United Kingdom, Institutional
Change
In summary, MasOrange’s sustainable competitive advantage, solid sector and country positioning, and lack of ESG concerns have helped us build conviction in holding this company.
competitive advantage
We believe MasOrange’s position as a leading network operator gives the company a competitive edge, with the cost and effort for new competitors to replicate mobile tower and fibre optic infrastructure acting as a strong barrier to entry. Furthermore, its range of differentiated and strategically bundled services creates cross-selling opportunities, making it more difficult for customers to switch to competitors and customers tend to stick with their well-established brands, reducing churn and increasing revenue stability. We do not see competitor attempts at increasing market share as being successful and believe MasOrange is well-positioned to remain Spain’s dominant market player. Its competitive position is enhanced by the local regulatory environment, with the government supporting network consolidation by limiting local spectrum access to three operators (one of which is MasOrange). In summary, we believe MasOrange’s economic moat is fortified by its network infrastructure, brand loyalty, product differentiation and local regulatory dynamics.
Key points
- MasOrange’s main assets are its fibre and mobile networks, which are expensive and hard to replicate for any new entrants to the market.
- The company has a vast local presence, for example its 5G mobile network covers over 80% of the Spanish population.
- Liquidity is strong and leverage is manageable for MasOrange’s stable business profile.
1 Source: MasOrange Lender Presentation, April 2024.
CONSIDER THE RISKS
Investors should consider the risks that may impact their capital, before investing. The value of your investment may fluctuate from the time of the original investment. Please refer to the risks section enclosed. A decision to invest should take account of all the characteristics and objectives described in the prospectus and KIID and/or offering documents. The portfolio does not have a sustainable investment objective. While the evaluation of sustainability risks through the analysis of ESG factors is part of the investment process, it may not necessarily result in the exclusion of a security. Please refer to the sustainability related disclosures for information on the commitments of the portfolio: https://www.wellington.com/en/legal/sfdr.
Risks
Below Investment Grade: Lower rated or unrated securities may have a significantly greater risk of default than investment grade securities, can be more volatile, less liquid, and involve higher transaction costs. | Capital: Investment markets are subject to economic, regulatory, market sentiment and political risks. All investors should consider the risks that may impact their capital, before investing. The value of your investment may become worth more or less than at the time of the original investment. The Fund may experience a high volatility from time to time. | Credit: The value of a bond may decline, or the issuer/guarantor may fail to meet payment obligations. Typically lower-rated bonds carry a greater degree of credit risk than higher-rated bonds. | Emerging Markets: Emerging markets may be subject to custodial and political risks, and volatility. Investment in foreign currency entails exchange risks. | Hedging: Any hedging strategy using derivatives may not achieve a perfect hedge. | Interest Rates: The value of bonds tends to decline as interest rates rise. The change in value is greater for longer term than shorter term bonds. | Manager: Investment performance depends on the investment management team and their investment strategies. If the strategies do not perform as expected, if opportunities to implement them do not arise, or if the team does not implement its investment strategies successfully; then a fund may underperform or experience losses. | Sustainability: An environmental, social or governance event or condition that, if it occurs, could cause an actual or potential material negative impact on the value of an investment.
Please refer to the fund prospectus and KIID for a full list of risk factors and pre-investment disclosures.