Friday, May 27, 2005

Push the button

Readers of this humble bloglet will know that one of my recurring themes recently is the potential for DSL/VoIP/Triple Play markets in Europe to deteriorate into some Three Stooges-like fight, to a soundtrack of M&A advisors' cash registers ringing. I have put together a list of 11 public consolidation candidates, which seems to demonstrate that the market is on message. Average total return in euros over one month for these stocks is 8.3% (10.3% excluding Easynet), vs. 3.8% for the STOXX, and 2.4% for the STOXX Telecom component. In the current climate, I'd be very surprised if these stocks, as a group, don't outperform next month as well. I guess ideally the list should also include Cable & Wireless, due to its relative strength in UK unbundling, but the buyer would have to be in a position to either absorb all the other assets, or break the company up.

11 consolidation candidates and one month performance (EUR)

Easynet Group (UK) : -11.7%
Freenet (Germany) : 17.2%
Fastweb (Italy) : 3.2%
Iliad (France) : 17.8%
Nextgentel (Norway) : 14.3%
Pipex (UK) : 4.4%
Saunalahti (Finland) : 28%
Tiscali (Italy, Netherlands, UK, Germany) : 4.6%
Versatel (Netherlands) : 9.1%
United Internet (Germany) : 1.5% (Germany) : 3.1%

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