Following the National-Roaming deal between 1&1 and Vodafone, Telefónica Deutschland shares experienced a significant drop in price
After JPMorgan withdrew its buy recommendation for Telefónica Deutschland stocks, they are approaching a record low. On Tradegate, they experienced a loss of 1.6 percent, dropping to 1.704 Euros, compared to the previous day’s Xetra closing. If this trend continues, they could surpass their previous Xetra low of 1.723 euros from March 2020.
In August, the stock price of Telefónica Deutschland has already lost about 30 percent of its value. One reason for this is the potential revenue decrease with 1&1, as Vodafone unexpectedly entered a partnership with 1&1 to generate additional revenue.
The two companies have decided on a National-Roaming partnership. This means that 1&1 customers can use Vodafone’s network in areas where their primary contract partner doesn’t have their own transmission towers, starting from October 2024.
Vodafone will receive rental income for this agreement. Previously, 1&1 had such an arrangement with Telefónica Deutschland (O2), but it only applied to the 4G network. The agreement with Vodafone also includes the latest 5G mobile standard.
Akhil Dattani, an analyst at JPMorgan, downgraded the Telefónica Deutschland stock from “Overweight” to “Neutral” due to this cooperation between Vodafone and 1&1, which significantly impacts Telefónica Deutschland. He estimates that about half of the previous free cash flow (EFCF) and 15 percent of the operating income (EBITDA) are at stake because of this.
On August 16, 2023, the Telefónica Deutschland stock (ISIN DE000A1J5RX9) reached a new all-time low at 1.71 Euros, matching the price from August 15, 2023.
Since July 4, 2023, the Telefónica Deutschland stock has been in a long-term downtrend, losing 34.16 percent of its value during this period. Currently, the distance to the 200-day moving average is -34.50 percent.
Over the last ten years, Telefónica Deutschland has achieved an average annual return of -6.00 percent, and the investment risk is assessed as high with a loss ratio of 3.12.