We expect solid results from OTE on Wed, 19th of Feb.
We expect Greece to continue to deliver 2%+ topline and 3.5% EBIDTA growth, with solid KPIs. On guidance, we expect OTE to guide to ~€600m of adjusted EFCF, which implies a 30% YoY EFCF growth. In big contrast to other telco incumbents, we expect OTE to reduce capex in 2020 vs. 2019. We increase our EFCF projections, raise PT to €17.7. Q4 numbers.
We expect Greek mobile service revenue to accelerate to 6% from 3% in Q3, helped by easier comps. We expect retail fixed service revenue growth to remain at ~2%, with overall Greek revenue growth at 2.5%, a slight acceleration on the 2.2% in Q3.
At EBITDA level, we expect 3.5% growth, a slowdown vs. 5.9% in Q3. We adjust the comparison base for one offs in operating income, recorded in 4Q18, leading us to slightly trim numbers for 4Q19. 2020 Guidance.
We expect OTE to guide on >€400m on reported EFCF (including spectrum spend and restructuring) and ~€600m on adjusted EFCF (ex-spectrum and restructuring). The timing of the spectrum auction and also the magnitude of restructuring charges in 2020 is creating a lot of uncertainty for reported FCF. We expect 2020 to be the peak restructuring year and we expect a significant pick up in restructuring charges in 2020 vs. 2019 (~€120m vs. €67m resp).
We expect reported 2020 EFCF of ~€450m. Excluding both spectrum and restructuring, we expect ~€620m in EFCF in 2020 vs. €470m in 2019. Romania sale and the investment case. We continue to expect the potential sale of Romania in 1H20, which we see a meaningful positive catalyst for the shares if the deal materialises.
The broader investment case for OTE is very attractive. OTE is one of the few incumbents that is delivering LSD-MSD topline and EBITDA growth, with EFCF doubling between 2018 and 2021E.OTE also trades on a discount vs. the sector, and has a clear near term catalyst should Romania sale materialise.
Changes to estimates and valuation. Our revenues are unchanged and our EBITDA forecasts are marginally lower (as explained above). Our capex and cash taxes are lowered, leading to 8% EFCF 2020 upgrades. We also significantly increase 2020 restructuring charges. OTE trades on 5.2x 2020 EV/EBIDTA and 9.3% unlevered FCF yield vs. the sector on 6.1x and 5.7%.