What will change for Tim after the phone call from Kkr. Analyst reports
All the scenarios after the move of the American fund Kkr on Tim. Here are the reports from analysts and investment banks
Tim shines in Piazza Affari after the acceleration of the weekend during which a "friendly" purchase proposal from Kkr, the American infrastructure fund with which it has already been launched, arrived on the table of the board of directors of the former Telecom Italia a collaboration in FiberCop, the former monopolist's last mile network company. Kkr has fielded a proposal of € 0.505 per share, although still in the preliminary phase.
HSBC'S JUDGMENT ON KKR'S PROPOSAL FOR TIM
After yesterday and Tim's board meeting, HSBC raises its judgment and recommends buying, updating Tim to a 'Buy' rating, from the previous 'Reduce'. For Hscb analysts, Kkr's move now requires the parties involved to "show their cards": the approach of the US fund comes after months of operational and strategic uncertainty that "affected the performance of Telecom Italia (operational, financial ) and as a title) ".
THE COMMENT OF UBS
The path towards the formal offer “may not be certain or fast, but to think that the offer is articulated and credible and should trigger the reactions of interested parties and counterparties. Vivendi, whose 23.9% stake in Tim was built at an average price that we estimate to be above € 1 per share, may not find the offering attractive. And he may have to decide whether to support Kkr's plan or oppose it; in the latter case, Vivendi will have to present an alternative plan (for example a different strategic solution or even a counter-appeal) ". For UBS analysts, it is true that "some conditions must be met and some obstacles overcome", but in any case Kkr's offer "seems to have solid foundations". Furthermore, even if they do not exclude "that some political parties may emphasize opposing the transaction", they see "common ground between the Government and the KKR in terms of access to the fixed network". With the minimum acceptance level of acceptance of 51%, Kkr's move can "be successful even if the French do not bring their shares," suggests UBS.
JEFFERIES 'REPORT ON TIM AND KKR
The Jefferies experts on their part see the Italian government's response as encouraging, a response that probably "reflects fears about Tim's ability to develop FTTP Plans". The potential obstacles identified by the analysts are linked to competition (the influence of Cdp on two fixed networks) and to Vivendi (given the carrying price of 1.07 euros, devalued to 0, 83 euros). Jefferies also points out that if we remove the FiberCop valuation and the current market values of Tim Brasil and Inwit from Tim's EV, “the residual assets are trading 5.9 times the operating Ev / Fcf ratio. The sector average, on the other hand, stands at € 13.4 ”. However, "fundamental to any re-rating of Tim is the amount of debt that could be loaded in the event of a possible spin-off of the fixed network, and this could be reinforced by the inclusion of primary network assets".
WHAT WILL CDP DO?
The role of Cdp is fundamental for the theme of the infrastructural network and Vivendi's potential moves. According to Banca Akros analysts, these are two nodes on which the solution of the Tim puzzle after the offer of the Kkr fund could depend. "Until now we tended to believe that a foreign offer on Tim could not have obtained the conditions of Golden Power given the set of strategic assets involved – write the analysts of the investment bank – It is probable that the involvement of an investment bank public finance such as Cdp would help address the demand for network ownership with a full carve-out potential ”. On Vivendi, Akros underlines that if, in light of the conditions of the offer (Kkr aims at 51%), Vivendi's position is not essential for the operation to go through, however, a contrary position of the French would fuel speculation on possible counter offers. Akros has a target price of 51 cents per share against an average target price of the brokers (KKR pre-offer) of 44 cents.
THE INTERMONTE JUDGMENT
A “jumbo offer” by KKR to be considered preliminary because it could also increase both to capture further potential factors of upside and Noovle at M&A in Brazil) and to counter any counter offers. This is Intermonte's opinion on the friendly proposal put on the plate by the American fund for the telecommunications group. The analysts who signed the report, Giorgio Tavolini and Andrea Randone, highlight that the target threshold set by KKR, that is 51% of Tim, should reduce the risk of failure of the operation since it would be within reach even in the event of a contrary position. Vivendi or CDP, which could also remain shareholders. But "the devil is in the details", the report stresses, and it is therefore likely that in the four-week conferences the temperature of the political debate on Tim rises. According to Intermonte, a private TIM would be the favorable scenario for a break up of the company – in two distinct companies focused on services and on the network – and would accelerate the project of the single network.
THE COUNTER-OFFERS ARRIVE ACCORDING TO BESTINVER
Once the position of the Treasury with respect to the KKR proposal and the conditions for the operation is clear, "it would not be strange to see competitive offers from other players, private equity or industrial". Bestinver analysts do not therefore rule out a series of raises on Tim after the preliminary proposal by KKR also in light of the fact that on the stock market the prices do not even remotely reflect the value of the company. For Bestinver it is unlikely that the Italian government will use the powers of Golden Share to block the KKR operation given that the US fund is already a partner of Tim in the secondary network of Fibercop.
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-cambiera-per-tim-dopo-la-telefonata-di-kkr-i-report-degli-analisti/ on Mon, 22 Nov 2021 10:37:05 +0000.