Slowing subscriber growth, emerging
cable, fading regulatory protection and
need for NGA investments intensifying
􀀗 Adding a bleak macro outlook, we cut
our forecasts 3%-7%; we see altnets
stuck in a consolidation battle, losing
ground and synergy potential
􀀗 We remain Overweight on United
Internet, downgrade Drillisch to Neutral,
remain Neutral on Versatel and freenet
and Underweight on QSC – all ratings
have volatility indicators
Losing time in consolidation battle
In February 2008, we predicted difficult times for German
altnets, driven by slowing subscriber growth, price erosion,
emerging cable competition and the need to upgrade networks
to next-generation access (NGA). We concluded that altnets are
the structural losers and consolidation is unavoidable as the
importance of scale reasserts itself in the industry. We find now
that conditions have tightened further. Subscriber growth has
slowed more than expected, cable operators gained even more
and price erosion shows no signs of stopping.
We still see three or four large players plus cable in the end
game. But altnets are stuck in a consolidation battle that’s
hurting all the parties involved, while cable is winning time
to build momentum. Our analysis of more advanced markets
like the US and Japan suggests the move to NGA generally
favours scale players and leaves altnets struggling to adapt
their business models.
Winners and losers
Within a cautious stance on German altnets overall, we continue
to prefer pure reseller United Internet (Overweight (V), target
price EUR10) as the best way to play consolidation. We think
ULL network players are the structural losers (QSC,
Underweight (V), EUR1, and Versatel, Neutral (V), EUR11).
At freenet (Neutral (V), EUR5.5) restructuring needs to take
place before we see any benefits from the debitel acquisition;
we conclude it’s still too early to buy. For Drillisch, we now
incorporate the theoretical put option risk into our valuation and
downgrade to Neutral (V) with a new target price of EUR2.2

目录

Altnets losing time 3
Challenging market 9
Company profiles 15
Drillisch 16
Freenet 20
QSC 25
United Internet 29
Versatel AG 33
Disclosure appendix 38
Disclaimer 43