Telecoms: Undervalued with a Case of Merger Fever

In Europe, telecom is focused on convergence and increased build – outs of fibre and 4G

Brian Colello, CPA 17 July, 2018 | 12:10PM
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Europe has been a busy place for telecom-related mergers and acquisitions. We have seen competing bids from Twenty-First Century Fox and Comcast in attempts to acquire U.K. satellite TV provider Sky (SKY). Although we were previously sceptical of a bidding war between the two firms for Sky, recent regulatory announcements suggest that Fox's prior advantages when it comes to buying Sky – such as being the first bidder and already owning 39% of Sky shares – have been essentially nullified.

Complicating the matters further is Walt Disney's bid to acquire assets from Fox, although the U.K. recently announced that if Fox were to gather enough support from shareholders to buy Sky, and Fox were then able to sell Sky News to Disney, the Fox-Sky merger might be more likely to receive regulatory approval.

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Brian Colello, CPA  is a senior stock analyst with Morningstar.