Cesky Tel management announced rebranding of Cesky Tel and Eurotel to Telefonica O2 Czech Republic as of July 1. The whole rebranding process should be finished by the end of the year and management doesn’t have any intentions with established brand Eurotel. The costs of rebranding has not been disclosed but according to ARBOmedia this rebranding should be the largest in Czech telco operators. Estimates of last rebranding of Oskar/Vodafone amounts to CZK 500m. According to CEO J. Smith, the merger should have no negative effect on earnings, while in the longer term, the company expects a positive impact of EUR 300m, with more than 60% on the revenue side.
Our view: the merger and the resulting synergies have been already announced and therefore we see the news as neutral. We reiterate our Buy recommendation with fair value of CZK 510.