Morgan Stanley's review of the European telecommunications reporting season shows a split performance across top-line and profit metrics. Sixty percent of companies in the region have released their results. Revenue performance broadly beat analysts' projections, yet 50% of companies missed on EBITDA.
The sector has climbed 10% year-to-date, but that gain is one percentage point behind the broader European market. Morgan Stanley notes the sector has weakened since June, with satellite-related issues influencing firms in both the United States and Europe. Uncertainty over tower assets persisted, and Deutsche Telekom's shares remained negative for the year.
At the operating-profit level, only two companies outperformed expectations on EBITDA: Telia and KPN. Overall EBITDA growth decelerated to 1.3% in the second quarter, down from 3.6% in the first quarter. Nordic operators, including Tele2 and Telenor, saw EBITDA growth revert to more normal levels after a particularly strong 2025 performance that was driven by cost reductions.
On specific company notes beyond Europe, T-Mobile US reported second-quarter results on July 23 that came in ahead of Morgan Stanley's EBITDA forecasts by 1.4%. For Deutsche Telekom, Morgan Stanley expects improved revenue and EBITDAaL trends in Germany following a broadband price increase of c3 per month implemented in early April.
Revenue outcomes were tilted toward beats: 56% of companies topped expectations, 11% met forecasts, and 33% missed. The three firms that missed revenue estimates were Nordic operators Elisa and Telenor, and Liberty Global. The Nordic shortfalls were attributed to weak mobile service revenues and competitive market dynamics.
Guidance trends were mixed. Half of the companies maintained their guidance. Vodafone raised its EBITDAaL and free cash flow guidance and said it expects to deliver results at the upper end of its updated ranges. By contrast, Elisa, Telenor, and KPN reduced guidance across various metrics, including service revenues and cash flow.
Contextual note: The reporting season portrayed a sector with resilient top-line results in aggregate but notable pressure on operating profits, and a range of company-specific outcomes on guidance and near-term momentum.