How Tim’s Accounts Will Go (According to Tim and Analysts)
What's new in the guidance of the Tim group. Facts, numbers, comments and effects on the stock market for the Telecom Italia share
All the latest news from Tim between announced guidance, words from Gubitosi, push on Timvision, agreement with Dazn and Cloud Pa objective.
Here are the details starting from what happened today in Piazza Affari for the Telecom Italia stock.
BAG EFFECT FOR TIM
On a very negative day for the European stock exchanges and for Milan in particular, Telecom closed (minus 3.2%) among the worst in the Ftse Mib, after updating the group's guidance by incorporating the effects of the distribution agreement with Dazn and general effects on the market of the time delay of the measures to support digitization (voucher plan).
THE CUT OF THE EBITDA GUIDANCE
According to analysts, “the cut in the guidance on domestic Ebitda for 2021, now seen in mid single digit decline from flat, has affected the performance of the stock market”. In particular, the agreement with Dazn for the distribution of the Serie A championship entails an acceleration in the expected growth in revenues and Ebitda (mid single digit growth) in the years 2022-2023, with 2021 objectives confirmed in terms of turnover (stable to low to single digit growth), but revised to “low to mid single digit decrease” (a decline is expected) for Ebitda, also as a result of the general effects on the market of the time lag of the vouchers plan for families and businesses.
WHAT EQUITA ANALYSTS SAY
"While the expected stabilization of domestic revenues is confirmed, the stabilization guidance of domestic Ebitda has been worsened, now seen in a mid-single digit decline (-2.6% in the first quarter of 2021 and -7.6% in the 2020) ”, write Equita analysts, who recall that the 2021 domestic capex have been slightly raised to 3-3.1 billion (from 2.9 billion) as a function of the take-up of football”. For 2022-2023, the company "leads for a full recovery of the lower Ebitda 2021, with a mid-single-digit rebound (from the previous low-to-mid single digit and compared to our expectation of flat Ebitda)", underlines Equita, explaining that “the new guidance implies a worsening of around 3% over 2021 at the EBITDA level, which becomes 8% at the EBIT level and over 10% at the adjusted profit level”.
TIM'S CONFIRMATIONS OF OBJECTIVES
For the rest, the group confirmed the cash generation target of 4 billion over the plan period and the Net Debt / Ebitda ratio of 2.6 times to 2023 and also confirmed the dividend distribution policy. In the second quarter of 2021, the stabilization of fixed lines and the growth of Ubb lines were confirmed. "If the impact of football can be considered a one-off and it is expected to support customers and revenues, but not necessarily EBITDA, we are instead more concerned by the signs of poor price discipline highlighted in the market in recent months, even before of the launch of Iliad in the fixed. We therefore think that the market will react by looking more at 2021 than at the new 2022-2023 targets, also in light of the difficulty of the group (and of the sector) to stabilize the results ”, writes Equita.
THE INTESA SANPAOLO REPORT ON TIM
"The company has once again postponed its domestic EBITDA stabilization target whose guidance decline is even worse than our forecasts as it should be expected to decline in the average single digit compared to -1, 7% estimated by us. Furthermore, the potential findings of the Antitrust on the agreement with Dazn, the threat of dumping in the average revenues per user in the domestic fixed segment by Sky and the imminent entry of Iliad always in the fixed market reduce in our opinion the visibility for 2022. ”, Say the analysts of Intesa Sanpaolo who in any case confirm the buy opinion and the target price of 0.56 euros on the share.
THE JUDGMENT OF BANCA AKROS
Banca Akros (buy and target price at € 0.63) observes according to Mf that "the gap in domestic EBITDA is between 200 and 300 million and most of this amount is linked to the agreement with Dazn" and notes that so far the company has minimized any negative impact. “We consider this negative announcement as a profit warning, despite the confirmations on the equity free cash flow targets and the expected acceleration of the EBITDA in 2022-2023. We do not change recommendations after these statements, a correction in the middle of the single digit could represent an interesting entry point ”.
TIM'S PRESS RELEASE
Here is in detail what Tim communicated: the group chaired by Salvatore Rossi and led by the CEO, Luigi Gubitosi, has essentially updated the guidance by providing that the distribution agreement with Dazn will lead to an increase in revenues as early as 2021 and, with full production in 2022-2023, an acceleration of growth expected for domestic (low to midsingle digit / mid single digit growth) and group (low to mid single digit / mid single digit growth) revenues and EBITDA. The dynamics of the start-up costs of the initiative will translate into a positive contribution to EBITDA only starting from 2022.
