Vodafone Joins Attempts for European Consolidation; Maintain Our FVE of GBX 135

Vodafone seems to be advocating for a new potential wave of consolidation among European telecom operators. Vodafone started the week by announcing it intends to merge its U.K and Portugal business units with CK Hutchison and Nowo, respectively. Orange and MasMovil have also been attempting to merge in Spain since July. We remain cautious about these potential mergers and acquisitions until regulatory approval is granted, given how rigid regulators were over the past decade, blocking many deals (in the U.K, France, and Denmark) or imposing remedies that wrecked the initial purpose of the merger (Italy in 2018). We maintain our no moat rating and GBX 135 fair value estimate for Vodafone.