How are Tim’s accounts

How are Tim's accounts

Tim: the quarterly accounts, the effect on the stock market, the words of Labriola and the opinion of the analysts

BAG EFFECT FOR TIM

The Stock Exchange rewards Tim, the quarterly accounts and the indications given by the managers to the financial community on the year-end objectives, considered “easily achievable” which open up the possibility of a new increase in the targets for 2023-24. The stock on the highs of the session rises by 6.09% to 0.2475 euros, thus revising the levels of four months ago, in July 2022.

THE JUDGMENT OF THE ANALYSTS

For analysts, the one of Rete Unica has become "a 'soap opera'" and they ask Tim's CEO, Pietro Labriola, how he will "reconcile what the government is willing to achieve with plan A" that which provides for separation of the fiber network and integration with that of Open Fiber.

THE WORDS OF LABRIOLA

Tim will hit the 2022 objectives, revised upwards in July, CEO Pietro Labriola is sure of this. "There are improvements in all the KPIs (the key performance indicators, ed ) and the guidance is easily achievable," he said, concluding his presentation of the third quarter accounts. “Signs of rationality are consolidating on the market and we will continue with our 'volume to value' strategy” he adds, reiterating: “We have promised to do better than expected and we are keeping this promise despite a tougher macroeconomic environment than expected”.

Tim could revise his goals upwards again for the next 2 years. Based on the 2022 results, if the current trend continues – and CEO Pietro Labriola has just said that he is "optimistic" and considers them "easily reachable" – also as analysts calculate "it is possible that even in 2023-24 the our guidance can be retouched in an improved way, but we will talk about it in February ”. So the manager answered an analyst on a conference call.

“I cannot answer on behalf of the government but I can tell you what happens within my remit: we have extended the MoU, now with Cdp we have a month to find the best solution. The 'non-exclusive' is not a question of having changed approach ”. Labriola, in a conference call with analysts in the late morning after the quarterly published the previous evening, said that Cassa Depositi e Prestiti still remains "the best choice in Italy to build the country's unique network in terms of industrial synergies", writes Bloomberg. . Labriola also indicated the possibility that the financial targets for the 2023-2024 two-year period could be raised after the group made three profit warnings in 2021.

Tim has not given up on selling a stake in Tim Enterprise and the creation of a company is to be understood as the first step and not a slowdown with respect to the plan presented in July. "We want to openly declare that we are working on the plan presented at the Capital Market Day with clear stages, 'corporateising' to then be ready to sell a share if necessary". A quote that, however, will be, Labriola reiterates, "in a minority because Tim Enterprise is an excellent business".

THE ACCOUNTS OF TIM

One aspect catches the eye of the analysts from Tim's accounts in particular. Net financial debt after lease amounted to € 20.1 billion as at 30 September 2022 – after the payment of € 1.7 billion for the payment of the last tranche of the 5G spectrum in Italy – up by € 2.5 billion compared to December 31, 2021. This is what emerges from the financial statements for the first nine months of the year approved by the board of directors of Telecom Italia, which met yesterday under the chairmanship of Salvatore Rossi. Revenues grew, albeit slightly (+ 0.8%), to 10.8 billion, but in the nine months the loss rose to -2.78 billion.

THE GROUP NOTE

"The Group's results in the third quarter – reports Tim's note – during which the stabilization and relaunch of the domestic business and the acceleration of the development of Tim Brasil continued, are fully in line with the targets for 2022 which had been partially revised upwards last August (Group organic Ebitda 'high single digit decrease' from 'low teens decrease', Group Ebitda After Lease 'low teens decrease' from 'mid to high teens decrease ') ".

REVENUES GROW …

The Tim Group's service revenues amounted to € 10.8 billion at group level, up 0.5 percent. In the quarter, they rose 3% to 3.7 billion.

Revenues in Italy, where the operator makes the bulk of its turnover, fell by 5.3% to 2.92 billion euros. “In Italy, the premium positioning strategy 'Value vs. A volume which saw promotional activities limited to a maximum and which contributed to a greater rationality of the fixed and mobile market, the integration of Oi's assets and the strategy of organic growth in fixed assets continued in Brazil ”explains the group.

… BUT ALSO THE RED ON THE BALANCE SHEET

The net result for the January-September period was a loss of € 2.728 billion (€ -10 million in the first nine of 2021), compared to a profit of € 360 million in the same period of the previous year. The result is affected by the devaluation of fiscal assets for almost 2 billion.

FRONT PROFITABILITY

Group EBITDA for the nine months amounted to € 3.945 billion (€ 4.349 billion in the first nine months of 2021, -9.3% in reported terms, -9.4% in organic terms). The trend improved in the third quarter when the EBITDA fell by 6.5% to 1.6 billion euros.

Ebitda After Lease amounted to 1.3 billion euros between July and September. This is in line with analyst consensus provided by the company and down from € 1.48 billion a year ago.

DEBT GROWS

Net financial debt amounted to 25.5 billion euros, an increase of 3.3 billion euros compared to 31 December 2021. Net financial debt after lease at 30 September 2022 amounted to 20.1 billion euros , up by 2.5 billion euros compared to 31 December 2021. Total adjusted gross financial debt is 32.671 billion, up 2.48% compared to 30.188 billion in June.

LABRIOLA'S POSITION ON DEBT

Tim is an "industrially sound company" which, however, suffers from "the burden of debt" declared the CEO of the Group, Pietro Labriola, during the meeting of Confindustria Bari and Bat on 8 November. “We must structurally solve the debt problem”, added Labriola, indicating in the plan presented last July the best way to achieve this goal.

SINGLE NETWORK DOSSIER AND NOT ONLY ON THE TABLE

Finally, as regards the single network project, the group recalled that "on October 29, Tim announced that he had signed Teemco Bidco S.à.rl, a Luxembourg company controlled by one or more funds managed by Kohlberg, with CDP Equity. Kravis Roberts & Co. LP (Kkr), Macquarie Asset Management (Macquarie) and Open Fiber an agreement to amend the non-binding memorandum of understanding ( Memorandum of Understanding ) relating to the integration project between the TIM and Open Fiber networks, signed last May 29. The latter "extends its effectiveness to November 30, 2022".

So "On the network dossier, we wait for November 30 to see if the CDP will proceed with the presentation of an offer to take over the infrastructure", Corriere della Sera recalls.

Therefore, reports Repubblica , “Tim also postpones the opening of the“ beauty contest ”for the sale of a minority stake in Enterprise, the business of large customers and the cloud (which grew by 56% in the first nine months). Labriola has already selected the advisors: together with Goldman Sachs, Mediobanca and Vitale, who also assist him on the network, Tim's CEO has also chosen Banco Santander to make an assessment of the division that since yesterday was officially detached in a company in part. However, no formal process has been opened to enhance Tim Enterprise: the possible sale of a minority stake remains one of the options that could be activated in the event that the single network project were to be skipped ”.


This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-vanno-i-conti-di-tim/ on Thu, 10 Nov 2022 14:46:06 +0000.