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Morgan Stanley Revises Targets on EMEA Telecom Stocks

DUBAI - Morgan Stanley revised its price targets on several telecom stocks in the EMEA (Europe, Middle East and Africa) region, while maintaining its “overweight” position on the sector.

“We view telecoms as defensive,” Morgan Stanley said in a note to clients, adding that stocks in the sector had strong funding position in 2009.

The brokerage said companies in the EMEA telecoms sector offered resilient cash flow through a cut in capex and strong balance sheets with low refinancing risk.

It upgraded Turkcell to “overweight” from “equal weight” saying the company had a strong balance sheet and the lowest risk screening.

In the region, Morgan Stanley said Egypt’s Mobinil could cover all its debt refinancing and estimated dividend payments through its free cash flow and from 1 billion Egyptian pounds of undrawn facilities.

Morgan Stanley, however, noted that Mobinil might need to raise 1.3 billion Egyptian pounds in 2010 and that the funding deficit might pressurise 2009 dividends. The brokerage also acknowledged that the telecoms sector in EMEA was not immune to the global slowdown. Following are the price target changes made by Morgan Stanley on EMEA stocks.