Bouygues shares fall after Investing.com cut Telecoms FY26 guidance

Investing.com — Bouygues (OTC:) (EPA:) shares fell on Thursday after the telecom giant cut its fiscal 2026 guidance for its telecom division.

At 4:33 am (0833 GMT), Bouygues was trading 5% lower at €28.60.

The downward revision signals growing concerns about Bouygues Telecom’s future performance, as it expects modest revenue and EBITDA growth compared to its previous forecasts.

“While we were already below our previous guidance, this expected ‘modest’ growth over 2023-2026 compares with our current forecast of 9% revenue growth and 14% EBITDAaL growth, crystallizing our concerns about the risk of the decline in our numbers,” analysts at Morgan Stanley said in a note.

In its updated guidance, Bouygues Telecom projected only modest growth in service sales and EBITDAaL for the years 2023 to 2026, a stark contrast to the more aggressive growth rates of more than 15% and 25%, respectively, initially indicated.

This change signals the pressures facing the telecommunications industry, particularly from intense competition and a changing consumer landscape.

In addition, the company has made adjustments to its investment plans, reducing its guidance starting in 2025. Bouygues Telecom believes it is ahead of its coverage and quality targets, leading to a reassessment of investment needs in a market characterized by slower growth in mobile data usage.

“We think this capex has reduced the bell with the recent moves we’ve seen among alternative networks going into a cash conservation mode,” the analysts said.

Despite maintaining free cash flow guidance for fiscal 2026, the unchanged figure comes with caveats as it excludes changes in working capital that could put pressure on cash flow in the near term.

Investors are keenly aware that any future tax rate hikes in France could also add to pressure on Bouygues’ financial performance.

In an attempt to rejuvenate its market position, Bouygues has announced the launch of a new brand, B.iG, which will debut on October 7. This innovative range of multi-line, family-oriented offers includes competitive fiber plans and significant household discounts. adding mobile lines.

With discounts of up to €10 per month per line for families with multiple mobile subscriptions, Bouygues aims to capture a larger share of the B2C market.

However, these deals could also dilute margins and intensify competitive pressures in the telecommunications sector.

B.iG’s new offers follow similar launches by competitors such as Iliad, which has introduced its own family plans with limited discounts. Bouygues claims customers could save up to €564 annually for four mobile lines, beating the €480 savings announced by Iliad.

However, this pricing strategy raises concerns about the potential for increased competition and price turbulence as rivals such as Orange and SFR may respond to Bouygues’ bold moves.