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Research Tree provides access to ongoing research coverage, media content and regulatory news on TELECOM ITALIA SPA. We currently have 7 research reports from 1 professional analysts.
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TELECOM ITALIA SPA
TELECOM ITALIA SPA
Ready to dominate TV distribution and prepared for new competition from Iliad
20 Feb 17
TI has released a good set of Q4 results: Revenues were up organically by 0.8% yoy (vs -5.2% in Q1, -4.2% in Q2 and -1.2% in Q3) while the EBITDA (excluding the negative impact of non-recurring items) has increased sharply by 5.9% yoy as in Q3 but vs a decline of 1.7% in H1! EBITDA has clearly benefited from the actions implemented in the “cost recovery plan” that started in Q2 in the Domestic Business and in Q3 in the Brazil Business. In Italy, revenues were up by 2.7% yoy (vs +1% in Q3 and -1.7% in the H1). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. But the key point is the EBITDA which has grown by 8.4% (vs 7.9% in Q3, +6.9% in Q2 and -5.2% in Q1). Excluding non-recurring restructuring charges, EBITDA would have grown by +4.5% in 2016, with an EBITDA margin of 45.9%, up 1.9ppts on 2015. In Brazil, Q4 revenues were down organically and at constant change by only 1.7% yoy (vs -5.2% in Q3 and -14% in H1)! The main issue is that the total number of subscribers (c.63m with a market share of 26%) was still down by 4.3% vs end 2015. Note, however, that like its competitors the group has seen its prepaid customer base contract sharply in 2016, due to the adoption of a restrictive policy for the disconnection of inactive customers according to Anatel’s new criteria (the Brazilian National Telecommunications Agency). Q4 EBITDA was up by 2.8% yoy (vs +0.5% in Q3 and -10.9% in H1) with the start in Q3 of cost-cutting operations.
A solid Q3 confirming a good trend
07 Nov 16
A good Q3 release for the Italian incumbent: revenues were down organically by only 1.2% yoy (vs -5.2% in Q1 and -4.2% in Q2) while the EBITDA (excluding the negative impact of non-recurring items) has increased sharply by 7% yoy (vs a decline of 1.7% in H1!), with an EBITDA margin of 44.4%, 3.3ppts higher than in Q3 15. The EBITDA has clearly benefited from the actions implementing the “cost recovery plan” that started in Q2 in the Domestic Business and in Q3 in the Brazil Business. In Italy, revenues were up by 1% yoy (vs -1.7% in the H1). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. But the key point is the EBITDA which has grown by 7.9%. Excluding non-recurring restructuring charges (corresponding to 3% of EBITDA), EBITDA would have grown by +3.3% for the first 9m, with an EBITDA margin of 46.5%, up 1.8ppts on 2015, confirming the positive change in trend that started in Q2 (Q3: +7.8%, Q2: +6.9%, Q1: -5.2%). In Brazil, Q3 revenues were down organically and at constant change by 5.2% yoy (vs -14% in H1)! Service revenues were down by 2.4% yoy, while revenues from product sales dropped by c.40%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers (c.63.2m) was still down by 4.5% vs end 2015 (with a market share of 25.2%, vs 25.7% at end 2015). Note, however, that like its competitors the group has seen its prepaid customer base contract sharply in 2016, due to the adoption of a restrictive policy for the disconnection of inactive customers according to Anatel’s new criteria (the Brazilian National Telecommunications Agency). The Q3 EBITDA margin was good at 32.6%, up 1.4ppt on Q3 15. Excluding non-recurring costs, EBITDA has indeed grown by 0.5% with the start of cost-cutting operations which offset the reduction in revenues.
An integrated European media powerhouse dies before being born
24 Oct 16
Once upon a time (say about 6 months ago), Mediaset and Vivendi concluded a splendid strategic alliance: the French group was to acquire 100% of Mediaset Premium, while each entity would be taking a 3.5% stake in the other on the occasion. The ambition was to build a pan-European OTT platform and to create a southern European content and VOD powerhouse… The announced wedding has since moved to the divorce legal battlefield, maybe paving the way for a ménage à trois.
Best quarter in Italy since 2009
27 Jul 16
Q2 revenues were down organically by 4.2% yoy (vs -5.2% in Q1) while the EBITDA (excluding the negative impact of non-recurring items) has decreased by only 1.7% yoy, with an EBITDA margin of 42.0%, 1.4ppts higher than in H1 15. But in Italy, revenues were down by only 1.1% yoy (vs -2.5% in the three previous quarters). The solid, structural recovery of Mobile revenues was confirmed, thanks both to the maintenance of market share and the stabilisation of ARPU levels. Note the revenues of the Consumer segment in H1 (55% of Domestic revenues) have increased by 1.5% yoy. But the key point is the EBITDA: excluding non-recurring restructuring charges (corresponding to 2% of EBITDA), EBITDA would have grown by +0.9%, with an EBITDA margin of 45.1%, up 1.2ppts on H1 15 and a positive inversion of trend compared to Q1 (+6.9% yoy in Q2 vs -5.2% yoy in Q1). In Brazil, Q2 revenues were down organically and at constant change by 13% yoy (vs -15% in Q1)! Service revenues were down by 5.7% yoy, while revenues from product sales dropped by c.60%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers (c.64m) was still down by 3.4% vs end 2015 (with a market share of 25.6%, vs 25.7% at end 2015 and 26.7% a year ago). The H1 EBITDA margin was, however, at 29.9%, up 1.5ppt on H1 15. Another key point of the H1 release: TIM and Fastweb have entered into a strategic partnership aimed at speeding up the creation of the ultrabroadband infrastructure with FTTH technology in 29 Italian cities. The partnership envisages the establishment of a joint venture with 80% of the capital held by TIM and 20% by Fastweb. The new company’s business plan therefore envisages connecting around 3m homes with FTTH technology within 2020 which will allow connection speeds of 1Gps. Total investment is €1.2bn, which the joint venture will finance in part with equity and in part with debt. TIM’s share is already included in the capex of the 2016-18 Business Plan. Moreover, as part of the partnership, TIM will buy from Fastweb over the next 18 months the infrastructure with FTTH technology that will allow around 650 thousand homes in 6 cities to connect to TIM’s network a year earlier than envisaged in the Business Plan. The strategic partnership will allow the two companies to create the latest generation, extremely high speed, infrastructure more rapidly, at the same time permitting synergies in the investments.
