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European telecoms networks share boost

As news broke on Tuesday July 23rd that Telefonica had agreed a deal with KPN to purchase their Germany based network E-Plus, telecoms companies around Europe were celebrating as financial markets saw massive increases in stock values.

Telefonica, the network that originated in Spain, is building on their established base in the German market, currently controlling the country’s 3rd largest network. E-Plus, who they have just agreed a deal for, is currently the 4th largest, consolidating the customers of both networks and forming part of a much larger group, which KPN will have a €3.1 billion stake in.

The deal created a buzz around the financial markets, causing the share values of most players to raise well above average levels. Speculation is rife that such a deal and the consequences it is having will create a domino effect across the telecoms industry. John Karidis of Oriel Securities believes that “Telecom Italia would try again to merge with Hutchison in Italy, while TeliaSonera will finally manage to sell Yoigo in Spain”.

A number of networks were already riding a wave of share-price related success, as Telecom Italia were previously up 6.7% after receiving approval for a fixed line network. Bouygues, a French conglomerate were also up 6.9% after entering talks with Vivendi, topping the FTSE Eurofirst 300.

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