Morgan Stanley says European telecom earnings show mixed results

Investing.com -- Morgan Stanley reported that 60% of European telecommunications companies have released their earnings results. Revenue performance exceeded analyst expectations, but half of the companies missed their EBITDA targets.

The European telecom sector gained 10% year-to-date but underperformed the broader European market by one percentage point. The sector has shown weakness since June, with satellite-related concerns affecting companies in the United States and Europe. Deutsche Telekom shares remained negative for the year, and uncertainty around tower assets continued.

Half of the companies fell short on EBITDA, with only Telia and KPN beating expectations. EBITDA growth slowed to 1.3% in the second quarter, down from 3.6% in the first quarter. Nordic telecom companies, including Tele2 and Telenor, saw EBITDA growth return to normal levels after strong performance in 2025 driven by cost reductions.

T-Mobile US reported second-quarter results on July 23, exceeding Morgan Stanley's EBITDA forecasts by 1.4%. Deutsche Telekom is expected to show improved revenue and EBITDAaL trends in Germany following a €3 per month broadband price increase in early April.

Revenue results showed 56% of companies beating expectations, 11% meeting forecasts, and 33% missing targets. The three companies that missed revenue estimates were Nordic operators Elisa and Telenor, along with Liberty Global. Nordic misses resulted from weak mobile service revenues and competitive market conditions.

Half of the companies maintained their guidance. Vodafone raised its EBITDAaL and free cash flow guidance, stating it expects to deliver results at the upper end of its updated ranges. Elisa, Telenor, and KPN reduced their guidance for various metrics including service revenues and cash flow.

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