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A tale of three telcos: Telia is best bet for Nordics, says Jefferies

Swedish telco Telia represents a better prospect for investors than its Norwegian neighbour Telenor, despite risks to the company, according to analysts from Jefferies.

In a note on Scandinavian telcos, Jefferies also said that “visibility is limited” on prospects for a third player in the region, Tele2.

The analysts said that Telia “has a sustainable opportunity to reduce capex in its home market” thanks to the advanced state of the rollout of FTTH in the Swedish market. They said that Telia is “closing in on the fixed end-game, with better visibility towards the longer-term market structure than at many European peers.”

Jefferies warned that Telia may not make its 2018 full-year cost objectives, it said that the company could benefit from opportunities for domestic cost reductions along with synergies from its acquisition of Norwegian cable operator Get and disciplined capex.

Jefferies predicts that Telia will be turning in TV revenues of just over SEK2 billion by 2020, reflecting “moderate” growth, alongside rising broadband revenues of SEK4.6 billion and a declining fixed voice business.

Regarding Telenor, Jefferies said that the company had suffered from “more severe top-line pressures than expected” and challenges to its Asian operations in Malaysia, Thailand and Myanmar.

The analysts said that visibility about Tele2’s performance “is severely hampered by the Com Hem

Acquisition” thanks to different accounting treatment to the prior reporting, no pro-forma figures available so far and lack of clarity about synergies.