Equity Research NOS SGPS SA: Case Study on the Financial Policy Towards 6G

The present document consists of an Equity Research report on NOS SGPS, S.A. (NOS.LS). NOS is an established and leading telecommunications company in Portugal offering a diverse range of services, including Fixed Pay TV, Fixed Voice, Fixed Broadband, Mobile, IoT, and Data Management services. This report issues a Buy recommendation for NOS, with a 2024YE price target of €4.15/share. To value the company, a Sum-of-the-Parts approach was employed where a discounted cash flow analysis, based on FCFF, was developed for each segment (Telco and A&C). This valuation represents an upside potential of 27% from the January 12th, 2024 closing price of €3.27, with a medium-low risk. To support this analysis, other methods such as Relative Valuation were developed, as well as a number of stress tests. This report was used for the local Portuguese CFA Institute Research Challenge. To complement the original research presented during the competition, a case study was elaborated focusing on the existing financial policies that companies might adopt and their impacts on financial statements. Furthermore, it aims to identify the optimal financial policy for the company in preparation for the expected significant investment in deploying the 6G grid, which will succeed the recent deployment of 5G and is scheduled for the beginning of the next decade. The case study’s elaborations also has into consideration the original analysis of the company’s current position and competitive environment along with a number of constraints to guide its execution. Please note that this report includes only publicly available information until January 12th, 2024.