Getlink SE: A Contrarian Play on Europe's Energy Lifeline?

The outage of ElecLink, Getlink SE’s (GET.N) critical 1GW electricity interconnector between France and the UK, has become a litmus test for the resilience of Europe’s energy infrastructure—and the financial staying power of its operator. After a September 2024 fault triggered a cascading series of delays, the interconnector’s prolonged downtime has tested investor patience. Yet beneath the near-term turbulence lies a compelling case for Getlink as a contrarian buy: a monopolistic, regulated asset with decarbonization tailwinds, trading at a discount due to temporary setbacks.

The Financial Toll of Technical Setbacks

ElecLink’s outage, initially expected to last weeks, has now spanned nearly nine months. The fault—rooted in structural weaknesses in the cable’s French-side foundation—has dragged on revenue and raised questions about operational reliability. By Q1 2025, ElecLink’s revenue had plummeted 69% to €33 million, contributing to a 17% drop in group revenue (to €328 million). Combined with penalties for delayed restarts, the total commercial impact through early 2025 now exceeds €41 million.

Yet Getlink’s guidance remains defiantly intact. The company reaffirmed its 2025 EBITDA target of €780–830 million, buoyed by two critical factors:
1. Resilient Core Divisions: Eurotunnel (passenger/vehicle transport) and Europorte (rail freight) delivered 2% revenue growth each in Q1, offsetting ElecLink’s losses. Eurotunnel’s truck traffic rose 3%, while Eurostar traffic surged 9% despite disruptions.
2. Cost Discipline: Aggressive cost management has shielded margins, even as energy markets normalize and border control changes (not factored into targets) add uncertainty.

Technical Challenges vs. Strategic Imperatives

The outage’s root cause—a flaw in ElecLink’s foundation—highlights the risks of aging infrastructure. However, Getlink’s swift repairs and gradual restart by February 2025 suggest the issue is containable, not systemic. More importantly, ElecLink’s strategic value cannot be understated:
- Energy Security: The interconnector’s 1GW capacity is vital for balancing France and the UK’s grids, especially as renewables grow.
- Regulatory Safeguards: As a regulated asset, ElecLink’s returns are underpinned by long-term revenue mechanisms, insulating it from volatile wholesale prices.
- Decarbonization Tailwinds: Europe’s push for cross-border energy integration—key to achieving climate goals—ensures sustained demand for interconnectors.

Why This Is a Contrarian Opportunity

The market’s reaction to ElecLink’s outage has been swift but myopic. Getlink’s shares have underperformed peers due to fears of prolonged downtime and EBITDA misses. Yet three factors make this a compelling contrarian entry point:

1. Near-Term Pain, Long-Term Gain

While ElecLink’s Q1 2025 revenue was gutted, the interconnector’s restart in February 2025 unlocked €168 million in secured 2025 revenue by year-end 2024. Auctions for its capacity post-restart—combined with regulated income streams—position ElecLink to recover its €280 million 2024 revenue base (down from €560 million in 2023) by 2026.

2. Monopolistic Moats

Getlink’s Eurotunnel and ElecLink assets are virtual monopolies in their niches. With no viable alternatives for rail freight or cross-Channel electricity transmission, the company enjoys pricing power and recurring revenue streams. Even in a weak macro environment, Eurotunnel’s 36% truck market share and Europorte’s growth defy economic headwinds.

3. Valuation Discount for Temporary Setbacks

At current prices, Getlink trades at a 14.5x EV/EBITDA multiple, below its five-year average of 16x. This discount reflects fear over ElecLink’s reliability but ignores the asset’s irreplaceable role. Once the interconnector stabilizes, valuation multiples should expand—especially as Europe’s energy transition accelerates.

Risks and Mitigants

• Operational Risk: Further ElecLink faults could delay recovery. Mitigated by Getlink’s rigorous post-repair testing and focus on foundation reinforcement.
• Regulatory Risk: Changes to interconnector revenue mechanisms could impact cash flows. Mitigated by long-term contracts and Getlink’s track record of negotiating favorable terms.
• Macro Uncertainty: Weaker cross-Channel traffic or energy demand could strain margins. Mitigated by diversification into stable rail and freight segments.

Conclusion: Buy the Dip in Europe’s Infrastructure Anchor

Getlink’s ElecLink outage is a temporary stumble for a company with structural advantages in a decarbonizing world. With a resilient core business, regulated tailwinds, and a discounted valuation, the stock presents a rare chance to buy a critical infrastructure operator at a discount. For investors with a 3–5 year horizon, this is a setup to profit from Europe’s energy transition—while the market overreacts to short-term noise.

The path forward is clear: ElecLink’s return to service marks the beginning of a recovery. For the contrarian, this is the moment to act.