Mobistar will publish its 4Q11 results on Wednesday 8 February at 7am CET, followed by an analyst meeting at 2pm CET. We expect the company to achieve its FY11 targets and our 4Q forecasts are in line with consensus expectations. Due to regulation as well as competitive pressure, Mobistar will probably guide for further declines in FY12 profits. Pending the release we reiterate our Hold rating and € 44 target.
FY11 targets to be achieved: We expect Mobistar to achieve its FY targets (flat sales, € 520m to 535m in EBITDA, and € 220m to 230m in net income) and we have pencilled in € 438m in 4Q sales (+1.4% y/y helpedby strong handset sales following the iPhone 4S launch), € 126.7m in EBITDA (down 3% y/y and a 33.3% margin) and € 57.3m in net profit. This is in line with consensus estimates. We have pencilled in a € 29.4 ARPU for the quarter (CSS: € 29.6). We also expect Mobistar to report 42k Starpack clients (TV offer), versus 35k expected by the consensus, again highlighting that the offer can hardly be called a success.
FY12 to show further earnings decline: given the continuing impact of regulation and competitive pressure, we expect a further deterioration in profitability this year and we have pencilled in € 520m in EBITDA, again in line with the consensus.
Lower EPS means dividend to be down: if Mobistar sticks to its 100% pay-out policy as we expect, the decline in the FY11 EPS would mean that the DPS drops to € 3.76, or a gross dividend yield of around 9.5%.
At 5.2/5.3x EV/EBITDA11/12E, Mobistar is trading more or less in line with peers. We see the current valuation as fair and we reiterate ourHold rating and € 44 target on Mobistar.