Nos’s revenue could grow 2.1% in the second half of the year, driven by the telecom segment and audiovisual recovery. The estimate is by Fitch, which also expects improvements in cinematography to drive growth in 2022. Given these impulses, the financial rating agency expects the company, led by Miguel Almeida, to increase shareholder compensation over the next three years.
“EBITDA margin [lucros antes de juros, impostos, depreciações e amortizações] According to Fitch’s definition, in 2021 it will be 37.1% (which is equivalent to 43.9% of declared EBITDA), according to a Fitch report released on Tuesday. “EBITDA margin should improve slightly since then, thanks to operating leverage.”
Fitch’s guidance points to capex between 25% and 27% this year and next, “reflecting an acceleration in the launch of investments in fiber and 5G.” 5G-related cash outflows are expected to be € 150 million throughout the year.
“Dividends should gradually increase to around € 190 million in 2024,” he says, noting that Nos does not have a fixed dividend policy that determines annual distribution according to available cash flow. In 2020, the company earned 92 million euros and gave to shareholders a total of 143.5 million euros (0.278 euros per share).
On Tuesday, Fitch affirmed its # # BBB long-term rating (second notch above the barrier separating quality from speculative investment) with a stable outlook. This decision took into account the “strong business profile” of Portugal’s second largest telecommunications company, as well as the maturity and convergence of a market in which each of the three major players has a “significant” market share.
While there is a potential for threats to the competitive rationale of the market, the agency warns that the ongoing 5G spectrum auction represents uncertainty about the scope and timing of payments. On the one hand, “conservative fiscal policy and indebtedness below the thresholds strongly position the rating”, while “the possible size of spectrum payments and the expectation that capital expenditures will remain high in 2022 limit the current rating”.
