Proximus Earnings: Strong Earnings Drive Stock Higher, but Fourth Operator Looms on the Horizon

Narrow-moat Proximus' first-quarter results were strong, pushing share prices higher with underlying domestic revenue up 4.5% (guidance of 1% growth for the full year) and underlying domestic EBITDA up 4.7 % (guidance of 1% growth). We are pleased with Proximus' performance on the revenue front, as it is able to pass price increases to customers with little impact on churn rates. Unlike a year ago where EBITDA growth was negative, energy costs and wage adjustments did not weigh on EBITDA in the quarter. Management reiterated its 2024 guidance but cautioned investors regarding the anticipated changes to the Belgium competitive landscape due to a fourth operator. We are maintaining our EUR 10.5 fair value estimate, and at a 4.4 times enterprise value to 2024 EBITDA multiple the stock looks cheap to us.