TI-A Telecom Italia

[LightWhale]

wrapping up some recent happenings:

 

Fiber Front:

• Elliott and Vivendi set to clash at the annual meeting on March 29.

• The Italian State Bank weighs doubling stake in TIM, from 5% to 10%, which seems like a move to block Vivendi (which holds 24% vs Elliott 9.6%), with the intention of “supporting the national strategic infrastructures”. Seems hard to understand it as anything but pushing forward a single national network (the state lender has a stake in Open Fiber as well)

• The regulator rejected TIM’s plan to legally separate the grid while retaining majority control, citing lack of competition. My understanding is that this decision boosts Elliott’s plan for a full spin off of the network and the selling of controlling stake.

 

5G front:

TIM Signed 5G network partnership deal with Vodafone to roll out 5G infrastructure at lower costs.

 

Saving Shares conversion:

in their recent presentation, Vivendi now supports “any proposals that are shown to be in the best long-term interest of all TIM shareholders, including …simplification of the capital structure”. Seems like the only point of agreement with Elliott, so the moment of conversion might be nearing.

Link to the presentation: https://www.vivendi.com/wp-content/uploads/2019/02/Restoring_Value_for_TIM.pdf

 

Mobile front:

Iliad’s stock price hit an eight-year low, with 2018 yielding its first ever drop in net mobile subs & first ever drop in broadband subs. Meanwhile, building mobile networks in Italy while ramping up faster fibre broadband in France means that the company’s negative CF is deteriorating and pressures are mounting.

 

[ebdem]

Anyone still covering TIM?

Seems to cheap for me here - especially if leverage is falling to around 18 billion without lease and 23 with lease.

They plan to have 4,5 - 5 billion Equite FCF  in 2021/22. Market cap is currently 7,85 billion. EV should be around 30 billion then.

 

Looks all to cheap for me. Elliott saw the value at 1,60 € and Vivendi entered at around 1,20 €.

[kab60]

Following loosely. While debt is going down, leverage less so I believe. Just going with estimates, they did 8222m ebitda in 2019 vs 6844m this year and next year is expected to be flat. On headline numbers it has looked cheap for a long time, but a combination of financial leverage and operational leverage can get messy if revenue keeps falling. Demographics and market share losses (if I recall correctly) means I never could get quiet comfortable, not sure whether a partial combination with Enels fiber business changes that. What do you think will stem the declines?

[ebdem]

They just sold a share of the fiber cabinet to house business for around 8,5x EV/EBITDA: https://www.gruppotim.it/en/investors/reports-presentations/presentations-webcasts/2020/fibercop-cdpe-mou.html. It made 1,8 billion.

 

They also sold the tower business for 1,6 billion: https://telecoms.com/505205/telecom-italia-becomes-latest-to-cash-in-on-tower-popularity/.

 

This is the latest debt reporting (without leasing)

 

There is also the chance to get cash for the other parts of the network.

 

EBITDA this year is also depressed, cause tourism revenue is missing.