14. January 2020 | 08:11 CET
Deutsche Telekom & Co with 5G challenge - Will Philion benefit in 2020?
5G is not only a major challenge for Deutsche Telekom. All German network operators have to cope with the high investments required for the next generation mobile communications standard. They are still busy working on the 4G LTE standard. One example is the recent announcement that Telefonica Deutschland is not meeting its obligations for 4G network rollout. Only those who can ensure high network utilization will earn money. To achieve this, no network operator can avoid independent mobile service providers like Philion SE. The still young listed company has repositioned itself with the takeover of Handyflash.de at the end of 2019. Profitable growth is expected to begin in 2020. There are good reasons why the small-cap stock could take off in 2020.
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ISIN: DE000A1X3WF3 , DE0005557508 , DE000A1J5RX9
Sales target EUR 100 million, marketcap. EUR 9 million
Behind Philion is René Schuster. The former CEO of Vodafone and Telefonica Deutschland wants to take advantage of the changes in the German telecommunications market and build one of the three leading network-independent mobile service providers. At the beginning of 2018, the listed shell Philion was taken over and Fexcom, the largest independent chain store in the German mobile phone market, was brought in.
With the acquisition of Handyflash.de, the strategic build-up phase was completed and revenue and profit growth is accelerating. This is because the Group is pursuing an omni-channel strategy compared to Freenet and 1&1. In addition, a close partnership with the Swiss mobilezone group should bring cost advantages. Also further targeted M&A activities are planned.
Construction phase completed
"With the acquisition of Handyflash.de and the even closer partnership with mobilezone, we have created the prerequisites to implement the omni-channel approach much faster now. Furthermore, we can realize cost advantages along the entire value chain", says René Schuster, Chairman of the Board of Directors of Philion.
"Philion is actively helping to break down the outdated sales structures in the German telecommunications market and will offer customers significant added value. It will not matter whether they prefer to shop online or come to the stores. All customers can look forward to innovative products, competent advice and attractive prices."
Use economies of scale on the cost side
The agreement with mobilezone provides for the following: Philion completely takes over OBS GmbH with the online platform Handyflash.de and 30 stationary branches. Handyflash.de is the third largest online service provider in the German mobile phone market, has contracts with all network operators and already a complete platform for the implementation of a comprehensive omni-channel approach.
To this end, Philion is relinquishing its 30% stake in Mister Mobile GmbH with the DEINHANDY brand acquired at the end of 2018. In addition, the two partners will cooperate intensively in purchasing and in relationship management with the network operators. This will allow Philion to benefit from significant economies of scale on the cost side.
New research in progress
In the current year, Philion aims to achieve sales in excess of EUR 100 million and a significant profit for the first time. Market capitalization is currently only around EUR 9 million. Further takeovers should increasingly exploit economies of scale. Accordingly, sales and profits should rise sharply in the coming years.
Concrete figures for the coming years will soon be available to investors in a new study. The analysts of a renowned research house are expected to start coverage in the current or coming month.