The new CEO's aim to reach 2019 with €1.6bn of efficiencies
16 May 16
Q1 revenues were down organically by 5.6% yoy: In Italy, revenues were down by 2.3% yoy (as in the two previous quarters). This is a little bit disappointing: the recovery trend is slowing slightly compared to the previous quarters, after, in particular, a worsening of the performance in the Fixed segment, while the solid, structural recovery of Mobile revenues was confirmed, thanks both to maintenance of market share and stabilisation of ARPU levels. Note the revenues of the Consumer segment in the Q1 (55% of Domestic revenues) have increased by 2% yoy. In Brazil, Q1 revenues were down by 15% yoy! Service revenues were down by 8.3% yoy while revenues from product sales dropped by 61%, reflecting a sales policy less focused on the sale of handsets, as well as the impact of the Brazilian macro-economic crisis on family spending decisions. The main issue is that the total number of subscribers was 67.273m, a fall of 11.2% yoy, but this corresponds to a slight increase compared to end 2015 (with a market share of 26.1%, vs 25.7% at end 2015 and 26.7% a year ago). EBITDA was down by 7.5% yoy excluding non-recurring charges, with a quite correct margin of 43.34% in Italy while the Brazilian one was 28.7%, down 0.8 ppts on the previous year due to the contraction in revenues.
Don’t miss the opportunity to buy TI at a good price
17 Feb 16
The stock declined sharply by 4% yesterday following the release of mixed results in Q4. The stock has now declined just over 30% from its highs of last autumn (when Bolloré and Niel invited themselves to the capital of the Italian telco). 2015 revenues were down by 4.6% yoy, while the EBITDA declined by 17.9%, but this includes non-recurring charges of €1bn. Without these, the organic decline would have been of 4.5% with a margin of 41% (1.8ppt higher than in 2014!).
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Visible benefits from restructuring
23 Feb 17
In our view, Monitise’s H1 17 results demonstrate the benefits of management’s ongoing transformation programme. EBITDA profitability was sustained, and accompanied by cash outflow more than halving vs H1 16A. With gross cash at £27.3m, the group’s financial position remains strong. Initial FINkit sales are under “active discussion” and ongoing regulatory initiatives (CMA, PSD2) give further grounds for optimism in the outlook.
Small Cap Breakfast
16 Feb 17
Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime. Issue closing 23 Feb. Arix Bioscience — Intention to float on the main market from the global healthcare and life science Company supporting medical innovation. Raised £52m in Feb 16 with investors including Woodford Investment Management
Ronez performing, debt facilities agreed
21 Feb 17
Confirming our view that Ronez is a high-quality maiden acquisition, SigmaRoc today announces that trading and operational performance at the verticallyintegrated aggregates business on the Channel Islands has been strong in the first few weeks of trading since the deal completed in early 2017. January sales volumes are reportedly above budget, a healthy order book is in place for the remainder of the quarter, and requisite back-office systems are being developed faster and at lower cost than initially anticipated. Furthermore, SigmaRoc has agreed terms with Santander Bank for a £2m revolving credit facility and is close to agreeing an £18m term facility – once finalized these debt facilities should see SigmaRoc sufficiently capitalized to progress initial projects in management’s pipeline of growth opportunities. We thus continue to believe that Ronez has potential to generate EBITDA to the group of at least £6m pa as efficiencies continue to be unlocked under the new independent ownership structure, providing SigmaRoc with a firm platform from which to leverage more acquisitions and/or organic investments and thus deliver further earnings growth as it progresses its niche buy-and-build strategy.
New Screen – Consistent Growth + “11 with legs”
17 Dec 15
To represent the theme of “Consistent Growth”, we introduce our second basket of small-cap stocks selected by a screening process. This will sit alongside our first (deep value) basket introduced and described in our note dated 26th May 2015 (Our first screen – 10 deep value stocks to consider). The screening criteria address both the extent AND the quality of growth in EPS and sales, which we consider add a worthwhile additional element to stock selection. The process results in a basket of 25 stocks, the performance of which we will track over time, allowing comparison of investment styles, but also highlighting interesting companies. We have taken a closer look at 11 stocks “11 with legs” (see list on the right) in this screen.
Satellites tracking well
16 May 16
Avanti has reported Q3 trading that not only allows it to maintain its guidance for revenue growth, delivering a positive EBITDA in Q3, but clearly indicates a path towards free cash generation. With contract momentum building with high quality customers, recurring revenues are growing, satellite capex is almost complete and the financing facilities nearing finalisation appear more than sufficient to execute the plan. As this progress becomes more widely appreciated, we expect the share price to be released from its shackles and start to trend towards cash-based fair values. Our own capped DCF still returns a fair value of 427p per share.