Orange: Morgan Stanley downgrades 'buy' rating

(CercleFinance.com) - Morgan Stanley has downgraded its buy ("overweight") rating on the share of the incumbent French telecom operator Orange, adopting a"weight inline" stance.

The broker has cut its corresponding target price from 20 euros to 17 euros, which still gives it significant upside potential of 25%.

The broker expects the group to continue to invest in fibre optics in France until the mid-2020s. "Capex" will therefore be higher than expected. "We expect Orange to continue spending more on French fibre - until the mid-2020s (a 15yr, E15bn project)," the broker says in its note.

In addition, Orange will have to deal with frequency auctions of the 5G telephony standard in France, as well as Spain.

Finally, the possibility of a split or a partial sale of telecom infrastructures (especially masts) is no longer relevant. Thus, and despite the Orange share having a valuation that is deemed "attractive", Morgan Stanley has downgraded its rating on the share.



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