customers.”

But the key to everything will happen because the multinational manages to reach an agreement with DAZN, the platform awarded the rest of the rights.

“The key will be the ability to Telefónica to reach an agreement with DAZN to integrate both platforms and avoid clients hiring two packages, something that we consider very relevant “, they added in the entity.

For analysts Deutsche Bank, the auction result is neutral for Telefónica, as long as the group can reach an agreement with DAZN, which they believe will be possible.

The question that remains to be elucidated, how do they warn in Barclays, is the price that Telefónica will finally have to pay to seal this agreement and be able to offer all the football to its customers.

What’s more, Telefónica I was reselling the old rights to Orange for 300 million euros a year, and now it is not clear that the French group wants to pay something for football after the arrival of new operators.

One small step

On the whole, analysts assessed the effects quite cautiously, albeit positively, of a deal that still has some unknowns to sort out. However, it is only a drop of water for the challenges ahead of the group.

The auction result “should be seen as a small positive for Telefónica, but not necessarily one that mitigates the other problems, analysts said. Citigroup.

In fact, the US bank’s economists expect that the positive impact on Telefónica’s ebitda will not exceed 50 million euros.

It is a grain of sand in the desert compared to the 14,000 million ebitda that the group reported in 2020 and that will hardly solve the problems of the multinational.

As the magazine already explained INVESTMENT in an extensive reportThe telecom company has multiplied divestments to reduce the enormous debt that was suffocating it, but it is bleeding from the Spanish subsidiary.

In addition, the group has pending to advance the divestments in Latin America, stranded since the pandemic broke out. Or the sale of its fiber subsidiary in Spain, which generated many doubts among investors.

The upward turn is still a long way off for Telefónica

With these elements on the table, reconquering the psychological zone of 4 euros is Telefónica’s great challenge. He has been in this endeavor for a month without any success.

In this area there is an important resistance delimited by the long-term bearish guideline, which starts from 10 euros in 2017, he said Jose Luis Herrera, Analyst at Global Investment Bank (BIG).

Now “you may be making a continuation pattern that you have to validate exceeding the 4.05 euro area,” said the head of analysis of, Josep Codina.

Until this level is well and intentionally overcome, we can speak of upward momentum. Furthermore, for the move to be convincing, the operator should seek 4.25 euros, but before it has a very serious resistance at 4.2 euros, Codina added.

To get here, Telefónica needs at least a 15 percent rebound, something that will be very difficult to achieve if the market does not provide good news about the omicron variant, he said. Manuel Pinto, XTB analyst.

If the downward pressure intensifies again, the key support to maintain is 3.6 euros. Buyer money should come in there to support the value. Otherwise, the fall target is 3.1 euros, Pinto pointed out.