DOSSIER VOUCHER
Moreover, the expected contribution of the voucher plan to the improvement of revenues and margins and to the relaxation of the competitive context remains, even if, following the delays in the implementation of phase 2, it is expected to be delayed, entailing, together with the aforementioned incremental costs for the '' launch of the partnership with Dazn, a revision of the consolidated Ebitda 2021 objectives towards 'low to mid single-digit decrease' (mid single-digit decrease at domestic level).
HOW THE CASH OF TIM WILL GO
The generation objectives of 4 billion in cash over the plan period (Equity free cash flow) and the Net debt / Ebitda ratio of 2.6x to 2023 are confirmed.
DIVIDEND CHAPTER
The dividend distribution policy was also confirmed: 1 euro cent (floor) for ordinary shares and 2.75 euro cent for savings shares.
PNRR DOSSIER
The expected benefits from the National Recovery and Resilience Plan (Pnrr) on the domestic market and from the acquisition, with Vivo and Claro, of Oi's mobile assets in Brazil are not yet incorporated into the guidance.
HOW IS THE FIXED MARKET GOING
The improvement trend of domestic KPIs is confirmed in the second quarter of 2021. The stabilization of Tim's fixed lines was confirmed also in the second quarter, favored by the return to growth of the Italian fixed telephony market, which increased in the first quarter of 2021 of 450 thousand lines compared to the previous year (source Agcom), and of FTTH connections in particular, in which Tim had the most significant acceleration of FTTH connections among all the other operators in the period March 2020-March 2021, it is emphasized in a Tim's note. The migration of the customer base towards ultra-broadband grows in line with the previous quarter, thanks to an increasingly rich and convergence-oriented offer portfolio, and to the push in fiber optic coverage, which has allowed us to reach with ultra-bandwidth more than 93% of Italian households with fixed lines are large, the group's statement points out.
THE FURNITURE MARKET FOR TIM
In the mobile sector, in a particularly competitive market in the low-spending segment, the stabilization of the customer base continues: in the 'mobile number portability' (i.e. the flow to other operators) Tim records for the fourth consecutive quarter the best result among infrastructure operators.
WHAT GUBITOSI SAID TO CORRIERE DELLA SERA
“We remain a leader in connectivity and infrastructure but we have launched and are developing activities for the business market and for the Public Administration in the cloud, hedge computing, cybersecurity, the Internet of things and artificial intelligence. For the consumer market we are investing in Tim Vision, with the latest news from the Serie A Championship following the purchase of the rights by Dazn ”. This was stated by Luigi Gubitosi, CEO of Tim, in a passage from the interview published today at Corriere della Sera . But are Tim and TV compatible? Gubitosi replies: “We are adapting to an inevitable trend that has led Netflix, Amazon Prime and Disney + to lead the transformation of the market in the world. This year the Superbowl final was watched by nearly 100 million people across cable TV and streaming. This epochal change is also happening here and since technology does not wait, Tim is quickly adapting by expanding the offer to capture a rapidly growing demand. Obviously we are only talking about content distribution ”. And Gubitosi also assures: “We are promoters of Cloud technology in Italy. Noovle, born from the technological partnership between Tim and Google , is the first center of excellence for edge and cloud computing thanks to the most advanced Italian data center network with which we offer services to businesses, small and large, and to the Public Administration. All in maximum safety, located in Italy and regulated by Italian laws ". In addition, the group – as highlighted in recent days by Start Magazine – is working "with Cdp and other partners to develop a project for the PSN (National Strategic Pole) that we believe will meet the needs of modernization, security, simplification and innovation of the Public Administration ". Regarding the hypothesis of a common network, Gubitosi believes that the government “will appreciate solutions that bring benefits. I imagine that the Government will leave autonomy to CDP as an Open Fiber shareholder ”.
HERE THE INTEGRAL RELEASE OF TIM ON THE GUIDANCE
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/come-andranno-i-conti-di-tim-secondo-tim/ on Mon, 19 Jul 2021 09:47:59 +0000.