What analysts say about Tim and Labriola’s plans
All the latest news on Tim. Facts, numbers, rumors and analyzes
Vivendi-Cdp agreements for a split in two of Tim? Or does Kkr accelerate on the takeover bid?
It is these questions that analysts and investors' considerations and scenarios are based on Tim.
However, the questions do not produce positive effects on the stock market for Telecom Italia.
In fact, today a new sales session for Tim, on the day in which the general manager Pietro Labriola illustrates the scenarios for the future of the group in an informal meeting with the directors.
After -3.12% on the eve of the eve, the securities of the telecommunications group lost 3.66% to 0.4212 euros, with a minimum of 0.4153 euros, signing the worst performance of the Ftse Mib (-1, 27%).
The exchanges were quite lively, underlines the Radiocor agency : 51.8 million pieces changed hands, compared to an average of 115.114 million in the last thirty days for the entire session.
According to press rumors, one of the proposals that Labriola will bring to the directors is the split of Tim into two companies both listed, one for the network (NetCo) and one for services (ServiceCo).
According to Il Messaggero , the realization times would be around 18 months and FiberCop could thus complete the participation in the Pnrr tenders before a possible merger of the TIM network company with Open Fiber, to create the single network.
Again according to the Roman newspaper of the Caltagirone group, 60% of the debt is allocated to the network (10 billion out of 18) and NetCo's Ebitda would be around 2 billion.
As also noted by Equita analysts, “the network can in fact affirm a higher leverage” compared to the commercial services company. According to Equita, ServiceCo would have an EBITDA of 3.2 billion euros and a debt of 8 billion.
"The metrics seem very much to us", are the Equita experts, adding that "the risk of the stand-alone plan in our opinion is linked to the risk of executing the merger with OpenFiber, however significant leverage on both assets in one phase of high investments and ratings down under pressure, due to the trend of the retail business, suffering from the pressure of the fixed and mobile ARPU (Average Revenue Per User) and the potential impact of Iliad's entry ".
In this context, Il Sole 24 Ore also reports that Tim has ongoing talks with WindTre so that the company can also use the FiberCop network for its FTTH services.
For Equita, “as already done by many other operators, these are commercial agreements that integrate the network coverage of retail operators and therefore are added to the existing agreements with OpenFiber. These agreements should give FiberCop long-term visibility for a part of the wholesale customers, even if we still expect a reduction in market share due to the growth of OpenFiber ".
Just today, as mentioned, the offer for the Iliad landline will be presented with the details and the commercial launch scheduled for January 25th. "And in a context that is still unclear for the group's strategies", Intesa Sanpaolo said today (buy rating and target price at € 0.47), "today's launch of Iliad's fixed line offer is destined to further increase the competitive pressure on the segment of fixed network services in Italy ".
The investment bank expects an aggressive entry price, in line with the company's strategy. "However, unlike the wireless business where Iliad is installing its infrastructure, Iliad will remain a pure reseller in the wireline business and therefore the wholesale cost should provide a floor for potential dumping."
Moreover, for Intesa Sanpaolo the scenario of Tim's demerger may make sense for the NetCo (implied leverage of 5x), less so for the ServiceCo (implied leverage of 4x). Not to mention that “the enhancement of the cloud business and the fate of the 67% stake in Tim Brasil are other key elements of a still unclear puzzle”, concluded Intesa Sanpaolo.
"We have updated the estimates to incorporate the cut in the guidance communicated in December", explained Barclays analysts who lowered the 2021-2023 organic ebitda estimates to take into account the trend of the Italian business. Why the equal-weight rating? “Despite initial progress on cost cutting and deleveraging, Tim is facing a deteriorating competitive environment in Italy, with no mitigation in sight.
However, a merger with the Open Fiber network that would create value is still possible as the offer by Kkkr, so the share price should remain volatile ", predicted Barclays which simulated the worst case scenario: no deal with Open Fiber , a continuous deterioration in the trend of mobile telephony led by Iliad and the trend of retail / wholesale broadband, an unsuccessful offer by Kkr and a target price identified for Tim at 0.05 euros. Vice versa, in the best scenario: completion of all potential deals at attractive conditions (Open Fiber and Brazil), a more rational pricing environment in mobile telephony and strong growth in broadband subscribers, alternatively the success of Kkr's offer but at a higher price, at 0.70 euro (in recent days there have been rumors of a raise to 0.80 euro per share), Tim can be worth for Barclays , in fact, 0.70 euro.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/che-cosa-dicono-gli-analisti-su-tim-e-sui-piani-di-labriola/ on Tue, 18 Jan 2022 14:34:57 +0000.